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

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


    For the Fiscal Year Ended:                   Commission File Number:
    --------------------------                   -----------------------
        December 31, 2001                                0-21092

                                 OCTuS, INC.
         -----------------------------------------------------------
         (Name Of Small Business Issuer As Specified In Its Charter)

            California                                  33-0013439
    --------------------------                  --------------------------
 (State Or Other Jurisdiction Of                     (I.R.S. Employer
  Incorporation Or Organization)                    Identification No.)

                            13161 Sundance Avenue
                             San Diego, CA 92129
         -----------------------------------------------------------
                   (Address Of Principal Executive Offices)

               Issuer's telephone number, including area code:
         -----------------------------------------------------------
                                 858-922-1219

       Securities registered pursuant to Section 12(b) of the Act:  None

          Securities registered pursuant to Section 12(g) of the Act:
   Units consisting of one Share of Common Stock and one Warrant to purchase
                         Common Stock (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.

     (1)     YES     X     NO          (2)     YES     X     NO

     Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-B is not contained in this Form, and will not 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.

Issuer's revenue for the most recent fiscal year:  $-0-

The aggregate market value of the voting stock held by nonaffiliates of the
Issuer:  $ 25,000 as of March 29, 2002.

The number of shares outstanding of each of the Issuer's class of common stock,
as of the close of the period covered by this report:

        Class:                             Common Stock, No Par Value
        Outstanding at December 31, 2001:  361,170 shares
        Class:                             Series C Preferred
        Outstanding at December 31, 2001:  250,000 shares

Documents Incorporated by Reference:  None.

===============================================================================

                                    PART I


ITEM 1.  DESCRIPTION OF BUSINESS.

     INTRODUCTION

     OCTuS, Inc. (the "Company" or "OCTuS") was incorporated in October 1983
under the laws of the State of California. In December 1991, in connection with
its shift in focus from the laser printer to the computer-telephone integration
market, the Company's name was changed from Office Automation Systems, Inc. to
OCTuS, Inc. In January 1993, the Company completed an initial public offering
of 100,000 units each consisting of one share of Common Stock and one Warrant
to purchase one share of Common Stock. The Company's Common Stock (OCTS),
Warrants (OCTSW) and Units (OCTSU) has traded on the OTC Bulletin Board until
February of 2000 when it started trading on pink sheets.

     The core of the Company's technology from its inception until 1991 was
comprised of software for use in controllers for laser printers and related
imaging devices. The Company incorporated this technology into its own
LaserPro(R) laser printer products and also licensed the technology to third
parties. In 1991, because of low margins and competition, the Company shifted
its primary focus from laser printer controller technology to the development
of the OCTuS PTA product line.

     From 1991 to early 1995, the Company was engaged primarily in the design
and development of computer software and associated hardware products focused
on the integration of the personal computer and the telephone. During that
time, the Company has developed a software product called OCTuS PTA(TM)
("Personal Telephone Assistant"), which incorporates a Microsoft Windows(TM)
graphical user interface ("GUI") and enables users to operate and integrate
telecommunications, facsimile transmission and receipt, telephone and personal
voice mail from a desktop or portable computer using the "point and click" of a
hand-held mouse. The Company shipped the first retail version of OCTuS PTA in
December 1993.

     In March 1995, the Company engaged a third-party distributor, Cintech
Tele-Management Systems, Inc. ("Cintech") to exclusively manufacture,
distribute and sell the retail version of OCTuS PTA in North America. Upon
execution of the Cintech agreement in March 1995, the Company shifted its focus
to a plan of pursuing licensing of the components of OCTuS PTA to third parties
for use in their respective products.

     On September 5, 1995, the Company entered into a product development and
license agreement with Ascom Telecommunications Limited ("Ascom") of the United
Kingdom. The agreement provided Ascom with an exclusive license to manufacture
and sell to distributors, resellers and end users in Europe a special version
of OCTuS PTA that had been modified to operate through the personal computer's
serial port with Ascom's proprietary telephone. The agreement provided that
Ascom pay the Company a total of $65,000 for the required modifications to the
standard OCTuS PTA product.

     Although the Company received $65,000 from Ascom as payment for the
required modifications to the standard OCTuS PTA program, on March 10, 1998,
Ascom terminated the Company's contract. The loss of this contract, the
Company's only contract for the OCTuS PTA software, seriously impaired the
ability of the company to sustain operations, and forced the Company to seek
alternative business opportunities. As of this date, the Company is actively
seeking such alternative business opportunities, which may include acquisition
of other software products, or acquisition of some other technology. Although
the Company is seeking such opportunities, it is unlikely that the Company will
be able to consummate any such transaction, which would generate sufficient
revenues to sustain the Company's operations.  Additional capital will likely
have to come from issuing additional equity interest, which cannot happen
without dramatically diluting the existing equity ownership of the Company's
Common stockholders.

     EMPLOYEES

     The Company did not add to its workforce during the year ended
December 31, 2001; as of August 30, 2000, the Company's, President
John C. Belden, who is based at the Company's San Diego, California
headquarters, is retained on a consulting basis through December 31, 2002.


ITEM 1a.  FACTORS THAT MAY AFFECT FUTURE RESULTS.

     HISTORY OF OPERATING LOSSES

     For the calendar year ended December 31, 2001, the Company recorded a loss
of $115,066. For the calendar year ended December 31  2000, the Company
recorded a loss of $ 46,385.

     At December 31, 2001, the Company had no tangible assets, no working
capital, an accumulated deficit of $ 22,913,800 and a shareholders' deficit of
$ 684,907. With both the Cintech and the Ascom transactions terminated, and
considering that the Company at this time has no product available for sale,
the Company will continue to generate significant losses. Unless the Company
acquires a new technology or product it is unlikely that the Company will be
profitable in the future.

     NEED FOR ADDITIONAL CAPITAL

     The Company's cash on hand as of March 15, 2002 was $-0-, which is
inadequate to meet the Company's budgeted operating requirements. Additional
cash resources are required to sustain the Company's operations. Since
September 2000 operations have been funded by loans from Grupo Dynastia S.A,
a Panamanian company, one of the Company's principal shareholders. It should be
noted that the Company has no commitment from any party to provide additional
capital and there is no assurance that such funding will be available when
needed or, if available, that its terms will be favorable or acceptable to the
Company. Should the Company be unable to obtain additional capital when and as
needed, it could be forced to cease business activities altogether. It is
unlikely that the Company will be able to raise additional capital without
dramatically diluting the existing equity ownership of the Company's Common
stockholders.

     RESTRUCTURING OF OPERATIONS

     The Company underwent substantial restructuring in 1994 and 1995,
primarily as a result of continued operating losses. This restructuring
included a substantial reduction in the Company's workforce from 46 employees
(as of March 31, 1994) to one employee (as of December 31, 2000) as well as
relocation of its headquarters to another facility with lower operating costs.
In addition, Ray M. Healy became the Company's President and Chief Executive
Officer in November 1994. However, Mr. Healy resigned as the Company's
President and Chief Executive Officer on May 31, 1995 in order to pursue other
opportunities and Mr. Belden was re-appointed to that position. Mr. Belden is
the sole remaining executive officer of the Company. Mr. Donald O. Aldridge,
a director of the Company since June 1995, was appointed Chairman of the Board
of the Company in October 1995. In June 1996, the Company sold to ATI 250,000
shares of Series C Preferred Stock (which votes with the Company's Common Stock
with each share of Series C Preferred Stock having ten votes) for $151,000 and
issued warrants to purchase up to an additional 150,000 shares of the Company's
Common Stock at an exercise price according to the following schedule: $8.60
per share for the first 50,000 shares, $10.00 per share for the second 50,000
shares, and $15.00 per share for the final 50,000 shares. In August of 2000,
Ownership of the warrants and Preferred C Shares were transferred to
Grupo Dynastia S.A. a Panamanian company. Mr. Aldridge resigned from the board
in October 1998 and was replaced by Mr. Ronald A. Newcomb in December 1998 who
has served as Chairman of the Board since until December 29, 2001 at which time
he did not stand for re-election and was replaced on the Board of Directors by
Bradley W. Nemeth. Mr. Belden was appointed to serve as Chairman and President.

     Although this restructuring effected a major reduction in the Company's
operating expenses, the Company's cash on hand continues to be insufficient to
meet its present operating expenses. Without a substantial infusion of capital
or generation of revenue, the Company will be required to cease its business
operations altogether.

     TRANSACTIONS WITH AFFILIATES

     The Company has been a party to certain transactions with related persons
and affiliates. The Company believes that all such transactions were in its
best interests and on terms no less favorable to the Company than could have
been obtained from unaffiliated third parties and each transaction was approved
by disinterested and independent members of the Board of Directors. However,
such agreements were not always reached as the result of arms-length
negotiations. In June 1996, the Company sold to Advanced Technologies
International, Ltd. ("ATI") 250,000 shares of Series C Preferred stock (which
votes with the Common Stock with each share of Series C Preferred Stock having
ten votes) for $151,000, and issued warrants to purchase up to an additional
150,000 shares of the Company's Common Stock at an exercise price according to
the following schedule: $8.60 per share for the first 50,000 shares, $10.00 per
share for the second 50,000 shares, and $15.00 per share for the final 50,000
shares.

     The Company had been meeting its liquidity needs through loans from ATI
until August 1998 when ATI ceased funding the Company and subsequently declared
bankruptcy.  The loan balance as of December 31, 2001 was $ 438,950. The
Company accrues 10.0% simple interest on such loans and the loan is due within
five (5) days of the Company's receiving sufficient funds from the exercise
of warrants. Smith Technology Development, LLC during 1999 through a bankruptcy
purchase agreement, acquired the note, stock and warrants. Subsequently,
during 2000, the note, stock and warrants were transferred in a sale
Grupo Dynastia S. A., a Panamanian company. There is no assurance that
Grupo Dynastia S. A. or subsequent owners of the notes and warrants will
continue to fund the Company or that exercise of the warrants will enable the
Company to repay such loans. Should the Company be unable to obtain additional
revenues, and/or raise additional capital, it could be forced to cease business
activities altogether.  On April 25, 2001, the affiliate negotiated a lower
exercise price of $0.40 per share, and 150,000 options were exercised in lieu
of a note payable and accrued interest totaling $60,000.

     NOTES AND ADVANCES PAYABLE

     From September 2000 through December 2000, Grupo Dynastia S. A. advanced
$32,168 to the company secured by notes bearing interest at the rate of 10% per
annum.  From January 2001 through March 2001, Grupo Dynastia S.A advanced
another $25,000 to the Company secured by notes bearing interest at the rate
of 10% per annum. On April 25, 2001, Grupo Dynastia, S.A. converted 150,000
warrants to 150,000 shares of OCTuS, Inc. restricted common stock in exchange
for reducing the outstanding notes due Grupo Dynastia, S.A. by $60,000.
Should the Company be unable to obtain additional revenues, and/or raise
additional capital, it could be forced to cease business activities altogether.
From September 2000 through December 2000, Grupo Dynastia S. A. advanced
$32,168 to the company secured by notes bearing interest at the rate of 10% per
annum.  From January 2001 through December 2001, Grupo Dynastia S.A advanced
another $34,500 to the Company secured by notes bearing interest at the rate
of 10% per annum.

     TRADING MARKET/DELISTING FROM NASDAQ SMALLCAP MARKET/VOLATILITY OF STOCK
PRICE

     In January 1993, the Company completed an initial public offering of
100,000 Units, each unit comprised of one share of Common Stock and one Common
Stock Purchase Warrant. These securities were quoted on the Nasdaq SmallCap
Market until February 1, 1995, at which time they were delisted due to the
Company's inability to meet that market's minimum capital and surplus
requirements. The securities now trade on the Over-The-Counter Bulletin Board,
maintained by the National Quotation Bureau, Inc., which are generally
considered to be less efficient markets. While the Company intends to reapply
for listing on the Nasdaq SmallCap Market if conditions are favorable for it to
do so, there can be no assurance that the Company's securities will be accepted
by the Nasdaq SmallCap Market upon application by the Company for relisting.

     The market price of the Common Stock, Units, and Warrants, like that of
the securities of many other high technology companies, has been highly
volatile. Factors such as fluctuation in the Company's operating results,
announcements of technological innovations or new products by the Company or
its competitors, developments in the Company's strategic alliances with other
companies, and general market conditions may have a significant effect on the
market price of the Common Stock. See table in Part II, Item 5, "Market for
Common Equity and Related Stockholder Matters."

     EFFECT OF CERTAIN ANTI-TAKEOVER CHARTER AND BYLAW PROVISIONS

     Certain provisions of the Company's Amended and Restated Articles of
Incorporation (the "Articles") and Bylaws could have the effect of making it
more difficult for a third party to acquire, or could discourage a third party
from attempting to acquire, control of the Company. Such provisions may limit
or reduce the price that investors might be willing to pay for shares of the
Common Stock. Certain of such provisions allow the Company to issue preferred
stock with rights senior to those of the Common Stock and impose various
procedural and other requirements that could make it more difficult for
shareholders to effect certain corporate actions. The Articles also provide for
a classified board in the event the Company's shares are traded on a national
securities exchange or the Nasdaq National Market. A classified board could
make it more difficult for a third party to acquire control, or could
discourage a third party from attempting to acquire, control of the board.


ITEM 2.  DESCRIPTION OF PROPERTY.

     Since November 1999 the company used only floor space in the office of
its sole officer, John Belden at 600"B" Street 18th Floor San Diego, CA.
Since July 1, 2001, the company's offices are located in Mr. Belden's office at
13161 Sundance Avenue, San Diego, CA 92129.  The Company pays no rent, which
would be negligible, for the use of this space.

     The Company does not maintain any other leases for office space and owns
no real property.


ITEM 3.  LEGAL PROCEEDINGS.

     On February 15, 2002, a Complaint was filed against the Company.  The
Complaint alleges that the Company is in default on two promissory notes, one
dated April 14, 1998, and the other dated September 27, 2000 (the "Notes"),
totaling $426,511, plus accrued interest in the sum of $184,214.  Based on
an opinion of counsel, the Company expects to settle the matter.



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

     The following matters were approved by security holders at the
shareholders' meeting held in San Diego, CA on December 29,2001:

     1.   Election of the following directors for the ensuing year to serve
until the next Annual Meeting of Shareholders and until their successors have
been elected and qualified.

          John C. Belden
          Robert A. Freeman
          Bradley W. Nemeth

     2.   Approved an amendment to the Articles of Incorporation effecting
a one for twenty (1:20) reverse stock split of the Common Stock.

     3.   Approved the Company's audit firm Stark Winter Schenkein & Co., LLP

     4.   Approved the change the state of the Company's incorporation and
domicile from California to Nevada.


                                   PART II


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

     The Company's Common Stock, Units and Warrants were quoted on the Nasdaq
Small-Cap Market under the symbols OCTS, OCTSU and OCTSW, respectively, upon
completion of the Company's initial public offering on January 15, 1993 until
February 1, 1995. On February 1, 1995, the Company's securities were delisted
from the Nasdaq Small-Cap Market due to the Company's inability to meet that
market's minimum capital and surplus requirements. Since February 1, 1995, the
Company's securities have been traded on the OTC Bulletin Board.  The Company's
securities now trade on the "pink sheets"

     Set forth below are the ranges of high and low bid prices for the Common
Stock as reported by Nasdaq from March 31, 1999, through March 31, 2002.
Quotations reflect interdealer prices without retail markup, markdown, or
commissions and may not represent actual transactions.

                                 COMMON STOCK
                       QUARTER ENDED        HIGH         LOW
                   March 31, 1999 (1)       1/8         1/32
                   June 30, 1999 (1)         .06         .03
                   September 30, 1999 (1)    .05         .03
                   December 31, 1999 (1)     .04         .03
                   March 31, 2000 (1)        .05         .03
                   June 30, 2000 (1)         .02         .01
                   September 30, 2000 (1)    .01         .005
                   December 31, 2000 (1)     .005        .005
                   March 31, 2001 (1)        .005        .005
                   June 30, 2001 (1)         .005        .005
                   September 30, 2001 (1)    .005        .005
                   December 31, 2001 (2)     .01         .005
                   March 25, 2002 (2)        .01         .005
                   -----------------------
                   (1)  OTC "Pink Sheets"
                   (2)  OTC Bulletin Board

     On March 25,2002 the closing price of the Company's Common Stock on the
OTC Bulletin Board was $0.005 per share.

     The Company has never declared or paid cash dividends on its Common Stock
and has no current intention to declare or pay any dividends on its Common
Stock in the foreseeable future. The Company intends to retain its earnings,
if any, for the development of its business. On January 15, 1998, public and
underwriter's 5-year warrants, issued pursuant to the Company's initial public
offering lapsed and expired.

     As of March 15, 2002, there were approximately 975 holders of the
Company's Common Stock, and one holder of the Company's Series C Preferred
Stock, the Company's only outstanding classes of securities.


ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS.

     This information should be read in conjunction with the audited financial
statements and notes thereto which begin on page F-1 of this report for the
years ended December 31, 2001 and 2002, respectively.

     OVERVIEW

     OCTuS was incorporated in 1983 to develop a low cost controller for laser
printers. By the end of 1985, the Company had developed a laser printer
controller with a proprietary page description language, which it incorporated
into laser printers and marketed under the LaserPro(R) trademark. The Company
was also licensing its laser printer controller technology. This strategy
produced increasing sales and profits until mid-1989 when profits began to
decline primarily as a result of low margins and other competitive reasons
caused by the high cost of the necessary component parts in relation to the
competitive market price and the dominant market position of larger high-volume
competitors. Although there is no assurance, the Company does not expect the
foregoing factors to significantly affect the OCTuS PTA line of products
because software products do not rely so heavily on component parts supplied by
other manufacturers. While royalties from printer licensing agreements provided
working capital, the Company began to suffer operating losses in 1989, which
have continued through the present.

     In early 1991, the Company began shifting its emphasis from laser printer
controller products to the development of its new product line. Since 1991,
the Company has made significant changes to its business, management and
operations. However, until September 1993, substantially all of the Company's
revenues were derived from business activities involving the Company's laser
printer technology and technology licensing agreements. In September 1993,
the Company sold substantially all of the assets and inventory of the laser
printer business to National Computer Systems, Inc. ("NCS"). Since that time,
the Company has not generated significant revenues from sales of its
OCTuS PTA product due to poor product sales and lack of broad market
acceptance. As a result, in 1994, the Company was required to significantly
downsize its staff and reduce its operating expenses, which continued into
1995. See Part I, "Description of Business," "--Employees," and "--Factors
Which May Affect Future Results," "---Restructuring of Operations."

     In March 1995, the Company engaged a third-party distributor,
Cintech Tele-Management Systems, Inc. ("Cintech") to exclusively manufacture,
distribute and sell the retail version of OCTuS PTA in North America. Since
that time, the Company has focused its efforts on the licensing of its OCTuS
PTA technology to third parties for incorporation by such parties into their
own respective product lines. Although several companies have expressed
interest in licensing the Company's technology, no significant licensing
arrangements have been entered into to date, nor can there be any assurance
that the revenue from any such licensing agreements will be sufficient to
sustain the Company's operations. In such case, the Company will be required
to curtail business altogether. In March of 1997, Cintech elect not to renew
its agreement with the Company, thereby leaving the Company with no current
means of distribution of its products. See Part I, "Description of Business,"
"--OCTuS PTA",

     The discussion and analysis set forth below covers the following
comparative periods: the calendar years ended December 31, 2001 and
December 31, 2000.

     RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000

     ROYALTY AND TECHNOLOGY INCOME.  There was no royalty income for the fiscal
year ending December 31, 2001, which represented no change from the same period
in 2000.

     INTEREST INCOME. There was no interest income for the fiscal year ending
December 31, 2001, which represented no change from the same period in 2000.

     SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses for calendar year 2001 increased $ 36,908, from
$ 32,782 in the fiscal year ending December 31, 2000 to  $69,690 in the fiscal
year ending December 31, 2001.  The increase resulted from efforts to bring the
company current with its financial reporting and consulting fees paid to the
President of the Company.

     RESEARCH AND DEVELOPMENT. There were no research and development expenses
for the fiscal years ending December 31, 2001 and 2000.

     EXTRAORDINARY ITEM.  The Company had defaulted on $29,210 due to a finance
company.  The Company has determined that the period for collection on this
debt has expired and as a result, the Company has written off the debt and
recognized an extraordinary gain of $29,210 in 2000.

     NET LOSS/GAIN. The Company experienced a net loss of $ 115,066 for
the fiscal year ended December 31, 2001. This reflects an increased loss
of $ 68,681 over the loss of $ 46,385 for the fiscal year ended
December 31, 2000.

     LIMITATIONS ON NET OPERATING LOSS AND CREDIT CARRYFORWARDS

     As of December 31, 2001the Company had significant tax credit and research
carry forwards for federal tax reporting purposes that expire through 2008.
Additionally, the Company has federal and state net operating loss carry
forwards, expiring through 2015. Because of a substantial change in the
Company's ownership resulting from an initial public offering, an annual
limitation of approximately $600,000 has been placed on utilization of the
loss carry forwards generated prior to the Company's initial public offering.

     LIQUIDITY AND CAPITAL RESOURCES

     For the year ended December 31, 2001 the Company incurred a net loss of
$ 115,066. Cash on hand as of December 31, 2001was $ -0-. Management
believes that without an influx of significant new funds, the Company will
not be able to sustain its operations through the rest of 2002. Although the
Company has actively been pursuing new investment, there can be no assurance
that any new investment will be entered into by the Company, or that the terms
of any such agreements will be on terms favorable to the Company. In June 1996,
the Company sold to Advanced Technologies International, Ltd. ("ATI") 250,000
shares of Series C Preferred stock (which votes with the Common Stock with each
share of Series C Preferred Stock having ten votes) for $151,000 and issued
warrants to purchase up to an additional 150,000 shares of the Company's Common
Stock at an exercise price ranging from $8.60 to $15.00 which were subsequently
reduced to $0.40 per share.  The Company had met its liquidity needs through
loans from ATI until August 1998 when ATI ceased funding the Company and
subsequently declared bankruptcy.  During 1999, Smith Technology Development,
LLC acquired the note, stock and warrants through a bankruptcy purchase
agreement. Subsequently, during 2000, the note, stock and warrants were
transferred in a sale to Grupo Dynastia S. A., a Panamanian company. The loan
balance as of December 31, 2001 was $ 428,311. The Company accrues 10.0% simple
interest on such loan and the loan is due within five (5) days of the Company's
receiving sufficient funds from the exercise of warrants. There is no assurance
that Grupo Dynastia S.A. or subsequent owners of the notes and warrants will
continue to fund the Company or that exercise of the warrants will enable the
Company to repay such loans. Should the Company be unable to obtain additional
revenues, which is likely, and/or raise additional capital, it could be forced
to cease business activities altogether.  See Part I, Description of Business,
"OCTuS PTA," "Strategic Alliances and Market Reception," and "General
Distribution Strategy."


ITEM 7.  FINANCIAL STATEMENTS.

     The full text of the Company's audited financial statements for the fiscal
year ended December 31, 2001 begins on page F-1 of this Report.


ITEM 8.  ACCOUNTING AND FINANCIAL DISCLOSURE.

     In April 1999 the Company changed accountants.  The Company has been
delinquent on its SEC filings and filed a Form 8-K for this event in
November 2000.  There were no disagreements with the former accountants
regarding accounting principles or reporting.  In February 2001, the company
again changed accountants and filed a Form 8-K for this event in February 2001.
There were no disagreements with the former accountants regarding accounting
principles or reporting.


                                   PART III


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


ITEM 10. EXECUTIVE COMPENSATION
<TABLE>
     The following table sets forth, for the fiscal years ending
December 31, 2001 and 2000, the cash compensation paid by the Company,
as well as certain other compensation paid or accrued for those years, to
Mr. Belden, who served as Chief Executive Officer of the Company. No other
officers were employed by the Company in 2000 or 2001 that earned over
$100,000 in annual salary and bonuses (the "named executive officers").
<CAPTION>
                                                            LONG-TERM COMPENSATION
                                                            -----------------------
                                 ANNUAL COMPENSATION                AWARDS
                            -----------------------------   -----------------------
                                                OTHER       RESTRICTED   SECURITIES
      NAME AND                                  ANNUAL        STOCK      UNDERLYING    ALL OTHER
PRINCIPAL POSITION   YEAR   SALARY   BONUS   COMPENSATION     AWARDS      OPTIONS     COMPENSATION
------------------   ----   ------   -----   ------------   ----------   ----------   ------------
<S>                  <C>    <C>      <C>     <C>            <C>         <C>           <C>
John C. Belden       2001   42,000     0          0             0             0           0
  President & CEO    2000    7,000     0          0             0             0           0
</TABLE>
<TABLE>
STOCK OPTION GRANTS TABLE

     The following table provides information concerning the grant of stock
options to the named executive officers of the Company during fiscal 2001
and 2000. The Company does not have any outstanding stock appreciation rights.
<CAPTION>
                                % OF TOTAL
                   NUMBER OF      OPTIONS
                  SECURITIES    GRANTED TO
                  UNDERLYING     EMPLOYEES      EXERCISE
                    OPTIONS         IN          OR BASE      EXPIRATION
 NAME             GRANTED (#)   FISCAL YEAR   PRICE ($/SH)      DATE
------   ------   -----------   -----------   ------------   ----------
<S>      <C>      <C>           <C>           <C>            <C>
 None     2001         0             0             N/A           N/A
 None     2000         0             0             N/A           N/A
</TABLE>
<TABLE>
      OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE TABLE

     The following table provides information with respect to the named
executive officers, concerning the exercise of stock options during fiscal 2001
and 2000 and unexercised options held as of the end of fiscal 2001 and 2000.
<CAPTION>
                                                NUMBER OF
                                                SECURITIES       VALUE OF
                                                UNDERLYING     UNEXERCISED
                                               UNEXERCISED     IN-THE-MONEY
                         SHARES                 OPTIONS AT      OPTIONS AT
                        ACQUIRED                FY-END(#)       FY-END($)
                           ON       VALUE     --------------   ------------
                        EXERCISE   REALIZED    EXERCISABLE/    EXERCISABLE/
     NAME                 (#)        ($)      UNEXERCISABLE   UNEXERCISABLE
--------------   ----   --------   --------   --------------   -------------
<S>              <C>    <C>        <C>        <C>              <C>
John C. Belden   2001      0          0           19,490           0/0
                 2000      0          0           19,490           0/0
</TABLE>

     EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT

     Effective July 17, 1996, the Board of Directors authorized and approved
a two year Employment Agreement for its Chief Executive Officer, John Belden.
Mr. Belden has continued to served as the Chief Executive Officer on an at will
basis after his employment agreement ended on July 17, 1998.  The Company
accrued wages for Mr. Belden through the end of 1998.  In January 1999 the
Company's activities had subsided and Mr. Belden found other full time
employment, therefore the Company stopped accruing wages at that time.
In total the Company owed Mr. Belden $48,604 at December 31, 1998, the amount
was still owed at December 31, 1999.  In August 2000 Mr. Belden converted the
accrued wages into paid-in capital.


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth certain information regarding the
beneficial ownership of the Company's Voting Stock as of March 15 2002, by
(i) each of the Company's named executive officers and directors;
(ii) the Company's named executive officers and directors as a group; and
(iii) shareholders known by the Company to beneficially own more than 5% of any
class of the Company's voting securities. For purposes of this Proxy Statement,
beneficial ownership of securities is defined in accordance with the rules of
the Securities and Exchange Commission and means generally the power to vote or
exercise investment discretion with respect to securities, regardless of any
economic interests therein. Except as otherwise indicated, the Company believes
that the beneficial owners of the securities listed below have sole investment
and voting power with respect to such shares, subject to community property
laws where applicable. Unless otherwise indicated, the business address for
each of the individuals or entities listed below is c/o OCTuS, Inc.,
13161 Sundance Avenue San Diego, CA 92129.
<TABLE>
                                            NUMBER OF
                             NUMBER OF       SERIES C
                               COMMON       PREFERRED
                               SHARES         SHARES
                            BENEFICIALLY   BENEFICIALLY
NAME                           OWNED          OWNED               PERCENT OF CLASS
----------------------      ------------   ------------   --------------------------------
<S>                         <C>            <C>            <C>
OFFICERS AND DIRECTORS
Bradley W. Nemeth (1)
Director                        1,250                       0.59% of Common Stock, if issued

John C. Belden (1)
President & CEO, Director      19,490                       5.4% of Common Stock, if issued

Robert A. Freeman (1)           1,250                       0.59% of Common Stock, if issued

Grupo Dynastia S.A. (3)(5)    150,000        250,000       41.53% of Common Stock, if issued
                                                          100% of Preferred Stock issued
                                                           65.4% of Voting Stock

EXECUTIVE OFFICERS AND
   DIRECTORS AS A GROUP
   (3 persons)(1)              21,990                       6.6% of Common Stock, if issued
<FN>
_________
(1)  Includes the following shares issuable upon exercise of stock options
     which are exercisable within 60 days from: Mr. Belden, 19,490;
     Mr. Freeman, 1,250 and Mr. Nemeth, 1,250
(2)  Mr. Nemeth's address is 9645 Granet Suite 225 San Diego, CA  92123
(2)  Mr. Freeman's address is. 3525 Del Mar Heights Road #344 San Diego,
     CA 92130-2122
(3)  Formerly owned by Advanced Technologies International, Ltd. ("ATI") and
     reported in a Schedule 13D filed on July 12, 1996 by ATI. Taken over by
     Smith Technologies International, Ltd. their address is 9265 Dowdy Drive,
     Suite 107, San Diego, CA 92126. Warrants to purchase 150,000 shares of
     Common Stock at prices ranging from $.43 to $.75 per share. Warrants are
     not calculated into any percentages. Sold to Grupo Dynastia S. A in
     August 2000.
(4)  Preferred C shares have 10:1 voting rights and are therefore calculated by
     the rights, not the number of shares.
(5)  The address of Grupo Dynastia S. A. is Apartado Postal 55-0295, Patilla
     Panama City, Republic de Panama
</TABLE>

                              CHANGE IN CONTROL

     In June 1996, the Company sold to Advanced Technologies International,
Ltd. ("ATI") 250,000 shares of Series C Preferred Stock for $151,000 and issued
warrants to purchase up to an additional 150,000 shares of the Company's Common
Stock. While voting power was disbursed among the Company's shareholders prior
to the ATI transaction, ATI controlled 56.6% of the voting power (assuming
exercise by ATI of the warrant) of the Company's Voting Stock. ATI declared
Bankruptcy in 1999 and the Preferred Stock and warrants were subsequently
purchased by a foreign entity in September 2000.

                        INFORMATION REGARDING DIRECTORS

     The information set forth below as to each Director has been furnished to
the Company by the respective Director:

                                                            DIRECTOR
NAME                  PRESENT POSITION WITH THE COMPANY      SINCE     AGE
-----------------   -------------------------------------  ---------   ---
Bradley W. Nemeth   Director                                  2001      50
John C. Belden      President; Chief Executive Officer;       1989      72
                    Chief Financial Officer; and Director
Robert A. Freeman   Director; Assistant Secretary             1983      63

     Mr. Nemeth is a graduate of the United States Naval Academy (1970) and
received a Juris Doctor Degree from University of San Diego School of Law
(1983) and admitted to practice in the State of California in the same year.
In 1991, he was awarded a Master of Taxation Degree (L.L.M.) from the
University of San Diego, School of Law.  Mr. Nemeth is a member of the law firm
of Nemeth and Coffin, LLP, Chairman of the Board of Pacific Ship Repair and
serves on the board of directors of Meridian Capital Partners, Inc. He is past
president of the San Diego Council of the Navy League of the United States.

     Mr. Belden has served as a director of the Company since October 1989,
as its President and Chief Executive Officer from March 1990 to November 1994,
and as its Chairman from November 1994 to October 1995. He was re-appointed
President and Chief Executive Officer in June 1995 following Ray M. Healy's
resignation. From November 1990 to July 1992, and since August 1994, he has
also served as the Company's Chief Financial Officer. From March 1995 to
January 1997, he served as Corporate Secretary. From June 1984 until assuming
his current position, Mr. Belden served as Vice President, Marketing of the
American Electronics Association.

     Mr. Freeman, a co-founder and an original director of the Company, has
served as a director since 1983 and as Assistant Secretary of the Company since
1996. In addition, he has served in other positions with the Company, including
Vice President, Marketing, in 1988 and Vice President, Research and
Development, from 1983 to 1987. Since 1989, Mr. Freeman has provided consulting
services from time to time in addition to his duties as a director. Since 1991,
Mr. Freeman has been a partner in RJ Engineering that has, from time to time,
provided consulting services to the Company. Mr. Freeman also served as Chief
Operating Officer of Pan Pacific Technology Group from 1989 to 1991.


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The Company had been meeting its needs for cash through loans from ATI.
The loan balance had been increasing at approximately $15,000 per month until
August 1998 when ATI ceased funding the Company. The Company accrues 10.0%
simple interest on such loans and the loan is due within five (5) days of
the Company's receiving sufficient funds from the exercise of warrants. ATI
declared Bankruptcy in 1999 and the Note, Preferred Stock and warrants were
subsequently purchased by a Grupo Dynastia S. A. during September 2000.
Since September 2000, Grupo Dynastia S. A has advanced the Company $10,639
earning 10 % per annum.


ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

     The Company did not file any reports on Form 8-K during the last
quarter of the period covered by this report. However, Form 8-K was filed
on November 22, 2000 to report a change in the Company's Auditors. Form 8-K
was filed in February 2001 to report a change in the Company's Auditors.



                                  OCTuS, INC.

                                  SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
small business issuer has duly caused this report to be signed on its behalf by
the undersigned thereunto authorized.

                                       OCTuS, INC.


Date:     March 25, 2002               /s/  John C. Belden
                                       -------------------
                                       Chief Executive Officer


     Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the Registrant and in the capacities indicated as of March 25, 2002

Signature                             Title                          Date
-----------------    ---------------------------------------    --------------

_________________    President (Principal Executive Officer,    March __, 2002
John C. Belden          Principal Financial & Accounting
                               Officer), Director

_________________                   Director                    March __, 2002
Bradley W. Nemeth
_________________                   Director                    March __, 2002
Robert A. Freeman



EXHIBIT INDEX

SEQUENTIALLY
  EXHIBIT                                                             NUMBERED
   NUMBER       DESCRIPTION NUMBERED                                    PAGE
------------    --------------------------------------------------    --------
    3.1         Amended and Restated Articles of Incorporation            +

    3.1.1       Certificate of Determination of Preferences of           ++
                Series C Preferred Stock of OCTuS, Inc.

    3.2         Amended Bylaws                                            !

    9           Irrevocable Proxy from Tokyo Electric Co., Ltd.           *
                (included in Exhibit 10.26.1)

   10.3         Sample Warrant                                            *

   10.4         Amended and Restated 1987 Nonstatutory Stock              +
                Option Plan

   10.5         Form of Stock Option Agreement, Non-Qualified             *
                Options, 1987 Plan

   10.6         Amended and Restated 1988 Nonstatutory Stock              *
                Option Plan

   10.7         Form of Stock Option Agreement, Non-Qualified             *
                Options, 1988 Plan

   10.8         Amended and Restated 1992 Key Executive Stock             *
                Purchase Plan

   10.9         Lease dated April 7, 1995 by and between Mistek         +++
                Investment Group and OCTuS, Inc. for
                8352 Clairemont Mesa Blvd., San Diego, CA 92111

   10.10        Standard Industrial Net Lease dated July 29, 1994        ++
                by and between Sorrento Corporate Center and
                OCTuS, Inc., for 9944 Barnes Canyon Road, Suite A,
                San Diego CA 92121

   10.11        Lease Surrender Agreement dated April 8, 1995           +++
                (as amended May 31, 1995), by and between
                Sorrento Corporate Center and OCTuS, Inc., for
                9944 Barnes Canyon Road, Suite A, San Diego,
                CA 92121

   10.12        Employment Agreement dated June 1, 1992 by and            #
                between OCTuS, Inc. and John C. Belden, as amended
                May 14, 1993 and February 16, 1995

   10.16        Form of Indemnification Agreements entered into by        *
                and between OCTuS, Inc. and its officers and directors

   10.17        401(k) Plan Document                                      *

   10.18        Form of Unit Certificate                                  *

   10.19        Directors 1993 Stock Option Plan                          +
                Form of Stock Option Agreement, Non-Qualified
                Options, 1993 Directors Stock Option Plan                **

   10.20        Warrant, Caledonian European Securities Ltd.,            **
                dated July 15, 1993

   10.21        Warrant, Neil Haverty, dated July 15, 1993               **

   10.22        Warrant, Maroon Bells Capital Partners, Inc.,            **
                dated July 15, 1993

   10.23        Promissory Note of Nolan K. Bushnell, dated as           **
                of February 8, 1993, payable to OCTuS, Inc.

   10.24        Stock Pledge Agreement by Nolan K. Bushnell in favor     **
                of OCTuS, Inc., dated February 8, 1993, as amended
                October 7, 1993

   10.25        Purchase and Sale Agreement dated September 14, 1993     **
                by and between OCTuS, Inc. and National Computer
                Systems, Inc.

   10.26        Letter Agreement dated January 26, 1995 by and            #
                between OCTuS, Inc. and National Computer Systems, Inc.

   10.27        Purchase and License Agreement dated March 7, 1995      +++
                by and between Cintech Tele-Management Systems, Inc.
                and OCTuS, Inc., as amended May 16, 1995

   10.28        Product Development and License Agreement dated           !
                September 5, 1995 by and between Ascom
                Telecommunications Limited and OCTuS, Inc.

   10.29        Promissory Note dated December 1, 1995 from               &
                OCTuS, Inc. to Maroon Bells Capital Partners, Inc.

   10.30        Stock and Warrant Purchase Agreement dated               ++
                June 24, 1996 by and between OCTuS, Inc. and
                Advanced Technologies International, Ltd.

   10.31        Warrant to Purchase Common Stock from OCTuS, Inc.        ++
                to Advanced Technologies International, Ltd. dated
                June 24, 1996

   10.32        Agreement dated as of August 8, 1996 relating to          &
                settlement of claims among OCTuS parties and
                RAS/TAG parties.

   11           Statements re: computation of (loss) earnings           +++
                per share and shares used in per share calculation

   16.1         Letter dated March 13, 1996 from Price Waterhouse         ~
                to the Securities and Exchange Commission

----------------
*    Incorporated by reference from the Company's Form S-1, as amended,
     bearing the SEC registration number 33-51862, which was declared
     effective January 15, 1993.

**   Incorporated by reference from the Company's Annual Report on
     Form 10-KSB for the calendar year ended December 31, 1993.

+    Incorporated by reference from the Company's Post-Effective
     Amendment No. 1 on Form S-3 to Form S-1, bearing the SEC registration
     number 33-51862, which was declared effective January 6, 1995.

#    Incorporated by reference from the Company's Annual Report on
     Form 10-KSB for the calendar year ended December 31, 1994 filed with
     the SEC April 17, 1995.

+++  Incorporated by reference from the Company's amended Annual Report on
     Form 10-KSB/A for the calendar year ended December 31, 1994 filed with
     the SEC July 6, 1995.

!    Incorporated by reference from the Company's Quarterly Report on
     Form 10-QSB for the period ended September 30, 1995 filed with
     the SEC November 13, 1995.

~    Incorporated by reference from the Company's Form 8-K filed with the
     Securities and Exchange Commission on March 12, 1996.

&    Incorporated by reference to the Company's Annual Report on Form 10-KSB
     for the fiscal year ended December 31, 1996 as filed with the SEC on
     March 31, 1997.

++   Incorporated by reference from the Company's Quarterly Report on
     Form 10-QSB for the period ended June 30, 1996 filed with the SEC
     on August 12, 1996.


===============================================================================


                                 OCTuS, Inc.

                         As of and for the Year Ended
                               December 31, 2001



===============================================================================

                                 OCTuS, Inc.
<TABLE>
                              Table of Contents

<CAPTION>
                                                                        Page
<S>                                                                 <C>
Report of Independent Auditors                                          F-1

Consolidated Balance Sheet                                              F-2

Consolidated Statements of Operations                                   F-3

Consolidated Statement of Changes in Stockholders' (Deficit)            F-4

Consolidated Statements of Cash Flows                                   F-5

Notes to Consolidated Financial Statements                           F-6 - F-11
</TABLE>


===============================================================================
<PAGE>

                       STARK WINTER SCHENKEIN & CO., LLP



                        REPORT OF INDEPENDENT AUDITORS





Shareholders and Board of Directors
OCTuS, Inc.

We have audited the accompanying consolidated balance sheet of OCTuS, Inc.
as of December 31, 2001, and the related consolidated statements of operations,
changes in stockholders' (deficit), and cash flows for the years ended
December 31, 2001 and 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 auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform
the audits to obtain reasonable assurances 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 financial statements. An audit also includes assessing the accounting
principles used and significant estimates by management, as well as evaluating
the overall 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 OCTuS, Inc. as of
December 31, 2001, and the results of its operations, and its cash flows for the
years ended December 31, 2001 and 2000, in conformity with accounting principles
generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern.  As discussed in Note 2 to
the consolidated financial statements, the Company has suffered recurring
losses from operations and has working capital and stockholders deficits.
These factors raise substantial doubt about the Company's ability to continue
as a going concern.  Management's plans in regard to these matters are also
discussed in Note 2.  The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.



/s/ Stark Winter Schenkein & Co., LLP

Denver, Colorado
January 29, 2002 (March 26, 2002 as to Note 9)


                                      F-1
===============================================================================
<PAGE>
                                 OCTuS, Inc.
<TABLE>
                          CONSOLIDATED BALANCE SHEET

<CAPTION>
                                                             December 31,
                                                                 2001
                                                             ------------
<S>                                                          <C>
                     ASSETS

CURRENT ASSETS
Total current assets                                         $       -
                                                             ============


    LIABILITIES AND STOCKHOLDERS' (DEFICIT)

CURRENT LIABILITIES
  Accounts payable and accrued expenses                      $     22,431
  Accounts payable and accrued expenses - related parties         223,526
  Notes payable - related party                                   438,950
                                                             ------------
Total current liabilities                                         684,907

STOCKHOLDERS' (DEFICIT)
  3.6% cumulative preferred stock, no par value,
    2,000,000 shares authorized, 250,000 shares issued
    and outstanding                                               151,000
  Common stock, no par value, 100,000,000 shares
    authorized, 361,170 shares issued and outstanding          22,026,577
  Paid-in capital                                                  51,316
  Accumulated (deficit)                                       (22,913,800)
                                                             ------------
Total stockholders' (deficit)                                    (684,907)

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

<FN>
           The Notes to the Consolidated Financial Statements are an
                      integral part of these statements.
</TABLE>
                                      F-2
===============================================================================
<PAGE>
                                 OCTuS, Inc.
<TABLE>
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<CAPTION>
                                                     Year ended December 31,
                                                       2001           2000
                                                   ------------   ------------
<S>                                                <C>            <C>
Revenues                                           $       -      $       -
                                                   ------------   ------------

General and administrative expenses                      69,690         32,782
                                                   ------------   ------------

(Loss) from operations                             $    (69,690)  $    (32,782)

Interest expense                                        (45,376)       (42,813)
                                                   ------------   ------------
Net (loss) before extraordinary item
  and income taxes                                 $   (115,066)  $    (75,595)

Extraordinary item
  Gain on forgiveness of debt, net of tax of $5,840        -            23,370
                                                   ------------   ------------

Net (loss) before income taxes                     $   (115,066)  $    (52,225)

Income taxes (benefit)                                     -            (5,840)
                                                   ------------   ------------

Net (loss)                                             (115,066)       (46,385)

Preferred dividends                                       9,000          9,000
                                                   ------------   ------------

Net (loss) available to common shareholders        $   (124,066)  $    (55,385)
                                                   ============   ============


PER SHARE INFORMATION - BASIC AND FULLY DILUTED

Weighted average shares outstanding                     361,170        211,170
                                                   ============   ============

(Loss) per common share:
  (Loss) from operations                           $     (0.29)   $     (0.32)
  Gain from extraordinary item                             -             0.10
                                                   ------------   ------------

Net (loss) per common share                        $     (0.32)   $     (0.22)
                                                   ============   ============

<FN>
           The Notes to the Consolidated Financial Statements are an
                      integral part of these statements.
</TABLE>
                                      F-3
===============================================================================
<PAGE>
                                 OCTuS, Inc.
<TABLE>
         CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' (DEFICIT)
                    YEARS ENDED DECEMBER 31, 2001 AND 2000

<CAPTION>
                                   Number of   Number of                                                          Total
                                   Preferred    Common     Preferred     Common      Paid-in   Accumulated    Shareholders'
                                    Shares      Shares       Stock        Stock      Capital    (Deficit)       (Deficit)
                                   ---------   ---------   ---------   -----------   -------   ------------   -------------
<S>                                <C>         <C>         <C>         <C>           <C>       <C>            <C>
Balance, December 31, 1999           250,000     211,170     151,000    21,966,577      -       (22,752,349)     (634,772)

  Capital contribution                  -           -           -             -       51,316           -           51,316
  Net (loss) for the year ended
     December 31, 2000                  -           -           -             -         -           (46,385)      (46,385)
                                   ---------   ---------   ---------   -----------   -------   ------------     ---------
Balance, December 31, 2000           250,000     211,170   $ 151,000   $21,966,577   $51,316   $(22,798,734)    $(629,841)

  150,000 warrants exercised at
     $0.40 per share                    -        150,000        -           60,000      -              -           60,000
  Net (loss) for the year ended
     December 31, 2001                  -           -           -             -         -          (115,066)     (115,066)
                                   ---------   ---------   ---------   -----------   -------   ------------     ---------
Balance, December 31, 2001           250,000     361,170   $ 151,000   $22,026,577   $51,316   $(22,913,800)    $(684,907)
                                   =========   =========   =========   ===========   =======   ============     =========

<FN>
           The Notes to the Consolidated Financial Statements are an
                      integral part of these statements.
</TABLE>
                                      F-4
===============================================================================
<PAGE>
                                 OCTuS, Inc.
<TABLE>
                    CONSOLIDATED STATEMENTS OF CASH FLOWS

<CAPTION>
                                                     Year ended December 31,
                                                       2001           2000
                                                   ------------   ------------
<S>                                                <C>            <C>
OPERATING ACTIVITIES
Net (loss)                                         $   (115,066)  $    (46,385)
Adjustments to reconcile net (loss) to net cash
  flows from (used in) operating activities:
     Forgiveness of debt                                   -           (29,210)
Changes in:
     Accounts payable and accrued expenses               (5,362)          (519)
     Accounts payable and accrued expenses
       - related parties                                 83,956         42,813
                                                   ------------   ------------
Net cash (used in) operating activities                 (36,472)       (33,301)
                                                   ------------   ------------

INVESTING ACTIVITIES
Net cash (used in) investing activities                    -              -
                                                   ------------   ------------

FINANCING ACTIVITIES
Proceeds from notes payable - related party              36,300         33,468
                                                   ------------   ------------
Net cash provided by financing activities                36,300         33,468
                                                   ------------   ------------

Net increase (decrease) in cash                            (172)           167

CASH AT BEGINNING OF YEAR                                   172              5
                                                   ------------   ------------

CASH AT END OF YEAR                                $       -      $        172
                                                   ============   ============


SUPPLEMENTAL CASH FLOWS INFORMATION:
Cash for paid for:
  Interest                                         $       -      $       -
                                                   ============   ============
  Income taxes                                     $       -      $       -
                                                   ============   ============

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING
        AND FINANCING ACTIVITIES:
  Conversion of accrued salary into
     contributed capital                           $       -      $     51,316
                                                   ============   ============
  Warrant exercised for 150,000 shares of
     common stock in lieu of payment of note
     payable and accrued interest of $60,000       $     60,000   $       -
                                                   ============   ============

<FN>
           The Notes to the Consolidated Financial Statements are an
                      integral part of these statements.
</TABLE>
                                      F-5
===============================================================================
<PAGE>
                                 OCTuS, Inc.
                  Notes to Consolidated Financial Statements
                              December 31, 2001


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

OCTuS, Inc. (the "Company") was formed as a California corporation in 1983.
The Company was involved in the development of various printer controller
technologies.  However, the Company currently has no revenue generating
operations and is currently seeking strategic alternatives.

BASIS OF CONSOLIDATION

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

USE OF ESTIMATES

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

CASH AND CASH EQUIVALENTS

For the purpose of the statements of cash flows, all highly liquid investments
with the maturity of three months or less are considered to be cash
equivalents.

REVENUE RECOGNITION

Revenue is recognized when earned.

FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value estimates discussed herein are based upon certain market assumptions
and pertinent information available to management as of December 31, 2001.
The respective carrying value of certain on-balance-sheet financial instruments
approximated their fair values.  These financial instruments accounts payable,
accrued expenses and notes payable.  Fair values were assumed to approximate
carrying values for payables because they are short term in nature and their
carrying amounts approximate fair values.
Earnings (loss) per share

The Company follows Statement of Financial Accounting Standards ("SFAS")
No. 128, "Earnings Per Share."  Basic earning per common share ("EPS")
calculations are determined by dividing net income by the weighted average
number of shares of common stock outstanding during the year.  Diluted earning
per common share calculations are determined by dividing net income by the
weighted average number of common shares and dilutive common share equivalents
outstanding.  During the periods presented common stock equivalents were not
considered, as their effect would be anti-dilutive.

STOCK-BASED COMPENSATION

The Company accounts for stock based compensation in accordance with SFAS
No. 123, "Accounting for Stock-Based Compensation." The provisions of SFAS
No. 123 allow companies to either expense the estimated fair value of stock
options or to continue to follow the intrinsic value method set forth in APB
Opinion 25, "Accounting for Stock Issued to Employees" ("APB 25") but disclose
the pro forma effects on net income (loss) had the fair value of the options
been expensed. The Company has elected to continue to apply APB 25 in
accounting for its stock option incentive plans.

NEW ACCOUNTING PRONOUNCEMENTS

In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 ("SAB 101").  SAB 101 provides guidance on applying
accounting principles generally accepted in the United States of America to
revenue recognition in financial statements and is effective in the Company's
fourth quarter of 2000.  The implementation of SAB 101 did not have an impact
on the Company's operating results.

In July 2001, the Financial Accounting Standards Board (FASB) issued SFAS 141,
Business Combinations, and SFAS 142, Goodwill and Intangible Assets.  SFAS 141
is effective for all business combinations completed after June 30, 2001.
SFAS 142 is effective for the year beginning January 1, 2002; however certain
provisions of that Statement apply to goodwill and other intangible assets
acquired between July 1, 2001, and the effective date of SFAS 142.  The Company
does not believe the adoption of these standards will have a material impact on
the Company's financial statements.

In July 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations.  This statement addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and
the associated asset retirement costs.  This Statement applies to all entities.
It applies to legal obligations associated with the retirement of long-lived
assets that result from the acquisition, construction, development and (or) the
normal operation of a long-lived asset, except for certain obligations of
lessees.  This Statement is effective for financial statements issued for
fiscal years beginning after June 15, 2002.  The Company is evaluating the
impact of the adoption of this standard and has not yet determined the effect
of adoption on its financial position and results of operations.

In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets.  This statement addresses financial accounting
and reporting for the impairment or disposal of long-lived assets and
supersedes FASB Statement No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of.  The provisions of the
statement are effective for financial statements issued for fiscal years
beginning after December 15, 2001.  The Company is evaluating the impact of the
adoption of this standard and has not yet determined the effect of adoption on
its financial position and results of operations.


NOTE 2 - GOING CONCERN

The accompanying consolidated financial statements have been prepared in
conformity with accounting principles generally accepted in the United States
of America, which contemplates continuation of the Company as a going concern.
The Company has working capital and shareholders' deficiencies of $684,907 and
an accumulated deficit of $22,913,800 as of December 31, 2001.  The Company has
generated recurring losses, aggregating $115,066 and $46,385 in 2001 and 2000,
respectively.

The Company is currently seeking a viable business to merge with and, in
addition, is seeking equity capital.  However, the Company has no commitment
from any party to provide additional capital and there is no assurance that
such funding will be available when needed, or if available, that its terms
will be favorable or acceptable to the Company.

The financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the
amounts and classification of liabilities that may result from the possible
inability of the Company to continue as a going concern.


NOTE 3 - INCOME TAXES

The Company has no income tax expense or benefit for all periods presented as
the Company has incurred net operating losses since inception and has
recognized valuation allowances for all deferred tax assets.

Reconciliation of the Federal statutory income tax rate of 34% to the effective
rate is as follows:

          Federal statutory income tax rate      34.00 %
          State taxes, net of federal benefit     4.95 %
          Valuation allowance                   (38.95)%
                                                --------
                                                   -   %
                                                ========

The tax effects of temporary differences and net operating losses that give
rise to significant portions of deferred tax assets and liabilities consisted
of the following:

                                                    2001
                                                ------------
          Deferred tax assets (liabilities)
            Net operating loss carry forward    $  7,791,000
            Less valuation allowance              (7,791,000)
                                                ------------
          Net deferred tax                      $       -
                                                ============

At December 31, 2001, the Company has a Federal net operating loss carry
forward of approximately $22,900,000, which expires beginning in 2003 and a
state net operating loss carry forward of approximately $423,000, which expires
beginning in 2002.


NOTE 4 - STOCKHOLDERS' (DEFICIT)

COMMON STOCK

On January 15, 1993, the Company completed an offering of 100,000 units at
the initial public offering price of $120.00 per unit.  Each unit consisted
of one share of Common Stock, no par value, and one common stock purchase
warrant.

The Company's Common Stock, units and warrants were delisted from the NASDAQ
Small-Cap Market as of February 1, 1995 due to the Company's inability to meet
that markets minimum capital and surplus requirements, and were traded on the
OTC Bulletin Board until February 2000.  Since this date the Company's Common
Stock has been trading on the National Quotation Bureau Pink Sheets.

As of December 31, 2001 the stock warrants had been fully exercised at $0.40
per share in lieu of payment of $60,000 of note payable and related interest.

PREFERRED STOCK

In July 1996 the Company issued 250,000 of its Series C Preferred Stock and
one five-year stock purchase warrant for 3,000,000 shares of its common stock
for $151,000.

The cumulative Series C Preferred Stock is senior in preference and priority
with respect to the Company's Common Stock and any and all classes of the
Company's Preferred Stock.  The holder of the Series C Preferred Stock is
entitled to receive cumulative dividends at the annual rate of $0.036 per
share payable in cash when, and if declared by the Company's Board of
Directors.  Dividends accrue on a cumulative basis on each share of Series C
Preferred Stock whether or not declared or paid.  The holder of each share of
Series C Preferred Stock shall be entitled to 10 votes per share and are
entitled to vote on all matters before Common Stock shareholders.

Cumulative dividends unpaid on Series C Preferred Stock amounted to $49,685 at
December 31, 2001.  The Board of Directors has not formally declared a dividend
on the Preferred Stock since issuance.

COMPENSATORY STOCK OPTION PLANS

The Company has a stock option plan and has reserved a total of 439,799 shares
of common stock at December 31, 2001, for option grants to directors, officers,
employees, consultants of the Company and any subsidiary or parent of the
Company.  Such options are granted at fair value, vest over three to five
years, and expire not more than ten years from date of grant.

The Company accounts for stock-based compensation plans by applying APB
Opinion #25, "Accounting for Stock Issued to Employees," and related
Interpretations ("APB 25"). Under APB 25, because the exercise price of the
Company's employee stock options approximates the market price of the
underlying stock at the date of grant, no compensation cost is recognized.

Statement of Financial Accounting Standards No. 123 ("SFAS 123"), Accounting
for Stock-Based Compensation, requires the Company to provide pro forma
information regarding net income and earnings per share as if compensation
cost for the Company's stock option plans had been determined in accordance
with the fair value based method prescribed in SFAS 123. The fair value of the
option grants is estimated on the date of grant utilizing the Black-Scholes
option pricing model. No options have been granted during the years ended
December 31, 2001 and 2000.

Transactions under all stock option plans are summarized as follows:

                                              Number of       Weighted Average
                                                Shares         Exercise Price
                                             ------------     ----------------
   Outstanding at December 31, 1999                21,990          $1.72
      Options granted                                -               -
      Options expired                                -               -
                                             ------------          -----
   Outstanding at December 31, 2000                21,990          $1.72
      Options granted                                -               -
      Options expired                                -               -
                                             ------------          -----
   Outstanding at December 31, 2001                21,990          $1.72
                                             ============          =====

                       Options Outstanding              Options Exercisable
               ------------------------------------    ----------------------
                              Weighted     Weighted                  Weighted
                               Average      Average                   Average
Range of         Number      Contractual   Exercise      Number      Exercise
Prices         Outstanding      Life        Price      Exercisable    Price
-----------    -----------   -----------   --------    -----------   -------
$ 3.69            9,490       10.0 years   $   3.69       9,490       $ 3.69
  0.25           11,250       10.0 year        0.25      11,250         0.25
  0.10            1,250       10.0             0.10       1,250         0.10
-----------    -----------   -----------   --------    -----------   -------
$ 0.10-3.69      21,990       10.0 years   $   1.72      21,990       $ 1.72

The Company accounts for transactions with individuals other than employees
in which goods or services are the consideration received for the issuance
of equity instruments in accordance with the provisions of SFAS 123, based
on the fair value of the consideration received or the fair value of the
equity instrument issued, whichever is more reliably measurable.


NOTE 5 - EMPLOYEE BENEFIT PLAN

The Company has instituted a retirement plan to provide employees with
retirement benefits through a program of regular savings supplemented by
Company contributions.  The Company's funding policy is to make matching
contributions in a range from 0% to 100% of employee contributions,
pursuant to the plan, up to a maximum of 6% of a participant's gross earnings.
The Company made no matching contributions to the plan for the years ended
December 31, 2001 and 2000.


NOTE 6 - NOTES PAYABLE - RELATED PARTY

NOTES PAYABLE - RELATED PARTY CONSISTS OF THE FOLLOWING:

  *  Unsecured promissory note, principal balance of $428,311, interest
     at 10%, interest and principal due within 5 days of the exercise of
     a stock purchase warrant, which was exercised during 2001.
     The promissory note is delinquent as of the date of the audit report.
  *  Unsecured promissory note, principal balance of $10,639, interest
     at 10%. The promissory note is delinquent as of the date of the
     audit report.

Accrued interest related to these notes payable as of December 31, 2001 is
$185,501.


NOTE 7 - RELATED PARTY TRANSACTIONS

During the year ended December 31, 2000, the President converted the accrued
salary and vacation into contributed capital.  As part of this agreement,
the Company agreed to retain this individual as a consultant for six months,
starting September 2000, at a monthly rate of $3,500.  The Company extended
the agreement through December 31, 2002.  As of December 31, 2001 and 2000,
the Company incurred $42,000 and $14,000 of consulting expenses related to
this agreement, respectively, $33,055 which is still outstanding.

An officer advanced $1,800 to the Company to cover operating expenses.
This amount is outstanding at December 31, 2001.

During the year ended December 31, 2001, a shareholder of the Company
advanced $3,169 to the Company to cover operating expenses during the year.
This amount is still outstanding as of December 31, 2001.


NOTE 8 - EXTRAORDINARY ITEM - FORGIVENESS OF DEBT

The Company had defaulted on $29,210 due to a finance company.  The Company
has determined that the period for collection on this debt has expired and
as a result, the Company has written off the debt and recognized an
extraordinary gain of $29,210 during the year ended December 31, 2000.


NOTE 9 - SUBSEQUENT EVENTS

The Board of Directors approved a 1:20 reverse stock split for all outstanding
shares of the Company's Common Stock.  The effective date for the reverse stock
split is April 10, 2002.  The reverse stock split will be treated retroactively
for the purposes of financial statement presentation and all related items have
been retroactively adjusted as necessary.

On February 15, 2002, a Complaint was filed against the Company.  The Complaint
alleges that the Company is in default on two promissory notes, one dated
April 14, 1998, and the other dated September 27, 2000 (the "Notes"),
totaling $426,511, plus accrued interest in the sum of $184,214.  Based on
an opinion of counsel, the Company expects to settle the matter.