<PAGE>
 
                                  FORM 10-QSB
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

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

                For the quarterly period ended   March 31, 1999
                                                 --------------

                                      OR

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

       For the transition period from _______________ to _______________

                        Commission file number  0-21384
                                                -------

                          KAIRE HOLDINGS INCORPORATED
                 ---------------------------------------------
            (Exact name of registrant as specified in its charter)

           Delaware                                             13-3367421
-------------------------------                           ----------------------
(State or other jurisdiction of                             (I.R.S. employer
incorporation or organization)                            identification number)

   2139 Pontius Avenue, Los Angeles , California                   90025
   --------------------------------------------------------------------------
     (Address of principal executive offices)                    (Zip Code)

      Registrant's Telephone number, including area code: (310) 312-9652
                                                          --------------

                     INTERACTIVE MEDICAL TECHNOLOGIES LTD.
 ----------------------------------------------------------------------------

 (former, name, address and former fiscal year, if changed since last report)

Indicate by check mark whether the Registrant (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        No  X
                                              ---       ---

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

                                                Outstanding at
                Class of Common Stock           March 31, 1999
                ---------------------           --------------
                  $.001 par value              22,387,384 shares

        Transitional Small Business Disclosure Format  Yes       No  X
                                                           ---      ---

                                     - 1 -
<PAGE>
 
                                  FORM 10-QSB
                      Securities and Exchange Commission
                            Washington, D.C. 20549

                          KAIRE HOLDINGS INCORPORATED

                                     Index

PART I - FINANCIAL INFORMATION

     Item 1. Consolidated Financial Statements

             Condensed Consolidated Balance Sheets at
              December 31, 1998 and March 31, 1999 (unaudited)

             Condensed Consolidated Statements of Operations
              for the three months ended March 31, 1998 (unaudited)
              and 1999 (unaudited)

             Condensed Consolidated Statements of Cash Flows
              for the three months ended March 31, 1998(unaudited)
              and 1999 (unaudited)

             Notes to Condensed Consolidated Financial Statements

     Item 2. Management's Discussion and Analysis of Financial Condition
              and Results of Operations.


PART II. - OTHER INFORMATION

     Item 1. Legal Proceedings

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

     Item 6. Exhibits and Reports on Form 8-K

SIGNATURES

                                     - 2 -
<PAGE>
 
                         PART I. FINANCIAL INFORMATION
                         -----------------------------

ITEM I.   FINANCIAL STATEMENTS

                 KAIRE HOLDINGS INCORPORATED AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEET
                     December 31, 1998 and March 31, 1999

                                    ASSETS
                                    ------
<TABLE>
<CAPTION>
                                               December 31,   March 31,
                                                   1998         1999
                                               ------------   ---------
                                                             (unaudited)
<S>                                            <C>           <C>
Current assets
      Cash and cash equivalents                 $    6,331   $   82,959
      Accounts receivables, net                     55,260       50,046
      Inventory                                     70,042       70,042
      Deposits                                       9,500        9,500
      Other Asset                                   28,404       28,989
                                                ----------   ----------
         Total current assets                      169,537      241,536
                                           
Furniture and equipment, net                        16,035       10,972
Other Assets                               
Deposits                                   
Patents, net                               
                                                ----------   ---------- 
         Total assets                           $  185,572   $  252,508
                                                ----------   ----------

                     LIABILITIES AND SHAREHOLDERS' DEFICIT
                     -------------------------------------
 
Current liabilities
      Notes payable                                 25,000       25,000
      Accounts payable and accrued expenses      1,531,065    1,477,633
                                                ----------   ----------

         Total current liabilities               1,556,065    1,502,633

Convertible notes payable and Debentures         1,240,100    1,240,100   

                                                ----------   ---------- 
         Total liabilities                       2,796,165    2,742,733
                                                ----------   ---------- 
</TABLE>

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

                                     - 3 -
<PAGE>
 
                 KAIRE HOLDINGS INCORPORATED AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEET
                     December 31, 1998 and March 31, 1999

<TABLE>
<CAPTION>
                                                   December 31,     March 31,
                                                      1998            1999
                                                   ------------     ---------
                                                                   (unaudited)
<S>                                               <C>             <C>
Shareholders' deficit                           
  Common stock, $0.075 and $0.001 par value     
    authorized 400,000,000 shares, 15,387.384   
    issued and outstanding at $0.075, 7,000,000 
    issued and outstanding at $0.001                 1,154,054       1,163,210
  Additional paid-in-capital                        26,948,097      27,162,066
  Accumulated deficit                              (30,712,744)    (30,815,499)
                                                  ------------    ------------
                                                
    Total Shareholders' Deficit                     (2,610,593)     (2,490,224)
                                                
 Total liabilities and stockholders' deficit      $    185,572    $    252,508
                                                  ------------    ------------
</TABLE>

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

                                     - 4 -
<PAGE>
 
             INTERACTIVE MEDICAL TECHNOLOGIES LTD. AND SUBSIDARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                       For the  Quarters Ended March 31,

<TABLE>
<CAPTION>
                                               (Unaudited)   (Unaudited)
                                                  1998          1999
                                               -----------   -----------
<S>                                            <C>           <C>
REVENUES
      Products and Services                    $   99,958    $   69,089
      Lease Rentals                                     -             -
                                               ----------    ----------
        Total Revenue                              99,958        69,089
 
Cost of Revenues                                   53,811        32,177
 
Gross Profit                                       46,147        36,912
 
Operating Expenses
      Research and development                          0             0
      Selling, general and administrative         365,852       104,546
                                               ----------    ----------
        Total Operating Expenses                  365,852       104,546

                                               ----------    ----------
Loss from Operations                             (319,704)     ( 67,634)
 
Interest Expense (Income) and Other
Interest expense - other                          (30,927)      (34,723)
Interest expense - lease operations                     -             -
Interest Income                                         -             -
Net Losses on pending acquisition                       -             -
                                               ----------    ----------
      Total interest expense and other            (30,927)      (34,723)

                                               ----------    ----------
Loss before provision for state
  income tax                                     (350,632)    ( 102,357)
 
Provision for state income taxes                      400           400
 
Net Loss                                         (351,032)     (102,757)
                                               ----------    ----------

Basic Loss per Share                           $    (0.12)   $   (0.011)
 
Diluted Loss per Share                         $    (0.12)   $   (0.011)
 
Weighted average shares outstanding             2,978,284     9,217,537
</TABLE>

          See the accompanying notes to these consolidated statements

                                     - 5 -
<PAGE>
 
                  KAIRE HOLDINGS INCORPORATED AND SUBSIDARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                       For the Quarters Ended March 31,

<TABLE>
<CAPTION>
                                                           (Unaudited)   (Unaudited)
                                                              1998          1999
                                                           -----------   -----------
<S>                                                        <C>           <C>
Cash flows from operating activities               
Net Loss                                                    $(423,712)    $(102,757)
Adjustments to reconcile net loss to net cash      
 used in operating activities:                     
    Amortization and Depreciation                              18,513         5,063
    Common stock issued for services                                        140,000
    Common stock issued for interest on notes                   6,205         3,125    
    Compensation expenses related to below-market stock
     Options granted                               
(Increase) decrease in:                            
    Accounts receivable                                       (26,711)        5,214
    Other Asset                                                     -          (585)
    Prepaid expenses and other assets                          (6,197)            -
    Inventories                                                                   -
Increase (decrease) in:                            
    Accounts payable and accrued expenses                     156,818       (53,432)
                                                            ---------     ---------
                                                   
        Net cash used in operating activities                (275,085)       (3,373)
                                                            ---------     ---------
                                                   
Cash flows from investing activities               
    Purchase of furniture and equipment                             -             -
    Investment in affiliates                                        -             -
                                                            ---------     ---------
        Net cash used in investing activities                       -             -
                                                   
Cash flows from financing activities               
    Payments on notes payable                                                     -
    Proceeds from issuance of common stock                    200,078        80,000
    Proceeds from issuance of convertible notes                60,000
                                                            ---------     ---------
        Net cash provided by financing activities             260,078        80,000
                                                            ---------     ---------
</TABLE>

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

                                     - 6 -
<PAGE>
 
                  KAIRE HOLDINGS INCORPORATED AND SUBSIDARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                         For Quarters Ended March 31,

<TABLE>
<CAPTION>
                                                     (Unaudited)   (Unaudited)
                                                        1998          1999
                                                     -----------   -----------
<S>                                                  <C>           <C>
Net decrease in cash and cash equivalents              (15,007)       76,628
                                                      --------       -------
 
Cash and cash equivalents, beginning of period          35,928         6,331
                                                      --------       -------
 
Cash and cash equivalents, end of period              $ 20,921       $82,959
                                                      --------       -------
</TABLE>

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

                                     - 7 -
<PAGE>
 
                 KAIRE HOLDINGS INCORPORATED and SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (unaudited)
                                 March 31,1999

1.  Significant Risks
    -----------------

        The Company has incurred net losses of $12,210,263 and $1,037,608 for
the years ended December 31, 1997 and 1998, respectively and an additional loss
of $351,032 and $102,757 for the three months ended March 31,1998 and March 31,
1999. The loss in 1998 resulted from a combination of carryover costs related to
the failed 1997 acquisitions, in particular the failed Kaire International Inc.
transaction plus costs related to downsizing the Company. The continued loss
incurred in the first quarter of 1999 is a result of the combination of a
decline in first quarter sales from the Laboratory operations plus the high
costs involved in running a public company. The accumulative effect of the
continuing losses have adversely affected the liquidity of the Company. Future
losses will likely negatively impact the Company's ability to raise future
working capital.

        As of March 31, 1999, the Company had an accumulated deficit of
$30,815,499 and negative working capital of $1,261,097. In addition, the Company
remains subject to various business risks including but not limited to its
ability to maintain vendor and supplier relationships by paying bills when due,
and overcoming future and ongoing product development, distribution and
marketing issues.

        The Company's condensed consolidated financial statements have been
prepared on the assumption the Company will continue as a going concern. The
Company has suffered recurring losses from operations, has an accumulated
deficit, has negative working capital and faces product development and
distribution issues that raise substantial doubt about its ability to continue
as a going concern. The financial statements do not include any adjustments
relating to the recoverability and classification of asset carrying amounts or
the amount of liabilities that might result should the Company be unable to
continue as a going concern.

        The Company, which was formerly known as Interactive Medical
Technologies Ltd., was incorporated in Delaware in 1986. The Company provides
non-radioactive diagnostic products and laboratory analysis services to private
and government research facilities, academic centers, and hospitals engaged in
studying the effects of experimental drugs and/or surgical procedures have on
regional blood flow. The Company's products and services are sold through the
Company's E-Z Trac division.

        In 1993, the Company acquired Venus Management, Incorporated, ("VMI")
which was incorporated in New York on August 1, 1989. VMI's principle assets at
the time were two MRI 

                                     - 8 -
<PAGE>
 
systems, one which was leased to an MRI service provider operating in New York
and the second unit which was not operational. The non-operational unit was
returned to the finance company upon which VMI received a release of claims
agreement. Concerning the leased system, on or about March 1, 1995, VMI entered
into a transfer of interest agreement with Siemens Credit Corp., Medical Funding
of America ("MFA") and Tri-county whereby Kaire gave its corporate guaranty for
all of Venus' obligations under this agreement. MFA defaulted on the loan and on
April 2, 1997 Siemens Credit Corporation filed a civil action against Kaire for
the accelerated amount due plus costs. Subsequently, a Transfer of Interest
Agreement was drawn up between Venus Management, Siemens Credit Corporation and
Medical Management, Inc. (NYSE symbol CMI) whereby CMI would take over the lease
and at the same time the legal action was put on hold. (see legal Proceedings).

        In May 1996, the Company made a proposal to acquire Pastels
International, Inc. ("Pastels"), a private California personal care products
company that manufactured several beauty and skin care formulations. Prior to
June 1997, the Company decided not to proceed with the acquisition due to
Pastels not meeting certain key performance criteria. The company had advanced
$302,856 to Pastels, of which $272,437 was expensed in 1996 and the balance of
$30,419 was expensed in 1997.

        In September 1996, the Company attempted to enter into an agreement to
acquire Nutra Quest, Incorporated ("NQI"), a start-up network marketing company,
which distributed food supplement and nutrition consumer's products. Due to
difficulties with NQI's CEO and management, the anticipated business growth
expected by NQI never materialized which lead to the termination of NQI's CEO
during the fourth quarter of 1997. Subsequently, the NQI CEO seized the
Company's headquarters along with certain assets, thus permanently damaging
NQI's business. As a result of these of chain of events, NQI operations were
terminated during the fourth quarter of 1997. At this time any remaining
distributor downlines were transferred to Kaire International and the remaining
NONI inventory was also transferred to Kaire International, Inc. The Company
funded NQI $2,003,728 of which $502,728 and $1,501,000 was expensed in 1996 and
1997 respectively. (see Legal Proceedings).

        In December 1997 the Company entered into an agreement (the "Agreement")
to acquire 80% of Kaire International, Inc. ("KII"), a network marketing firm
based in Longmont, Colorado, with 1997 annual sales of approximately
$31,000,000. In exchange for KII's Common Stock, the Agreement called for the
Company to invest an initial $1,000,000 plus Company Common Stock, and to
subsequently provide additional capital totaling $2,000,000 by the latter of
February 15, 1998 or the completion of KII's year-end audit. Determining that
the Company was not going to raise the additional capital needed by such dates,
the Company and KII entered into an agreement whereby the Company assigned
approximately two thirds of its equity position in KII to a third party, and the
third party was to fund KII $2,000,000. For consideration, the Company received
an option from KII repurchase the same number of KII shares that it had assigned
to the third party $2,000,000. The Company was unable to raise the funds and the
option expired on August 5, 1998. After the occurrence of these events, the
Company owns 24% of KII. A write down of $2,632,003 in the KII investment was
reflected in the Company's 1997 financial statements. KII filed an S-1
Registration Statement on February 11, 1998 and an Amended S-1 Registration
Statements on July 10, 1998 and October 23, 1998. The Registration statement
provides for the selling of 1,000,000 shares of KII at $6.00 a share. The under
writer is the May Davis Group Incorporated, located in Baltimore, MD, and the
attorney is Gusrae, Kaplan & Bruno

                                     - 9 -
<PAGE>
 
located in New York, NY. Subsequent to the filing of the amended Registration
Statement, KII decided not to proceed with the offering. On December 10, 1998,
Natural Health Trends Corp., ("NHTC") (NASDAQ: Symbol NHTCC), announced it had
signed an agreement as of November 24, 1998 to purchase certain assets of KII
for a combination of Series E and Series F Preferred stock, Acquisition Warrants
and a percentage of NHTC's net income for a period of five years. On February
19, 1999, NHTC announced that the acquisition was completed. It is not known
what effect the NHTC agreement will have on Kaire Holding's investment in KII,
thus due to the uncertainty in Kaire Holding's ability to recover its investment
in KII, its investment in KII was written off for the year ending December 1997.

        On February 19, 1998, Kaire Holdings, Incorporated changed its name from
Interactive Medical Technologies, Ltd., changed its NASDAQ OTC BBS symbol to
"KAHI" from "NONI" and reverse split its Common Stock at a ratio of seventy-five
(75) to one (1).

        Due to the above factors, losses are expected to continue at least for
the immediate future. In the event working capital is not available to the
Company, the Company would curtail all non commercial operations while
accelerating the distribution and sale of nutritional products and its efforts
to license its contrast microsphere technologies.

        The Company carries no direct product liability insurance, relying
instead on the coverage afforded by its distributors and the manufacturers from
whom it obtains products. These coverages directly protect the insured that pay
the premiums and only secondarily the Company. There is no assurance that such
coverages will adequately cover any claims that may be brought against the
Company. In addition, the Company does not have any general liability coverage.

2.  Summary of Significant Accounting Policies
    ------------------------------------------

             Basis of Presentation
             ---------------------

        The accompanying condensed consolidated financial statements have been
prepared assuming that the Company will continue as a going concern. Certain
matters raise substantial doubt about the Company's ability to continue as a
going concern. As discussed in Note 1, the Company operates under extreme
liquidity constraints and, because of recurring losses, increasing difficulty in
raising necessary additional capital. Management's plan in regard to these
matters is described above. The financial statements do not include any
adjustments relating to the recoverability and classification of asset carrying
amounts or the amount and classification of liabilities that might result should
the Company be unable to continue as a going concern.

        In the opinion of the management the accompanying consolidated financial
statements contain all adjustments necessary (consisting of only normal
recurring accruals) to present fairly the financial position at March 31,1999,
the results of its operations for the three months ended March 31, 1999 and the
cash flow for three months ended March 31, 1999. Certain information and
footnote disclosures normally included in financial statements that would have
been prepared in accordance with generally accepted accounting principles have
been condensed or omitted pursuant to the rules and regulations of 

                                     - 10 -
<PAGE>
 
the Securities and Exchange Commission, although management of the Company
believes that the disclosures in these financial statements are adequate to make
the information presented therein not misleading. It is suggested that these
condensed financial statements and notes thereto be read in conjunction with the
financial statements and the notes thereto included in the Company's December
31, 1998 Form 10-KSB.

        The results of operations for the three months ended March 31, 1999 are
not necessarily indicative of the results of operations to be expected for the
full fiscal year ending December 31, 1999.

        Income Taxes
        ------------

        The Company utilizes SFAS No. 109, "Accounting for Income Taxes," which
requires the recognition of deferred tax assets and liabilities for the expected
future tax consequences of events that have been included in the financial
statements or tax returns. Under this method, deferred income taxes are
recognized for the tax consequences in future years of differences between the
tax bases of assets and liabilities and their financial reporting amounts at
each period end based on enacted tax laws and statutory tax rates applicable to
the periods in which the differences are expected to affect taxable income.
Valuation allowances are established, when necessary, to reduce deferred tax
assets to the amount expected to be realized. The provision for income taxes
represents the tax payable for the period and the change during the period in
deferred tax assets and liabilities.

        Fair Value of Financial Instruments
        -----------------------------------

        The Company measures its financial assets and liabilities in accordance
with generally accepted accounting principles. For certain of the Company's
financial instruments, including cash and cash equivalents and accounts payable
and accrued liabilities, the carrying amounts approximate fair value due to
their short maturities. The amounts shown for notes payable also approximate
fair value because current interest rates offered to the Company for debt of
similar maturities are substantially the same.

        Stock Split
        -----------

        On or about February 19, 1998, the Company effected a 1-for-75 reverse
stock split of its common stock. All share and per share data have been
retroactively restated to reflect this stock split.

        Stock Options
        -------------

        SFAS No. 123, "Accounting for Stock-Based Compensation," establishes and
encourages the use of the fair value based method of accounting for stock-based
compensation arrangements under which compensation cost is determined using the
fair value of stock-based compensation determined as of the date of grant and is
recognized over the periods in which the related services are rendered. The
statement also permits companies to elect to continue using the current implicit
value accounting method specified in Accounting Principles Bulletin ("APB")
Opinion No. 25, "Accounting for Stock Issued to Employees," to account for 
stock-based compensation. The Company has elected to use the implicit value
based method and has disclosed the pro forma effect of using the fair value
based method

                                     - 11 -
<PAGE>
 
to account for its stock-based compensation.

        Income taxes are provided for the tax effects of transactions reported
in the financial statements and consist of state income taxes currently due. No
federal income taxes are due as a result of the Company's net operating loss
carryforwards.

        Net Loss Per Share
        ------------------

        In 1997, the Financial Accounting Standard Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per
Share." SFAS No. 128 replaced the previously reported primary and fully diluted
earnings per share with basic and diluted earnings per share. Unlike primary
earnings per share, basic earnings per share excludes any dilutive effects of
options, warrants, and convertible securities. Diluted earnings per share is
very similar to the previously reported fully diluted earnings per share. Basic
earnings per share is computed using the weighted-average number of common
shares outstanding during the period. Common equivalent shares are excluded from
the computation if their effect is anti-dilutive.


3.   Capital Transactions, Convertible Notes Payable and Debentures

       On December 9, 1997, the Company entered into an agreement with KII, a
multi-level marketing company, and certain KII stockholders ("KII Stockholders")
that collectively owned 3,573,351 shares, or approximately 80%, of KII's issued
and outstanding common stock. Based on the terms of the agreement, the Company
issued 1,576,122 shares of its common stock to the KII Stockholders in exchange
for 3,573,351 shares of KII's common stock. The 1,576,122 shares issued by the
Company were valued at approximately $3,694,000 which is equal to the number of
shares issued multiplied by the market price of the Company's common stock at
the date of the transaction. In addition to the exchange of shares, the Company
committed to provide $3,000,000 in additional capital to KII, or the Company
would forfeit a portion of its KII equity holdings based on certain provisions
of the agreement. The Company provided $1,000,000 in additional equity capital
and committed to provide an additional $500,000, $500,000, and $1,000,000 by
December 25, 1997, January 15, 1998, and February 15, 1998, respectively.

       The Company was unsuccessful in obtaining the additional $2,000,000 and
sold to an unrelated third party 2,500,155 shares of its KII common stock for
nominal consideration. The purchaser of these shares agreed to provide KII with
the additional $2,000,000 in capital, thereby relieving the Company of its
additional $2,000,000 capital commitment described above. Additionally, KII
granted the Company an option to purchase 2,500,155 shares of KII common stock
for $2,000,000, which expired on August 5, 1998. The Company was not able to
raise sufficient funds to exercise this option.

       As a result of the above transactions, the Company's ownership in KII has
been decreased from 80% to approximately 24% (1,073,196 shares), which occurred
subsequent to December 31, 1997. Based on the Company's temporary controlling
interest in KII, the Company accounted for its investment in KII using the
equity method.

                                     - 12 -
<PAGE>
 
       A $2,632,000 impairment charge related to the Company's investment in KII
was recorded in the year ended December 31, 1997 due to the Company's subsequent
loss of ownership interest and the doubtfulness of recovering this investment.
Additionally, the Company provided a full valuation charge on the remaining
balance of the Company's investment in KII equal to $2,062,035.

       As of December 31, 1998, there were approximately 608 shareholders of
record of the company's Common Stock.

       During the fiscal year ended December 31, 1997, to raise capital, the
Company issued securities using the exceptions available under the Securities
Act of 1933 including unregistered sales made pursuant to Section 4(2) of the
Securities Act of 1933 and pursuant to Regulation S, as follows:

       For the period beginning on or about May 5, 1997 through December 31,
1997, there were 25,566,804 shares (340,891 shares on a post reverse split
basis) of common stock sold issued pursuant to Section 4(2) of the Securities
Act of 1933 and pursuant to Regulation S for approximately $1,222,639.

       For the period beginning May 23, 1997 through December 31, 1997, $441,500
of convertible promissory notes were converted into 7,354,321 shares (98,058
shares on a post reverse split basis) of common stock. The majority of these
shares were issued in reliance on Regulation S with the remainder made pursuant
to Section 4(2) of the Securities Act of 1933.

       1997 quarterly interest payments totaling $6,417.60 due on a convertible
promissory note held by the Wolas Family Trust were paid with 134,426 shares
(1,792 shares on a post reverse split basis) of the Company's common stock,
issued pursuant to Section 4(2) of the Securities Act of 1933.

       On December 18, 1997, 118,209,200 shares (1,576,123 shares on a post
reverse split basis) of the Company's common stock were issued to the
shareholders of Kaire International Inc., in exchange for at least 80% of Kaire
International's outstanding shares of common stock. The Company's common stock
were issued pursuant to Section 4(2) of the Securities Act of 1933.
 
       During October through December 1997, the Company issued 8% convertible
debentures due three years from the date of issuance. The debentures are
convertible beginning with the 41st day after issuance and at a conversion price
equal to 70% of the average closing bid price of the Company's common stock
during the last five days prior to the conversion date. In connection with the
issuance of these debentures, the Company recorded additional interest amounting
to $364,000 related to the beneficial conversion feature of the debentures. The
note holders have certain registration rights. At December 31, 1997, convertible
debentures outstanding aggregated to $850,000. These funds were issued to Kaire
International Inc. As of December 31, 1998, $225,000 remains to be converted.

       During the fiscal year ended December 31, 1998, the Company issued
securities using exemptions available under the Securities Act of 1933 including
sales made pursuant to Section 4(2) of the Securities Act of 1933 and pursuant
to Regulation S, as follows (please note that the below 1998 

                                     - 13 -
<PAGE>
 
shares issued reflect the 75 to 1 reverse split that occurred on February 19,
1998).

       For the period January 1, 1998 through December 31, 1998 there were
337,153 shares of common stock sold issued pursuant to pursuant to Regulation S
for approximately $43,552.

       For the period January 1, 1998 through December 31, 1998, $1,089,100 of
convertible promissory notes were converted into 11,066,292 shares of common
stock. The majority of these shares were issued in reliance on Regulation S and
pursuant to Section 5 of the Securities Act of 1933.

       During the fiscal year ended December 31, 1998, 1,394,138 registered
shares of common stock were issued for consulting services rendered.

       Certain 1998 quarterly interest payments through December 30, 1998
totaling $48,980 due on a convertible promissory note held by various note
holders were paid with 333,310 shares of the Company's common stock, issued
pursuant to Section 4(2) of the Securities Act of 1933.

       In February 1998, as a result of a Special Shareholder Meeting, the
Company effected a 1-for-75 reverse stock split of its common stock. All share
and per share data have been retroactively restated to reflect this stock split.

       For the period January 1, 1999 through March 31, 1999, an option for
2,000,000 shares at $0.04 per share was exercised. The corresponding shares were
issued April 20, 1999.

       On March 10, 1999, 4,000,000 shares of common stock were issued to Peter
Benz, the then President of the Company for certain debt owed him for 1996 and
1997 services.

       On March 15, 1999, 3,000,000 shares of common stock were issued to Peter
Benz, the then President of the Company for certain debt owed him for 1996 and
1997 services.


4.   Pending Acquisitions
     --------------------

Pastels - Not Consummated

In 1996 and 1997, the Company attempted to enter into the Personal Care Products
area with Pastels International, Inc. ("Pastels"), and the Nutritional
Supplements area with Nutra Quest Incorporated ("NQI") through acquisitions.
Pastels manufactured several beauty and skin care formulations sold commercially
under the names AloeBare, a depilatory, and Skinnergy, an anti-aging skin
treatment. The Company ended its involvement with Pastels in early 1997 as a
result of Pastels not meeting certain key criteria necessary for the acquisition
to be successful. The company had advanced $302,856 to Pastels, all of which has
been expensed in full.

                                     - 14 -
<PAGE>
 
     NQI - Not Consummated

     NQI was a start up operation that the Company attempted to acquire in 1996
and 1997. NQI had a broad line of products with specific emphasis on nutritional
alternatives to coffee, tea and soda, herbal supplements to more efficiently
process calories, mineral and enzyme supplements for use as digestive aids,
athletic performance products containing a blend of amino acids and rice protein
as well as a personalized profile to evaluate the health and nutritional needs
of each individual. Due to difficulties with NQI's CEO and management, the
anticipated business growth expected by NQI never materialized and by December
1997 NQI operations were terminated. The total amount advanced Nutra Quest was
$2,003,728 of which $502,728 was written off in 1996 with the remainder of
$1,501,000 being written off in 1997.

     Kaire International Incorporated - Not Consummated
 
     In December 1997 the Company entered into an agreement (the "Agreement") to
acquire 80% of Kaire International, Inc. ("KII"), a network marketing firm based
in Longmont Colorado with 1997 annual sales of approximately thirty one million
dollars ($31,000,000). In exchange for KII's Common Stock, the Agreement called
for the Company to invest an initial $1,000,000 plus Company Common Stock, and
to subsequently provide additional capital totaling two million dollars
($2,000,000) by the latter of February 15, 1998 or when their independent
accountants signed off on KII's year-end audit. Determining that the Company was
not going to raise the additional capital needed, the Company and KII entered
into a third party agreement whereby the Company assigned two thirds of its
position in KII to a third party and the third party was to fund KII two million
dollars ($2,000,000). For consideration, the Company received an option from KII
to purchase back the same number of KII shares that it had assigned to the third
party, for two million dollars ($2,000,000). The Company was unable to raise the
funds and the option expired on August 5, 1998. The Company currently owns 24%
of KII and therefore is reported on the equity basis. A write down of $2,632.003
in the KII investment was reflected in the Company's financial statements based
on the Company's assignment of approximately two thirds of its equity position
to a third party for a release of $2,000,000 funding obligation. On December 10,
1998, Natural Health Trends Corp., ("NHTC") (NASDAQ: Symbol NHTCC), announced it
had signed an agreement as of November 24, 1998 to purchase certain assets of
KII for a combination of Series E and Series F Preferred stock, Acquisition
Warrants and a percentage of NHTC's net income for a period of five years. It is
not known what effect the NHTC agreement will have on Kaire Holding's investment
in KII, thus due to the uncertainty in Kaire Holding's ability to recover this
investment, the Company wrote off its investment in KII of $4,694,038 for the
year ending December 1997.

     Potomac Worldwide, Ltd. - Not Consummated

     In March 1998, the Company attempted to enter into an agreement to acquire
35% of Potomac Worldwide, Ltd. ("Potomac"), a BVI company, and its primary
subsidiary, Nanjing Potomak Beauty & Care Co. Ltd. ("Nanjing") located in
Mainland China. Nanjing retails and wholesales health foods, household
chemicals, cosmetics and shape forming underwear. The basis for this agreement
was to cross license products between Potomac and KII. Due to Kaire Holdings,
Inc.'s 

                                     - 15 -
<PAGE>
 
reduced equity position in Kaire International, Inc., the Potomac agreement was
not performed and is considered terminated.

5.   Contingencies
     -------------

Rudolf Steiner Research Foundation - No Longer a Party to the Complaint

     In February 1996, the Rudolf Steiner Research Foundation filed a complaint
in the United States District Court for the Central District of California
against Clark M. Holcolm, Lawrence Gibson, Murray Bettingen, Bettingen, Inc.,
and the Company. This action alleges civil RICO, violation of the Securities Act
of 1933, violation of California Corporation Code, fraud, deceit and intentional
misrepresentation, negligent misrepresentation, conversion, constructive trust
and breach of contract. The Company has been removed as a party to this action
in 1997.

SEC Proceeding - Settled

     Prior to June 1992, the Company, in executing a private placement, issued
approximately 2,506,982 shares of the Company's common stock to individuals.
This placement was structured in reliance upon the advice of the Company's then
securities counsel and was believed that the shares issued qualified for
exemption from registration under federal and state securities laws. However,
certain subsequent resale's of these shares, commencing in June 1992, by the
original purchasers or their transferees, raised an issue as to whether a
technical distribution occurred that might have required either the original
shares issued or the shares resold to have been registered. All of the foregoing
resales were either directly effected or arranged for by Clark M. Holcomb.

     In October 1993, the Company filed a registration statement with the SEC to
register all of the foregoing 2,506,982 shares with the SEC. Never the less, the
SEC investigated the above transactions and on October 1995, advised the Company
that it was filing a civil injunctive action against the Company, Dr. William
Shell and Clark M. Holcomb for alleged violations of the registration provisions
of the federal securities laws.

     The Company entered into a consent decree ("Decree") with the SEC in which
in the Company, without admitting or denying any wrongdoing, would be enjoined
from violating the registration provisions of the federal securities laws in the
future. The SEC accepted the Decree in June, 1997. No monetary penalties were
assessed against the Company.

Federal Trade Commission Proceeding - Settled

     The Seattle Regional Office of the Federal Trade Commission had advised the
Company that it believed the Company's fat sequesterant product, which was
marketed by KCD, a former licensee, under the name "SeQuester," had been
improperly represented in advertising claims, and that the sequesterant product,
when previously marketed by the Company under the name "Lipitrol", also was
improperly represented in advertising claims. (Note, this product is no longer
marketed by Kaire Holdings). On June 16, 1996 the FTC filed a complaint be filed
against the licensee, the 

                                     - 16 -
<PAGE>
 
Company and certain individuals in connection with the foregoing. Subsequently
the Company and the FTC agreed upon a proposed settlement in which the Company
would consent to a permanent injunction prohibiting it from making
misrepresentations relating to weight loss or weight reduction products or
services, or with respect to tests or studies relating to such programs or
services. In addition, the Company would pay consumer redress to the FTC in an
aggregate amount of $35,000 over a period of twelve months. The Company's Board
of Directors voted to accept the proposal in March 1996, which was formally
approved by the FTC in June 1997. Final payment was made to the FTC on April 16,
1998.

Siemens Credit Corporation - MRI Equipment Assigned to Third Party

     On or about February 19, 1992, Medical Funding of America ("MFA") leased to
Tri-County a Siemens Mobile Magneton Impact MRI System with a Van. On or about
June 24, 1992 Siemens and MFA entered into a loan and security agreement in the
amount of $2,019,496, which was, paid directly to Siemens Medical Systems, Inc.
On or about March 1, 1995 Siemens, MFA, Tri-County and Venus Management (an
Interactive Medical Technologies (Kaire Holdings) subsidiary ("Kaire")) entered
into a transfer of interest agreement whereby Kaire gave its corporate guaranty
of all of Venus' obligations under this agreement. Venus and MFA defaulted on
the loan and on April 2, 1997 Siemens Credit Corporation filed a civil action
for the accelerated amount due plus costs. This action is still pending. On or
about October 9, 1997, a Transfer of Interest Agreement was drawn up between
Venus Management, Siemens Credit Corporation and Medical Management, Inc.
("CMI") (NYSE: symbol CMI) whereby CMI would take over the lease. CMI took
possession of the MRI. All parties executed the agreement except Siemens who
continued to negotiate with CMI in an attempt to get CMI to pay all of the
arrearages owed Siemens. At present CMI and Siemens are still negotiating over
the terms of the agreement. It is the opinion of the Company's management that
its obligations under this agreement have been assigned and that Siemens will
not pursue this matter any further.

Nutra Quest Inc. - Counter Claim Settled

     On or about October 17, 1997, the CEO of Nutra Quest, Inc. ("CEO"),
considered a wholly owned subsidiary of Kaire Holdings (formerly Interactive
Medical Technologies, Ltd. (the "Company")) was terminated. On or about that
time, the CEO took possession of and removed certain company financial and
administrative records of the Company and disputed the Company's ownership of
Nutra Quest, Inc. The Company obtained a permanent injunction preventing CEO
from representing himself as Nutra Quest Inc. and filed a complaint concerning
ownership of Nutra Quest Inc. The CEO appealed the injunction and served the
Company a cross complaint in July 1998. Concerning the Appeal, Nutra Quest's
opening appellate brief was due on September 11, 1998. Concerning the Cross-
Complaint, on August 21, 1998, the Company filed the following motions; 1)
Demurrer to Cross-Complaint, 2) Motion to Strike Cross-Complaint and 3) Motion
to Dismiss Cross-Complaint. On November 3, 1998 the respective parties engaged
mediation and successfully and completely resolved all claims. The settlement is
a "walk away" for all involved and does not require payment or receipt of any
funds or transfer of any assets or property.

                                     - 17 -
<PAGE>
 
     The effect of the CEO's actions against the Company in 1998 permanently
   damaged Nutra Quest's business to the extent that the Company terminated its
   operation in December 1997. The amount invested in Nutra Quest was written
   off in 1997 (see financial statements for more detail).


   M&A West, Inc. - Claim Settled

     On or about July 2, 1998, M&A West, Inc. a Nevada corporation, filed a
   Complaint against the Company claiming acts that constitute a breach of
   action. M&A West, Inc. is a public relations firm that was contracted to help
   the Company obtain additional funding through the creation of interest in our
   stock. Kaire contends that M&A West did not perform as contracted and in turn
   filed an answer and a counterclaim for return of compensation paid. The
   parties attended Non-Binding Arbitration on March 29, 1999 where the parties
   mutually decided not to pursue this matter and agreed to a "walk away"
   settlement.

   Ex-employee Files Various Claims against the Company - Settlement Reached May
   1999

     An ex-employee who was released from the Company on or about January 1998
   due to downsizing, filed suit on November 18, 1998 against the Chief
   Executive Officer and the Company for sexual harassment/discrimination,
   failure to maintain a work environment free from harassment, wrongful
   termination/constructive discharge in violation of public policy, breach of
   implied-in fact contract, breach of covenant of good faith and fair dealing,
   intentional infliction of emotional distress, negligence and retaliation.
   The  complaint was served the last week of December 1998.  The damages prayed
   are as follows: special damages - $250,000, general damages - $1,000,000 and
   punitive damages - $3,000,000.

     The response to the complaint was filed January 29, 1999 with the discovery
   process to begin shortly thereafter. The status conference is scheduled for
   June 18, 1999. On or about April 2, 1999 the parties had a conference where
   settlement offers were exchanged. The party's attorneys reviewed the offers
   and reached a settlement on or about May 17, 1999. The settlement was for
   $5,000 cash and 130,000 shares of common stock.



     Item 2.   Management's Discussion and Analysis or Plan of Operation

     The Company is engaged in the business of developing, manufacturing and
   marketing diagnostic imaging products and services relating to blood flow
   research in animals and the research and development of propriety diagnostic
   imaging products and procedures for human applications that use existing
   imaging equipment such as x-ray, CAT scan, MRI and ultra sound.  The Company
   markets three products, two of which are designed for animal blood flow
   studies, the E-Z Trac Ultraspheres and the NuFlow fluorescent microspheres.
   The third product is a service the Company provides for its clients which
   counts NuFlow fluorescent microspheres used in the blood flow studies and
   measures regional blood flow under laboratory conditions.
 

                                     - 18 -
<PAGE>
 
     The E-Z Trac Ultraspheres are microspheres designed for small research
   studies measuring regional blood flow.  The NuFlow fluorescent microspheres
   are designed to measure regional blood flow for both small or large regional
   blood flow research studies using E-Z Trac's Investigative Partner Service
   ("IPS") to analyze the studies samples.  The Company markets microsphere
   products to pharmaceutical companies, universities, hospitals and other
   academic centers engaged in regional blood flow studies o experimental drugs
   or surgical procedures.

     In 1996 and 1997, the Company attempted to enter into the Personal Care
   Products area with Pastels International, Inc. ("Pastels"), and the
   Nutritional Supplements area with Nutra Quest Incorporated ("NQI") through
   acquisitions.  Pastels manufactured several beauty and skin care formulations
   sold commercially under the names AloeBare, a depilatory, and Skinnergy, an
   anti-aging skin treatment.  The Company ended its involvement with Pastels in
   early 1997 as a result of Pastels not meeting certain key criteria necessary
   for the acquisition to be successful. The company had advanced $302,856 to
   Pastels, all of which has been expensed in full.

     NQI was a start up operation that the Company attempted to acquire in 1996
   and 1997.  NQI had a broad line of products with specific emphasis on
   nutritional alternatives to coffee, tea and soda, herbal supplements to more
   efficiently process calories, mineral and enzyme supplements for use as
   digestive aids, athletic performance products containing a blend of amino
   acids and rice protein as well as a personalized profile to evaluate the
   health and nutritional needs of each individual.  Due to difficulties with
   NQI's CEO and management, the anticipated business growth expected by NQI
   never materialized and by December 1997 NQI operations were terminated.  The
   total amount advanced Nutra Quest was $2,003,728 of which $502,728 was
   written off in 1996 with the remainder of $1,501,000 being written off in
   1997.

     In December 1997 the Company entered into an agreement (the "Agreement") to
   acquire 80% of Kaire International, Inc. ("KII"), a network marketing firm
   based in Longmont Colorado with 1997 annual sales of approximately thirty one
   million dollars ($31,000,000).  In exchange for KII's Common Stock, the
   Agreement called for the Company to invest an initial $1,000,000 plus Company
   Common Stock, and to subsequently provide additional capital totaling two
   million dollars ($2,000,000) by the latter of February 15, 1998 or when their
   independent accountants signed off on KII's year-end audit.  Determining that
   the Company was not going to raise the additional capital needed, the Company
   and KII entered into a third party agreement whereby the Company assigned two
   thirds of its position in KII to a third party and the third party was to
   fund KII two million dollars ($2,000,000).  For consideration, the Company
   received an option from KII to purchase back the same number of KII shares
   that it had assigned to the third party, for two million dollars
   ($2,000,000).  The Company was unable to raise the funds and the option
   expired on August 5, 1998.  The Company currently owns 24% of KII and
   therefore is reported on the equity basis.  A write down of $2,632.003 in the
   KII investment was reflected in the Company's financial statements based on
   the Company's assignment of approximately two thirds of its equity position
   to a third party for a release of $2,000,000 funding obligation.  On December
   10, 1998, Natural Health Trends Corp., ("NHTC") (NASDAQ: Symbol NHTCC),
   announced it had signed an agreement as of November 24, 1998 to purchase
   certain assets of KII for a combination of Series E and Series F Preferred
   stock, Acquisition Warrants  and a percentage of NHTC's net income for a
   period of five years.  It is not known what effect the NHTC agreement will
   have on Kaire 

                                     - 19 -
<PAGE>
 
   Holding's investment in KII, thus due to the uncertainty in Kaire Holding's
   ability to recover this investment, the Company wrote off its investment in
   KII of $4,694,038 for the year ending December 1997.

     On February 19, 1998, Kaire Holdings, Incorporated changed its name from
   Interactive Medical Technologies, Ltd., changed its NASDAQ OTC BBS symbol to
   "KAHI" from "NONI" and reverse split its Common Stock at a ratio of one (1)
   to seventy-five (75).

     In March 1998, the Company attempted to enter into an agreement to acquire
   35% of Potomac Worldwide, Ltd. ("Potomac"), a BVI company, and its primary
   subsidiary, Nanjing Potomak Beauty & Care Co. Ltd. ("Nanjing") located in
   Mainland China.  Nanjing retails and wholesales health foods, household
   chemicals, cosmetics and shape forming underwear.  The basis for this
   agreement was to cross license products between Potomac and KII.  Due to
   Kaire Holdings, Inc.'s reduced equity position in Kaire International, Inc.,
   the Potomac agreement was not performed and is considered terminated.

   Results of Operations

   Three Months Ended March 31, 1998 Compared to March 31, 1999
 
<TABLE>
<CAPTION>
                                                For the
                                      Three Months Ended March 31,

                                              1998    1999
                                              ----    ----
   ($ Thousands)
   <S>                                        <C>     <C> 
   Revenues - Products and Services
        Microspheres & Lab Services           $100     $69
        Fat Sequestration - License Fees
           and  Royalties                        -       -
                                              ----    ----
                                               100      69
   Cost of Revenues
   Microspheres & Lab Services                  54      32
    Fat Sequestration - License Fees
           And Royalties                         -       -
                                              ----    ----
                                                54      32
   Gross Margin Product & Services              46      37
                                              ----    ---- 
   Revenues - Lease Operations                   -       -
   Cost of Revenues - Lease operations                   -
                                              ----    ----
     Gross margin - lease operations
                                              ----    ----
</TABLE> 
                                            
     The three months ended March 31, 1999, revenues from products and services
   were approximately $69,089, a decrease of $30,869 or 30% from the same period
   in 1998.

                                     - 20 -
<PAGE>
 
     Gross profit for products and services was $36,912 for three months ended
   March 31,1999, a decrease of $9,235 or 20% over the same period prior year.
   Lease operations in 1997 experienced an additional decrease in gross margin
   due to expenses relating to the MRI equipment which had not be assigned to a
   third at that time.

     Research and development expense decrease in the three month period ended
   March 31, 1999 as a result if no new R&D expenditures in 1998.  There were no
   new R&D projects entered into in 1999.

     SG&A expense decreased to $104,546 from $365,852 for the three month period
   ended March 31, 1999.  The three month decrease resulted from reduced payroll
   expense and the phasing out of outside consultants.

     Interest expense for operations for the three month period ended March
   31,1999 was $34,723 compared to $30,927 for the comparable three month period
   prior year.  The increase resulted from interest due on convertible notes
   which were issued during first quarter of 1998.

     No provision was made for Federal income tax since the Company has incurred
   significant net operating losses from inception. Through March 31, 1999, the
   Company incurred net operating losses for tax purposes of approximately
   $102,757. The net operating loss carry forward may be used to reduce taxable
   income through the year 2013. The Company's tax returns have not been audited
   by the Internal Revenue Service. The carry forward amounts may therefore be
   subject to audit and adjustment. As a result of the Tax Reform Act, the
   availability of net operating loss carry forwards can be deferred, reduced or
   eliminated under certain circumstances. Net operating losses in the State of
   California were not available for use during 1992 and the carry forward
   period has generally been reduced from fifteen years to five years beginning
   in 1993.


     Liquidity and Capital Resources
     -------------------------------

     The Company's revenues have been insufficient to cover acquisition costs,
   cost of revenues and operating expenses.  Therefore, the Company has been
   dependent on private placements of common stock securities, bank debt, loans
   from private investors and the exercise of common stock warrants in order to
   sustain operations.  In addition, there can be no assurances that private or
   other capital will continue to be available, or that revenues will increase
   to meet the Company's cash needs, or that a sufficient amount of the
   Company's common stock or other securities can or will be sold or that any
   common stock purchase options/warrants will be exercised to fund the
   operating needs of the Company.
 
        On March 31, 1999 the Company had assets of $252,508 compared to
   $185,572 on December 31, 1998.  The Company had a total stockholders' deficit
   of $2,490,224 on March 31, 1999 compared to a deficit of $2,610,593 on
   December 31, 1998, a decrease of $120,369.

        As of March 31, 1999 the Company's working capital position decreased
   $125,431 from a 

                                     - 21 -
<PAGE>
 
   negative $1,386,528 at December 31, 1998 to a negative $1,261,097, primarily
   as a result of a decrease in accounts payable and miscellaneous accruals of
   $53,432 plus an increase in cash of $76,628 offset by a decrease in
   receivables of $5,214.

        In order to meet its current operating needs, the Company has cut all
   its operations except for the products and services sold through its E-Z
   division, including consolidation of operations to West Los Angeles,
   headcount reductions and elimination of all consultants and financial
   advisors.  Going forward, the company's plan of operation is to concentrate
   its efforts on the sale of its colored microspheres and related laboratory
   and diagnostic services.

     Year 2000 Issue

        The Company has attempted to evaluate the impact of the year 2000 issue
   on its business and does not expect the amounts, if any, to be expensed to be
   material.  No such costs have been expensed to date, since the Company uses
   off the shelf software.

        Currently the Company anticipates commencing communication with its
   significant vendors and customers to determine the extent that year 2000
   compliance issues of such parties may effect the Company. At this time, the
   Company believes there will be no disruption in business due to its
   customers' or vendors' year 2000 readiness.  The Company has not established
   a contingency plan.  There can be no guarantee that the systems of such other
   companies will be timely converted without a material adverse effect on the
   Company's business, financial condition or results of operations.

   Outlook

     The Company has developed a new strategic plan that is expected to expand
   the Company's presence and provide its customers with the ability to transact
   business in a secure and informed environment via an internet e-commerce site
   (www.vitaplanet.com). It is anticipated that this facility will be
   operational sometime in May 1999.

     Along with the Company's current product line, the Company will be
   introducing five product categories: 1) sport nutrition, 2)  executive
   nutrition, that will provide nutritional products for people in high stress
   positions, 3) specialty nutrition, that will provide nutritional assistance
   for people with special physical needs, 4) ayueveda medicinal, that are
   traditional products that focus on the bodies main organs, and 5) aphrodisiac
   products.  There will be sixteen to eighteen additional products introduced
   within the subsequent thirty to sixty days.

     The Company's e-commerce facility will allow the Company to receive
   individual customer orders through its commercial site which will alert the
   designated manufacturer and fulfillment center to process the order.

     The e-commerce business provides several operational advantages for the
   Company including no inventory cost or related capital expenditures, no need
   for warehousing, shipping, large support staffs and the various related
   costs.

                                     - 22 -
<PAGE>
 
     Although the Company is on schedule to debut the new commercial site, there
   can be no assurance that the Company will be successful in its attempts to
   implement the new business.


                          PART II.  OTHER INFORMATION
                          ---------------------------
                                        
     Item 1.  Legal Proceedings

   Rudolf Steiner Research Foundation - No Longer a Party to the Complaint

     In February 1996, the Rudolf Steiner Research Foundation filed a complaint
   in the United States District Court for the Central District of California
   against Clark M. Holcolm, Lawrence Gibson, Murray Bettingen, Bettingen, Inc.,
   and the Company.  This action alleges civil RICO, violation of the Securities
   Act of 1933, violation of California Corporation Code, fraud, deceit and
   intentional misrepresentation, negligent misrepresentation, conversion,
   constructive trust and breach of contract.  The Company has been removed as a
   party to this action in 1997.

   SEC Proceeding - Settled

     Prior to June 1992, the Company, in executing a private placement, issued
   approximately 2,506,982 shares of the Company's common stock to individuals.
   This placement was structured in reliance upon the advice of the Company's
   then securities counsel and was believed that the shares issued qualified for
   exemption from registration under federal and state securities laws.
   However, certain subsequent resale's of these shares, commencing in June
   1992, by the original purchasers or their transferees, raised an issue as to
   whether a technical distribution occurred that might have required either the
   original shares issued or the shares resold to have been registered.  All of
   the foregoing resales were either directly effected or arranged for by Clark
   M. Holcomb.

     In October 1993, the Company filed a registration statement with the SEC to
   register all of the foregoing 2,506,982 shares with the SEC.  Never the less,
   the SEC investigated the above transactions and on October 1995, advised the
   Company that it was filing a civil injunctive action against the Company, Dr.
   William Shell and Clark M. Holcomb for alleged violations of the registration
   provisions of the federal securities laws.

     The Company entered into a consent decree ("Decree") with the SEC in which
   in the Company, without admitting or denying any wrongdoing, would be
   enjoined from violating the registration provisions of the federal securities
   laws in the future.  The SEC accepted the Decree in June, 1997.  No monetary
   penalties were assessed against the Company.

   Federal Trade Commission Proceeding - Settled

     The Seattle Regional Office of the Federal Trade Commission had advised the
   Company that it believed the Company's fat sequesterant product, which was
   marketed by KCD, a former licensee, under the name "SeQuester," had been
   improperly represented in advertising claims, and that the 

                                     - 23 -
<PAGE>
 
   sequesterant product, when previously marketed by the Company under the name
   "Lipitrol", also was improperly represented in advertising claims. (Note,
   this product is no longer marketed by Kaire Holdings). On June 16, 1996 the
   FTC filed a complaint be filed against the licensee, the Company and certain
   individuals in connection with the foregoing. Subsequently the Company and
   the FTC agreed upon a proposed settlement in which the Company would consent
   to a permanent injunction prohibiting it from making misrepresentations
   relating to weight loss or weight reduction products or services, or with
   respect to tests or studies relating to such programs or services. In
   addition, the Company would pay consumer redress to the FTC in an aggregate
   amount of $35,000 over a period of twelve months. The Company's Board of
   Directors voted to accept the proposal in March 1996, which was formally
   approved by the FTC in June 1997. Final payment was made to the FTC on April
   16, 1998.

   Siemens Credit Corporation - MRI Equipment Assigned to Third Party

     On or about February 19, 1992, Medical Funding of America ("MFA") leased to
   Tri-County a Siemens Mobile Magneton Impact MRI System with a Van. On or
   about June 24, 1992 Siemens and MFA entered into a loan and security
   agreement in the amount of $2,019,496, which was, paid directly to Siemens
   Medical Systems, Inc. On or about March 1, 1995 Siemens, MFA, Tri-County and
   Venus Management (an Interactive Medical Technologies (Kaire Holdings)
   subsidiary ("Kaire")) entered into a transfer of interest agreement whereby
   Kaire gave its corporate guaranty of all of Venus' obligations under this
   agreement. Venus and MFA defaulted on the loan and on April 2, 1997 Siemens
   Credit Corporation filed a civil action for the accelerated amount due plus
   costs. This action is still pending. On or about October 9, 1997, a Transfer
   of Interest Agreement was drawn up between Venus Management, Siemens Credit
   Corporation and Medical Management, Inc. ("CMI") (NYSE: symbol CMI) whereby
   CMI would take over the lease. CMI took possession of the MRI. All parties
   executed the agreement except Siemens who continued to negotiate with CMI in
   an attempt to get CMI to pay all of the arrearages owed Siemens. At present
   CMI and Siemens are still negotiating over the terms of the agreement. It is
   the opinion of the Company's management that its obligations under this
   agreement have been assigned and that Siemens will not pursue this matter any
   further.

   Nutra Quest Inc. - Counter Claim Settled

     On or about October 17, 1997, the CEO of Nutra Quest, Inc. ("CEO"),
   considered a wholly owned subsidiary of Kaire Holdings (formerly Interactive
   Medical Technologies, Ltd. (the "Company")) was terminated.  On or about that
   time, the CEO took possession of and removed certain company financial and
   administrative records of the Company and disputed the Company's ownership of
   Nutra Quest, Inc.  The Company obtained a permanent injunction preventing CEO
   from representing himself as Nutra Quest Inc. and filed a complaint
   concerning ownership of Nutra Quest Inc.  The CEO appealed the injunction and
   served the Company a cross complaint in July 1998.  Concerning the Appeal,
   Nutra Quest's opening appellate brief was due on September 11, 1998.
   Concerning the Cross-Complaint, on August 21, 1998, the Company filed the
   following motions; 1) Demurrer to Cross-Complaint, 2) Motion to Strike Cross-
   Complaint and 3) Motion to Dismiss Cross-Complaint.  On November 3, 1998 the
   respective parties engaged mediation and 

                                     - 24 -
<PAGE>
 
   successfully and completely resolved all claims. The settlement is a "walk
   away" for all involved and does not require payment or receipt of any funds
   or transfer of any assets or property.

     The effect of the CEO's actions against the Company in 1998 permanently
   damaged Nutra Quest's business to the extent that the Company terminated its
   operation in December 1997. The amount invested in Nutra Quest was written
   off in 1997 (see financial statements for more detail).


   M&A West, Inc. - Claim Settled

     On or about July 2, 1998, M&A West, Inc. a Nevada corporation, filed a
   Complaint against the Company claiming acts that constitute a breach of
   action. M&A West, Inc. is a public relations firm that was contracted to help
   the Company obtain additional funding through the creation of interest in our
   stock. Kaire contends that M&A West did not perform as contracted and in turn
   filed an answer and a counterclaim for return of compensation paid. The
   parties attended Non-Binding Arbitration on March 29, 1999 where the parties
   mutually decided not to pursue this matter and agreed to a "walk away"
   settlement.

   Ex-employee Files Various Claims against the Company - Settlement Reached May
   1999

     An ex-employee who was released from the Company on or about January 1998
   due to downsizing, filed suit on November 18, 1998 against the Chief
   Executive Officer and the Company for sexual harassment/discrimination,
   failure to maintain a work environment free from harassment, wrongful
   termination/constructive discharge in violation of public policy, breach of
   implied-in fact contract, breach of covenant of good faith and fair dealing,
   intentional infliction of emotional distress, negligence and retaliation.
   The  complaint was served the last week of December 1998.  The damages prayed
   are as follows: special damages - $250,000, general damages - $1,000,000 and
   punitive damages - $3,000,000.

     The response to the complaint was filed January 29, 1999 with the discovery
   process to begin shortly thereafter.  The status conference is scheduled for
   June 18, 1999.  On or about April 2, 1999 the parties had a conference where
   settlement offers were exchanged.  The party's attorneys reviewed the offers
   and reached a settlement on or about May 17, 1999.   The settlement was for
   $5,000 cash and 130,000 shares of common stock.

     While the ultimate outcome of these issues, if claims were asserted and
   litigated, is complicated and not free from doubt, management with the advice
   of legal counsel believes, on the basis of the facts currently known, that it
   is not probable that the Company would have any material liability.  However,
   there can be no assurance that the Company will prevail in any of the above
   proceedings.  Also the Company may be required to continue to defend itself
   resulting in substantial additional expense.  In the event the Company is
   unable to pay the defense costs associated with the foregoing an unfavorable
   settlement or judgment could be awarded against the Company which could have
   a material adverse effect upon the Company

     The Company currently has no firm commitments for material capital
   expenditures, with any 

                                     - 25 -
<PAGE>
 
   such future commitments being dependent upon the availability of funds. The
   Company does not anticipate that future compliance with existing
   environmental and occupational safety regulations will have a significant
   impact on its capital expenditures or on its financial condition or future
   operating results.

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

     On or about October 1, 1997, a proposal to increase the number of
   authorized shares to 400,000,000 for the purpose to provide for the merger
   with Kaire International, Inc. was voted upon and authorized by a majority of
   Kaire Holdings, Inc. shareholders.

     On or about January 30, 1998, a proposal to 1) reverse split the Company's
   common stock up to and not to exceed a reverse ratio of seventy-five to one,
   2) amend the Company's Articles of Incorporation changing the Company name to
   Kaire Holdings Incorporated and 3) changing the Company's NASDAQ symbol to
   KHI was voted and authorized by a majority of Kaire Holdings, Inc.
   shareholders.  These changes became effective on February 19, 1998.
        
   Item 6.    Exhibits and Reports on Form 8-K:

         (a)  Exhibits

              27  Financial Data Schedule

         (b)  The Company filed the following Reports on form 8-K:

              1.  Form 8-K dated  March 23, 1998: Items 4, 5 and 7.

                                     - 26 -
<PAGE>
 
                                   SIGNATURES
                                   ----------

        Pursuant to the requirements of Section 13 or 15(d) of the Securities
   Exchange Act of 1934, the Registrant has duly caused this report to be signed
   on its behalf by the undersigned, thereunto duly authorized.

                                     KAIRE HOLDINGS INCORPORATED.
                                     --------------------------------
                                              (Registrant)



   Date:   May 19, 1999              By: /s/ Steven R. Westlund
          -------------------------      ----------------------------
                                            Steven R. Westlund
                                            (Chief Executive Officer)



   Date:   May 19, 1999              By: /s/ Owen M. Naccarato
          -------------------------      ----------------------------
                                            Owen M. Naccarato
                                            (Chief Financial Officer)

                                     - 27 -