<PAGE>

                       U.S. SECURITIES AND EXCHANGE COMMISSION
                                Washington, D.C. 20549

                                   ---------------

                                     FORM 10-KSB

               [X]       ANNUAL REPORT PURSUANT TO SECTION 13
                   OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
                       For the Fiscal Year Ended March 31, 1998

                                          or

               [ ]     TRANSITION REPORT PURSUANT TO SECTION 13
                   OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

                                  -----------------

                          Commission File Number:  0-24362 

                                 NUMED SURGICAL, INC.
                    (Name of Small Business Issuer in its charter)

                  Nevada                                 34-1755390
                  ------                                 ----------
     (State or other jurisdiction of        (I.R.S. Employer Identification No.)
incorporation or organization)

        7270 Sawgrass Point Drive                           33782
          Pinellas Park, Florida                            -----
          ----------------------                          (Zip Code)
 (Address of principal executive offices)

                      Issuer's telephone number: (813) 524-3227

                                  -----------------

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

<TABLE>
<CAPTION>
           Title of each class                 Name of each exchange on which
           to be so registered                   each class is to registered
           -------------------                   ---------------------------
           <S>                                 <C>
                   None                                Not applicable
</TABLE>

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

                       Common Stock, par value $.001 per share
                                   (Title of class)

Indicate by check mark whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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 [   ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
Regulation S-K is not contained herein; and will not be contained, to the best
of the issuer'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.   [ X ]

Issuer's revenues for its most recent fiscal year are $3,918.

The number of shares outstanding of the Issuer's Common Stock, $.001 par value,
as of June 1, 1998, was 8,775,685.  The aggregate market value of the voting
stock held by non-affiliates computed by reference to the average of the bid and
ask prices of such Common Stock, as of June 1, 1998, was $635,774.

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

                                         -1-
<PAGE>

PART I
ITEM 1.  DESCRIPTION OF BUSINESS

     INTRODUCTION.  NuMED Surgical, Inc. ("NuMED Surgical" or the "Company") was
incorporated in the State of Nevada on October 18, 1993, by NuMED Home Health
Care, Inc., also a Nevada corporation ("NuMED HHC").  NuMED Surgical was formed
for the purpose of spinning-off to the stockholders of NuMED HHC the
surgical/medical products division of NuMED HHC.  In preparation for the
spin-off, certain assets and liabilities of NuMED HHC's surgical/medical
products division and NuMED Technologies, Inc. ("NuMED Tech"), a wholly-owned
subsidiary of NuMED HHC, were transferred by NuMED HHC to NuMED Surgical in
exchange for 5,175,685 shares of the Common Stock, par value $.001 per share, of
NuMED Surgical (the "NuMED Surgical Common Stock").  NuMED HHC distributed the
NuMED Surgical Common Stock to its stockholders of record as of September 30,
1993 (the "Record Date").   Each NuMED HHC stockholder of record as of the
Record Date received one (1) share of NuMED Surgical Common Stock for every one
(1) share of the NuMED HHC Common Stock, par value $.001 per share, held on the
Record Date.  NuMED Surgical had no operations or business history other than as
a division or wholly-owned subsidiary of NuMED HHC.

     NuMED Surgical has been actively engaged in the research, development and
distribution of medical instruments and surgical supplies since February 1991 to
the health care market. The Company, also has been actively engaged in the
contract manufacturing and distribution of products for assistive living,
self-care and homecare. Both of these markets are becoming extremely competitive
with direct manufacturers and catalog merchandisers entering the market.  In
addition to the other merchandisers entering this market, the original surgical
table manufacturers are becoming more aggressive in marketing table accessories
thus making it more difficult to compete in this market of group purchasing. 
However, the major factor was that the Company's major manufacturer, AMATECH
Corporation, is becoming a significant force in the market that was occupied by
two significant companies, Allen Medical and NuMED Surgical, just three years
ago. Therefore, during the fourth quarter of fiscal 1997, the Company made the
decision to sell its major product line to AMATECH Corporation and to liquidate
the remaining businesses. The Company's Board of Directors, after lengthy
discussions regarding the market and where NuMED Surgical fits, felt that the
value of the patient positioning business will deteriorate over time and that
this would be the best time to maximize the value of this product line. 

     The Company's principal office is located at 7725 Sawgrass Point Drive,
Pinellas Park, Florida, 33782 and its telephone number is (813) 524-3227.

     INDUSTRY OVERVIEW.  The Company's business is part of a dynamic and ever
changing health care market.  There are tremendous pressures on all participants
in the market of distributing surgical accessories.  Hospitals and other health
care facilities are now consolidating through mergers and acquisitions as a
result of increasing costs and changes in hospital expenditures.  The Self/Home
Care Market, of which the assistive living market is a subset, is one of the
fastest growing markets due to the fact that patients are being discharged
quicker than in the past and therefore patients are not as ambulatory, thus
needing assistive, diagnostic and therapeutic products.  The Company has
liquidated the remaining portion in fiscal year 1998.

                                         -2-
<PAGE>

     BUSINESS STRATEGY.  Management felt that the value of the business would be
maximized by selling the major product line to AMATECH, NuMED Surgical's
manufacturer, and to liquidate the remaining businesses.  NuMED was able to
generate significant market interest in the Liftmate product but was
unsuccessful in obtaining a distribution partner. 

     PRODUCTS AND MANUFACTURING.  NuMED Surgical's sales have come principally
from its distribution of surgical table accessories manufactured by AMATECH,
which constituted approximately 82% of total revenues for fiscal 1997.  As
planned, NuMED Surgical introduced a new positioning product which was thought
to position the Company in a leadership position in the surgical positioning
market, however, the competition reacted quickly with pricing pressures, thus
neutralizing the Company's impact.   
     
     EMPLOYEES.  NuMED Surgical has no full time employees.  The President
resigned effective March 31, 1997.

     COMPETITION.  In the patient positioning product market, NuMED Surgical's
principal competitors was Allen Medical, AMSCO, Alimed and O.R. Direct (Division
of AMATECH).  Major medical equipment companies such as Invacare and Sunrise
Medical compete with NuMED Surgical in the assistive living area.

     NuMED Surgical has been unable to get an industrial partner or find
acquisition candidates for the table-top steam sterilizer and the instruments. 
The Company feels that there are companies that will perceive value in the
sterilizer, instruments and Liftmate. However, the Company can make no
assurances that the product lines will be sold.
  
     RESEARCH AND DEVELOPMENT.  All research and development has been stopped.

     SIGNIFICANT CUSTOMERS.  NuMED Surgical had one key customer for its
medical/surgical products during 1997:  Tri-anim Health Services, Inc. (formerly
National Medical Specialty).  Sales to this significant customer totaled
$226,900 in fiscal 1997.  There were no sales in fiscal year 1998.

     SALES AND MARKETING.    NuMED Surgical spent approximately $50,000 in
advertising and marketing on a new patient positioning product (stirrups) and
Liftmate during fiscal 1997.  However, NuMED did not have the internal resources
to fund the manufacturing of Liftmate and was unable to effectively penetrate
the patient positioning market with the new stirrups due to pressures in the
market place.  During 1998, all sales and marketing ceased.

     GOVERNMENTAL REGULATIONS.  The Company was engaged in the preparation and
manufacture of medical devices and is therefore subject to regulation by the
FDA.  The level of FDA regulation to which a given medical device is subjected
is governed by the "class" into which the device is placed, with Class I
representing the lowest level of regulation and Class III representing the
highest.

     NuMED Surgical distributed accessories for surgical tables and patient
lifts for non-ambulatory patients, which are classified as Class I devices.

                                         -3-
<PAGE>

     DIVESTITURE.   On March 31, 1997, the Company decided to sell its  major
product line to AMATECH Corporation and to liquidate the remaining business. 
The Company sold all of the assets related to the product line to AMATECH
Corporation.  The remaining assets, sterilizer design, Liftmate marketing rights
and sales leads, and laparoscopic instrument design and inventory was liquidated
during fiscal year 1998. 

ITEM 2.  DESCRIPTION OF PROPERTY

     NuMED Surgical maintains its principal executive offices and corporate
headquarters at 7270 Sawgrass Point Drive, Pinellas Park, Florida, 33782.  NuMED
Surgical believes this property to be in good condition and adequate for the
purposes for which it is used by NuMED Surgical.

ITEM 3.  LEGAL PROCEEDINGS

     Management is not aware of any material litigation pending or threatened
against NuMED Surgical.

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

     None  


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

     MARKET INFORMATION FOR NUMED SURGICAL.  NuMED Surgical is traded on Pink
Sheets (OTC: NMDS).  There is a limited public trading market for the Company's
Common Stock at the present time. The Transfer Agent for the Common Stock is The
Huntington National Bank, Columbus, Ohio.

     DIVIDENDS.  NuMED Surgical has not paid cash dividends on its Common Stock
since inception.  NuMED Surgical is in liquidation and will not pay cash
dividends in the foreseeable future.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS

     FOR THE YEARS ENDED MARCH 31, 1998 AND 1997.

     INTRODUCTION.  The following is an analysis of the operations of NuMED
Surgical for the fiscal years ended March 31, 1998 and 1997 and should be read
in conjunction with the Company's Financial Statements and notes that appear
elsewhere in this report.

     RESULTS OF OPERATIONS. NuMed Surgical was liquidated during fiscal year
1998.  No significant amount of activity took place during the year.
     
                                         -4-
<PAGE>

     FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES.  For fiscal year 1998
there is a net deficiency of $8,663.  For fiscal 1997 NuMED Surgical experienced
negative cash flow from operating activities of ($23,039) as compared to
($147,104) in fiscal 1996.  NuMED Surgical financed operations with funds from
the limited offering described in Part II Item 5.  At March 31, 1997, NuMED
Surgical had debt outstanding of $47,695 to AMATECH.  The bank line of credit
was paid from the proceeds of the sale of assets to AMATECH Corporation.  NuMED
Surgical continues to experience negative cash flow from operations due to the
relatively long collection cycle for its receivables. 

ITEM 7.  FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                            INDEX TO FINANCIAL STATEMENTS
                                                                            Page
     NUMED SURGICAL                                                         ----
     <S>                                                                    <C>
     Report of Independent Auditors                                          F-1
     Statements of Net Deficiency in Liquidation as of 
       March 31, 1998 and 1997                                               F-2
     Statement of Changes in Net Deficiency in Liquidation                   F-3
     Statement of Operations for the Year Ended March 31, 1997               F-4
     Statement of Changes in Stockholders' Equity (Deficit)for 
       the Year Ended March 31, 1997                                         F-5
     Statement of Cash Flows for the Year Ended March 31, 1997               F-6
     Notes to Financial Statements                                           F-7
</TABLE>

Financial statements are presented as an attachment to this Form 10KSB.

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

     None.

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

     DIRECTORS AND OFFICERS OF NUMED SURGICAL.  The following table sets forth
certain information with respect to the directors and officers of NuMED
Surgical.

<TABLE>
<CAPTION>
     NAME                AGE  POSITION WITH NUMED SURGICAL
     ----                ---  ----------------------------
     <S>                 <C>  <C>
     Jugal K. Taneja     53   Chairman of the Board, Chief Executive Officer and
                              Director

     Robert P. Ottman    54   Director
</TABLE>

     Each director holds office until the next annual meeting of stockholders
and until a successor has been elected and qualified.   
     
     Michael J. Diroff resigned as Director effective March 31, 1997.

                                         -5-
<PAGE>

     ROBERT P. OTTMAN has served as a Director of NuMED Surgical since its
inception in October 1993.  Mr. Ottman has served as a Director for NuMED Home
Health Care, Inc. since 1991.  In early 1993, Mr. Ottman was elected
Vice-President of Champion Bolt Corporation and is responsible for marketing and
human resources.

     JUGAL K. TANEJA has been Chief Executive Officer and Chairman of the Board
of Directors and a Director of NuMED Surgical since its inception in October
1993.  Mr. Taneja resigned as Chief Executive Officer as of April 18, 1995.  Mr.
Taneja has been Chairman of the Board, Chief Executive Officer and a Director of
NuMED Home Health Care, Inc. since 1991.  Mr. Taneja also serves as a Director
and Chief Executive Officer and Secretary of National Diagnostics, Inc.  Mr.
Taneja is Chief Executive Officer of Bancapital Corporation.  Mr. Taneja
formerly served as the President of Bancapital Management Corporation through
March 31, 1995.  Mr. Taneja also served as a director and the Chief Executive
Officer of Bancapital Financial Corporation, the parent company of A.T. Brod &
Co., Inc. and as the Chief Executive Officer of A.T. Brod & Co., Inc.  Prior to
his association with Bancapital and the Company, Mr. Taneja served as Senior
Vice President of Union Commerce Bank and Huntington National Bank from 1979 to
1983.

ITEM 10.  EXECUTIVE COMPENSATION

     The following table sets forth certain information concerning compensation
paid to or earned by the Company's Chief Executive Officer and the President. 
No executive officer of the Company earned salary and bonus in excess of
$100,000 for the fiscal year ended March 31, 1996.  The Company's Chairman and
Chief Executive Officer for fiscal 1996 and 1997, Mr. Taneja, received no direct
compensation from the Company for the fiscal years ended March 31, 1996, 1997,
and 1998.  Pursuant to a professional Services Agreement by and between the
Company and Bancapital, Bancapital provided certain services to the Company at
an agreed upon price, including the services of Mr. Taneja.  

                              SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                       OTHER        
NAME AND PRINCIPAL POSITION             YEAR          SALARY         BONUS          COMPENSATION(1) 
---------------------------             ----          ------         -----          --------------- 
<S>                                     <C>           <C>            <C>         <C>
Jugal K. Taneja                         1998          $-----         $-----      $------------------
Chairman or the Board                   1997           -----          -----       ------------------
                                        1996           -----          -----       ------------------

Michael J. Diroff                       1998             -0-          -----               -0-       
President                               1997          90,000          -----             6,000       
                                        1996          90,000          -----             6,000       

Nayan S. Shah                           1998             -0-          -----       ------------------
Chief Executive Officer                 1997             -0-          -----       ------------------
                                        1996          79,200          -----       ------------------
</TABLE>

(1) Represents an auto allowance paid to Mr. Diroff during fiscal 1996 and 1997.

                                         -6-
<PAGE>

     EMPLOYMENT AGREEMENTS.  Under Mr. Diroff's Employment Agreement, he
received an annual base salary of $60,000 through April 30, 1993, $66,000
starting May 1, 1993, and $73,000 upon relocation to Cleveland in 1993.  After
three months in Cleveland, Mr. Diroff's salary was increased to an annual rate
of $80,000, and as of April 1, 1995, it was increased to $90,000.  Mr. Diroff
will receive a performance bonus annually based on achieving required revenues
and profits.  Mr. Diroff's employment agreement is being reviewed by the Board
to provide a performance based compensation plan.  Michael J. Diroff resigned
form this position on March 31, 1997.
 
     DIRECTOR'S FEES.  The directors of NuMED Surgical receive $500 per meeting
for their services, however, these fees will be suspended until further notice.
 
ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth the shares of NuMED Surgical Common Stock
beneficially owned as of June 23, 1997, by (1) each beneficial owner of more
than 5% of such shares known to NuMED Surgical, (2) each director of NuMED
Surgical, and (3) all directors and officers of NuMED Surgical as a group.

<TABLE>
<CAPTION>
                                                     SHARES OF COMMON
                                                   STOCK OWNED CURRENTLY
    NAME AND ADDRESS                               ---------------------
    OF BENEFICIAL OWNER                           AMOUNT       % OF CLASS
    -------------------                           ------       ----------
   <S>                                           <C>           <C>
  JUGAL K. TANEJA(1)                             1,894,316      21.59%
  6505 Rockside Road, Suite 400
  Independence, OH 44131
            
  MICHAEL J. DIROFF                                487,000        5.6%
  6505 Rockside Road, Suite 425
  Independence, OH 44131

  ROBERT P. OTTMAN                                 123,625       1.41%
  170 Holly Drive                                                        
  Fairview, PA 16415                                                     
                                                                         
  MANJU TANEJA(2)                                  524,550       5.98%
  6505 Rockside Road, Suite 400                                          
  Independence, OH 44131                                                 
                                                                         
  DIRECTORS AND OFFICERS AS A GROUP (3 persons)  2,417,941      27.55%
</TABLE>

    (1)    Includes 449,700 shares held in the name of The First Delhi Trust
           (a trust for Mr. Taneja's children) and 900,000 shares held in the
           name of Westminster Trust Company (a partnership in which Mr.
           Taneja is the general partner).  Mr. Taneja has voting rights of
           the stock held by First Delhi Trust.  

    (2)    Ms. Manju Taneja is Jugal Taneja's wife.  Mr. Taneja has no voting
           rights on this stock.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS  

    None

                                         -7-
<PAGE>

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K.

    The Exhibit Index is located on Page 8.  No Form 8-K's were filed in fiscal
1996.

    (EXHIBIT INDEX)

(2)           Amended, Consolidated and Restated Bill of Sale and Assignment
              and Assumption Agreement by and among NuMED Home Health Care,
              Inc., NuMED Technologies, Inc., and NuMED Surgical, Inc. dated
              April 15, 1994.  (Schedule A to Amended, Consolidated and
              Restated Bill of Sale and Assignment and Assumption Agreement by
              and among NuMED Home Health Care, Inc., NuMED Technologies, Inc.,
              and NuMED Surgical, Inc. dated April 15, 1994 has been omitted
              pursuant to Item 601(b)(2) of Regulation S-B and will be provided
              to the Commission upon request.)  Incorporated herein by
              reference to Exhibit 2(b) to Form 10-SB, File No. 0-24362, filed
              by NuMED Surgical, Inc. on June 16, 1994.


(3)(a)        Articles of Incorporation of NuMED Surgical, Inc. dated October
              18, 1993.  Incorporated herein by reference to Exhibit 3(a) to
              Form 10-SB, File No. 0-24362, filed by NuMED Surgical, Inc. on
              June 16, 1994.

(3)(b)        By-Laws of NuMED Surgical, Inc.  Incorporated herein by reference
              to Exhibit 3(b) to Form 10-SB, File No. 0-24362, filed by NuMED
              Surgical, Inc. on June 16, 1994.

(4)           Provisions of Nevada General Corporation Law addressing
              stockholder rights and liabilities.  Incorporated herein by
              reference to Exhibit 4 to Form 10-SB, File No. 0-24362 by NuMED
              Surgical, Inc. on June 16, 1994.

(10)(a)       Agreement between AMATECH Corporation and NuMED Surgical, Inc.
              dated February 11, 1991.Incorporated herein by reference to
              Exhibit 10(a) to Form 10-K, File No. 33-19243-D, filed by NuMED
              Home Health Care, Inc. on July 13, 1992.

(10)(b)       Technology Transfer Agreement between NuMED Technologies, Inc.
              and The Cleveland Clinic Foundation dated August 21, 1991. 
              Incorporated herein by reference to Exhibit 10(c) to Form 10-K,
              File No. 33-19243-D, filed by NuMED Home Health Care, Inc. on
              July 13, 1992.

 (10)(c)      Technology Transfer Agreement between NuMED Technologies, Inc.
              and Dr. Amin El Mallawany dated February 11, 1992.  Incorporated
              herein by reference to Exhibit 10(d) to Form 10-K, File No.
              33-19243-D, filed by NuMED Home Health Care, Inc. on July 13,
              1992.

(10)(d)       Employment Agreement between NuMED Home Health Care, Inc. and
              Michael J. Diroff dated January 1, 1993.  Incorporated herein by
              reference to Exhibit 10(cc) to Form 10-K, File No. 33-19243-D,
              filed by NuMED Home Health Care, Inc. on June 28, 1993.

                                         -8-
<PAGE>

(10)(e)       Technology Transfer Agreement between NuMED Home Health Care,
              Inc. and The Cleveland Clinic Foundation dated February 1, 1993. 
              Incorporated herein by reference to Exhibit 10(ee) to Form 10-K,
              File No. 33-19243-D, filed by NuMED Home Health Care, Inc. on
              June 28, 1993.

(10)(f)       Professional Services Agreement between Bancapital Corporation
              and NuMED (Surgical/Medical Products Division) dated January 1,
              1993.  Incorporated herein by reference to Exhibit 10(gg) to Form
              10-K, File No. 33-19243-D, filed by NuMED Home Health Care, Inc.
              on June 28, 1993.

(10)(g)       Employment Agreement between NuMED Surgical, Inc. and Nayan S.
              Shah, PhD dated May 2, 1995.  Incorporated herein by reference to
              Exhibit 10(g) to Form 10-KSB, File No. 0-24362, filed by NuMED
              Surgical, Inc. on July 13, 1995.

(10)(h)       Acquisition Agreement between NuMED Surgical, Inc. and the
              McKenney Group dated July 31, 1995.  Incorporated herein by
              reference to Exhibit 10(h) to Form 10KSB, File No. 33-19243-D,
              filed by NuMED Surgical, Inc. on June 28, 1996.

(10)(i)       Service/Distribution Agreement between NuMED Surgical, Inc. and 
              Health Products and Technologies Inc. dated January 23, 1996.  
              Incorporated herein by reference to Exhibit 10(i) to Form 10KSB, 
              File No. 33-19243-D, filed by NuMED Surgical, Inc. on June 28,
              1996.

(10)(j)       Settlement Agreement between NuMED Surgical, Inc. and Marlow
              Surgical Technologies, Inc. dated January 25, 1996.  Incorporated
              herein by reference to Exhibit 10(j) to Form 10KSB, File No.
              33-19243-D, filed by NuMED Surgical, Inc. on June 28, 1996. 

(10)(k) ##    Acquisition Agreement between NuMED Surgical, Inc. and AMATECH
              Corporation dated March 31, 1997.  Incorporated herein by
              reference to Exhibit 10(k) to Form 10KSB, File No. 33-19243-D,
              filed by NuMED Surgical, Inc. on June 26, 1997.

---------------------------

## Filed herewith

                                         -9-
<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.

                                NuMED SURGICAL, INC.

Date   9/23/98                  By /s/ Jugal K. Taneja
    -------------                  -------------------------------
                                Jugal K. Taneja,
                                Chief Executive Officer/Director

    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 date indicated:


SIGNATURE                           TITLE                DATE


/s/ Jugal K. Taneja
-----------------------   Chief Executive Officer/       
Jugal K. Taneja           Director


/s/ Robert P. Ottman
-----------------------   Director  
Robert Ottman

                                         -10-
<PAGE>

                                     [LETTERHEAD]


                             INDEPENDENT AUDITORS' REPORT


To the Board of Directors
NuMed Surgical, Inc.
Clearwater, Florida


We have audited the statements of net deficiency in liquidation of NuMed
Surgical, Inc. (a Nevada corporation) as of March 31, 1998, and the related
statements of changes in net deficiency in liquidation for the year then ended. 
These financial statements are the responsibility of the Company's management. 
Our responsibility is to express an opinion on these financial statements based
on our audit.  The financial statements of NuMed Surgical, Inc. as of March 31,
1997 were audited by Ernst & Young, LLP, whose report dated June 4, 1997
expressed an unqualified opinion on those statements.

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

As discussed in Note A to the financial statements, effective March 31, 1997 the
Company sold the majority of its operating assets and effectively ceased
operations.  The Company is presently in the process of liquidation, and
management's plans in regard to this matter are further discussed in the notes
to the financial statements.  Therefore, at March 31, 1997 the Company has
changed its basis of accounting from the going-concern basis to a liquidation
basis.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets in liquidation of NuMed Surgical, Inc. as
of March 31, 1998, and the changes in net assets in liquidation for the year
then ended, in conformity with generally accepted accounting principles.


/s/ Kirkland, Russ, Murphy & Tapp


May 29, 1998

                                         F-1

<PAGE>

                                 NUMED SURGICAL, INC.

                     STATEMENTS OF NET DEFICIENCY IN LIQUIDATION
                                           
                         YEARS ENDED MARCH 31, 1998 AND 1997

<TABLE>
<CAPTION>
                                                    1998           1997    
                                                ------------   ------------
<S>                                             <C>            <C>         
ASSETS

Current assets:
  Cash                                           $    8,274         35,341 
  Accounts receivable                                13,270         63,322 
  Allowable for bad debts                           (13,270)       (16,370)
  Inventories                                             -          8,272 
  Prepaid expenses and other assets                       -            300 
                                                -----------    -----------
                                                            
        Total assets                             $    8,274         90,865 
                                                -----------    -----------
                                                -----------    -----------

LIABILITIES AND NET DEFICIENCY

Current liabilities:
  Accounts payable                              $       500         32,708 
  Accrued expenses                                   16,437         14,760 
  Due to AMATECH                                          -         47,695 
                                                -----------    -----------
        Total current liabilities                    16,937         95,163 

Net deficiency in liquidation, attribute to 
  8,775,685 shares                              $    (8,663)        (4,298)
                                                -----------    -----------
                                                -----------    -----------
</TABLE>

See notes to financial statements and auditors' report.

                                         F-2

<PAGE>

                                 NUMED SURGICAL, INC.

                STATEMENT OF CHANGES IN NET DEFICIENCY IN LIQUIDATION
                                           
                              YEAR ENDED MARCH 31, 1998

<TABLE>
<CAPTION>
<S>                                                          <C>           
Increase in net assets (liabilities) in liquidation:
   Sales                                                     $       3,918
   Bad debt recovery                                                 3,101
                                                             -------------
Decreases in net assets (liabilities) in liquidation:
   Cost of goods sold                                              (16,760)
   Professional fees                                               (13,012)
   Occupancy                                                        (6,432)
   Office expense                                                   (1,283)
   Other                                                            (6,112)
                                                             -------------

                    Decrease in net assets (liabilities) in
                      liquidation before adjustments               (36,580)

Adjustments of estimated values                                     32,215 
                                                             -------------

                    Decrease in net assets (liabilities) in
                      liquidation                                   (4,365)

Beginning net assets in liquidation                                 (4,298)
                                                             -------------

Ending net assets (liabilities) in liquidation               $      (8,663)
                                                             -------------
                                                             -------------
Loss per share:
   Loss attributable to common stockholders                  $      (4,365)
   
   Net loss per common share (basic and diluted)                         - 
                                                             -------------
                                                             -------------
   Weighted average common stock outstanding 
     (basic and diluted)                                         8,775,685 
                                                             -------------
                                                             -------------
</TABLE>

See notes to financial statements and auditors' report.

                                         F-3

<PAGE>

                                 NUMED SURGICAL, INC.

                               STATEMENT OF OPERATIONS

                          FOR THE YEAR ENDED MARCH 31, 1997

<TABLE>
<CAPTION>
                                                                             
                                                                     1997    
                                                                  -----------
<S>                                                               <C>        
Net sales                                                         $  488,340 

Cost of goods sold                                                   304,199 
                                                                  ---------- 

             Gross profit (loss)                                     184,141 

Selling, general and administrative expenses:
   Salary and benefits                                                98,890 
   Professional fees                                                  30,544 
   Travel and entertainment                                            8,397 
   Occupancy                                                          15,008 
   Advertising and marketing                                          23,687 
   Insurance                                                          17,050 
   Research and development expense                                      242 
   Office expense                                                      7,132 
   Depreciation, amortization and write off of long lived assets      68,605 
   Bad debt                                                            9,492 
   Other                                                              11,175 
                                                                  ---------- 

             Total selling, general and administrative expenses      290,222 
                                                                  ---------- 

             Operating loss                                         (106,081)

Other income (expense):
   Interest expense                                                   (6,189)
   Interest income                                                         3 
   Gain on sale of assets                                             19,435 
   Other expense                                                        (525)
   Bad debt recovery                                                       - 
                                                                  ---------- 

             Total other income (expense)                             12,724 
                                                                  ---------- 

             Net loss                                             $  (93,357)
                                                                  ---------- 
                                                                  ---------- 

Net loss per share                                                $      .01 
                                                                  ---------- 
                                                                  ---------- 

Shares used in computing per share information                     8,775,685 
                                                                  ---------- 
                                                                  ---------- 
</TABLE>

See notes to financial statements and auditors' report.


                                         F-4
<PAGE>

                                 NUMED SURGICAL, INC.

                               STATEMENT OF CASH FLOWS
                                           
                          FOR THE YEAR ENDED MARCH 31, 1997

<TABLE>
<CAPTION>
                                                                                   1997   
                                                                               -----------
<S>                                                                            <C>        
Cash flows from operating activities:
   Net loss                                                                     $(93,357)
   Adjustments to reconcile net loss to net cash used in                       
     operating activities:                                                     
      Depreciation, amortization and write off of long lived assets               68,605 
      Gain from the sale of assets                                               (19,435)
      Provision for bad debts write off of long lived assets                       9,492 
      Increase (decrease) in cash due to net changes in operating                 
       assets and liabilities:                                                   
        Accounts receivable                                                      (12,757)
        Inventories                                                               43,384 
        Prepaid expenses and other current assets                                      - 
        Accounts payable                                                          (6,387)
        Accrued expenses                                                         (12,584)
                                                                                 ------- 
                                                                               
            Net cash used in operating activities                                (23,039)
                                                                                 ------- 
                                                                               
Cash flows from investing activities -                                         
   Proceeds from sale of product line                                             92,695 
                                                                                 ------- 
                                                                               
                                                                               
Cash flows from financing activities:                                          
   Proceeds from short-term borrowings                                            23,000 
   Payments on line of credit                                                    (64,544)
                                                                                 ------- 
                                                                               
            Net cash used in financing activities                                (41,544)
                                                                                 ------- 
                                                                               
Increase (decrease) in cash                                                       28,112 
                                                                               
Cash at beginning of period                                                        7,229 
                                                                                 ------- 

Cash at end of period                                                           $ 35,341 
                                                                                 ------- 
                                                                                 ------- 
</TABLE>
                                                                               
See notes to financial statements and auditors' report.

                                         F-5
<PAGE>

                                 NUMED SURGICAL, INC.

                          FOR THE YEAR ENDED MARCH 31, 1997

<TABLE>
<CAPTION>
                                        STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)                     
                             ----------------------------------------------------------------------     Net assets  
                                     Common stock                                                     (deficiency) in
                             --------------------------      Paid-in      Accumulated                  liquidation at
                                Shares          Value        capital        deficit          Total     March 31, 1997
                             -----------        -------     ----------    -----------       --------   --------------
<S>                          <C>               <C>          <C>           <C>               <C>        <C>           
Balance at March 31,
   1996                        8,775,685        $ 8,776        473,222       (392,939)       89,059                 -

Net loss                               -              -              -        (93,357)      (93,357)                -
                             -----------        -------     ----------    -----------       --------          -------
Balances at March 31, 
  1997 before liquidation 
  basis of  accounting         8,775,685          8,776        473,222       (486,296)       (4,298)                -

Changes in basis of 
  accounting                           -         (8,776)      (473,222)       486,296         4,298            (4,298)
                             -----------        -------     ----------    -----------       --------          -------

Balances at March 31, 
  1997 after the liquidation 
  basis of accounting          8,775,685       $      -              -              -              -           (4,298)
                             -----------        -------     ----------    -----------       --------          -------
                             -----------        -------     ----------    -----------       --------          -------
</TABLE>

See notes to financial statements and auditors' report.

                                         F-6
<PAGE>

                                 NUMED SURGICAL, INC.

                            NOTES TO FINANCIAL STATEMENTS

                               MARCH 31, 1998 AND 1997
                                           

A.    DESCRIPTION OF THE COMPANY AND BASIS OF PRESENTATION OF SALE OF ASSETS

      NuMed Surgical, Inc. (NuMed or the Company) has been actively engaged 
      in the research, development and distribution of medical instruments 
      and surgical supplies since February 1991 to the health care market.  
      Effective March 31, 1997, the Company made the decision to sell its 
      remaining major product line to AMATECH Corporation (AMATECH) and 
      adopted a plan of liquidation.  As a result, the assets remaining at 
      March 31, 1997 are recorded at net realizable value.  All operating 
      assets were disposed of by March 31, 1998.

      In an agreement effective March 31, 1997, NuMed sold approximately $25,565
      of inventory, $47,695 of accounts receivable and all other assets 
      pertaining to the business of design, manufacture, sales or marketing of
      patient positioning products, disposables and pads to AMATECH. 
      Consideration given to NuMed was the payment of its $64,544 line of credit
      and forgiveness of the $27,695 of accounts payable to AMATECH and $456
      cash.  The Company recorded a gain of $19,435 as a result of the sale.

B.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      SALES

      Provision has been made for returns of certain surgical medical products
      for which customers are entitled to a fourteen day trial evaluation. 
      Credit is extended based on an evaluation of the customer's financial
      condition and collateral is not generally required.

      INVENTORIES

      Inventories are carried at the lower of cost or net realizable value.  The
      cost of inventories is determined under the first-in, first-out (FIFO)
      method.  Inventories consist mainly of surgical table accessories and
      assisted living products.

      USE OF ESTIMATES

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

                                                                   (continued)

                                         F-7

<PAGE>

                                 NUMED SURGICAL, INC.

                            NOTES TO FINANCIAL STATEMENTS


     EARNINGS PER SHARE

     In the fourth quarter of fiscal 1998, the Company adopted Statement of
     Financial Accounting Standards No. 128, Earnings Per Share (SFAS 128). 
     Under SFAS 128, basic net loss per share of common stock is computed by
     dividing income available to common stockholders by the weighted average
     number of common shares actually outstanding during the period.  Diluted
     net loss per share of common stock presents income attributable to common
     shares actually outstanding plus dilutive potential common shares
     outstanding during the period.

C.   LONG-LIVED ASSETS

     In the fourth quarter of fiscal 1997, NuMed wrote off the balance of
     long-lived assets to amortization expense of $34,849 in accordance with
     FASB Statement No. 121, "Accounting for the Impairment of Long-Lived Assets
     and Assets to be Disposed of".  The long-lived assets included
     organizational costs, an exclusive distribution agreement, leasehold
     improvements and prototype equipment which have no realizable value at
     March 31, 1997 given management's intent to liquidate the Company as
     discussed in Note A.

D.   INCOME TAXES

     Deferred taxes reflect the impact of temporary differences between the
     financial statements and tax bases of assets and liabilities primarily
     relating to net operating losses.

<TABLE>
<CAPTION>
                                               March 31,
                                            1998       1997 
                                          --------  ---------
     <S>                                 <C>        <C>      
     Deferred tax assets:
      Total deferred tax assets         $ 185,894     203,350 
      Total deferred tax liability                         -  
      Valuation reserve                  (185,894)   (203,350)
                                         --------    -------- 

      Net deferred tax asset            $       -           - 
                                         --------    -------- 
                                         --------    -------- 
</TABLE>

     Due to the existence of the net operating losses that have been fully
     reserved, no provision for income tax is required for 1998 or 1997.  Net
     operating loss carryforwards of approximately $451,000 expire through years
     2009 and 2013.

                                         F-8