SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED JUNE 30, 2001

[_]      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 000-27592

                              SCANTEK MEDICAL INC.
                ------------------------------------------------
             (Exact name of registrant as specified in its charter)

                  DELAWARE                                     84-1090126
         -----------------------------                       ---------------
         (State or Other Jurisdiction                        (I.R.S.Employer
         Incorporation of Organization)                   or Identification No.)


                   321 PALMER ROAD, DENVILLE, NEW JERSEY 07834
                                 (973) 366-5250
             ------------------------------------------------------
             (Address and telephone number, including area code, of
                    registrant's principal executive office)

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

         Securities registered pursuant to Section 12(g) of the Act: COMMON
         STOCK, $.001 PAR VALUE

         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 [X] NO [ ]

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, 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. [ ]

         Aggregate market value of voting stock held by non-affiliates as of
October 1, 2001 was approximately $1,344,880 (based upon the closing sales price
of those shares reported on the National Association of Securities Dealers
Bulletin Board for that day).

         Number of shares of Common Stock outstanding as of October 1, 2001:
         24,970,690.

         DOCUMENTS INCORPORATED BY REFERENCE:        NONE

<PAGE>
                              SCANTEK MEDICAL INC.
                                      INDEX
<TABLE>
<CAPTION>

Part I                                                                                   Page
                                                                                         ----
<S>                                                                                      <C>
         Item 1.  Business                                                                  1

         Item 2.  Properties                                                               22

         Item 3.  Legal Proceedings                                                        22

         Item 4.  Submission of Matters to Vote of
                  Security Holders                                                         22

Part II

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

         Item 6.  Management's Discussion and Analysis
                  of Financial Condition and Results
                  of Operations                                                            27

         Item 7.  Financial Statements                                                     33*

         Item 8.  Changes in and Disagreements with
                  Accountants on Accounting and
                  Financial Disclosure                                                     34
Part III

         Item 9.  Directors and Executive Officers;                                        34
                  Promoters and Control Persons;
                  Compliance with Section 16(a)
                  of the Exchange Act

         Item 10. Executive Compensation                                                   36

         Item 11. Security Ownership of Certain Beneficial
                  Owners and Management                                                    38

         Item 12. Certain Relationships and
                  Related Transactions                                                     41
 Part IV

         Item 13. Exhibits and Reports on Form 8-K                                         43

         Signatures                                                                        48

         * Page F-1 follows page 33
</TABLE>



<PAGE>

                                     PART I

         All statements contained herein that are not historical facts,
including, but not limited to, statements regarding anticipated growth in
revenue, gross margins and earnings, statements regarding the Company's current
business strategy, the Company's projected sources and uses of cash, and the
Company's expectations, are forward-looking statements in nature and involve a
number of risks and uncertainties. Actual results may differ materially. Among
the factors that could cause results to differ materially are the following: the
availability of sufficient capital to finance the Company's business plans on
terms satisfactory to the Company's competitive factors; the ability of the
terms satisfactory to the Company's competitive factors; the ability of the
Company to adequately defend or reach a settlement of outstanding litigations
and investigations involving the Company or its management; changes in labor,
equipment and capital costs; changes in regulations affecting the Company's
business; future acquisitions or strategic partnerships; general business and
economic conditions; and other factors described from time to time in the
Company's reports filed with the Securities and Exchange Commission. The Company
wishes to caution readers not to place undue reliance on any such
forward-looking statements. These statements are made pursuant to the Private
Litigation Reform Act of 1995 and, as such, speak only as of the date made.

ITEM 1.  BUSINESS

GENERAL

         Scantek Medical, Inc. (OTC: BB, SKML) (the "Company"), a Delaware
corporation, was organized under the name "Jenncor Acquisition Inc." on June 10,
1988, to obtain funding for prospective business opportunities available to
publicly held entities. Until October 3, 1991, when the Company exchanged its
shares with Scantek Digital Systems Inc. ("SDSI"), the Company's only business
activities involved raising capital through a public offering pursuant to
Regulation A of the Securities Act of 1933, as amended (the "Act"). Pursuant to
the share exchange between the Company and SDSI, the then holder of several
patents relating to a medical product known as the
BreastCare(TM)/BreastAlert(TM), Differential Temperature Sensor/Breast
Abnormality Indicator (the "BreastCare(TM)/BreastAlert(TM)"), SDSI became a
wholly-owned subsidiary of the Company. The Company was formerly a developmental
stage company and became fully operational in early 1999.

         On June 6, 2000, the Company opened its web site,
www.scantekmedical.com. The web site provides information about the Company and
its business, and its principal product, BreastCare(TM)/BreastAlert(TM). Also
included are summaries of clinical studies, sales and distribution progress and
plans, press releases and financial information, participation at medical
conferences, and links to other sites for information on breast cancer."

                                       -1-


<PAGE>



         The Company is headquartered in Denville, New Jersey, where it
maintains approximately 7,000 square feet of manufacturing and administrative
space. At this facility, the Company has two production lines in which to
manufacture the BreastCare(TM)/BreastAlert(TM). These production lines are
capable of producing two million units per shift annually. One production line
will be shipped to the Company's subsidiary, Scantek Medical do Brasil Ltda,
when the new manufacturing facility is completed at Port Suape,
Pernambuco-Brazil in the first half of calendar year 2002. The Company maintains
a manufacturing and administrative staff and intends to add to its staff in key
functional areas, pending funding of the Company and revenue from sales of the
BreastCare(TM)/BreastAlert(TM) units.

         The Company is a medical company engaged in developing, manufacturing,
selling and licensing of products and devices to assist in the early detection
and diagnosis of disease. At the present time, the Company is focusing on
manufacturing, selling and licensing the Company's first product, the
BreastCare(TM)/BreastAlert(TM) in response to the global demand for the early
detection of breast disease, a major threat to women's health in developing as
well as industrial countries. In today's health care environment, containment of
medical care cost is a major priority. The Company has focused its business on
easy to use low cost products and devices for its domestic and international
markets, which will have an impact on preventive health care and cost
containment. The BreastCare(TM)/BreastAlert(TM) has United States Food and Drug
Administration ("FDA") marketing clearance; the BreastCare(TM)/BreastAlert(TM)
is to be used by physicians as an adjunct to clinical breast examination,
mammography and other established procedures for the detection of breast
disease. The BreastCare(TM)/BreastAlert(TM) is a single-use, non-invasive, easy
to use and cost-effective test to alert the physician to the possibility of a
physiological condition that may be thermally active cancer.

         The BreastCare(TM)/BreastAlert(TM) can detect cellular abnormalities as
small as one-half centimeter in diameter as established through biopsy proven
tumors. The Company believes that this technology upon which the
BreastCare(TM)/BreastAlert(TM) is based will be useful in measuring certain
other body disorders.

THE PRODUCT

         At present, the fear of breast cancer continues to escalate,
comparatively because little is actually known with respect to managing breast
cancer. It is estimated worldwide, that each year, over 300,000 women will die
from breast cancer. In fact, according to the America Cancer Society, this grave
disease has been identified to be the medical issue of highest priority for
women's health. Moreover, it cannot be predicted who will develop this epidemic
cancer; any woman at any age may develop breast cancer. Breast cancer is the
second leading cause of death for women in the U.S., but the most common for
women between the ages of 35 and 54. Worldwide, breast cancer ranked highest as
the leading cause of cancer deaths for women. Early detection and diagnosis of
breast cancer are important in the reduction of mortalities.

                                       -2-


<PAGE>



         In the United States, American women are afforded with a preventive
health measure, mammography. In developing countries however, mammography is not
readily available to women, even for those women who have the resources to pay
for such. There is a void between manifestation of the breast cancer and
detection due to unavailable screening systems. Failure to intervene during this
period may significantly reduce the likelihood of survival because the cancer
then metastasizes. The American Cancer Society, on Cancer Facts & Figures in
2001, reported that if cancer is localized at the time of diagnosis, there is a
96% chance of a 5-year survival rate, which has risen from 72% in 1940.
Nevertheless, in spite of research and efforts to detect breast cancer in the
early stages, the rate of mortality due to breast cancer in developing countries
has consistently increased over the past four decades.

         Management believes that the BreastCare(TM)/BreastAlert(TM) will help
to detect breast cancer in its early stages. Management believes that the
BreastCare(TM)/BreastAlert(TM) will assist in the recognition of abnormal early
cellular development by recording the heat differentiation of corresponding
areas of the breast. The BreastCare(TM)/BreastAlert(TM) is not a definitive test
for cancer (i.e., a biopsy, the removal and examination of, usually microscopic,
tissue from the living body, performed to establish a precise diagnosis) but is
a risk marker to identify and follow breast abnormalities by means of
temperature conductivity integration when used adjunctly with clinical palpation
and mammography.

         One of the important biological activities of malignant tumors is the
increased rate of growth as compared to the surrounding or "host" tissue. The
malignant propensities are directly related to the speed of cell division; this
in turn is reflected by accelerated local metabolism, which is adequately
supported by increased blood and lymphatic vascularity. These biological
alterations can be detected by measuring temperature differences in the tumor
and its immediate environment, or by comparing to the same area of the opposite
breast.

         The BreastCare(TM)/BreastAlert(TM) is designed to assist in the
detection of pathology of the breast by recognizing "significant" heat
differences in the underlying tissue of a particular area, by comparing
corresponding (mirror-image) segments of one breast to the other. The cause of
the hyperthermia cannot be determined by this test alone; therefore, the
BreastCare(TM)/BreastAlert(TM) serves as an early warning signal to alert the
doctor to the fact that there is evidence of a pathological process, one of
which could be thermally active breast cancer, which should be further evaluated
within a particular area of the breast.

         The BreastCare(TM)/BreastAlert(TM) is designed to complement, not
replace, conventional breast abnormality screening methods and devices. It is
intended for use by women of all ages. The BreastCare(TM)/BreastAlert(TM) is
available for a routine, primary office care procedure used by physicians,
gynecologists and other medical specialists as part of a breast disease
monitoring program adjunctively with Breast Self Examination (BSE), Clinical
Breast Examination (CBE), (depending upon a patient's age, family history, and
other factors) mammography and other established clinical procedures.

                                       -3-



<PAGE>

         The basis for the BreastCare(TM)/BreastAlert(TM) is based upon data
going back a number of years which show that blood on the venous side of breast
cancers is warmer than blood on the arterial side of the lesion. This indication
of heat generation is presumably due to increased metabolic rate of neoplastic
tissue, including more rapid cell division, angiogenesis, etc. However, heat is
not specific to neoplasia and may for example be due to inflammation. The
presence of asymmetrical patterns (one side is warmer than the other by 2
degrees Fahrenheit) is a sign that may be detected with the
BreastCare(TM)/BreastAlert(TM).

         The BreastCare(TM)/BreastAlert(TM) consists of a pair of mirror-image,
non-invasive, lightweight, disposable soft pads, each of which has three
wafer-thin foil segments containing columns of heat sensitive chemical sensors
that change color from blue to pink reflecting an 8.5 degree temperature range
between 90 and 98.5 Fahrenheit. When placed against a woman's breast inside her
brassiere for a period of 15 minutes, the BreastCare(TM)/BreastAlert(TM)
registers the temperature variations due to heat conducted from within the
breast tissue to the surface of the skin. The result will be digitally, not
analogically, indicated by color changes for each temperature gradation.
Significant temperature differences (2 degrees Fahrenheit or four bars) in the
corresponding areas of the breast may indicate an abnormal unilateral thermal
activity long before a lump is discovered by self-examination, clinical
examination or other detection methods such as mammography, ultrasound, etc.
Accordingly, by comparing the mirror-image temperature differences between the
two breasts registered by the BreastCare(TM)/BreastAlert(TM), a determination
can be made as to whether a sufficient abnormality is present to warrant further
site-specific testing by other diagnostic techniques, including, but not limited
to mammography and/or biopsy. The BreastCare(TM)/BreastAlert(TM) test does not
replace recommended guidelines for scheduled mammographic screening.

         The BreastCare(TM)/BreastAlert(TM) is a safe, non-invasive, economical
and easy to use test. The BreastCare(TM)/BreastAlert(TM), which is disposable,
can be administered and evaluated by health care providers after minimal
instruction and a permanent record of results can be placed in the patient's
files. Management believes that the utilization of the
BreastCare(TM)/BreastAlert(TM) is cost effective and when used in combination
with a mammographic work-up or at intervals of recommended screenings, will have
an impact on breast cancer mortality and improve a woman's preventive health
strategy.

                                       -4-


<PAGE>


SCIENTIFIC BASIS

         Infrared thermography for the evaluation of breast lesions was
introduced in 1956, and systems employing thermosensitive liquid crystal films
have generated renewed interest since 1978. Studies by Dr. Michael Gautherie,
University of Strasbourg, France and others dating from 1970 have directly
evaluated the heat of cancerous breast tissue compared with that of healthy
breast tissue. These studies found that tumor temperature was always higher than
the surrounding temperature and suggested that the increase in tumor heat
resulted from an increased metabolism. Furthermore, two other phenomena were
found to occur: (i) tumor heat was found to be transported within the
surrounding breast tissue (principally by blood convection through the veins)
resulting in local or diffuse increases in skin temperature and (ii) vascular
changes were observed in the tumor area and further in the subcutaneous breast
tissues. In short, both hyperthermia and hypervascularization were found to have
occurred in the tumor and at its periphery, in comparison to the temperature and
blood flow of healthy tissue in the contralateral breast. Further research by
Dr. Gautherie and others has demonstrated an unequivocal relationship between
the metabolic heat production of cancer tissue and the doubling time of tumor
volume: the faster the tumor grows the more heat it generates.

         The BreastCare(TM)/BreastAlert(TM) measures underlying breast tissue
temperature and not skin surface temperature by retaining emitted heat when the
BreastCare(TM)/BreastAlert(TM) is placed against the breast. It differs from
preexisting infrared and liquid crystal thermography techniques, which allow the
heat to escape or radiate during measurement. The BreastCare(TM)/BreastAlert(TM)
takes into consideration that the average temperature patterns of a healthy
woman's breast are closely symmetrical. This method detects abnormalities by
comparing the temperature differences in the corresponding mirror image areas of
a woman's breast.

         Recently, the scientific foundation for the
BreastCare(TM)/BreastAlert(TM) effectiveness has been considerably strengthened.
Comprehensive research has established in detail the mechanisms by which
malignancies radically alter the host tissue environment, notably through two
quantitatively measurable processes: (i) A tumor significantly elevates overall
rates of metabolic activity and (ii) A tumor greatly intensifies capillary
vascularization in host tissues. In particular, this latter process of
angiogenesis was a very critical finding because it is the probable mechanism by
which cancers with an enhanced mestastic potential prepare to invade the host.
These are only two of a number of measurable host alterations and each is
associated with asymmetric heat distribution.

                                       -5-


<PAGE>

SUMMARY CLINICAL TESTING HISTORY

         Development and clinical trials of the BreastCare(TM)/BreastAlert(TM)
were completed between 1980 and 1984. This testing showed that the
BreastCare(TM)/BreastAlert(TM) is capable of detecting lesions in the breast
earlier than through clinical examination by sensing metabolic changes in the
breast. Biopsy and screening clinical trials were conducted at well-established
U.S. institutions to assess and validate BreastCare(TM)/BreastAlert(TM)
usefulness in detecting breast cancer at Memorial Sloan-Kettering Hospital in
New York, at M.D. Anderson Memorial Hospital in Houston, at Brotman Memorial
Hospital at UCLA, and at Guttman Breast Diagnostic Institute in New York. The
BreastCare(TM)/BreastAlert(TM) was found to be accurate in terms of the
documented sensitivity of the BreastCare(TM)/BreastAlert(TM) (true positive for
cancer) and specificity (true negatives - no cancer detectable by accepted
medical methods) in relation to the biopsy (the "Gold Standard" diagnostic
procedure), clinical breast examination and mammography.

BreastCare(TM)/BreastAlert(TM) Test Results vs. Biopsy Findings: In the first
study in 1984, the BreastCare(TM)/BreastAlert(TM) was the focus of a clinical
trial involving 179 women who underwent a biopsy. This multi-center study was
conducted at three prestigious cancer institutions: M.D. Anderson Hospital and
Tumor Institute, Memorial Sloan-Kettering Hospital, and Brotman Memorial
Hospital. The BreastCare(TM)/BreastAlert(TM) tested positive for the suspicion
of cancer in 93 of the 112 women who were diagnosed with cancer, for an overall
sensitivity index of 83.0% and was notably stronger in detecting unilateral
cancers - a sensitivity index of 88.1% (that is, 74 of the 84 unilateral cancers
diagnosed). The frequency of false negatives was higher among patients who
underwent biopsies of both breasts (less than 3% of breast cancers are believed
to be bilateral generally).

         The biopsy results were subjected to a breakdown by the size of the
cancer detected and the patient's age. The threshold tumor size detectable with
the BreastCare(TM)/BreastAlert(TM) is five millimeters and up, an early-stage
cancer; out of a total of eight cancers under 1.0 centimeters which were
diagnosed during the screening study, seven tested positive using the
BreastCare(TM)/BreastAlert(TM). It appears that the
BreastCare(TM)/BreastAlert(TM) has the proven ability to detect small,
early-stage cancers which are most likely to be associated with favorable
treatment outcomes. Moreover, a breakdown of the BreastCare(TM)/BreastAlert(TM)
results by age suggests an especially high efficacy in detecting suspicious
abnormalities in younger women. This is noteworthy because a pre-screening
method is critically needed for women under 50 who have not been urged or who
have chosen not to seek a mammogram on an annual basis, since fast-growing,
potentially aggressive cancers are associated with the women in this age
distribution. The BreastCare(TM)/BreastAlert(TM) will be used adjunctively with
palpation and mammography.

                                       -6-



<PAGE>

BreastCare(TM)/BreastAlert(TM) Test Results vs. Clinical Findings vs.
Mammography and Physical Examination: In the second clinical trial study in
1984, the BreastCare(TM)/BreastAlert(TM) was studied prospectively in 2,805
asymptomatic women for the test's ability to detect abnormalities suspicious of
breast cancer. Specifically, the BreastCare(TM)/BreastAlert(TM) data was
compared to the mammographic and clinical findings, as well as to a limited
number of cytological findings. Of the 2,805 women screened, 99 were recommended
for a biopsy based on the suspicion of cancer in 86 of the 99 women (a
sensitivity index of 86.9%). Fifty-nine biopsies were subsequently performed and
13 of the 15 cancers diagnosed were positive for the
BreastCare(TM)/BreastAlert(TM) test (a sensitivity index of 86.7% against
biopsy). Of the 2,706 women who had no suspicion of cancer based on mammogram
and/or clinical examinations, 2,340 had negative BreastCare(TM)/BreastAlert(TM)
results (a specificity index of 86.5%).

         The BreastCare(TM)/BreastAlert(TM) is accurate, both in terms of
sensitivity and specificity. Notably, the very low false positive rate (true
negatives with a positive BreastCare(TM)/BreastAlert(TM) test) of 13.5% for the
initial screening trial of BreastCare(TM)/BreastAlert(TM) actually assumes two
additional circumstances: (1) that no mammographically undetectable cancers
occurred; and (2) that the rate of subsequent cancers within this so-called
false positive group is not statistically higher than that of the population of
women as a whole. A lower true false positive rate for the
BreastCare(TM)/BreastAlert(TM) can be assumed if abnormal thermal distribution
is a risk marker for future disease incidences, as had frequently been
suggested. In fact, several publications have documented a positive predictive
value for thermographically based tests to detect future cancers. The screening
study demonstrated reliability approaching that of mammography and significantly
greater than distantly related thermographic techniques.

         In conclusion, these studies have demonstrated the following with
respect to use of the BreastCare(TM)/BreastAlert(TM): (i) the
BreastCare(TM)/BreastAlert(TM) measures differences in temperature between
corresponding areas of the left and right breasts, (ii) the
BreastCare(TM)/BreastAlert(TM) is a safe device; no adverse reactions were
observed, (iii) minimal variances were found due to clinical influences of
hormones, (iv) a positive test result was found to be a strong indication that a
breast abnormality exists which warrants further examination by a physician with
respect to the possibility of breast cancer; and (v) it is advisable to confirm
a positive test result with a repeat test. The best results were achieved upon
arising in the morning, a time which is characterized by low body temperature in
normal tissue (a positive result was confirmed with a retest). Although a
negative test result was found to indicate a greatly reduced likelihood of
cancer, it does not mean that the woman is free of breast abnormalities,
including cancer. The BreastCare(TM)/BreastAlert(TM) may fail to detect the very
slow growing (cold) tumors which have a relatively low rate of metabolic
activity. In a study of 200 asymptomatic women, comparison of two successive
tests indicated that 12 of 178 negative scores (7%) shifted to a positive level
in the second test.

                                       -7-


<PAGE>

         In the screening study of 2,805 women at the Guttman Breast Diagnostic
Institute, the observed 13.5% "false positive" index of the
BreastCare(TM)/BreastAlert(TM) test on 366 women did not correlate with the
Guttman clinical staff conclusion on any breast abnormality indicating the
positive of cancer. The observed 13.5% "false positive" index does not mean that
the BreastCare(TM)/BreastAlert(TM) yielded a positive reading in 13.5% of the
women with no abnormalities of the breast. The clinical staff screens for
conditions that warrant investigation regarding the possibility of breast
cancer. Thus, breast abnormalities that produce elevation of temperature in one
breast may result in a positive BreastCare(TM)/BreastAlert(TM) score, but may be
classified as nonmalignant by the clinical staff. Furthermore, because the
thermal signal will often proceed the tentative confirmation by imaging or
clinical findings by trained physicians, a number of women classified as "false
positive" could have cancer and would be confirmed by biopsy at a later time.
Various follow-up studies using other thermology technologies have shown this to
be true and unofficial 1-year follow-ups by Sloan Kettering of the false
positive results were proven to be fast growing fatal cancers. The 2,805 women
in the Guttman study may not be considered representative of the general
population since many symptomatic women were referred to this center by other
concerned physicians (In a separate home study test of 200 asymptomatic women,
only 5.5% had false positive).

ADDITIONAL CLINICAL STUDIES

         Through the efforts of the Company, the European Institute of Oncology,
located in Milan, Italy, has performed clinical studies on the
BreastCare(TM)/BreastAlert(TM). The study, which involves 250 women, was under
the supervision of Dr. Virgilio Sacchini, a world-renowned surgical oncologist.
The final report is forthcoming.

         On June 11, 1999, at the International Mastology Meeting in Sao Paulo,
Brazil, Dr. Alfred Barros, surgical oncologist and president of the Brazilian
Society of Mastology, and Dr. Carlos Menke, gynecologist, professor of the
University of Rio Grande Do Sul and Mastologist of the Clinical Center of Porto
Alegre, presented the results of the Brazilian multi center clinical study of
the Company's BreastCare(TM)/BreastAlert(TM) device. The clinical study was
conducted by physician members of the Brazilian Society of Mastology using a
uniform protocol to examine the capabilities of the
BreastCare(TM)/BreastAlert(TM) with a screening method and diagnostic validation
of cases suspicious of cancer. The BreastCare(TM)/BreastAlert(TM) was compared
with corresponding mammographic (909 cases) and /or biopsy (151) results. The
results were analyzed and evaluated by Dr. Alvaro Ronco, the head of Cancer
Epidemiology at Pronacam (National Breast Cancer Program, Ministry of Public
Health of Uruguay) and a member of the New York Academy of Sciences and of the
Society for Epidemiological Research in Baltimore as follows: (i) If clinical
breast examination is normal or doubtful (absence of suspicion of cancer) and
the BreastCare(TM)/BreastAlert(TM) test is negative, the probability of absence
of cancer confirmed by biopsy is around 95%; (ii) if clinical breast examination
is suspicious of cancer and the BreastCare(TM)/BreastAlert(TM) is positive, the
probability of having cancer is about 98%; and (iii) the performance of the
BreastCare(TM)/BreastAlert(TM) is slightly better in women under 50 years old,
who are mainly pre menopausal.

                                       -8-


<PAGE>

         In August 1999, the BreastCare(TM)/BreastAlert(TM), was presented by
speakers via satellite at the European School of Oncology Congress in Rio de
Janeiro, Brazil. The Chairmen were Professors Umberto Veronesi (Italy) and Jose
A. Pinotti (Sao Paulo)

         Dr. Virgilio Sacchini, Surgical Oncologist of the European Institute of
Oncology Milan, Italy presented "Experience in the Clinical Application of the
BreastCare(TM)/BreastAlert(TM) in Medical Practices", via satellite, which
related to the European and Brazilian experience which discussed: 1) The need
for a low-cost, accurate test, which provides immediate results with physical
examination, and mammography; 2) A new technology called
BreastCare(TM)/BreastAlert(TM), which can supply the need; 3) That there is
evidence of recent clinical studies in South America and Europe that suggest the
evaluation of heat on the surface of the breast, that
BreastCare(TM)/BreastAlert(TM) can be an auxiliary modality in diagnosing breast
cancer; 4) With the new modality, objective results are produced immediately;
and, 5) That the technology is based on cellular epithelial increases in
temperature when abnormal metabolic process happens, which is proliferation of
atypical epithelial.

         Dr. Carlos Menke, Gynecologist, professor of University of Rio Grande
Do Sul and Mastologist of the Clinical Hospital of Porto Alegre also spoke on
the Brazilian experience with the clinical studies. Management is very confident
with the results of the studies i.e., when clinical examination is normal and
BreastCare(TM)/ BreastAlert(TM) is negative, the probability of the absence of
breast cancer is 95%, and if clinical examination is suspicious and
BreastCare(TM)/BreastAlert(TM) is positive, the probability of the presence of
cancer is 98%.

         In September 1999, the BreastCare(TM)/BreastAlert(TM) was presented at
its exhibition and several symposiums at the III North East Mastology Congress
in Salvador-Bahia-Brazil. Dr. Ezio Novais Dias, president of the Congress, is a
renowned gynecologist and mastologist at the San Rafael Hospital in
Salvador-Bahia. Dr. Dias is vice president of the International Society of
Mastology, President of the Brazilian Mastology School and a member of the
Company's Brazilian Medical Board and is the new president of the Brazilian
Mastology Society.

         The Company's BreastCare(TM)/BreastAlert(TM) was given extensive
exposure at the Congress by some of the most renowned mastologists in South
America, as well as, in the world. Dr. Jose Antonio Ribeiro Filho, Gynecologist
and Mastologist, and President of the Brazilian Academy of Medicine coordinated
a symposium on "BreastCare(TM)/ BreastAlert(TM); A New Method of Diagnosis of
Breast Cancer."

         Also Dr. Alvaro Ronco, head of Cancer Epidemiology at Pronocam
(National Breast Cancer Program, Ministry of Public Health of Uruguay), member
of the New York Academy of Sciences (New York) and of the Society for
Epidemiological Research (Baltimore) presented the "Epidemiology Aspects with
BreastCare(TM)/BreastAlert(TM)."

                                       -9-


<PAGE>

         Dr. Alfredo Barros, Gynecologist and Mastologist at University Medical
Hospital in Sao Paulo and president of the Brazilian Mastology Society gave the
results of the Brazilian Mastology Society's "BreastCare(TM)/BreastAlert(TM)
clinical studies." Dr. Carlos Henrique Menke, gynecologist, professor at
University of Rio Grande Do Sul and Mastologist at the Clinical Center of Porto
Alegre, presented "Clinical Applications of BreastCare(TM)/BreastAlert(TM)."

         The Company anticipates that such studies, as well as future studies,
will play a vital role for future screening projects in hospital and clinical
settings.

REGIONAL REPORT: SOUTH AMERICA

         The Company has focused a substantial portion of its resources in South
America. The Company's efforts, though not well funded, have provided an
important proving ground for the Company's operating model, which consists of
(i) regionalized production and assembly, supported by local marketing partners;
(ii) the support of opinion leaders, medical societies and mastologists; (iii)
public and medical awareness of the advantages of the
BreastCare(TM)/BreastAlert(TM) screening; (iv) organized forums and training for
doctors by region; and (v) government screening programs. The Company intends to
deploy this model in other regions throughout the world. A summary of the
Company's efforts in South America are as follows:

         In January 1998, the Company organized a wholly owned subsidiary,
Scantek Medical S.A., Inc., an Uruguayan company, to distribute the
BreastCare(TM)/BreastAlert(TM)in South America.

         The Company entered into an exclusive license agreement (the "License
Agreement"), dated September 22, 1997 and amended February 18, 1998, with
Sandell Corp. S.A. ("Sandell"), an Uruguayan corporation. As of June 30, 1999,
upon mutual consent of both parties, the Company terminated the License
Agreement with Sandell. In connection with the termination of the License
Agreement, the Company wrote off the balance of the $400,000 license fee due the
Company and approximately $103,000, which represented its investment in Sandell.

         During September 1998, the Company commenced the sale of its
BreastCare(TM)/BreastAlert(TM) in Brazil, Uruguay and Paraguay through its South
American licensee. The Company is establishing a production facility in Brazil.
This will eliminate the high value-added tax and hopefully will be able to
facilitate sales. The Company terminated its license agreement with its former
licensee in South America and key personnel for the former licensee have joined
the Company and continue to play a major role in the Company's South American
marketing and sales. The Company's Brazilian subsidiary, Scantek Medical do
Brasil Ltda, plans to manufacture, market and distribute the
BreastCare(TM)/BreastAlert(TM) in Brazil and export to other South American
countries.

                                      -10-


<PAGE>



         Through its Brazilian subsidiary, the Company signed an agreement with
the State of Pernambuco in December 1999. The State of Pernambuco has the second
largest concentration of hospitals in Brazil offering quality care and is also
the most desirable location for production, shipping, financing and tax
incentive. The Company is establishing a 2,550 square meter manufacturing
facility in Recife, Pernambuco at the new port of Suape. The Company has broken
ground, and anticipates construction to be completed by the first half of
calendar year 2002. The Company will ship the production equipment for arrival
by the time construction is completed.

         The State of Pernambuco and the federal government has offered various
incentives including acreage, at a reduced price, to build the facility, a 75%
reduction in income taxes through 2013, free shipping outside the state, and in
connection with the federal programs offered in Northeast Brazil, financing
programs to help fund the operations and capital improvements.

         On May 11, 2000 the Company's Brazilian subsidiary received final
approval to participate in the Sudene Program, a federal program organized to
develop the Northeast of Brazil. Scantek Medical do Brasil, Ltda was approved to
receive funding for approximately $4 million in the Sudene federal program. An
extension of time has been granted by Sudene for the Company to fulfill certain
milestones which must be completed before December 31, 2001.

         On June 1, 2000 Scantek Medical do Brasil Ltda signed letters of
commitment with the Infantile Maternal Institute of Pernambuco ("IMIP") and
Unimed Recife ("Unimed").

         IMIP will use the BreastCare(TM)/BreastAlert(TM) in a pilot-screening
program for the detection of breast cancer. Scantek Medical do Brasil Ltda is
supporting the pilot program by donating BreastCare(TM)/ BreastAlert(TM) units.
The IMIP will reaffirm its social commitment by developing and incorporating the
BreastCare(TM)/BreastAlert(TM) usage in its pilot screening program.

         Unimed, a Brazilian healthcare provider, will incorporate the
BreastCare(TM)/BreastAlert(TM) into the program of approved examination
procedures for the detection of breast cancer. Unimed Recife is part of Unimed,
a national organization that is a major health care provider for over 11 million
participants in Brazil. Scantek Medical do Brasil Ltda is supporting this
pioneering institution in the private sector of the medical community in Recife
with the first sale to Unimed for 3,000 BreastCare(TM)/BreastAlert(TM) units.

         Both IMIP and Unimed programs will be molded after the methodology used
at the Gynecology and Obstetrics of the University of Medicine of Sao Paulo
University.

         On May 4, 2001 the Company announced that it received an official
invitation from the City of Nova Iguacu of the State of Rio de Janeiro in Brazil
to work out an agreement for BreastCare's participation in the Women's Health
Program,

                                      -11-


<PAGE>

         The proposed agreement will call for an initial purchase order for
approximately one million dollars ($1,000,000) of BreastCare(TM) units. Nova
Iguacu is the seventh (7th) largest municipality in Brazil. The Agreement will
be finalized after a 30-day Bidding Process, (which gives others the opportunity
to bid the BreastCare(TM) for government use; however, the Company has the only
BreastCare(TM) product for sale in Brazil). After the bidding period, an
official classification number will be assigned to BreastCare(TM) for government
use in Brazil.

         On May 30, 2001, the Company received notification from the Mayor and
the Health Secretary of Nova Iguacu that the BreastCare(TM)order will be in
excess of $1.5 million.

         In early July 2001 a classification number was assigned to
BreastCare(TM). Thereafter, based on the State of Rio de Janeiro's
classification number assigned to BreastCare(TM), any government agencies,
municipalities and states in Brazil will not have to go through any preliminary
process before ordering the BreastCare(TM).

         At the end of July 2001, the Company's Brazilian Managers and medical
representatives met with the Health Municipal Partnership for Baixada Fluminense
(CISBAF) to discuss the expansion of the Women's Health Project for the Baixada
Fluminense territory for an approximate $3 million order. Baixada Fluminense is
a region in the northern section of the State of Rio de Janeiro composed of 13
municipalities with an aggregate population of 4 million people and 71 health
centers. CISBAF is the representative for all the municipalities of the Health
Ministry in Brazil. CISBAF is the most important health organization in Baixada
Fluminense.

         In August/September 2001, Fiocruz, a government agency in the Ministry
of Health assisted in the BreastCare(TM) educational program for the Women's
Health Program for the City of Nova Iguacu.

         The final agreement and receipt of the purchase order are anticipated
before the end of calendar year 2001.

         The Company plans to ship the BreastCare(TM)/BreastAlert(TM) from the
United States until the production facility in Brazil is operational.

FEDERAL PROGRAM

          In October, 1999, the Company donated 2,100 BreastCare(TM)/
BreastAlert(TM) units to Fiocruz, a federal agency in Recife, Pernambuco-Brazil
to be used in a pilot screening project for 2,000 women over 40 years of age.
Dr. Alexandre Bezerra de Carvalho, Director of CPqam/Fiocruz, of the Ministry of
Health organized the government-sponsored project specifically for validation of
BreastCare(TM)/BreastAlert(TM)'s usefulness in a major breast cancer-screening
program being organized in Brazil.

                                      -12-


<PAGE>

         This pilot program is intended to prove the viability of the
BreastCare(TM)/BreastAlert(TM) as a low-cost, accurate test to increase the
indexes of early detection of breast cancer in Brazil. With the assistance of
SUS (Public System of Health), the Primary Assistance Program uses Sanitary
Agents (skilled health personnel) to screen indigent women for breast cancer
with the BreastCare(TM)/BreastAlert(TM) test. The Company is confident of the
acceptance of the use of BreastCare(TM)/BreastAlert(TM) by Agents of Health
(ACS), the Ministry of Health and Secretaries of Health.
BreastCare(TM)/BreastAlert(TM) has proven its value in the Fiocruz pilot cancer
project. The Company is anticipating to receive confirmation from the government
of Pernambuco to confirm BreastCare(TM)/BreastAlert(TM) usage in its screening
program.

         As is known, in developed countries, the strategy of early detection of
breast cancer is based on the wide use of mammography for women over 40 years of
age. In developing countries the lack of mammography equipment, trained human
resources and financial resources are major constraints to use this strategy.
According to Dr. Bezerra de Carvalho, Brazil would need 4,000 mammography
machines to assist the population of approximately 120 million people that uses
the Public System of Health of which about 14.5 million women who are over 40
years of age. This gives a good picture of the dimension of the problem in
Brazil.

SAO PAULO

         In December 1999, BreastCare(TM)/BreastAlert(TM) has been integrated
into a very important Brazilian Breast Cancer Prevention Collaborative Project
in Sao Paulo Brazil. The Collaborative Project is being coordinated by Professor
Jose Aristodemo Pinotti, and is being implemented by the Gynecology Clinic of
the University Medical School of Sao Paulo, with the support of the Brazilian
Mastology Society, Anna Bove Foundation and "Fundacao Pro Mulher" at the
Clinical Hospital of the University at Sao Paulo.

         The Company's BreastCare(TM)/BreastAlert(TM) is being used in adjunct
with clinical breast examination and the Gail Risk Factor (criteria used to
measure ones risk for breast cancer) in a pilot breast cancer screening program
at the Gynecology Clinic of the University Medical School of Sao Paulo. This
pilot breast cancer-screening center is the first collaborative project to
establish Breast Cancer Screening Centers and the integration of BreastCare(TM)/
BreastAlert(TM) in the detection process.

         The cases detected at the Breast Cancer Screening Centers will be
properly guided to diagnosis and treatment. This process of referral will be
facilitated by the fact that "PRO-MULHER" (a private, non-profit institution) is
linked to Gynecologic services under Dr. Pinotti at Sao Paulo University, which
have substantially all the facilities for diagnosis and treatment of breast
cancer.

         Brazil and its various states are currently back to where it started in
terms of Breast Cancer Control Programs, but are undergoing a transition to
provide better screening for women.

                                      -13-



<PAGE>

REGIONAL REPORT: CHILE AND SINGAPORE

                  On April 15, 2000, D-Lanz Development Group, Inc. ("D-Lanz")
and the Company entered into an agreement to amend its previous license
agreement dated April 29, 1997 and amended June 11, 1999. D-Lanz had a change in
control and the License will be assigned to a new corporation, Global Agri-Med
Technologies, Inc. ("Global"). The Company agreed to assign and transfer the
license to Global, which includes the exclusive license in Chile and Singapore.
In addition, the Company has agreed to give Global non-exclusive license
extensions to Africa, Korea, and South Asia. Global must receive final clearance
from the Company before any participation or distribution can proceed in any
city, state, territory or country in the non-exclusive extensions as stated
above. Both parties have agreed to update certain terms in the previous
agreement that will be beneficial to both parties.

REGIONAL REPORT: EUROPE

         Management of the Company has currently suspended the expansion into
Europe due to limited availability of human and financial resources. However,
strategic planning with potential European partners have been examining the
model it established in South America and are designing a plan for the target
markets.

         On July 14, 1999, the Company granted an exclusive license to NuGard
HealthCare Ltd. ("NuGard"), an Irish Company, to market the Company's
BreastCare(TM)/BreastAlert(TM) in Ireland and the United Kingdom. Pursuant to
this licensing agreement, NuGard will pay a non-refundable licensing fee of
$350,000 in various stages, of which $59,000 was received as of June 30, 2000,
and the Company received common shares equivalent to fifteen (15%) percent of
NuGard's total outstanding common shares. The purchase price will range from $10
to $15 per unit - FOB US. The license agreement requires minimum purchases of
5,000 units a month and payments of licensing fees which have been postponed
until the license agreement can be renegotiated. At this time, the Company has
not renegotiated the license agreement.

         Through the efforts of the Company, the European Institute of Oncology,
located in Milan, Italy, has performed clinical studies on the
BreastCare(TM)/BreastAlert(TM). The study, which involved 250 women, under the
supervision of Dr. Virgilio Sacchini, a world-renowned surgical oncologist. The
final report is forthcoming.

         In order to sell medical devices to the new European Community, a
Certification Europe ("CE") is required, which is based primarily upon
documentation of a compliant Quality Control System. In August 1999, the Company
received a CE for the BreastCare(TM)/BreastAlert(TM).

REGIONAL REPORT: UNITED STATES

         The Company 's goals in North America for the immediate future are to
review and reorganize marketing and sales, utilizing the Company's experience
and approach it has used in South America. However, in order to accomplish this,
additional funding will be needed to implement a new marketing and sales
strategy in order to re-launch the BreastCare(TM)/BreastAlert(TM), which it
anticipates will begin 10 to 12 months after major financing is completed.

                                      -14-


<PAGE>

         Pursuant to a License Agreement, dated March 17, 1995, as amended on
July 31, 1995, October 20, 1995 and May 31, 1996, together with three extensions
on February 26, 1996, March 17, 1996 and April 29,1996, the Company granted
HumaScan Inc. ("HumaScan") an exclusive license to manufacture and sell the
BreastCare(TM)/BreastAlert(TM) in the United States and Canada. On March 15,
1999, pursuant to a Settlement Agreement, dated as of the 11th day of March
1999, the Company regained the rights to market and sell its
BreastCare(TM)/BreastAlert(TM) in the U.S. and Canada. Pursuant to the
Settlement Agreement, all licensing agreements between the Company and HumaScan,
which gave HumaScan the right to manufacture, market and sell the
BreastCare(TM)/BreastAlert(TM), were terminated. Pursuant to the original and
amended licensing agreements, HumaScan was indebted to the Company for failure
to pay license fees, royalties and other sums of money. In exchange for the
cancellation of $575,000 of indebtedness, due to it by HumaScan and for the
payment by the Company to HumaScan of an additional $340,000, HumaScan agreed to
assign certain special manufacturing equipment, furniture, raw materials, tools,
materials, laboratory equipment and inventory of HumaScan for the manufacture of
the BreastCare(TM)/BreastAlert(TM). In addition, the Company received 150,000
shares of HumaScan's common stock as part of the Settlement Agreement.

         The Company has two complete sensor manufacturing and assembly lines
for the production of the BreastCare(TM)/BreastAlert(TM) product. The value of
these two manufacturing lines is estimated by the Company to be approximately
$5.5 million. One complete manufacturing line will be shipped to Brazil.

         On July 11, 2000 the Company was issued a new patent for its
Differential Temperature Sensor Device For Use in the Detection of Breast
Cancer. The patent No. 6,086,247 will expire on February 5, 2018, twenty (20)
years from the date of filing. The patent was filed on the invention for
improvements over the prior art.

         On October 24, 2000, the U.S. Letters Patent No. 6,135,968 was issued
for its Differential Temperature Measuring Device and Method for prostate
examination. The device is trademarked under the name ProstAlert. The patent
will remain in effect for 20 years after initial filing, expiring September 10,
2017. Preliminary testing was done in 1998 with very promising results. The
Company will be unable to expand its product line unless additional funding is
completed. Clinical trials need to be performed to determine the efficacy of the
test with results presented to the United States Food and Drug Administration
("FDA") for marketing clearance.

REGULATIONS

         The Company's development and manufacture of medical devices is
controlled by the Food, Drug and Cosmetic Act (the "Act"). The Food and Drug
Administration ("FDA"), which administers the Act, has promulgated a number of
regulations which dictate the method by which new products are allowed to enter
the United States market (Title 21, CFR Section 807, Premarket Notification),
and the documentation and control of manufacturing processes (Title 21, CFR
Section 820, Good manufacturing Practices for the Manufacturing, Storage and
Installation of Medical Devices).

                                      -15-


<PAGE>



         Subject to the potential changes in regulatory status, the Company
believes that it is in full compliance with the requirements of Part 807
Premarket Notification, as promulgated under Section 510(k) of the Act, and has
received permission to market the BreastCare(TM)/BreastAlert(TM). On January 24,
1984, the FDA determined that the BreastCare(TM)/BreastAlert(TM) is
substantially equivalent to a device marketed in interstate commerce and
accordingly may be freely marketed without further FDA authorization. Also
included under Part 807 is a requirement for product registration and listing,
which the Company believes has been satisfied.

         Management believes that the proprietary nature of the product is
protected under patent rights issued in the United States and certain foreign
countries.

FOREIGN REGULATION

         Because the Company proposes to distribute its product in foreign
countries, the Company will be required to comply with the regulations of those
countries where its product is distributed by the Company through licensees. No
assurances can be given that the Company and/or its licensees will be able to
comply with the regulatory requirements of the foreign markets in which the
BreastCare(TM)/BreastAlert(TM) will be sold.

         Most countries require product registration before you can sell. In
South America, the Company's subsidiary, Scantek Medical S.A., Inc., and its
marketing partners have applied for and have received product registration in
Brazil, Uruguay, Argentina and Peru. Paraguay and Bolivia have no registration
requirements to sell. In addition, the Company has applied for and received a
Certification Europe (CE), which is required, as of June, 1998, of all products
marketed in the European Union.

PATENTS

         The proprietary nature of the BreastCare(TM)/BreastAlert(TM) is
protected under patent rights issued in the U.S. and foreign countries. However,
in general, the level of protection afforded by a patent is directly
proportional to the ability of the patent owner to protect and enforce his
rights under the patent. Since the financial resources of the Company are
currently limited, and patent litigation can be both expensive and time
consuming, there is a risk that enforcing the patents for the
BreastCare(TM)/BreastAlert(TM) will have a material adverse financial effect on
the Company or the Company will not have the financial resources necessary to
enforce its patents. Once the Company's existing patents expire, other companies
may be able to create substantially similar products. If this were to happen,
the Company would not be able to avail itself of the protection afforded by the
patent laws.

                                      -16-


<PAGE>

         U.S. patents for the BreastCare(TM)/BreastAlert(TM)include:

- - Patent No. RE 32,000, granted and issued on October 8, 1985; this patent
    is a reissue of Patent No, 4, 190,058 for a "Device For Use in Early
    Detection of Breast Cancer", which was granted and issued on February 26,
    1980 and has since expired.

- - Patent No. 4,651,749, granted on March 24, 1987, entitled "Cancer
    Detection Patch for Early Detection of Breast Cancer; Temperature,
    Indicators, Flexibility, Thermoconductivity, Webs"; this patent is a partial
    continuation of Patent No. 4,190,058 above

- - Patent No. RE 4,624,264 granted November 24, 1986; this patent has been
    reinstated and expires November 25, 2003.

- - Patent No. 6,086,247 granted on July 11, 2000, for Differential
    Temperature Sensor Device for Use in the Detection of Breast Cancer and
    Breast Disease; this patent expires February 5, 2018.

- - Patent No. 6,135,968 granted on October 24, 2000, for Differential
    Temperature Measuring Device and Method for prostate examination; this
    patent expires September 10, 2017.

         In addition, in accordance with the Settlement Agreement between the
Company and HumaScan, HumaScan has assigned all of its rights, title and
interests in certain U.S. patents and U.S. and foreign trademarks, including the
following patents:

- - File No. 08/854,144, filed May 14, 1997, entitled "Breast and Axilla Cancer
    Screening Device and Method"

SUPPLIES AND RAW MATERIALS

         Supplies and raw materials for the manufacture of the
BreastCare(TM)/BreastAlert(TM) are available from various sources. Historically,
other than on a few rare occasions, the supplies and raw materials for producing
the BreastCare(TM)/BreastAlert(TM) have been readily available and the cost of
such materials has not experienced any material fluctuation. The Company has
determined the inventory planning and control, as well as other production
management systems, it intends to use. In addition, the Company has acquired
supplies and raw materials in connection with its settlement with HumaScan.

                                      -17-


<PAGE>

MARKETING AND DISTRIBUTION

         The Company has created an international marketing plan for licensing
and distribution to capture a significant portion of the $6 billion annual
global breast cancer market with a device that alerts the physician and patient
to the possibility of either proliferating thermally active breast cancer cells
or certain types of thermally active breast disease.

         Management believes that in emerging and developing countries, the
BreastCare(TM)/BreastAlert(TM) has the potential to become an important part of
the overall screening protocols used to detect breast disease. To market the
BreastCare(TM)/BreastAlert(TM) abroad, the Company intends to utilize the
following basic strategies:

         o Foreign production: The Company intends to set up its own Regional
Production Centers overseas. All sensor manufacturing will remain in the United
States under the Company's control, unless manufacturing is established at the
Company's subsidiary.

         o Foreign Licensing: The Company intends to enter into exclusive
agreements with various foreign entities, whereby the Company will either permit
such entity to distribute the BreastCare(TM)/BreastAlert(TM) or give such entity
the right to utilize the Company's trademark and patent in a specified
geographical area.

         o Joint Ventures: The Company intends to enter into agreements whereby
the Company will grant one or more partners (usually partner of the host
country) the right to share in the risks, cost and management of a foreign
operation. The Company, however, will retain control of the manufacturing. The
joint venture, if established, is anticipated to be with a major medical supply
manufacturer or pharmaceutical company which could benefit from the sales and
distribution of the BreastCare(TM)/BreastAlert(TM).

         o  Government Programs: Municipalities, State and Federal.

         o BreastCare(TM)/BreastAlert(TM) Centers: The Company anticipates that
it will establish breast care centers in cooperation with governments and
private businesses in order to utilize the BreastCare(TM)/BreastAlert(TM) with
an established protocol.

         The Company intends to manufacture the BreastCare(TM)/BreastAlert(TM)
for sale to partners pursuant to distribution agreements or intends to control
the manufacturing if a joint venture is established. With respect to pursuing
the International market for distribution of the BreastCare(TM)/BreastAlert(TM),
the Company intends to enter into new markets by establishing Regional
Production centers to manufacture and distribute within each target market.
Management believes that partnerships with companies which either have working
relationships with distributors throughout the world or have a distribution
network established in the medical communities of the target markets, will be an
excellent marketing vehicle for the Company. Each agreement will be exclusive
and tailored to maximize the penetration of each market. Initially the Company
intends to establish regional production centers and distribution networks in
the U.S., Brazil, Hungary, Ireland, United Kingdom and China.

                                      -18-


<PAGE>

         The Company, as it has done in the past, intends to conduct a premarket
investigation of the market before marketing is commenced and prior to
finalizing any agreements. A market profile for each market will be completed to
analyze the target markets. The profile will establish the strongest
distributors and the buying decision-makers (i.e., physicians, hospitals,
clinics, government agencies and over the counter customers). Management
believes that a standard market profile will permit comparisons between markets
at a later date and provide profiles of the types of markets that provide the
best results. In addition, the Company will expand communications with the
Ministries of Health, Department of Health and Clinical Services to investigate
the statutory controls regulating the sale of medical devices.

         The Company has focused on developing partnerships with various
international companies who have relationships with distributors throughout the
world and who have connections in the medical communities of the target markets.
Recently, the Company has been negotiating with distributors who have direct
contact with the distribution of medical product to government agencies, i.e.,
Brazil and will be the distributors for BreastCare(TM).

         Strategically, the Company intends to centralize manufacturing and
decentralize marketing in each geographical region. Specific markets within that
region shall be covered by individual agreements which provide for the promotion
and distribution of the BreastCare(TM)/BreastAlert(TM). Accordingly, the Company
intends to utilize centralization for control and decentralization for market
penetration. Management believes that the Company's expansion of several
regional centers for the manufacturing locations will give the Company good
access to shipping, tax considerations and low manufacturing cost, and to police
the crossover among distributors' areas where distribution is segmented.

SOUTH AMERICA MARKETING

         The Company intends to open a production center in Brazil. In South
America, the development of distributorships with selling partners has been and
are further being developed to approach private hospitals, clinics, physicians
and governments. The Company is introducing the BreastCare(TM) program, which
has been developed at the Sao Paulo University Hospital, for use in
municipality, state, and federal screening programs.

         A carefully structured program of publications and professional
meetings between such revered specialists and the rest of the physician
population has been underway throughout 1998, 1999 and 2000 and it is
anticipated that such will be expanded in ensuing years. This marketing approach
will be directed by the International Medical Advisory Board of the Company,
consisting of some of the top specialists in the world in the diagnosis and
treatment of breast disease. State and Federal governments are also helping to
create screening programs in accordance with the above activities.

                                      -19-


<PAGE>

EUROPE MARKETING

         The Company has been introducing the BreastCare(TM)/BreastAlert(TM) in
Europe at educational forums which were covered by the press and television.
Also, the Company will be exhibiting the BreastCare(TM)/BreastAlert(TM) at
medical congresses to introduce the device to the physician market.

         The Company intends to utilize government contracts to mass market the
BreastCare(TM)/BreastAlert(TM). Countries, such as Ireland and Spain lend
themselves to this approach, as well as do larger independent Eastern European
countries, including but not limited to, Romania, Bulgaria, Ukraine, Russia,
Greece and Turkey.

UNITED STATES AND CANADA MARKETING

         The Company's first introduction of the BreastCare(TM)/BreastAlert(TM)
product was by its former United States and Canadian licensee, HumaScan which
launched the product in December 1997. Before relaunching the
BreastCare(TM)/BreastAlert(TM) the Company plans to take a carefully constructed
approach to the marketplace in the United Sates and Canada. The Company intends
to spend between nine to twelve months reviewing and analyzing the best
marketing and sales approaches focused toward the physician user and managed
care insurers. The Company intends to mirror the approach used in South America
with respect to advisement and leadership from renowned breast disease
specialists.

FUTURE MARKETS

         The Company intends to market and sell the BreastCare(TM)/
BreastAlert(TM) worldwide. The Company intends to concentrate its efforts
through 2002 in South America, Europe and the United States. Simultaneously, the
Company intends to investigate and develop the marketplace in Asia, the Middle
East and the African continent.

COMPETITION

         The Company believes that the BreastCare(TM)/BreastAlert(TM), which
provides digital quantitative recordings of underlying tissue temperature,
represents a significant improvement over thermographic technology products
because such other products are subject to the inherent problems of subjective
evaluation of heat patterns. Based upon these differences, the Company believes
that the prospects for the BreastCare(TM)/BreastAlert(TM) as a supplement to
currently existing screening tests are very good.

         The Company believes it is in a unique position because there are no
known competing low cost screening devices on the market which would compete
directly with the BreastCare(TM)/BreastAlert(TM) for use by primary care
physicians. As a result, the Company believes that the
BreastCare(TM)/BreastAlert(TM) will augment other existing forms of screening
and technology.

                                      -20-


<PAGE>

         Some of the Company's future competitors may be large, well-financed,
and established companies which have greater resources for research and
development, manufacturing, and marketing than the Company has and, therefore,
may be better able than the Company to compete for a share of the market, even
in areas in which the Company may have superior technology. There can be no
assurance that the Company can continue to produce a product which is
commercially acceptable, or, that if continued to be produced, such a product
will be competitive with existing or future products. It is also possible that
there will be technological changes or developments by competitors which will
render the Company's products noncompetitive or obsolete.

FUTURE PRODUCTS

         The Company believes that the BreastCare(TM)/BreastAlert(TM) may have
applicability as a screening device for other abnormalities, including measuring
ovulation cycles for infertile couples, measuring changes in the cardiovascular
system to screen for potential stroke victims, and detecting abnormalities in
the kidneys, prostate and testicles. Although some testing was performed during
the BreastCare(TM)/BreastAlert(TM) development stage, these initial tests were
preliminary only, and in order to obtain FDA approval, which would be required
in order to market a future product. The Company intends to further explore its
initial findings and perhaps, introduce products in furtherance of these
findings.

         On October 24, 2000, patent #6,135,968 was granted for its Differential
Temperature Measuring Device and Method for prostate examination. This device is
trade marked under the name, ProstAlert(TM).

EMPLOYEES

         The Company employs a total of 9 employees. Three of these employees
are employed in the U.S. as follows: (i) two full time employees: President and
Chief Executive Officer and Vice President/ Corporate Secretary, and (ii) one
part time employee: Vice President of Corporate Development of the Company.
Additional personnel and consultants are utilized, as required, on a contractual
basis. Additionally, manufacturing personnel have been targeted to be utilized
when the purchase order from Brazil has been received.

         The remaining six (6) employees are employed in South America by the
Company's two South American subsidiaries, as follows: a General Manager, a
Medical Director, four (2) other Senior employees, and four (2) support staff
employees.

          None of the Company's employees are covered by a collective bargaining
agreement with a union. The Company considers its relationship with its
employees to be good.

                                      -21-


<PAGE>


RISKS AND UNCERTAINTIES

         The Company's business is subject to a number of risks and
uncertainties, including, but not limited to; (a) the risk that it may be unable
to raise enough capital to fund the Company's operations, (b) the risk that the
BreastCare(TM)/BreastAlert(TM) will not be accepted commercially, (c) the
Company's reliance on certain customers, and (d) the highly competitive nature
of the Company's industry and the impact that competitors' new products and
pricing may have upon the Company. Such factors, as well as shortfalls in the
Company's results of operations as compared with analyst's expectations, capital
market conditions and general economic conditions, may also cause substantial
volatility in the market price of the Company's Common Stock.

PUBLIC INFORMATION

         The Company electronically files with the Securities and Exchange
Commission (the "SEC") all its reports, including, but not limited to, its
annual and quarterly reports. The SEC maintains an Internet site which contains
all such reports and other information with respect to the Company on its
website, http://www.sec.gov. Additional information on the Company may be
obtained from the Company's web site, http://www.scantekmedical.com.

ITEM 2.  PROPERTIES

         The Company occupies approximately 7,000 square feet of warehouse and
office space, all of which is leased through leases expiring in June 2003. See
Note 13 of Notes to Consolidated Financial Statements for additional
information.

         On November 19, 1999 Scantek Medical do Brasil Ltda signed an agreement
with the State of Pernambuco-Brazil to establish a production facility at the
seaport of Suape, which is approximately 45 kilometers from Reife,
Pernambuco-Brazil. The Company's subsidiary acquired approximately 40,000 square
meters of land and has broken ground to build a 2,550 square meter production
facility. The production facility will be completed in the first half of
calendar year 2002.

ITEM 3.  LEGAL PROCEEDINGS

         The Company is not a party to any litigation or pending legal
proceedings.

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

         No matters were submitted to a vote of the Company's shareholders
during the fourth quarter of the year ending June 30, 2001.

                                      -22-


<PAGE>

                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         (a) Market Information

         The Company's common stock, par value $.001 per share (the "Common
Stock"), is traded in the over-the-counter market. The Common Stock is available
for quotation on the NASD Non-NASDAQ Electronic Bulletin Board. The following
table sets forth the periods indicated high and low bid quotation (as reported
by the OTC Bulletin Board) for the Common Stock:

                                                       HIGH         LOW
                                                       ----         ---
Fiscal Year ended June 30, 2000
         First Quarter                                 18/32        3/16
         Second Quarter                                 3/16        1/16
         Third Quarter                                 18/32        1/16
         Fourth Quarter                                  3/4         1/2

Fiscal Year ended June 30, 2001
         First Quarter                                   3/4         1/8
         Second Quarter                                 6/16        3/32
         Third Quarter                                   1/8        1/16
         Fourth Quarter                                 9/32        1/16

         The Common Stock is reported under the Symbol SKML. As of the date of
this report, the Company's shares of Common Stock were "non-designated"
securities as defined under the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.

         These quotations reflect an inter-dealer price, without retail mark-up,
markdown or commission, and may not necessarily reflect actual transactions.

         (b) Holders

         As of September 15, 2001, there were 203 shareholders of record of the
Company's Common Stock.

         (c) Dividends

         The Company has not paid any cash dividends and has no current plans to
pay any such dividends. There are no restrictions on the Company's ability to
pay dividends.

                                      -23-


<PAGE>

         (d) Recent Sales of Unregistered Securities

         On November 16, 1998, the Company sold 150,000 shares of Common Stock
each to Kenneth Courey, a former Director of the Company and Louis Gottlieb,
Vice President of Corporate Development of the Company, at a purchase price of
$.3333 per share, pursuant to Section 4(2) of the Securities Act of 1933, as
amended, based upon the nature of the sale and the purchasers.

         On December 1, 1998, the Company issued 75,000 shares of Common Stock
of the Company pursuant to financing, to three individuals at an issue price of
$.1875 per share.

         On July 1, 1999 the Company issued Zsigmond L. Sagi, the Company's
President and Chief Executive Officer, 79,250 shares of Common Stock of the
Company pursuant to financing, at an issue price of $.416 per share.

         On July 1, 1999 the Company issued Ms. Patricia Furness, the Company's
Vice-President/Corporate Secretary, 5,703 shares of Common Stock of the Company
pursuant to financing, at an issue price of $.5625 per share.

         On July 1, 1999 the Company issued Mr. Louis Gottlieb, the Company's
Vice-President of Corporate Development, 25,000 shares of Common Stock of the
Company pursuant to financing, at an issue price of $.375 per share.

         On July 1, 1999 the Company issued 52,500 shares of Common Stock of the
Company pursuant to financing, to two individuals including Paul Nelson (a
Director of the Company), at an issue price of $.40625 per share.

         On July 7, 1999 the Company sold 45,767 shares of Common Stock to
Maurice Siegel, Vice-President and Director of the Company, at a purchase price
of $.2185 per share, pursuant to Section 4(2) of the Securities Act of 1933,
based upon the nature of the sale and the purchaser.

         On July 7, 1999, the Company issued 50,000 shares of Common Stock of
the Company to Kenneth Courey, a former Director of the Company, pursuant to a
consulting contract, at an issue price of $.1875 per share.

         On December 30, 1999 the Company issued 7,500 shares of Common Stock of
the Company pursuant to financing, to two individuals including Paul Nelson, a
Director of the Company, at an issue price of $.07 per share.

         On March 8, 2000 the Company issued 2,500 shares of Common Stock of the
Company to Paul Nelson, pursuant to financing, at an issue price of $.53125 per
share.

         On March 8, 2000 the Company issued 23,750 shares of Common Stock of
the Company to Louis Gottlieb, pursuant to financing, at an issue price of
$.1875 and $.25 per share.

                                      -24-


<PAGE>

         On April 14, 2000 the Company issued 50,000 shares of Common Stock of
the Company to Louis Gottlieb pursuant to financing, at an issue price of $.25
per share.

         On April 14, 2000 the Company issued 35,200 shares of Common Stock of
the Company to Maurice Siegel, a Vice-President and Director of the Company, for
consulting services, at an issue price of $.25 per share.

         On April 14, 2000 the Company issued 125,000 shares of Common Stock of
the Company to Stock Siren LLC, pursuant to advertising and public relations, at
an issue price of $.1875 per share.

         On July 6, 2000 the Company issued 2,500 shares of Common Stock of the
Company to Paul Nelson, pursuant to financing, at an issue price of $.51 per
share.

         On August 1, 2000 the Company issued 67,900 shares of Common Stock of
the Company to Zsigmond L. Sagi, the Company's President and Chief Executive
Officer pursuant to financing, at an issue price of $.51 per share.

         On August 1, 2000 the Company issued Ms. Patricia Furness, the
Company's Vice-President and Corporate Secretary, 8,750 shares of Common Stock
of the Company pursuant to financing, at an issue price of $.51 per share.

         On October 20, 2000, the Company issued 100,000 shares of Common Stock
of the Company to Carriage House pursuant to financing at an issue price of $.20
per share.

         On October 24, 2000, the Company issued 19,000 shares of Common Stock
of the Company to (2) two individuals for loan extensions at an issue price of
$.20 per share.

         On December 29, 2000, the Company issued 100,000 shares of Common Stock
of the Company to a former director at an issue price of $.10 per share,
pursuant to converting a $10,000 loan.

         On December 29, 2000, the Company issued 15,000 shares of Common Stock
of the Company to Paul Nelson pursuant to loan extensions at an issue price of
$.10 per share.

         On November 10, 2000, the Company sold 60,000 shares of Common Stock of
the Company to a former director at a purchase price of $.20 per share, pursuant
to Section 4(2) of the Securities Act of 1933, as amended, based upon the nature
of the sale and the purchaser.

         On November 10, 2000, the Company issued 12,000 shares of Common Stock
of the Company to a former director at an issue price of $.20 as a bonus for the
sale of stock.

         On October 24, 2000, the Company issued 120,000 shares of Common Stock
of the Company to the Company's attorney for services rendered, at an issue
price of $.25 per share.

                                      -25-


<PAGE>

         On February 9, 2001 and April 3, 2001, the Company issued 45,000 and
105,000 shares of Common Stock of the Company to Carriage House at an issued
price of $.09 and $.08, respectively pursuant to loan extensions.

         On April 3, 2001, the Company sold 2,986,250 shares of the Common Stock
of the Company to outside parties at a purchase price of $.08 per share pursuant
to Sections 4(2) of the Securities Act of 1933, as amended, based upon the
nature of the sale and the purchasers.

         On April 3, 2001, the Company issued 750,000 shares of Common Stock of
the Company to Zsigmond L. Sagi the Company's President and Chief Executive
Officer for bonuses, at an issue price of $.08 per share.

         On April 3, 2001, the Company issued 350,000 shares of Common Stock of
the Company to Ms. Patricia Furness the Company's Vice President and Secretary
for bonuses at an issued price of $.08 per share.

         On April 3, 2001, the Company issued 250,000 shares of Common Stock of
the Company to Zsigmond G. Sagi for consultant services at an issue price of
$.08 per share.

         On April 3, 2001, the Company issued Mr. Louis Gottlieb the Company's
Vice President of Corporate Development, 86,250 shares of Common Stock of the
Company pursuant to loan extensions, at an issue price of $.08 per share.

         On April 3, 2001, the Company issued 132,500 shares of Common Stock of
the Company to (3) three individuals and (1) one company at an issue price of
$.08 per share, pursuant to loan extensions.

         On April 3, 2001, the Company issued 950,000 shares of Common Stock of
the Company to DC Consultants, pursuant to consulting services, at an issue
price of $.08 per share.

                                      -26-


<PAGE>

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

         OVERVIEW

         The following discussion and analysis should be read in conjunction
with the Company's consolidated financial statements and the notes related
thereto. The discussion of results, causes and trends should not be construed to
infer conclusions that such results, causes or trends necessarily will continue
in the future.

         RESULTS OF OPERATIONS

         The following table sets forth for the periods indicated the percentage
increase or decrease of items included in the Company's consolidated statement
of operations:

                                       % Increase (Decrease) from Prior Period
                                      -----------------------------------------
                                        June 30, 2001          June 30, 2000
                                      compared with 2000    compared with 1999
                                      ------------------    ------------------


Sales (1)                                  (29.00)%              (76.70)%
License fee revenues                        *                    (91.80)
Cost of sales (1)                          (13.40)                30.40
General and administrative
 expenses                                  (32.20)                48.00
Research and development                    (2.20)               (41.60)
Interest expense                            22.50                 48.50


(*) Percentage not meaningful


         REVENUES

         Net sales decreased to $21,137 for the year ended June 30, 2001 from
$29,775 for the year ended June 30, 2000. The Company is refocusing its South
American marketing strategy in Brazil. The Company expects to ship the
BreastCare(TM)/BreastAlert(TM) device from the United States during the fourth
quarter of calendar 2001 to Brazil until the manufacturing facility in Brazil is
complete and operational. Shipments to other parts of South America and Europe
will commence during the latter part of 2002. Manufacturing in Brazil is planned
to commence during the first half of calendar 2002 after the Company completes
construction of its new manufacturing facility in Brazil. Manufacturing for
Europe will continue in the United States facility until the Company establishes
a manufacturing facility in Europe.

         Net sales decreased to $29,775 during the year ended June 30, 2000 from
$127,775 during the year ended June 30, 1999. The Company contributes the
decline due to the factors mentioned above.


                                      -27-


<PAGE>


         License fee revenue decreased to $-0- during the year ended June 30,
2001 from $59,000 for the year ended June 30, 2000, as the Company did not
receive any licensee fee income during the year.

         License fee revenue decreased to $59,000 during the year ended June 30,
2000 from $727,500 for the year ended June 30, 1999 as the Company recognized
lower license fees from Nugard Healthcare Ltd. as compared to higher license
fees from Sandell Corp, D-Lanz Corp and HumaScan from the preceding year.

         COST OF SALES

         Cost of sales decreased to $465,282 for the year ended June 30, 2001
from $537,216 for the year ended June 30, 2000 primarily due to the reduction in
manufacturing labor and reduced write-offs of obsolete material during the year.

         Cost of sales increased to $537,216 during the year ended June 30, 2000
from $411,834 during the year ended June 30, 1999 primarily due to depreciation
expenses of $276,844 on the production equipment, compared to $198,288 for the
same annual period ended June 30, 1999.

         GENERAL AND ADMINISTRATIVE EXPENSES

         General and administrative expenses decreased 32.2% to $1,152,915 for
the year ended June 30, 2001 compared to $1,699,922 for the year ended June 30,
2000. This decrease is primarily due to a reduction of consulting services in
Brazil and reversal of an over accrual for consulting services in Uruguay.

         General and administrative expenses increased 48.0% to $1,699,922 for
the year ended June 30, 2000 compared to $1,148,449 for the year ended June 30,
1999. This increase is primarily due to increases in consulting services and
travel expenses in connection with the Company's South American marketing
strategies in Brazil.

         RESEARCH AND DEVELOPMENT

         Research and development expenses decreased 2.2% to $280,000 for the
year ended June 30, 2001 from $286,223 for the year ended June 30, 2000. The
decrease is primarily attributable to the elimination of minor research and
development expenses.

         Research and development expenses decreased 41.6% to $286,223 during
the year ended June 30, 2000 from $490,482 during the year ended June 30, 1999.
The decrease is primarily attributable to decreased salaries incurred by the
Company in the experimental area of development of its product.

         INTEREST EXPENSE

         Interest expense was $511,141 for the year ended June 30, 2001 compared
to $417,109 for the year ended June 30, 2000. The 22.5% increase was primarily
attributable to increases in the Company's short-term debt.

         Interest expense was $417,109 for the year ended June 30, 2000 compared
to $280,978 for the year ended June 30, 1999. The 48.5% increase was
attributable to the increase in the Company's short-term debt.


                                      -28-


<PAGE>



         OTHER INCOME

         The Company received $27,000 as miscellaneous income from the sale of
obsolete equipment originally obtained from Humascan as part of asset sale
during the year ended June 30, 2001.

         The Company sold marketable securities to meet cash requirements
resulting in a gain on marketable securities of approximately $25,000 for the
year ended June 30, 2000.

LIQUIDITY AND CAPITAL RESOURCES

         The Company's need for funds has increased from period to period, as it
has incurred expenses for among other things, research and development;
applications for and maintenance of domestic and international trademarks and
international patent protection; licensing and pre-marketing activities; and,
attempts to raise the necessary capital to expand the Company's production
capacity. Since inception, the Company has funded these needs through private
placements of its equity and debt securities and advances from the Company's
President, Chief Executive Officer and major shareholder. The Company has
entered into various license agreements that have raised additional funds. In
addition, the Company's auditors' report for the year ended June 30, 2001 dated
September 18, 2001, expressed an opinion as to the Company continuing as a going
concern.

         During September 1998, the Company commenced the sale of its
BreastCare(TM)/BreastAlert(TM) in Brazil, Uruguay and Paraguay through its South
American licensee. The Company is establishing a production facility in Brazil.
This will eliminate the high value - added tax and hopefully will be able to
facilitate sales. The Company terminated its license agreement with its former
licensee in South America but key personnel for the former licensee have joined
Scantek. The Company's Brazilian subsidiary plans to manufacture, market and
distribute the BreastCare(TM)/BreastAlert(TM) in Brazil and export to other
South American countries.

         The Company commenced its distribution operations in South America
during the second half of calendar 2000. However, until cash flow generated from
the shipment of the BreastCare(TM) device is sufficient to support the Company's
operations, the Company needs financing to fund its current overhead and various
capital requirements. As of June 30, 2001, the Company borrowed approximately
$1.4 million from unaffiliated third parties. These loans are payable by the
Company on various dates through August 31, 2002. In addition, as of October 1,
2001, the Company's President advanced the Company approximately $1.1 million.
These loans have supported the Company through the prior fiscal year and the
current fiscal year, and the Company expects the cash flow from sales commencing
in the fourth quarter of calendar 2001 to cover the operations of the Company in
calendar 2001 and 2002, providing the Company is successful in raising
additional capital to support the operations until cash flows generated for the
sales of the BreastCare(TM)/BreastAlert(TM) commences.

         As previously noted, the Company terminated its license agreement with
its South American licensee. The Company will manufacture, market and distribute
the BreastCare(TM)/BreastAlert(TM) throughout South America through the
Company's South American subsidiaries.

         Through its Brazilian subsidiary, the Company signed an agreement with
the State of Pernambuco in December 1999. The State of Pernambuco has the second
largest concentration of hospitals in Brazil offering quality care and
management believes that the location is also the most desirable for production,
shipping, financing and tax incentives. The Company is establishing a 2,550
square meter manufacturing facility in Recife, Pernambuco at the new port of
Suape. The Company has broken ground, and anticipates construction to be
completed by the first half of calendar 2002. The Company will ship the
production equipment for arrival by the time construction is complete.

                                      -29-


<PAGE>



         The State of Pernambuco has offered various incentives, including
acreage, at a reduced price, to build the facility, a 85% reduction in taxes
through 2013, free shipping outside the state, and in connection with the
federal programs offered in Northeast Brazil, financing programs to help fund
the operations and capital improvements.

         The Company plans to ship the BreastCare(TM)/BreastAlert(TM) from the
United States until the production facility in Brazil is operational.

         On October 1, 2000, the Company and its Brazilian subsidiary executed
an agreement with a Brazilian investment group. Scantek Medical Inc. was to sell
36% of its equity in Scantek Medical do Brasil Ltda for two million ($2,000,000)
dollars to the Brazilian investment group. On December 29, 2000, the agreement
was unilaterally terminated by the Company due to the failure of the Brazilian
investment group to comply with the terms of the agreement.

         On July 14, 1999, the Company granted an exclusive license to NuGard
HealthCare Ltd. ("NuGard"), an Irish Company; to market Scantek's
BreastCare(TM)/BreastAlert(TM) in Ireland and the United Kingdom. Pursuant to
the licensing agreement, NuGard will pay a non-refundable licensing fee of
$350,000 in various stages, of which $59,000 was received as of June 30, 2000,
and the Company received common shares equivalent to fifteen (15%) percent of
NuGard's total outstanding common shares. The purchase price will range from $10
to $15 per unit - FOB US. The licensing agreement requires minimum purchases of
5,000 units a month and payments of licensing fees which have been postponed
until the license agreement can be renegotiated. At the present time the Company
has not renegotiated the license agreement.

         On April 26, 2001 the Company signed a Letter of Intent for a European
joint venture with Arturo Madariaga Mazzingshi ("Madariaga"), a principal of
Commercial Balear De Multi propiegad, of Palma de Mallora, Spain. The Letter of
Intent calls for the organization of a joint venture to manufacture, market and
sell medical devices and products for the territory of Europe.

         The Company had anticipated to finalize the agreement to establish the
joint venture by the end of the Company's fiscal year. Upon signing the final
agreement, Madariaga will pay the Company $400,000 for exclusive license and
distribution for Europe. Due to the time constraints on Madariga's Australian
project , he has not been able to return to Recife, Brazil to finalize the
project. At this time the Company does not have a definitive date for
finalization.

         On May 4, 2001 the Company announced that it received an official
invitation from the City of Nova Iguacu of the State of Rio de Janeiro in Brazil
to workout an agreement for BreastCare's participation in the Women's Health
Program,

         The proposed agreement will call for an initial purchase order for
approximately one million dollars ($1,000,000) of BreastCare(TM) units. Nova
Iguacu is the seventh (7th) largest municipality in Brazil. The Agreement will
be finalized after a 30-day Bidding Process, (which gives others the opportunity
to bid the BreastCare(TM) for government use; however, the Company has the only
BreastCare(TM) product for sale in Brazil). After the bidding period, an
official classification number will be assigned to BreastCare(TM) for government
use in Brazil.

         On May 30, 2001, the Company received notification from the Mayor and
the Health Secretary of Nova Iguacu that the BreastCare(TM)order will be in
excess of $1.5 million.

                                      -30-


<PAGE>



         In early July 2001 a classification number was assigned to
BreastCare(TM). Thereafter, based on the State of Rio de Janeiro's
classification number assigned to BreastCare(TM), any government agencies,
municipalities and states in Brazil will not have to go through any preliminary
process before ordering the BreastCare(TM).

         At the end of July 2001, the Company's Brazilian Managers and medical
representatives met with the Health Municipal Partnership for Baixada Fluminense
(CISBAF) to discuss the expansion of the Women's Health Project for the Baixada
Fluminense territory for an approximate $3 million order. Baixada Fluminense is
a region in the northern section of the State of Rio de Janeiro composed of 13
municipalities with an aggregate population of 4 million people and 71 health
centers.

         CISBAF is the representative for all the municipalities of the Health
Ministry in Brazil. CISBAF is the most important health organization in Baixada
Fluminense.

         In August/September 2001, Fiocruz, a government agency in the Ministry
of Health assisted in the BreastCare(TM) educational program for the Women's
Health Program for the City of Nova Iguacu.

         The final agreement and receipt of the purchase order are anticipated
before the end of calendar year 2001.

         The Company's working capital and capital requirements will depend on
numerous factors, including the level of resources that the Company devotes to
the purchase of manufacturing equipment to support start-up production and to
the marketing aspects of its products. The Company intends to construct
production and/or assembly centers abroad to manufacture, market and sell the
BreastCare(TM)/BreastAlert(TM) in the international market. The Company entered
into an agreement with Zigmed Inc., pursuant to which Zigmed Inc. will
manufacture the sensor production equipment needed for manufacturing of the
BreastCare(TM)/BreastAlert(TM) device. The balance of $718,276 will be paid when
the Company raises the additional capital.

         The Company's success is dependent on raising sufficient capital to
establish a fully operable production and assembly facility to manufacture the
BreastCare(TM)/BreastAlert(TM) for the international market. The Company
believes the BreastCare(TM)/BreastAlert(TM) will be commercially accepted
throughout the international market. The Company does not have all the financing
in place at this time, nor may it ever, to meet these objectives.

This Management's Discussion and Analysis of Financial Condition and Results of
Operations includes forward-looking statements that may or may not materialize.
Additional information on factors that could potentially affect the Company's
financial results may be found in the Company's filings with the Securities and
Exchange Commission.


                                      -31-


<PAGE>


NEW ACCOUNTING PRONOUNCEMENTS

         Statement of Financial Accounting Standards ("SFAS") No. 133,
Accounting for Derivative Instruments and Hedging Activities, if effective for
all fiscal years beginning after June 15, 2000. SFAS 133, as amended,
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. Under SFAS 133, certain contracts that were not formerly
considered derivatives may now meet the definition of a derivative. The Company
adopted SFAS 133 effective July 1, 2001. Management has concluded that the
adoption of SFAS 133 will not have a significant impact on the financial
position, results of operations, or cash flows of the Company.

         In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin Financial Statements. SAB 101 summarizes certain
accounting principles to revenue recognition in financial statements. The
Company adopted the provisions of SAB 101 during the second quarter ended
December 31, 2000. Such adoption has not resulted in a material impact on the
Company's consolidated results of operations, financial position or cash flows.

         In March 2000, the Financial Accounting Standards Board ("FASB") issued
Interpretation No. 44 (FIN No. 44), Accounting for Certain Transactions
Involving Stock Compensation - an interpretation of APB 25. FIN No. 44 clarifies
(I) the definition of employees for the purposes of apply APB Opinion No. 25,
(ii) the criteria for determining whether a plan qualifies as a noncompensatory
plan, (iii) the accounting consequences of various modifications to the terms of
a previously fixed stock option or award, and (iv) the accounting for an
exchange of stock compensation awards in a business combination. FIN No. 44 was
effective July 1, 2000. This standard has not had a significant impact on the
Company's consolidated results of operations, financial position or cash flows.





                                      -32-

<PAGE>
ITEM 7.     FINANCIAL STATEMENTS

            INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                     PAGE
                                                                     ----

Independent Auditors' Report                                        F-1 - F-2

Financial Statements:

   Consolidated Balance Sheets,
    June 30, 2001 and 2000                                             F-3

   Consolidated Statements of Operations,
    Years Ended June 30, 2001, 2000, 1999                              F-4

   Consolidated Statements of Stockholders'
    Equity, Years Ended June 30, 2001, 2000, 1999                      F-5

   Consolidated Statements of Cash Flows,
    Years Ended June 30, 2001, 2000, 1999                            F-6 - F-7

Notes to Consolidated Financial Statements                           F-8 - F-28







                                      -33-

<PAGE>

                          INDEPENDENT AUDITORS' REPORT



To the Board of Directors and Stockholders of
Scantek Medical, Inc.


We have audited the accompanying consolidated balance sheet of Scantek Medical,
Inc. and subsidiaries (the "Company") as of June 30, 2001 and 2000, and the
related consolidated statements of operations, stockholders' deficiency, and
cash flows for each of the three years ended June 30, 2001. 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 audit.

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

In our opinion, such consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Scantek Medical,
Inc. and subsidiaries at June 30, 2001 and 2000, and the results of their
operations and their cash flows for each of the three years ended June 30, 2001
in conformity with principles generally accepted in the United States of
America.

                                       F-1


<PAGE>


The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. The Company is engaged in
manufacturing and marketing a product that detects early breast tissue
abnormalities including cancer. As more fully explained in Note 1 of Notes to
Consolidated Financial Statements, the Company needs to obtain additional
financing to fulfill its activities and achieve a level of sales adequate to
support its cost structure. These conditions raise substantial doubt about the
Company's ability to continue as a going concern. Managements' plans are also
described in Note 1. The consolidated financial statements do not include any
adjustments that might result from the outcome of these uncertainties should the
Company be unable to continue as a going concern.

WIENER, GOODMAN & COMPANY, P.C.
Certified Public Accountants
Eatontown, New Jersey

September 18, 2001








                                       F-2
<PAGE>

                      SCANTEK MEDICAL INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                           June 30,
                                                             2001            2000
                                                             ----            ----
                                     ASSETS
<S>                                                           <C>            <C>
Current Assets:
    Cash                                               $      6,026    $      2,898
    Marketable securities                                     2,765          20,735
    Accounts receivable                                          --          24,000
    Inventories                                             547,824         721,315
    Prepaid expenses                                             --           8,511
                                                       ------------    ------------
        Total Current Assets                                556,615         777,459
                                                       ------------    ------------

Property and equipement - net                             1,248,558       1,548,016
Other assets - net                                           33,567         101,174
                                                       ------------    ------------
    TOTAL ASSETS                                       $  1,838,740    $  2,426,649
                                                       ============    ============

            LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current Liabilities:
    Short-term debt                                    $  1,298,628    $    710,593
    Current portion of long-term debt                       850,000         300,000
    Accounts payable                                      1,269,839       1,263,095
    Accrued interest                                        927,490         539,333
    Accrued salaries                                      1,612,472       1,332,472
    Accrued expenses                                        554,435         528,406
                                                       ------------    ------------
        Total Current Liabilities                         6,512,864       4,673,899
                                                       ------------    ------------
Long-term debt                                            2,141,609       2,754,609
                                                       ------------    ------------
        Total Liabilities                                 8,654,473       7,428,508
                                                       ------------    ------------
Commitments and Contingencies
Stockholders' Deficiency:
    Preferred stock, par value $.001
     per share - authorized 5,000,000
     shares; none issued                                         --              --
    Common stock, par value $.001
     per share - authorized 45,000,000
     shares; outstanding 24,970,690 and
     18,810,540 shares                                       24,971          18,810
    Additional paid-in-capital                            4,286,082       3,726,976
    Cumulative other comprehensive loss                    (299,235)       (281,265)
    Deficit                                             (10,827,551)     (8,466,380)
                                                       ------------    ------------
        Total Stockholders' Deficiency                   (6,815,733)     (5,001,859)


    TOTAL LIABILITIES AND STOCKHOLDERS'
     DEFICIENCY                                        $  1,838,740    $  2,426,649
                                                       ============    ============

</TABLE>

                See notes to consolidated financial statements.

                                      F-3

<PAGE>

                      SCANTEK MEDICAL INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

                                                      For the Years Ended June 30,
                                                  ------------------------------------
                                                  2001             2000           1999
                                                  ----             ----           ----
<S>                                                               <C>            <C>
Revenues:
    Net sales                               $     21,137    $     29,775    $    127,775
    License fees                                    --            59,000         727,500
                                            ------------    ------------    ------------
                                                  21,137          88,775         855,275
                                            ------------    ------------    ------------
Costs and expenses:
    Cost of sales                                465,282         537,216         411,834
    General and administrative
     expenses                                  1,152,915       1,699,922       1,148,449
    Research and development                     280,000         286,223         490,482
                                            ------------    ------------    ------------
                                               1,898,197       2,523,361       2,050,765
                                            ------------    ------------    ------------
Loss from operations                          (1,877,060)     (2,434,586)     (1,195,490)
                                            ------------    ------------    ------------
Other income (expense):

    Interest and dividends                            30             223             --
    Gain on sale of marketable
     securities                                       --          25,007
    Loss on investments                               --              --       (103,100)
    Interest expense                            (511,141)       (417,109)      (280,978)
    Miscellaneous                                 27,000          10,000            --
                                            ------------    ------------    ------------
                                                (484,111)       (381,879)      (384,078)
                                            ------------    ------------    ------------
Net loss                                    $ (2,361,171)   $ (2,816,465)   $(1,579,568)
                                            ============    ============    ============

Loss per common share - basic and diluted   $      (0.12)   $      (0.15)   $     (0.09)
                                            ============    ============    ============

Weighted average number of common
shares outstanding - basic and diluted        20,521,527      18,431,820     17,679,575
                                            ============    ============    ============
</TABLE>

                See notes to consolidated financial statements.

                                      F-4

<PAGE>

                      SCANTEK MEDICAL INC. AND SUBSIDIARIES
              CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIENCY)

<TABLE>
<CAPTION>
                                                                                                                   Cumulative
                                                                                                    Retained         Other
                                                                           Comprehensive            Earnings      Comprehensive
                                                            Total           Income (Loss)            (Deficit)     Income (Loss)
                                                            -----           ------------            ---------     -------------
<S>                                                         <C>                <C>                <C>              <C>
Balance, June 30, 1998                                      $   1,561,695                         $ (4,070,347)    $  2,621,616
Common stock issued in lieu of
 compensation (issued at $.1875 per share)                         65,625
Sale of common stock (at $.3333 per share)                        100,000
Common stock issued for loan financing
 (issued at $.1875 to $.5625 per share)                            84,375
Issuance of stock options and warrants for services
 (issued at $.1875 to $1.125 per share)                           190,646
Net unrealized loss on marketable
 securities                                                    (2,787,501) $  (2,787,501)
                                                                                                    (2,787,501)
Net (loss)                                                     (1,579,568)    (1,579,568)           (1,579,568)
                                                                           -------------
    Comprehensive loss                                                     $  (4,367,069)
                                                                           =============
-----------------------------------------------------------------------------------------------------------------------------------
Balance June 30, 1999                                                                               (5,649,915)
                                                              (2,364,728)                                             (165,885)
Sale of common stock (at $.2185 per share)                        10,000
Common stock issued for loan
 financing and services rendered
 (issued at $.01 to $.5625 per share)                            199,254
Issuance of stock warrants for services
 (issued at $.1875 to $.75 per share)                             85,460
Net unrealized loss on marketable
 securities                                                     (115,380)  $    (115,380)
Net loss                                                      (2,816,465)     (2,816,465)           (2,816,465)
                                                                           -------------
    Comprehensive loss                                                     $  (2,931,845)
                                                                           =============
-----------------------------------------------------------------------------------------------------------------------------------
Balance, June 30, 2000                                     $  (5,001,859)                         $ (8,466,380)   $   (281,265)
Common stock issued for loan financing and services
 rendered (issued at $.08 to $.51 per share)                     302,517
Common stock issued for loan conversion
 (issued at $.10 per share)                                       10,000
Sale of common stock (at $.08 to $.20 per share)                 250,900
Issuance of stock warrants for services
 (issued at $.07 per share)                                        1,850
Net unrealized loss on marketable securities                     (17,970)  $     (17,970)                              (17,970)
Net loss                                                      (2,361,171)     (2,361,171)           (2,361,171)
                                                                           -------------
    Comprehensive loss                                                     $  (2,379,141)
                                                                           =============
-----------------------------------------------------------------------------------------------------------------------------------
Balance, June 30, 2001                                     $  (6,815,733)                        $ (10,827,551)   $   (299,235)
                                                           =============                         =============    ============

</TABLE>

<TABLE>
<CAPTION>
                                                                                   Additional
                                                                 Common             Paid-In
                                                                 Stock              Capital
                                                                 -----              -------
<S>                                                              <C>               <C>
Balance, June 30, 1998                                           $17,220           $  2,993,206
Common stock issued in lieu of
 compensation (issued at $.1875 per share)                           350                 65,275
Sale of common stock (at $.3333 per share)                           300                 99,700
Common stock issued for loan financing
 (issued at $.1875 to $.5625 per share)                              200                 84,175
Issuance of stock options and warrants for services
 (issued at $.1875 to $1.125 per share)                                                 190,646
Net unrealized loss on marketable
 securities
Net (loss)
    Comprehensive loss


------------------------------------------------------------------------------------------------
Balance June 30, 1999                                             18,070              3,433,002
Sale of common stock (at $.2185 per share)                            46                  9,954
Common stock issued for loan
 financing and services rendered
 (issued at $.01 to $.5625 per share)
                                                                     694                198,560
Issuance of stock warrants for services
 (issued at $.1875 to $.75 per share)                                                    85,460
Net unrealized loss on marketable
 securities
Net loss
------------------------------------------------------------------------------------------------
Balance, June 30, 2000                                           $18,810           $  3,726,976
Common stock issued for loan financing and services
 rendered (issued at $.08 to $.51 per share)
                                                                   3,015                299,502
Common stock issued for loan conversion
 (issued at $.10 per share)
                                                                     100                  9,900
Sale of common stock (at $.08 to $.20 per share)
                                                                   3,046                247,854
Issuance of stock warrants for services
 (issued at $.07 per share)                                                               1,850
Net unrealized loss on marketable securities
Net loss
    Comprehensive loss
------------------------------------------------------------------------------------------------
Balance, June 30, 2001                                           $24,971           $  4,286,082
                                                                 =======           ============

</TABLE>
                See notes to consolidated financial statements.

                                      F-5

<PAGE>
                      SCANTEK MEDICAL INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                  For the Years Ended June 30,
                                                                    -------------------------------------------------------
                                                                    2001                     2000                      1999
                                                                    ----                     ----                      ----
<S>                                                         <C>                      <C>                       <C>
Cash flows from operating
 activities:
    Net (loss)                                              $   (2,361,171)          $   (2,816,465)           $   (1,579,568)
Adjustments to reconcile net
 (loss) to net cash
 used in operating activities:
    Depreciation and amortization                                  367,065                  367,065                   288,655
    Net gain on sale of marketable
     securities                                                          -                  (25,007)                        -
    Write off of obsolete inventory                                119,286                        -                         -
    Non-employee stock based
     compensation                                                  167,600                  124,725                    84,375
    Non-cash officers compensation                                 136,767                   74,529                   195,418
   Other non-cash items                                                  -                   85,460                    60,853
   Changes in operating assets
     and liabilities                                               787,646                1,259,815                   512,755
                                                                  --------               ----------                ----------
        Net Cash (Used in)
        Operating Activities                                      (782,807)                (929,878)                 (437,512)
                                                                  --------               ----------                ----------
Cash flows from investing activities:
    Proceeds from sale of marketable
     securities                                                          -                  298,164                         -
    Purchase and deposits of property
     and equipment                                                       -                  (43,500)               (1,202,980)
                                                                  --------               ----------                ----------
       Net Cash Provided by (Used in)
        Investing Activities                                             -                  254,664                (1,202,980)
                                                                  --------               ----------                ----------
Cash flows from financing activities:
    Proceeds from borrowings                                       575,600                  473,215                 1,150,000
    Proceeds from officer loans                                          -                  309,413                   342,281
    Repayment of officer loans                                     (15,000)                 (76,084)                   (1,000)
    Repayment of notes                                             (25,565)                 (43,948)                   (1,202)
    Proceeds from sale of common stock                             250,900                   10,000                   100,000
                                                                  --------               ----------                ----------
       Net Cash Provided by (Used in)
        Financing Activities                                       785,935                  672,596                 1,590,079
                                                                  --------               ----------                ----------
Net increase (decrease) in Cash                                      3,128                   (2,618)                  (50,413)
Cash - beginning of period                                           2,898                    5,516                    55,929
                                                                  --------               ----------                ----------
Cash - end of period                                              $  6,026               $    2,898               $     5,516
                                                                  ========               ==========                ==========
</TABLE>
                See notes to consolidated financial statements.

                                      F-6

<PAGE>

                      SCANTEK MEDICAL INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                For the Years Ended June 30,
                                                  --------------------------------------------------------------

                                                       2001                     2000                      1999
                                                       ----                     ----                      ----
<S>                                                <C>                     <C>                         <C>
Changes in operating assets and
 liabilities consist of:
    Decrease (increase) in accounts receivable    $      24,000           $      (24,000)             $         -
    (Increase) decrease in inventory                     54,205                  177,481                  (898,796)
    Decrease in due from licensees                            -                        -                   801,900
    (Increase) decrease in prepaid
     expenses                                             8,511                   75,776                   (60,770)
    (Increase) in other assets                                -                   (8,602)                   80,490
    Increase (decrease) in accounts
     payable and accrued expenses                       700,930                1,039,160                 1,342,431
    Increase (decrease) in deferred
     income                                                   -                        -                  (752,500)
                                                                                                      -----------
                                                  $     787,646           $    1,259,815              $    512,755
                                                  =============           ==============              ============
Supplementary information:
    Cash paid during the year for:

       Interest                                   $      18,937           $       38,583              $    103,924
                                                  =============            =============              ============
       Income Taxes                               $         400           $          450              $      5,637
                                                  =============            =============              ============

    Non-cash investing activities:
     Unrealized loss on
     marketable securities                        $     (17,970)          $     (115,380)             $ (2,787,501)
                                                  =============           ==============              ============

    Non-cash financing activities
     Conversion of accrued officers
       salaries to common stock                   $           -           $            -              $     65,625
                                                    ===========           ==============              ============
    Conversion of notes payable to common stock   $      10,000
                                                  ============
    Common stock issued for loan financing and
     extensions                                   $     302,517           $      199,254              $     84,375
                                                  =============            =============              ============
    Issuance of stock warrants for services
     rendered                                     $       1,850           $       85,460              $    190,646
                                                   ============            =============              ===========


     Details of settlement agreement:
       Fair value of assets received                                                                  $    915,000
       Liabilities forgiven                                                                                575,000
                                                                                                      ------------
       Net cash paid                                                                                  $    340,000
                                                                                                      ============
</TABLE>
                See notes to consolidated financial statements.


                                      F-7


<PAGE>

                      SCANTEK MEDICAL INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

       ORGANIZATION

        Scantek Medical, Inc. and its subsidiaries (the "Company"), operates in
       one industry segment and is engaged, in developing, manufacturing,
       marketing, and licensing the BreastCare(TM)/BreastAlert(TM). The
       BreastCare(TM)/BreastAlert(TM) is an early screening device which can
       detect certain breast tissue abnormalities, including breast cancer. This
       device has been patented and has Food and Drug Administration ("FDA")
       approval for sale.

        During the year ended June 30, 1999, principal operations commenced and
       the Company commenced shipments of the BreastCare(TM)/BreastAlert(TM) in
       South America. The Company also regained rights to manufacture and sell
       the BreastCare(TM)/BreastAlert(TM) in the United States of America,
       Canada and their territories and possessions. See Note 6 of Notes to
       Consolidated Financial Statements for further information. Accordingly,
       the Company is no longer considered a development stage enterprise, as it
       was through June 30, 1998. There is no assurance that commercially
       successful products will be developed, nor that the Company will achieve
       a profitable level of operations.

       BASIS OF PRESENTATION

        The accompanying consolidated financial statements have been prepared on
       a going concern basis, which contemplates the realization of assets and
       the satisfaction of liabilities in the normal course of business.

        The Company has experienced losses during its development stage. Losses
       and negative cash flows from operations have continued in the current
       fiscal year and subsequent to June 30, 2001. As of June 30, 2001, the
       Company has a working capital deficit of approximately $7 million.

        The activities of the Company are being financed through the sale of its
       common stock and debt securities. During October 2000, the Company
       proposed to sell 36% of its Brazilian subsidiary to a Brazilian
       investment group for $2 million. The Company intended to reinvest the
       proceeds in Scantek Medical do Brasil Ltda. On December 29, 2000, the
       agreement was unilaterally terminated by the Company due to the failure
       of the Brazilian investors to comply with the terms of the agreement. The
       Company's continued existence is dependent upon its ability to obtain
       needed working capital through additional equity and/or debt financing,
       and the commercial acceptability of the BreastCare(TM)/BreastAlert(TM) to
       create sales that will help the Company achieve a profitable level of
       operations. However, there is no assurance that additional capital will
       be obtained or the BreastCare(TM)/BreastAlert(TM) will be commercially
       successful. This raises substantial doubt about the ability of the
       Company to continue as a going concern.

        The financial statements do not include any adjustments relating to the
       recoverability and classification of recorded asset amounts or the
       amounts and classifications of liabilities that might be necessary should
       the Company be unable to continue as a going concern.


                                       F-8


<PAGE>



       PRINCIPLES OF CONSOLIDATION

        The consolidated financial statements include the accounts of Scantek
       Medical, Inc. and its wholly-owned subsidiaries (the "Company"). All
       intercompany transactions have been eliminated.

       USE OF ESTIMATES

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

       MARKETABLE SECURITIES

        The Company classifies its investment in equity securities, as
       "available for sale", and accordingly, reflects unrealized losses as a
       separate component of stockholders' deficiency.

        The fair values of marketable securities are estimated based on quoted
       market prices. Realized gains or losses from the sales of marketable
       securities are based on the specific identification method.

       CONCENTRATION OF CREDIT RISK

        Financial instruments which potentially subject the Company to
       concentrations of credit risk consist principally of temporary cash
       investments. The Company places its temporary cash investments with high
       credit quality financial institutions and by policy, in the future, will
       limit the amount of credit exposure with any one financial institution.

       INVENTORIES

        Inventories are stated at the lower of weighted average cost or market.

       REVENUE RECOGNITION

        Revenue is recognized when the BreastCare(TM)/BreastAlert(TM) are
       shipped and title passes to customers.

        Revenue from licensing the BreastCare(TM)/BreastAlert(TM) is usually
       recognized when licensees commence operations and substantial performance
       has occurred. The Company historically has amended and renegotiated its
       licensees' agreements. Therefore, the Company recognizes license fee
       income when received.

       DEPRECIATION

        Equipment is stated at cost, less accumulated depreciation. Depreciation
       is recorded using the straight-line method over the estimated useful
       lives of the assets, which are between 5 and 10 years.


                                       F-9
<PAGE>

         PATENT COSTS

          The costs associated with the acquisition and filings of the United
         States, French, English, Dutch and other patents have been capitalized.
         The patents are amortized using the straight-line method over their
         respective lives, not to exceed ten (10) years. The carrying value of
         intangible assets is periodically reviewed by the Company, and
         impairments are recognized when the expected future operating cash
         flows to be derived from such intangible assets is less than their
         carrying value.

         RESEARCH AND DEVELOPMENT

          Research and development costs are expensed as incurred.

         EVALUATION OF LONG-LIVED ASSETS

          Long-lived assets are assessed for recoverability on an ongoing basis.
         In evaluating the fair value and future benefits of long-lived assets,
         their carrying value would be reduced by the excess, if any, of the
         long-lived asset over management's estimate of the anticipated
         undiscounted future net cash flows of the related long-lived asset. As
         of June 30, 2001, management concluded that no impairment exists.

         STOCK-BASED COMPENSATION

           The Company accounts for employee stock options in accordance with
         the provisions of Accounting Principles Board Opinion No. 25,
         "Accounting for Stock Issued to Employees." Accordingly, stock options
         granted to employees are recorded using the intrinsic value method. The
         Company has adopted the disclosure-only provisions of Statement Of
         Financial Accounting Standards No. 123, "Accounting for Stock-Based
         Compensation." The standard encourages, but does not require, companies
         to recognize compensation expense for grants of stock, stock options
         and other equity instruments to employees based on fair value.

         LOSS PER SHARE

          Basic loss per common share is computed by dividing net loss by the
         weighted average number of common shares outstanding during the year.
         Diluted earnings per common share are computed by dividing net earnings
         by the weighted average number of common and potential common shares
         outstanding during the year. Potential common shares used in computing
         diluted earnings per share relate to stock options and warrants which,
         if exercised, would have a dilutive effect on earnings per share. The
         number of potential common shares outstanding were 20,056,170,
         14,402,170 and 6,418,205 for the years ended June 30, 2001, 2000 and
         1999, respectively. During the years ended June 30, 2001, 2000 and
         1999, potential common shares were not used in the computation of
         diluted loss per common share, as their effect would be antidilutive.

         FAIR VALUE OF FINANCIAL INSTRUMENTS

          For financial instruments including cash, amounts due from licensees,
         accounts payable, accrued expenses and short term debt, it was assumed
         that the carrying amount approximated fair value because of the
         short-term nature of these instruments. The fair value of marketable
         securities are based on quoted market prices. It is not practicable to
         estimate the fair value of the non-publicly traded long-term debt.

                                      F-10
<PAGE>

         NEW FINANCIAL ACCOUNTING STANDARDS

           Statement of Financial Accounting Standards ("SFAS") No. 133,
         Accounting for Derivative Instruments and Hedging Activities, if
         effective for all fiscal years beginning after June 15, 2000. SFAS 133,
         as amended, establishes accounting and reporting standards for
         derivative instruments, including certain derivative instruments
         embedded in other contracts, and for hedging activities. Under SFAS
         133, certain contracts that were not formerly considered derivatives
         may now meet the definition of a derivative. The Company adopted SFAS
         133 effective July 1, 2001. Management has concluded that the adoption
         of SFAS 133 will not have a significant impact on the financial
         position, results of operations, or cash flows of the Company.

          In December 1999, the Securities and Exchange Commission ("SEC")
         issued Staff Accounting Bulletin Financial Statements. SAB 101
         summarizes certain accounting principles to revenue recognition in
         financial statements. The Company adopted the provisions of SAB 101
         during the second quarter ended December 31, 2000. Such adoption has
         not resulted in a material impact on the Company's consolidated results
         of operations, financial position or cash flows.

          In March 2000, the Financial Accounting Standards Board ("FASB")
         issued Interpretation No. 44 (FIN No. 44), Accounting for Certain
         Transactions Involving Stock Compensation - an interpretation of APB
         25. FIN No. 44 clarifies (I) the definition of employees for the
         purposes of apply APB Opinion No. 25, (ii) the criteria for determining
         whether a plan qualifies as a noncompensatory plan, (iii) the
         accounting consequences of various modifications to the terms of a
         previously fixed stock option or award, and (iv) the accounting for an
         exchange of stock compensation awards in a business combination. FIN
         No. 44 was effective July 1, 2000. This standard has not had a
         significant impact on the Company's consolidated results of operations,
         financial position or cash flows.

2.       INVESTMENT IN SUBSIDIARIES

         (a)      In July 1999, the Company organized Scantek Medical do Brazil
                  LTDA, a Brazilian Company and a wholly owned subsidiary, to
                  distribute the BreastCare(TM)/BreastAlert(TM) in Brazil. The
                  subsidiary will manufacture the BreastCare(TM)/BreastAlert(TM)
                  for South America in its proposed production facility in the
                  state of Pernambucco, which the Company expects to be
                  completed by the first half of calendar 2002. Construction
                  cost is anticipated to be approximately $1,000,000.

         (b)      In January, 1998, the Company organized a wholly-owned
                  subsidiary, Scantek Medical S.A. Inc., a Uruguayan company, to
                  distribute the BreastCare(TM)/BreastAlert(TM)in South America.


                                      F-11
<PAGE>

3.       MARKETABLE SECURITIES
<TABLE>
<CAPTION>
                                                            Estimated             Gross                Gross
                                                              Fair              Unrealized          Unrealized
                                           Cost               Value               Gains               Losses
                                     -----------------  ------------------  -------------------  ------------------
<S>                                          <C>                 <C>                    <C>                   <C>
June 30, 2001:
  Marketable securities-
   current:
      Common stock                         $ 2,000         $ 2,765            $ 765                 $      -
                                           ==========      ==========         ==========            ==========
      Warrants                             $ 300,000       $     -            $   -                 $300,000
                                           ==========      ==========         ==========            ==========
June 30, 2000:
  Marketable securities-
   current:
      Common stock                         $ 2,000         $ 20,735           $ 20,735              $ 2,000
                                           ==========      ==========         ==========            ==========
      Warrants                             $ 300,000       $      -           $      -              $300,000
                                           ==========      ==========         ==========            ==========
</TABLE>

          Gross realized gains were $-0-in 2001, $145,912 in 2000 and $-0- in
         1999. Gross realized losses were $-0- in 2001, $120,905 in 2000 and
         $-0- in 1999.

4.       INVENTORIES

                                                   June 30,
                                          ------------------------
                                          2001                2000
                                        --------             --------

        Raw materials                    $ 547,824           $ 614,138
        Finished goods                           -             107,177
                                         ---------           ---------

                                         $ 547,824           $ 721,315
                                         =========           =========

5.       PROPERTY AND EQUIPMENT

                                                   June 30,
                                          ------------------------
                                           2001                2000
                                         --------            --------
Land                                     $    43,500         $    43,500
Equipment                                  2,014,545           2,014,545
Furniture and fixtures                        27,489              27,489
Leasehold improvements                        16,525              16,525
                                         -----------         -----------
                                           2,102,059           2,102,059
Less accumulated depreciation                853,501             554,043
                                         -----------         -----------
                                         $ 1,248,558         $ 1,548,016
                                         ===========         ===========


                                      F-12
<PAGE>

         Depreciation expense for the years ended June 30, 2001, 2000 and 1999
        was $299,458, $299,458 and $221,049, respectively.

6.       OTHER ASSETS

                                                   June 30,
                                          ------------------------
                                            2001               2000
                                         ---------          ---------
Patent costs                             $ 676,069          $ 676,069
Security deposits                           33,352             33,352
                                         ---------          ---------
                                           709,421            709,421
Less accumulated amortization              675,854            608,247
                                         ---------          ---------
                                         $  33,567          $ 101,174
                                         =========          =========


6.       HUMASCAN AGREEMENT/SETTLEMENT

         On March 15, 1999 pursuant to a Settlement Agreement ("Agreement")
        dated as of the 11th day of March 1999, between the Company and
        HumaScan, Inc. ("HumaScan"), the Company regained the rights to market
        and sell its BreastCare(TM)/BreastAlert(TM) in the United States and
        Canada.

         Pursuant to the Agreement, all licensing agreements between the Company
        and HumaScan which gave HumaScan the right to manufacture, market and
        sell the BreastCare(TM)/BreastAlert(TM), were terminated. Pursuant to
        the original and amended licensing agreements, HumaScan was indebted to
        the Company for failure to pay license fees, royalties and other sums of
        money. In exchange for the cancellation of $575,000 of indebtedness due
        to the Company by HumaScan and for the payment by the Company to
        HumaScan of an additional $340,000, HumaScan agreed to assign certain
        special manufacturing equipment, furniture, raw materials, tools,
        materials, laboratory equipment and inventory of HumaScan for the
        manufacture of the BreastCare(TM)/BreastAlert(TM). The Company recorded
        raw materials and finished goods in the amount of approximately
        $856,000, which represents the fair market value of the inventory
        received. Equipment with an initial acquisition cost of approximately
        $2.5 million has been recorded for approximately $59,000, which
        represents the cost the Company paid HumaScan as part of the Agreement.


         The Company recognized $375,000 as license fee income in its statement
        of operations for the year ended June 30, 1999, that was previously
        written off in accordance with the amended licensing agreement.


                                      F-13
<PAGE>



7.       LICENSE AGREEMENTS

         The Company entered into an exclusive license agreement, dated
        September 22, 1997, and amended February 18, 1998, with Sandell
        Corporation S.A. (the "Sandell Agreement"), a Uruguayan corporation,
        ("Sandell"), pursuant to which the Company granted to Sandell an
        exclusive license to market and distribute the
        BreastCare(TM)/BreastAlert(TM) in Brazil, Venezuela, Columbia, Costa
        Rica, Ecuador, Nicaragua, Paraguay, Panama, Peru, Bolivia, Argentina and
        Uruguay. The Sandell Agreement was for a term of fourteen (14) years.
        Under the Sandell Agreement, Sandell was to pay the Company a
        non-refundable license fee of (i) $500,000 and (ii) thirty-five (35%)
        percent of the outstanding shares of Sandell on a fully diluted basis.
        Upon execution of the agreement the Company received $100,000. As of
        June 30, 1999, upon mutual consent of both parties, the Company
        terminated its agreement with Sandell. In connection with the
        termination of the agreement, the Company wrote off the balance of the
        $400,000 license fee due the Company, and approximately $103,000, which
        represented its investment in Sandell. The Company will manufacture,
        market and distribute the BreastCare(TM)/BreastAlert(TM) throughout the
        majority of South America through the Company's South American
        subsidiaries.

         On July 14, 1999, the Company granted an exclusive license to NuGard
        HealthCare Ltd. ("NuGard"), an Irish Company; to market the Company's
        BreastCare(TM)/BreastAlert(TM) in Ireland and the United Kingdom.
        Pursuant to the licensing agreement, NuGard will pay a non-refundable
        licensing fee of $350,000, of which $59,000 was received as of June 30,
        2001, and recorded as income during the year ended June 30, 2000. The
        purchase price for the BreastCare(TM)/BreastAlert(TM) will range from
        $10 to $15 per unit - FOB US. The license agreement requires minimum
        purchases of 5,000 units a month and payments of licensing fees, which
        have been postponed until the license agreement can be renegotiated. The
        Company also received common shares equivalent to fifteen (15%) percent
        of NuGards total outstanding common shares. The shares received have no
        value and nothing has been recorded As of this date, the Company has not
        been able to renegotiate the license agreement and no shipments have
        been made nor monies received due on the license agreement.

         On August 15, 1996, the Company entered into a license agreement with
        Health Technologies International Inc. ("HTI"), whereby HTI is to
        assemble, market and sell the BreastCare(TM)/BreastAlert(TM) in Chile
        and Singapore. HTI paid the Company a licensing fee of $250,000, which
        has been recorded as license fee income. During April 1997, HTI was
        acquired by D-Lanz Development Group, Inc. ("D-Lanz"). As part of the
        licensing agreement, the Company received 2,000,000 shares of D-Lanz
        common stock which is publicly traded on the Electronic Bulletin Board
        under the Symbol DLNZ and the Company recorded the investment in the
        shares for $2,000. The Company will classify its investment as
        "available for sale" and accordingly reflect unrealized gains, net of
        deferred taxes, as a separate component of stockholders' equity.


                                      F-14
<PAGE>

         On April 15, 1999, D-Lanz and the Company entered into an agreement to
        amend its previous license agreements. D-Lanz will have a change in
        control and the License will be assigned to a new corporation, Global
        Agri-Med Technologies, Inc. ("Global"). The Company agreed to assign and
        transfer the license to Global, which includes the exclusive license in
        Chile and Singapore. In addition, the Company has agreed to give Global
        non-exclusive license extensions to Africa, Korea, and South Asia.
        Global must receive final clearance from the Company before any
        participation or distribution can proceed in any city, state, territory
        or country in the non exclusive extensions as stated above.

         The Company received 2,000,000 common shares of Global and $27,500 in
        cash, which the Company recorded as income during the year ended June
        30, 1999. The payment extinguishes the Company's right to minimum
        royalties in any year until the first full calendar year following the
        fiscal year in which Global becomes profitable. The shares will be
        delivered, prior the establishment of a trading market for Global
        shares. The terms in this agreement will be deemed to amend the prior
        agreement, and thus will govern the prior agreement in the terms related
        to the previous agreement. Both parties have agreed to update certain
        terms in the previous agreement that will be beneficial to both parties.
        At June 30, 2001, the Company wrote down the marketable securities to
        $-0- as there was no quoted market value for the marketable securities.



















                                      F-15

<PAGE>

DEBT
Short-term debt at June 30, is as follows:
<TABLE>
<CAPTION>

                                                                                     2001                        2000
                                                                            ------------------------      --------------------
<S>                                                                               <C>                         <C>
           Secured notes, interest at 10% to 12%
            per year, due on various dates through
            June 30, 2002.  The loans are secured
            by inventory, receivables and equipment (1)                           $   330,000                 $        -

           Unsecured notes, interest
            at 10% to 16% per year, due on
            various dates through 6/30/02 (2)                                         890,628                    680,593

           Unsecured officer loans, due
            6/30/02, interest at prime plus
            2% (9% at June 30, 2001) (3)                                               78,000                     30,000
                                                                                  -----------                 ----------

                                                                                  $ 1,298,628                 $  710,593
                                                                                  ===========                 ==========

 Long-term debt at June 30, is as follows:
                                                                                     2001                        2000
                                                                            ------------------------      --------------------
           Secured note due June 30,
            2002, interest at 12% per year.
            The loan is secured by production
            equipment                                                             $  850,000                  $ 850,000

           Secured note due August 31, 2002,
            interest at 10% per year.  The loan
            is secured by inventory, receivables and
            equipment. (1)                                                           150,000                    150,000

           Unsecured officer loans, due
            December 31, 2002 interest
            at prime plus 2% (9% at
            June 30, 2001)  (4)                                                    1,103,603                  1,166,603

           Unsecured notes, interest at prime
            plus 2% (9% at June 30, 2001)
            due December 31, 2002 (5)                                                888,006                    888,006
                                                                                   ---------                 ----------

                                                                                   2,991,609                  3,054,609
           Current portion of long-term
            debt                                                                     850,000                    300,000
                                                                                   ---------                 ----------
                                                                                  $2,141,609                 $2,754,609
                                                                                  ==========                 ==========
</TABLE>

                                      F-16
<PAGE>



          Annual maturities on long-term debt as of June 30, 2001 during the
next five years are:

Year Ending June 30,
--------------------

     2002                        -
     2003                2,103,603
     2004                        -
     2005                        -
     2006                        -
                         ---------
                       $ 2,103,603
                       ===========

         (1) The holders of these notes received as additional consideration
        257,500 shares of the Company's common stock. For the year ended June
        30, 2001, 2000 and 1999 the Company recorded interest expense of $6,600,
        $20,313 and $75,000, respectively.

         (2) The holders of these notes received as additional consideration
        1,729,000 shares of the Company's common stock. For the year ended June
        30, 2001, 2000 and 1999 the Company recorded interest and consulting
        expense in the amount of $126,425, $70,802 and $23,438, respectively.

         (3) The unsecured note payable represents loans made to the Company by
        the Company's Vice President and Secretary. Interest expense for the
        year ended June 30, 2001 and 2000 amounted to $7,536 and $1,223,
        respectively. In consideration for the loan, the Company issued 14,453
        shares of the Company's common stock and recorded additional interest
        expense in the amount of $4,463 and $3,208 for the years ended June 30,
        2001 and 2000.

         (4) The unsecured note payable represents loans made to the Company by
        Mr. Zsigmond Sagi ("Mr. Sagi"), the Company's president and Chief
        Executive Officer. Interest expense for the years ended June 30, 2001,
        2000 and 1999 amounted to $108,800, $105,452 and $74,348, respectively.
        Accrued interest at June 30, 2001 and 2000 was $256,404 and $147,604,
        respectively. In consideration for loans, the Company issued 147,150
        shares of the Company's common stock and recorded additional interest
        expense in the amount of $34,629 and $32,969 for the year ended June 30,
        2001 and 2000.

         (5) The holder of the note was a corporation controlled by Mr. Sagi. On
        March 31, 1998, the corporation holding the note dissolved and
        distributed the note to its five shareholders in equal amounts of
        $177,601. Two of the five shareholders are executive officers of the
        Company, including Mr. Sagi and Carlo Civelli, former Vice President of
        Finance International. The note terms were renegotiated with the lenders
        with principal payments due December 31, 2000 and interest at prime plus
        two (2%) percent. The notes have been extended to December 31, 2002.
        Accrued interest at June 30, 2001 and 2000 was $318,570 and $230,880,
        respectively. Interest expense for the year, ended June 30, 2001, 2000
        and 1999, amounted to $87,690, $88,800 and $88,800, respectively.

                                      F-17
<PAGE>


9.       INCOME TAXES

         At June 30, 2001, the Company had a net operating loss ("NOL")
        carryforward of approximately $10,000,000 for financial reporting
        purposes and approximately $6,635,000 for tax purposes. The difference
        between financial reporting and tax purposes results from the temporary
        difference caused by the capitalization of start-up expenditures for tax
        purposes required by Internal Revenue Code Section 195 and the net
        unrealized losses on marketable securities. The Company has not
        reflected any benefit of such net operating loss carryforwards in the
        accompanying financial statements in accordance with Financial
        Accounting Standards Board Statement No. 109 as the realization of this
        deferred tax benefit is not more than likely. The tax NOL carryforwards
        expire in the years 2005 through 2013.

         A reconciliation of taxes on income at the federal statutory rate to
        amounts provided is as follows:

<TABLE>
<CAPTION>

                                                                              Years Ended June 30,
                                                                 -----------------------------------------------
                                                                 2001                 2000                  1999
                                                                 ----                 ----                  ----
<S>                                                              <C>                  <C>                   <C>
           Tax provision (benefit) computed
            at the Federal statutory rate                        $(945,000)           $(1,127,000)          $(632,000)
           Increase (decrease) in taxes
            resulting from:
           Effect of unused tax losses                             945,000              1,127,000             632,000
                                                                 ----------           ------------           ---------

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


         The types of temporary differences between the tax basis of assets and
        liabilities and their financial reporting amounts that give rise to a
        deferred tax asset and deferred tax liability and their approximate tax
        effects are:

<TABLE>
<CAPTION>
                                                                                   June 30,
                                                   ----------------------------------------------------------------------------
                                                                 2001                                          2000
                                                   -------------------------------               ------------------------------
                                                   Temporary                 Tax                 Temporary                Tax
                                                   Difference               Effect               Difference              Effect
                                                   ----------               ------               ----------              ------
<S>                                                 <C>                     <C>                   <C>                   <C>
Net operating
        loss carry-
        forward                                     $ (6,635,000)           $(2,654,000)          $(5,729,000)          $(2,292,000)
       Deferred start-
        up expenses                                   (3,666,000)            (1,466,000)           (2,229,000)             (892,000)
       Unrealized (losses)
        on marketable
        securities                                      (299,000)              (120,000)             (281,000)             (112,000)
       Valuation
        allowance                                     10,600,000              4,240,000             8,239,000             3,296,000
                                                     -----------             ----------             ----------           ----------
                                                     $         -             $        -             $       -            $        -
                                                     ===========             ==========             ==========           ==========

</TABLE>

                                      F-18


<PAGE>



10.      SEGMENTS - GEOGRAPHIC AREAS

         The Company does not have reportable operating segments as defined in
        the Statement of Financial Accounting Standards No. 131, "Disclosure
        about Segments of an Enterprise and Related Information". The method for
        attributing revenues to individual countries is based on the destination
        to which finished goods are shipped. The Company operates facilities in
        the United States and South America.

         One hundred (100%) percent of the sales of the
        BreastCare(TM)/BreastAlert(TM) for the year ended June 30, 2000 and
        1999, $24,000 and $127,775, respectively to South America were to the
        Company's South American licensee, Sandell Corporation S.A.("Sandell"),
        a related party, in which the Company owns 35% of the outstanding
        shares. Sales of the BreastCare(TM)/BreastAlert(TM) are not recorded by
        the Company until Sandell ships the BreastCare(TM)/BreastAlert(TM) to
        unrelated entities. . As of June 30, 1999 the Company has terminated its
        license agreement with Sandell. One hundred (100%) percent of the sales
        for the year ended June 30, 2001 were to one customer in Brazil shipped
        from the United States. Revenues include license fees received by the
        Company in connection with various arrangements contracted throughout
        the world. See Note 7 of Notes to Consolidated Financial Statements for
        further information.

<TABLE>
<CAPTION>

                                                                              Years Ended June 30,
                                                                 -----------------------------------------------
                                                                 2001                 2000                  1999
                                                                 ----                 ----                  ----
<S>                                                              <C>                  <C>                   <C>
Revenues from unrelated entities and countries of Company's domicile:
                  United States                                  $         -          $     59,420          $   727,500
                  South America                                       21,137                24,000              127,775
                  Ireland                                                  -                 5,355                    -
                                                                 -----------          ------------          -----------
                                                                 $    21,137          $     88,775          $   855,275
                                                                 ===========           ===========          ===========
Total Revenues:
                  United States                                  $         -          $     59,420          $   832,936
                  South America                                       21,137                24,000              127,775
                  Ireland                                                  -                 5,355                    -

    Less: intergeographic
                        revenue                                            -                     -             (75,436)
                                                                 -----------          ------------          -----------
                                                                 $    21,137         $     88,7755          $  855,275
                                                                 ===========          ============          ===========

Loss from operations:
                  United States                                  $(1,510,441)        $  (1,880,632)         $ (952,368)
                  South America                                     (366,619)             (553,954)           (243,122)
                                                                 -----------          ------------          -----------
                                                                 $(1,877,060)        $  (2,434,586)         $(1,195,490)
                                                                 ===========            ==========          ===========

Assets:
                  United States                                  $ 2,867,192         $   3,125,614          $3,645,4048
                  South America                                      103,474               118,599              127,883

    Less: intergeographic
     eliminations                                                 (1,131,926)             (887,564)            (411,263)
                                                                 -----------          ------------           ----------
                                                                $  1,838,740           $ 2,426,649           $3,362,024
                                                                 ===========            ==========           ==========
</TABLE>

                                      F-19
<PAGE>

<TABLE>
<CAPTION>
<S>                                                              <C>                  <C>                   <C>
Capital Expenditures:
                  United States                                 $          -           $         -             1,202,980
                  South America                                            -                43,500                     -
                                                                 -----------            ----------            ----------
                                                                $          -           $    43,500           $ 1,202,980
                                                                 ===========            ==========            ==========
Depreciation and amortization
   expense:
                  United States                                 $    367,065           $   367,065           $   288,655
                  South America                                            -                     -                     -
                                                                 -----------            ----------            ----------
                                                                $    367,065           $   367,065          $    288,655
                                                                 ===========            ==========            ==========
</TABLE>


         Transfers between geographic areas include raw materials manufactured
        in the United States which are shipped to South America to be
        manufactured into finished products. Loss from operations represents
        total revenue less operating expenses.

         Identifiable assets are those assets of the Company that are identified
        with the operation of each geographic area.

11.      STOCK-BASED COMPENSATION

         For the years ended June 30, 2001, 2000 and 1999, the Company issued
        3,013,900, 694,573 and 200,000 shares, respectively of the Company's
        common stock to employees and non-employees as stock-based compensation
        in the amount of $302,517, $199,254 and $84,375, respectively.

12.      STOCK OPTIONS AND WARRANTS

         The Company has adopted the disclosure-only provisions of the Statement
        of Financial Accounting Standards No. 123 "Accounting for Stock-Based
        Compensation". Accordingly, no compensation cost has been recognized for
        the stock options awarded. Had compensation cost for the Company's
        issuance of stock options and warrants been determined based on the fair
        value at the grant date for awards in fiscal years ended 2001, 2000 and
        1999, consistent with the provision of SFAS No. 123, the Company's net
        loss and net loss per share would have increased to the pro-forma
        amounts indicated below:

<TABLE>
<CAPTION>

                                                                              Years Ended June 30,
                                                                 -----------------------------------------------
                                                                 2001                 2000                  1999
                                                                 ----                 ----                  ----
<S>                                                              <C>                  <C>                   <C>
 Net (loss) - as reported                                        $ (2,361,171)        $ (2,816,465)         $ (1,579,568)
 Net (loss) - pro-forma                                            (2,823,392)          (3,260,223)           (1,722,680)
 Loss per share - basic
  and diluted - as reported                                      $      (0.12)        $      (0.15)         $      (0.09)
 Loss per share - basic
  and diluted -pro-forma                                         $      (0.14)        $      (0.18)         $      (0.10)

</TABLE>

                                      F-20


<PAGE>



12.  STOCK OPTIONS AND WARRANTS (Continued)

         The fair value of options and warrants are estimated on the date of
        grant using the Black-Scholes option pricing method with the following
        weighted average assumptions issued for grants in 2001, 2000 and 1999,
        respectively: dividend yield of 0%, expected volatility of 151% to 180%,
        risk free interest rate of 5.0% and expected lives of 2 1/2 years.

         The Company has granted stock options and warrants as follows:

         (a)    On March 7, 1995, the Company established a Non-Qualified Stock
        Option Plan (the "Plan"), which provides for the granting to key
        employees stock options. The Plan provides for the issuance of up to
        500,000 shares, none of which have been registered. No shares have been
        granted as of June 30, 2001.

         (b)    On March 7, 1995, the Company established a Stock Grant Program
        which provides for the granting to key employees common stock of the
        Company. The Stock Grant Program provides for the issuance of up to
        500,000 shares, none of which have been registered. No shares have been
        granted as of June 30, 2001.

         (c)    The following options and warrants were granted outside the two
        March 7, 1995 Plans during the year ending June 30, 2001:

         On April 3, 2001 the Company granted warrants to purchase 550,000
        shares of the Company's common stock at an exercise price of $.07 per
        share, the fair market value at the date of grant to the Company's
        attorneys and consultants for services rendered charged to general and
        administrative expenses in the amount of $1,850. The warrants are
        exercisable immediately and expire April 2, 2006.

         On April 3, 2001, the Company granted options to three directors
        totaling 40,000 shares each (120,000 shares) of the Company's common
        stock at an exercise price of $.07 per share, the fair value at the date
        of grant. The options are exercisable immediately and expire April 2,
        2006.

         On April 3, 2001, the Company granted options to purchase up to
        3,392,857 shares of the Company's common stock at an option price of
        $.07 per share, the fair value at the date of grant, for the conversion
        of accrued salaries from January 1, 2000 through March 31, 2001 to the
        Company's President and Chief Executive Officer. The options are
        exercisable immediately and expire April 2, 2006.

         On April 3, 2001, the Company granted options to purchase up to
        1,606,143 shares of the Company's common stock at an option price of
        $.07 per share, the fair value at the date of grant, for the conversion
        of accrued salaries from January 1, 2000 through March 31, 2001 to the
        Company's Vice President and Secretary. The options are exercisable
        immediately and expire April 2, 2006.


                                      F-21
<PAGE>

         On December 30, 1999 the Company granted warrants to purchase 190,000
        shares of the Company's common stock at an exercise price of $.07 per
        share, the fair value at the date of grant, to the Company's attorneys,
        for legal services, which were charged to general and administrative
        expenses, in the amount of $9,728. The warrants are exercisable
        immediately and expire December 29, 2004.

         On December 30, 1999, the Company granted options to purchase up to
        5,428,571 shares of the Company's common stock at an option price of
        $.07 per share, the fair value at the date of grant, for the conversion
        of accrued salaries to the Company's President and Chief Executive
        Officer. The options are exercisable immediately and expires December
        29, 2004.

         On December 30, 1999, the Company granted options to purchase up to
        1,428,572 shares of the Company's common stock at an option price of
        $.07 per share, the fair value at the date of grant, for the conversion
        of accrued salaries to the Company's Vice President and Secretary. The
        options are exercisable immediately and expires December 29, 2004.

         On December 30, 1999, the Company granted warrants to purchase 100,000
        shares of the Company's common stock at an exercise price of $.07 per
        share, the fair value at the date of grant, to consultants for financial
        consulting services rendered, which was charged to general and
        administrative expense, in the amount of $5,120. The warrants are
        exercisable immediately and expires December 29, 2004.

         On December 30, 1999, the Company granted warrants to purchase 600,000
        shares of the Company's common stock at an exercise price of $.07 per
        share, the fair value at the date of grant, to the Company's President
        and Chief Executive Officer. The warrants are exercisable immediately
        and expire December 29, 2004.

         On December 30, 1999, the Company granted warrants to purchase 340,000
        shares of the Company's common stock at an exercise price of $.07, the
        fair value at the date of grant, to the Company's Vice-President and
        Secretary. The warrants are exercisable immediately and expire December
        29, 2004.

         On December 30, 1999, the Company granted options to three directors
        totaling 40,000 shares each (120,000 shares) of the Company's common
        stock at an exercise price of $.07, the fair value at the date of grant.
        The options are exercisable immediately and expire December 29, 2004.

         On December 30, 1999, the Company granted warrants to purchase 750,000
        shares of the Company's common stock at an exercise price of $.07, the
        fair value at the date of the grant, to employees of the Company. The
        warrants are exercisable immediately and expire December 29, 2004.

         On May 14, 1999, the Company granted 4,375,027 options to officers and
        employees to purchase the Company's common stock at an exercise price of
        $.21875 per share, the fair value at the date of grant. The options are
        exercisable immediately and expire May 14, 2004.


                                      F-22
<PAGE>

         On December 14, 1998 the Company granted warrants to purchase 100,000
        shares of the Company's common stock at an exercise price of $.1875 per
        share, the fair value at the date of grant, to consultants in exchange
        for professional services rendered which were charged to general and
        administrative expense, in the amount of $3,981. The warrants are
        exercisable immediately and expire November 30, 2003.

         On August 5, 1998, the Company granted options to two directors
        totaling 40,000 shares each (80,000 shares) of the Company's common
        stock at an option price of $.5625 per share, the fair value at the date
        of grant. The options are exercisable immediately and expire August 5,
        2003.

         During the year ended June 30, 1998, the Company granted 400,000
        warrants to purchase the Company's common stock at exercise prices
        ranging from $.55 to $1.125, the fair value on the date of grant, to
        consultants for services rendered, which were charged to general and
        administrative expenses, in the amount of $27,780. The warrants are
        exercisable immediately and expire on dates ranging from July 31, 2000
        to January 26, 2003.

         On January 26, 1998, the Company granted options to officers of the
        Company to purchase a total of 450,000 shares of the Company's common
        stock at an exercise price of $.55 per share, the fair value at the date
        of grant. The options are exercisable immediately and expire January 25,
        2003.






                                      F-23


<PAGE>


         Information regarding the Company's Stock Option Plan and Warrants, for
        fiscal years ended 2001, 2000 and 1999, is as follows:

<TABLE>
<CAPTION>

                                           2001                          2000                             1999
                                    ----------------------        -----------------------          -----------------------
                                                  Weighted                       Weighted                         Weighted
                                                  Average                         Average                          Average
                                                 Exercised                       Exercised                        Exercised
                                    Shares         Price          Shares           Price           Shares           Price
                                    ------         -----          ------           -----           ------           -----
<S>                                 <C>              <C>           <C>                 <C>         <C>                  <C>
Options and warrants
 outstanding
 beginning of
 year                               14,402,170       $ 0.15        6,418,205           $ 0.28      2,013,178            $ 0.54
Options and warrants
 exercised                                   -            -                -                -              -                 -
Options and
 warrants granted                    5,669,000         0.07        8,957,143             0.07      4,555,027              0.22
Options and warrants
 expired                               (15,000)        1.13         (973,198)            0.48       (150,000)             0.63
Options and
 warrants out-
 standing, end
 of year                           20,056,170        $ 0.11      14,402,170            $ 0.15     6,418,205             $ 0.28
                                   ===========                   ===========                      ==========


Option and warrants
 price range at
 end of year                    $.07 to $.75                   $.07 to $1.13                     $.19 to $1.13
Option and warrants price
 range for exercised
 shares                               -                              -                                 -
Options and warrants
 available for grant                1,000,000                      1,000,000                       1,000,000

Weighted average fair value
 of options granted during
 the year                            $ .05                          $ .05                            $ .05

</TABLE>

                                      F-24


<PAGE>



The following table summarizes information about fixed-price stock options and
warrants outstanding at June 30, 2001:

<TABLE>
<CAPTION>

                                   Weighted
                                    Number              Average            Weighted            Number            Weighted
                                 Outstanding           Remaining            Average         Exercisable           Average
     Range of Exercise           at June 30,          Contractual          Exercise         at June 30,          Exercise
          Prices                     2001                 Life               Price              2001               Price
----------------------------  -------------------  -------------------  ---------------- -------------------  ----------------
<S>        <C>                    <C>                   <C>                <C>              <C>                   <C>
           $0.07                  14,626,143            4.0 years          $   -            14,626,143            $  0.07
      $0.19 to $0.38               4,515,027            2.8 years          $   -             4,515,027            $  0.22
      $0.55 to $0.75                 915,000            1.4 years          $   -               915,000            $  0.59
                                  ----------                                                ---------

                                  20,056,170                                                20,056,170
                                  ==========                                                ==========
</TABLE>


         13.      RELATED PARTY TRANSACTIONS

         a) On December 1, 1998 the Company issued 200,000 and 150,000 shares of
        the Company's common stock to Mr. Sagi and the Company's Vice
        President/Secretary, respectively, in consideration for deferring their
        current year salaries. In connection with the transaction the Company
        recorded a compensation expense in the amount of $65,625 for the year
        ending June 30, 1999.

         b) On March 31, 1998, SMC Corp. dissolved and distributed the note due
        from the Company to its five shareholders, including Mr. Sagi and Carlo
        Civelli. See Note 8 of Notes to Consolidated Financial Statements for
        further information. The principal amount of the note at June 30, 2000
        and 1999 was $177,601 for Mr. Sagi and Mr. Civelli. Interest expense for
        the year ended June 30, 2001, 2000 and 1999 was $17,538, $17,760 and
        $17,760 each, for Mr. Sagi and Mr. Civelli. As of June 30, 2001 and 2000
        accrued interest in the amount of $63,714 and $46,176 was due Mr. Sagi
        and Mr. Civelli.

         c) On November 16, 1998, the Company sold a total of 300,000 shares of
        the Company's common stock to a Director of the Company and an officer
        of the Company. The Company received $100,000 net proceeds from the
        sale.

         d) On July 1, 1999 and August 1, 2000, the Company issued 79,250 and
        67,900 and 5,703 and 8,750 shares of the Company's common stock to Mr.
        Sagi and the Company's Vice-President and Secretary, respectively, in
        consideration for loan financing for operations. In connection with the
        transaction the Company recorded accrued interest expense in the amount
        of $39,092 and $36,177 for the years ending June 30, 2001 and 2000,
        respectively.


                                      F-25
<PAGE>


         e) On July 1, 1999, December 30, 1999, March 8, 2000, July 6, 2000 and
        December 29, 2000 the Company issued a total of 25,000 shares of the
        Company's common stock to a Company director in consideration for loan
        financing for operations. In connection with the transaction the Company
        recorded accrued interest expense in the amount of $2,775 and $2,419 for
        the year ending June 30, 2001 and 2000, respectively.

         f) On July 7, 1999, the Company issued 50,000 shares of the Company's
        common stock to a former director of the Company as part of his
        employment agreement. In connection with the transaction the Company
        recorded compensation expense in the amount of $9,375 for the year
        ending June 30, 2000.

         g) On July 7, 1999, the Company sold 45,767 shares of the Company's
        common stock to an officer and director of the Company. The Company
        received $10,000 net proceeds from the sale. On April 14, 2000, the
        Company also issued 35,200 shares of the Company's common stock to the
        same officer and director in exchange for consulting services worth
        $8,800.

         h) On April 3, 2001, the Company issued 750,000 and 350,000 shares of
        the Company's common stock to Mr. Sagi and the Company's
        Vice-President/Secretary, respectively for bonuses. In connection with
        the transaction the Company recorded compensation expense in the amount
        of $88,000 for the year ended June 30, 2001.

13.      RELATED PARTY TRANSACTIONS

         h) The Company and Zigmed Corporation ("Zigmed") have entered into
        various agreements. Zigmed is owned and controlled by two sons of Mr.
        Sagi, who, prior to 1990, owned Zigmed. The Company has contracted with
        Zigmed to manufacture its sensor production equipment needed for its
        production centers. The Company sublets warehouse space to Zigmed for
        $1,970 per month and received $23,148 and $23,640 as rental income from
        Zigmed for the years ended June 30, 2001 and 2000. The Company has also
        contracted with Zigmed for the production of the
        BreastCare(TM)/BreastAlert(TM) sensors. Zigmed provided material, labor
        and product testing services of $34,748 and $74,430 for the years ended
        June 30, 2001 and 2000. The Company owes Zigmed approximately $92,000
        and $63,000 as of June 30, 2001 and 2000 for labor. See Note 13 of Notes
        to Consolidated Financial Statements for further information.


                                      F-26
<PAGE>

14.      COMMITMENTS AND CONTINGENCIES

         Leases

         The Company leases office and warehousing facilities. Certain of these
        leases require the Company to pay certain executory costs (such as
        insurance and maintenance). In June, 1997 the Company signed a three (3)
        year lease for office and warehouse space in Denville, New Jersey and
        amended its lease on April 15, 1999 to include an additional 6,000
        square feet adjacent to its corporate headquarters. The lease was
        further amended on June 14, 2001 for 7,000 square feet of office and
        warehouse space and extended through June 14, 2003. The Company also
        rents office space in Brazil, on a month to month basis, costing
        approximately $350 a month.

          Future minimum lease payments for operating leases are as follows:

                   Years Ending June 30,
                   ---------------------
                   2002                                67,620
                   2003                                71,001
                   2004                                 -
                   2005                                 -
                   Thereafter                           -
                                                     --------
                                                    $ 138,621

         Rent expense for the years ended June 30, 2001, 2000 and 1999 was
        approximately $126,000, $104,000 and $86,000, respectively.

         Employment Agreements

         The Company has entered into employment contracts with the two
        officers/directors of the Company. The agreements all provide the
        following: base salaries increasing upon certain conditions, incentive
        bonus plans and severance benefits.

         Production Agreements

         The Company intends to construct strategic regional production centers
        throughout the world to manufacture, assemble and market the
        BreastCare(TM)/BreastAlert(TM). The Company has entered into an amended
        agreement with Zigmed pursuant to which Zigmed will manufacture the
        sensor production equipment needed for the manufacturing centers for the
        contract price of $1,850,680 plus 100,000 shares of the Company's common
        stock. In August 1996, the Company paid Zigmed an advance deposit of
        $200,000 to begin production of the manufacturing equipment, and in
        September, 1996 issued Zigmed 100,000 shares of the Company's common
        stock (valued at $1.00 per share) against the contract. As of June 30,
        2001, the Company owes Zigmed $718,276. See Note 5 of Notes to
        Consolidated Financial Statements.




                                      F-27
<PAGE>

         The Company's Brazilian subsidiary has signed an agreement to construct
        a 2,550 square meter manufacturing facility in Recife, Pernambuco -
        Brazil at the new port of Suape. The Company has broken ground and
        anticipates construction to be completed by the first half of calendar
        2002. The Company's Brazilian subsidiary purchased the land for $43,500
        and anticipates the building cost to approximate $1,000,000.

         Financial Agreements

         On May 11, 2000 the Company's Brazilian subsidiary received final
        approval to participate in the Sudene Program, a federal program
        organized to develop the Northeast area of Brazil. Scantek do Brasil
        Ltda was approved to receive funding of approximately $4 million in the
        Sudene federal program. An extension of time has been granted by Sudene
        for the Company to fulfill certain milestones which must be completed
        before December 31, 2001.


                                      F-28


<PAGE>

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

         None.

                                    PART III

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

        The following table and biographical outlines set forth the directors,
and officers within the Company, positions presently held by each executive
officer of the Company, and a brief account of the business experience of each
such director and officer for the past five years.

                                              Positions and Officers
                                              within the Company/
          Name                   Age          Business Experience
          ----                   ---          -------------------

Zsigmond L. Sagi, Ph.D.          68           President, Chairman of
                                              the Board, and Chief
                                              Executive Officer

Patricia B. Furness              54           Vice President, Corporate
                                              Secretary and Director

Maurice Siegel, Ph.D.            71           Vice President of
                                              Research and
                                              Development and Director

Louis Gottlieb                   73           Vice President of
                                              Corporate Development

Paul Nelson                      71           Director





                                      -34-



<PAGE>


         ZSIGMOND L. SAGI, PH.D., has served as President, Chairman of the
Board, Chief Executive Officer and Chief Scientist of the Company since October
1991. Mr. Sagi has over 30 years experience in the health-care field and has
invented or developed several commercial medical devices and technological
products. From 1968 until 1977 he served as Executive Vice President and Chief
Operating Officer of Bio-Medical Sciences, Inc., a publicly held company of
which he was one of the founders. Thereafter, he organized and managed several
companies, including Zigmed Corp., a healthcare engineering firm. In 1974, he
founded BCSI Laboratories, Inc., the company which developed the
BreastCare(TM)/BreastAlert(TM). From 1986 until 1991, Mr. Sagi served as
Chairman of the Board and President of SMC Corp., a company he founded in 1986.
Mr. Sagi has been issued numerous United States and foreign patents in the
fields of healthcare, chemical applications, electronics and mechanics,
including the disposable oral thermometer, the Zigzag sewing machine, an
ambulatory automated feeding device, and a sterilization indicator. He received
his master's in mechanical engineering in 1954 and his doctorate in Physics in
1956 from the Technical University of Hungary.

         PATRICIA B. FURNESS, has served as the Vice President, Secretary and
Director of the Company since 1991. In addition to managing marketing and public
relations for the Company, Ms. Furness is also responsible for coordinating
product and business information to the medical and financial community and for
coordinating clinical follow up studies. From 1988 until 1991 she served as Vice
President and Secretary of Scantek Medical Corp., and, in 1989, was elected to
its Board of Directors. In 1987, Ms. Furness became the Manager of Corporate
Development of Zigmed, Inc., a manufacturer of automated systems for the health
care industry. Ms. Furness received a Bachelor of Science Degree in education
from Appalachian State University in Boone, North Carolina in 1969 and graduate
course study in Human Relations.

         MAURICE SIEGEL, PH.D., has served as the Company's Vice President of
Research and Development since 1991 and as a Director of the Company since
August 1997. Since 1989, Mr. Siegel served in the same capacity with Scantek
Medical Corp., the Company's predecessor. From 1980 to 1984, Mr. Siegel was
responsible for the continuing research and development of the
BreastCare(TM)/BreastAlert(TM). He supervised the analytical and manufacturing
operation and was involved in the process of receiving FDA medical device
approval for the BreastCare(TM)/BreastAlert(TM)for sale to the professional
market. Mr. Siegel was employed by Faberge, Inc. from 1957 through 1987, as
Director of Research and Development from 1957 to 1996, as Vice President of
Research and Development from 1966 to 1977, and last holding the position of
Executive Vice President of Research and Development from 1977 to 1987. Since
1987, Mr. Siegel has been self employed and has served, and continues to serve,
as a consultant to numerous companies, including Tri-Scent, Imported Beauty
Lines, Telebrands and Sun Laboratories. Mr. Siegel received a Ph.D. in Physical
and Organic Chemistry from New York University in 1957.

         LOUIS GOTTLIEB, has served as Vice President of Corporate Development
since August 1996. Presently, he is on the Board of Directors at Brookdale
Hospital Medical Center, Linrock Nursing Home, First Central Financial Corp.
From 1992-1995, Mr. Gottlieb was Treasurer and a board member of South Shore
Association for Independent Living. Since 1973 he has served as CEO of the
Gottlieb Group, one of the largest 500 construction firms in the U.S. From 1942
to 1945, Mr. Gottlieb served in the US Air Corps. as a Commissioned Lt. Fighter
pilot. Mr. Gottlieb studied civil engineering at Brooklyn Polytechnical
Institute.



                                      -35-


<PAGE>

         PAUL NELSON, has served on the Company's Board of Directors since 1991.
From 1987 until 1991, he served as a Director of Scantek Medical Corp., the
Company's Predecessor. In 1968, Mr. Nelson founded compressed Gas, Inc., a
wholesale supplier of medical and industrial compressed gases, whereby he served
as President and a Director of such company; Mr. Nelson has since sold his
ownership in such company. Mr. Nelson received a Bachelor of Science Degree from
the University of North Carolina in Chapel Hill, North Carolina.

Compliance with 16(a) of the Securities and Exchange Act of 1934

         To the Company's knowledge, based solely on a review of such materials
as are required by the Securities and Exchange Commission, no officer, director
or beneficial holder of more than ten (10%) percent of the Company's issued and
outstanding shares of Common Stock failed to timely file with the Securities and
Exchange Commission any form or report required to be so filed pursuant to
Section 16(a) of the Securities Exchange Act of 1934 during the fiscal year
ended June 30, 2001.

ITEM 10.   EXECUTIVE COMPENSATION

         The following sets forth, for the fiscal years ended June 30, 2001,
2000 and 1999, the annual and long-term compensation paid or accrued of the
Company's named officers.

                           SUMMARY COMPENSATION TABLE
                           --------------------------

<TABLE>


                                                                    Long-Term
                                                               Compensation Awards
                                                               -------------------
                                    Annual Compensation             Securities
Name and                        ---------------------------         Underlying
Principal Position     Year     Salary     Bonus      Other      Options/SARs (#)    Compensation
------------------     ----     ------     -----      -----      ----------------    ------------
<S>                    <C>     <C>        <C>          <C>          <C>                  <C>

Zsigmond L. Sagi       2001    $190,000   $60,000      $--          3,392,857            $--
President, Chairman    2000     190,000                $--          6,028,571            $--
of the Board, Chief    1999     190,000    37,500      $--          2,847,900            $--
Executive Officer

Patricia Furness       2001     90,000     28,000      $--          1,606,143            $--
Vice President         2000     90,000       --        $--          1,768,572            $--
Secretary and          1999     90,000     28,125      $--          1,427,127            $--

</TABLE>


EMPLOYMENT AGREEMENTS

         In July 1996, the Company entered into employment agreements in
principle with Mr. Sagi and Ms. Furness. The agreements provide for base
salaries of $190,000 and $75,000 respectively, incentive bonus plans and
severance benefits. Mr. Furness's base salary was increased to $90,000 effective
July 1997.

         In December 1998, the Company issued 200,000 and 150,000 shares of the
Company's common stock to Mr. Sagi and Ms. Furness for deferring their current
year salaries.

         In April 2001, the Company issued 750,000 and 350,000 shares of the
Company's common stock to Mr. Sagi and Ms. Furness as bonuses and for deferring
their salaries for the part three years.


                                      -36-
<PAGE>




         The following table contains information regarding the grant of stock
options during the year ended June 30, 2001 to the named Executive Officers.

                      OPTION/SAR GRANTS IN LAST FISCAL YEAR

<TABLE>

                                                                                             Potential Realizable
                                            Percent                                            Value at Assumed
                          Number of        of Total                                         Annual Rates of Stock
                         Securities      Options/SARs                                         Price Appreciation
                         Underlying       Granted to       Exercise or                        For Option Term (3)
                        Options/SARs       Employees        Base Price     Expiration      ----------------------
Name                     Granted (#)        in 2001           ($/sh.)         Date         5% ($)         10% ($)
----                     -----------        -------           -------         ----         ------         -------
<S>                      <C>                 <C>               <C>          <C>           <C>             <C>

Zsigmond
L. Sagi (1)               3,392,857          66.5 %            $.07         04/02/2006     303,117        382,500

Patricia
Furness (2)               1,606,143          31.5 %            $.07         04/02/2006     143,500        181,000

<FN>
(1)  On April 3, 2001 the Company issued 3,392,857 options to purchase the
     Company's common stock to Mr. Sagi for accrued salaries.

(2)  On April 3, 2001 the Company issued 1,606,143 options to purchase the
     Company's common stock to Ms. Furness for accrued salaries.

(3)  Amounts represent hypothetical gains that could be achieved if the listed
     options were exercised at the end of the option term. These gains are based
     on assumed rates of stock price appreciation of 5% and 10% compounded
     annually from the date the options were granted to their expiration date,
     based upon fair market value of the Common Stock as of the date the options
     were granted. Actual gains, if any, on stock option exercises and stock
     holdings are dependent upon the future performance of the Company and
     overall financial market conditions. There can be no assurance that amounts
     reflected in this table will be achieved.
</FN>
</TABLE>

OPTION EXERCISES AND HOLDINGS
-----------------------------

         The following table sets forth information regarding stock options
exercised by the Named Officers during the year ended June 30, 2001, including
the aggregate value of gains on the date of exercise. In addition, the following
table provides data regarding the number of shares covered by both exercisable
and non-exercisable stock options at June 30, 2001. Also reported are the values
for "in-the-money" options, which represent the positive spread between the
exercise price of existing options and either $.75 the closing sale price of the
Company's common stock on June 30, 2001.


                                      -37-


<PAGE>




AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES


<TABLE>



                                 Realized
                                   Value
                                 (Market)                 Number of                             Value of
                                   Price                  Securities                           Unexercised
                  Common            on               Underlying Unexercised                    In-The-Money
                  Shares         Exercise             Options/SARs at Year                 Options/SARs at Year
                 Acquired        Date Less                     End #                               End #
                   on             Exericse         -----------------------------       ------------------------------
  Name          Exercise #       Price) ($)        Excersiable     Unexercisable       Excersiable      Unexercisable
  ----          ----------       ----------        -----------     -------------       -----------      -------------
<S>             <C>              <C>               <C>                 <C>              <C>              <C>


Zsigmond
L. Sagi             --               --             12,569,328          --              1,539,467            --

Patricia
Furness             --               --              4,991,842          --                556,009            --

</TABLE>


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth certain information known to the Company
as of the date of this Statement, with respect to beneficial ownership of: (i)
each person who is known by the Company to be the beneficial owner of more than
five (5%) percent of the Company's outstanding Common Stock; (ii) each of the
Company's directors and executive officers; and (iii) all officers and directors
as a group. Except as otherwise indicated, the Company believes that the
beneficial owners of the Common Stock listed below, based on information
furnished by such owners, have sole investment and voting power with respect to
such shares, subject to community property laws, where applicable.






                                      -38-
<PAGE>

<TABLE>

--------------------------------------------------------------------------------------------------------------------
TITLE OF CLASS                 NAME & ADDRESS OF            AMOUNT & NATURE OF          PERCENT OF CLASS
                               BENEFICIAL                   BENEFICIAL
                               OWNER                        OWNER
--------------------------------------------------------------------------------------------------------------------
<S>                            <C>                          <C>                           <C>

Common Stock                   Zsigmond L. Sagi             18,611,045                    49.6 %
                               19 Lockley Court
                               Mountain Lakes, NJ           (2), (3), (4), (5)
                               07046
--------------------------------------------------------------------------------------------------------------------
Common Stock                   361 Acquisition Corp.        2,121,250                     8.5 %
                               885 W. Georgia St.
                               Suite 1200
                               Vancouver, BC
                               Canada V6L 3E8
--------------------------------------------------------------------------------------------------------------------
Common Stock                   Patricia B. Furness          6,343,296                     21.2 %
                               25 Beechway Road
                               Mountain Lakes, NJ           (6), (7), (8),  (9)
                               07046
--------------------------------------------------------------------------------------------------------------------
Common Stock                   Louis Gottlieb               566,250                       2.3 %
                               20 N. Central Avenue
                               Valley Stream, NY            (10), (11)
                               11580
--------------------------------------------------------------------------------------------------------------------
Common Stock                   Paul Nelson                  244,500                       .01 %
                               69 Lookout Road
                               Mountain Lakes, NJ           (12) (13)
                               07046
--------------------------------------------------------------------------------------------------------------------
Common Stock                   Maurice L. Siegel            195,767                       .01 %
                               560 W. 43rd Street
                               New York, NY                 (14)
                               10036
--------------------------------------------------------------------------------------------------------------------
Common Stock                   All Directors &              25,960,858                  60.7%
                               Officers as a Group
                               (consisting of 5
                               persons)
--------------------------------------------------------------------------------------------------------------------

<FN>
(1) There were 24,970,690 shares of Common Stock outstanding as of October 1,
2001.

(2) Includes 750,000 shares of the Company's Common Stock issued to Mr. Sagi on
April 3, 2001 for deferring annual salary.

(3) Includes 2,847,900 shares issuable to Mr. Sagi upon the exercise of options
granted on May 14, 1999 for the conversion of accrued salary; 5,428,571 shares
issuable to Mr. Sagi upon the exercise of options granted on December 30, 1999
for the conversion of accrued salary; 900,000 shares issuable to

                                      -39-
<PAGE>



 Mr. Sagi upon the exercise of options granted in January 1998 and December 1999
for deferring accrued salary; 3,392,857 shares issuable to Mr. Sagi upon the
exercise of an option granted on April 3, 2001.

(4) Does not include 45,000 shares of the Company's Common Stock owned by Mr.
Sagi's former wife, and 98,500 shares of the Company's Common Stock owned by Mr.
Sagi's children and their spouses, as to which Mr. Sagi disclaims beneficial
ownership.

(5) Includes 67,900 shares issued on August 1, 2000 in connection with financing
for the Company.

(6) Includes 10,000 shares owned by Ms. Furness' children, as to which Ms.
Furness disclaims beneficial ownership.

(7) Includes 350,000 shares of the Company's Common Stock issued to Ms. Furness
on April 3, 2001 for deferring annual salaries.

(8) Includes 1,427,127 shares issuable to Ms. Furness upon the exercise of
options granted on May 14, 1999 for the conversion of accrued salary; 1,428,572
shares issuable to Ms. Furness upon the exercise of options granted on December
30, 1999 for the conversion of accrued salary; 490,000 shares issuable to Ms.
Furness upon the exercise of stock options granted in January 1998 and December
1999 for deferring annual salaries; and 1,606,143 shares issuable upon the
exercise of options granted on April 3, 2001.

(9) Includes 8,750 shares issued to Ms. Furness on August 1, 2000 in connection
with financing for the Company.

(10) Includes 86,250 shares of the Company's Common Stock issued to Louis and
Ruth Gottlieb on April 3, 2001, in connection with financing for the Company.

(11) Includes 40,000 shares issuable to Mr. Gottlieb upon the exercise of
options granted April 3, 2001.

(12) Includes 80,000 shares issuable to Mr. Nelson upon the exercise of options
granted on December 30, 1999 and April 3, 2001.

(13) Includes 15,000 shares issued to Mr. Nelson on December 29, 2000 in
connection with financing for the Company.

(14) Includes 120,000 shares of the Company's Common Stock, issuable upon the
exercise of options granted on August 5, 1998, December 30, 1999 and April 3,
2001 to Mr. Siegel.

</FN>
</TABLE>


                                      -40-
<PAGE>




ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

(a)  The Company and SMC Corp. entered into various agreements with an
     investment banking firm ("361 Acquisition Corp.") to, among other things,
     provide financing for the Company in exchange for shares of common stock.
     In exchange for terminating all prior agreements between 361 and the
     Company and SMC Corp., the Company issued 621,250 shares of its common
     stock to 361 representing services valued at approximately $78,000, which
     was approved by the Board of Directors on March 7, 1995. On March 31, 1998,
     SMC Corp. dissolved and distributed the note receivable of $888,006 from
     the Company to its five shareholders in equal amounts of $177,601,
     including Mr. Sagi (the Company's President and Chief Executive Officer),
     Carlo Civelli (former Vice President of Finance International of the
     Company), Kilham Management, Malir Enterprises Corp., and Zurow Investment
     S.A. The note terms were renegotiated with the lenders with interest at
     prime plus two (2%) percent. As of June 30, 2001, accrued interest in the
     amount of $63,714 was due Mr. Sagi, of which $17,538 was expensed during
     the year ended June 30, 2001. The notes have been extended to December 31,
     2002.

(b)  The Company intends to construct regional production centers throughout the
     world to manufacture, assemble and market the
     BreastCare(TM)/BreastAlert(TM). Accordingly, the Company entered into an
     agreement dated August 25, 1996, as amended, with Zigmed, Inc. ("Zigmed"),
     a company owned by the two sons of Mr. Zsigmond Sagi; Zigmed, Inc. was
     owned by Mr. Sagi prior to 1990. Pursuant to such agreement, Zigmed agreed
     to manufacture the sensor production equipment for such manufacturing
     centers for the contract price of $1,850,680 plus 100,000 shares of the
     Company's Common Stock. In August 1996, the Company paid Zigmed an advance
     deposit of $200,000 to begin production of the manufacturing equipment, and
     in March 1997 issued Zigmed 100,000 shares of the Company's Common Stock
     (valued at $1.00 per share) against the contract. As of June 30, 2001, the
     Company owes Zigmed $718,276.

(c)  The Company and Zigmed have entered into various agreements. The Company
     contracted with Zigmed for the production of the
     BreastCare(TM)/BreatAlert(TM) sensors. Zigmed provided material, labor and
     product testing services of $34,747 for the year ended June 30, 2001. The
     Company owes Zigmed approximately $92,000 as of June 30, 2001 for labor.
     See Note 14 of Notes to Consolidated Financial Statements for further
     information.

                                      -41-


<PAGE>



(d)  The Company has borrowed funds from Mr. Zsigmond Sagi, the Company's
     President and Chief Executive Officer. The promissory note to Mr. Sagi
     bears interest at prime plus two (2%) percent, 9% at June 30, 2001, and is
     payable on December 31, 2002. The principal amount of the note is
     $1,103,603 at June 30, 2001. Interest expense for the year ended June 30,
     2001 was 108,800.

(e)  On August 1, 2000, the Company issued 67,900 shares of Common Stock of the
     Company to Zsigmond L. Sagi the Company's President and Chief Executive
     officer pursuant to financing. In connection with the transaction the
     Company recorded interest expense of $34,629 for the year ended June 30,
     2001.

(f)  On August 1, 2000, the Company issued Ms. Patricia Furness the Company's
     Vice-President and Secretary 8,750 shares of Common Stock of the Company
     pursuant to financing. In connection with the transaction the Company
     recorded interest expense of $4,463 for the year ending June 30, 2001.

(g)  On December 29, 2000 and April 3, 2001, the Company issued to a director
     and an officer 15,000 and 86,250 shares, respectively of the Company's
     common stock for loan extensions. In connection with the transaction the
     Company recorded interest expense in the amount of $8,400 for the year
     ended June 30, 2001.

(h)  On April 3, 2001, the Company issued 750,000 and 350,000 shares of the
     Company's common stock to the Company President and Chief Executive officer
     and the Company's Vice President and Secretary, respectively for bonuses.
     In connection with the transaction the Company recorded compensation
     expense in the amount of $88,000 for the year ended June 30, 2001.

(i)  On April 3, 2001, the Company issued 250,000 shares of the Company's common
     stock to Zsigmond G. Sagi, son of the Company's President and Chief
     Executive Officer, for consulting services. In connection with the
     transaction the Company recorded consulting services in the amount of
     $20,000 for the year ended June 30, 2001.















                                      -42-


<PAGE>






ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

         (a) The following financial statements and supplementary financial
information are filed as part of this Annual Report on Form 10-KSB:

                                                                         Page
                                                                         ----

         1.  Financial Documents:

         Independent Auditors' Report                                    F-1

         Consolidated Balance Sheets, June 30,
         2001 and 2000                                                   F-3

         Consolidated Statements of Operations, Years
         Ended June 30, 2001, 2000 and 1999                              F-4

         Consolidated Statements of Stockholders' Equity,
         Years Ended June 30, 2001, 2000 and 1999                        F-5

         Consolidated Statements of Cash Flows, Years
         Ended June 30, 2001, 2000 and 1999                           F-6 - F-7

         Notes to Consolidated Financial Statements                   F-8 - F-28



















                                      -43-


<PAGE>




         2.  Financial Statement Schedules:

         All schedules are omitted because they are inapplicable, not required
or the information is included in the financial statements or notes thereto.

         (b) Reports on Form 8-K:

                  There were no reports on Form 8-K during the quarter ended
June 30, 2001.

         (c) The following Exhibit Index sets forth the applicable exhibits
(numbered in accordance with Item 601 of Regulation S-B) which are required to
be filed with this Annual Report on Form 10-KSB.

Exhibit
Number                                Title
-------                               -----

3.1               Certificate of Incorporation and Bylaws of the Registrant --
                  Incorporated by Reference to Exhibit 2.1 and 2.2 of the
                  Company's Report on Form 10-SB/A-1 dated September 17, 1996.

3.2               Amendment to the Certificate of Incorporation filed March 31,
                  1997 -- Incorporated by Reference to Exhibit 3.2 of the
                  Company's Report on Form 10-KSB for the year ended June 30,
                  1997.

10.1              Private Placement Memorandum dated May 17, 1994 --
                  Incorporated by Reference to Exhibit 3.1 of the Company's
                  Report on Form 10-SB/A-1 dated September 17, 1996.

10.2              Instrument defining shareholder rights regarding 18,000 shares
                  of the Company's Common Stock purchased on November 29, 1991
                  -- Incorporated by Reference to Exhibit 3.2 of the Company's
                  Report on Form 10-SB/A-1 dated September 17, 1996.

10.3              Instruments defining shareholder rights regarding 18,000
                  shares of the Company's Common Stock purchased between June
                  and August, 1993 -- Incorporated by Reference to Exhibit 3.3
                  of the Company's Report on Form 10-SB/A-1 dated September 17,
                  1996.

10.4              Agreement defining Bio-Life shareholders' rights regarding
                  35,000 shares of the Company's Common Stock -- Incorporated by
                  Reference to Exhibit 3.4 of the Company's Report on Form
                  10-SB/A-1 dated September 17, 1996.

10.5              Asset Transfer Agreement among SDSI (as SMC Acquisition
                  Corp.), Mr. Sagi and Scantek Medical Corp. dated August 12,
                  1991 -- Incorporated by Reference to Exhibit 6.1 of the
                  Company's Report on Form 10-SB/A-1 dated September 17, 1996.

10.6              Letter Agreement between SMC Corp. and Zigmed Corporation
                  dated January 8, 1991 ("Zigmed Agreement") -- Incorporated by
                  Reference to Exhibit 6.2 of the Company's Report on Form
                  10-SB/A-1 dated September 17, 1996.

                                      -44-


<PAGE>



10.7              Amendment to Purchase Order Agreement dated August 28, 1996 -
                  Incorporated by Reference to Exhibit 10.7 of the Company's
                  Form 10-KSB for the year ended June 30, 1997.

10.8              Purchase Order between SMC Corp. and Zigmed Corp. dated
                  January 22, 1991 -- Incorporated by Reference to Exhibit 6.3
                  of the Company's Report on Form 10-SB/A-1 dated September 17,
                  1996.

10.9              Amendment to Purchase Order Agreement dated August 28, 1996 -
                  Incorporated by Reference to Exhibit 10.9 of the Company's
                  Form 10-KSB for the year ended June 30, 1997.

10.10             Non-Disclosure Agreement between SMC Corp. and Zigmed Corp.
                  dated January 7, 1990 -- Incorporated by Reference to Exhibit
                  6.4 of the Company's Report on Form 10-SB/A-1 dated September
                  17, 1996.

10.11             Escrow Agreement among SMC Corp., 361 Acquisition Corp. and
                  Chase Lincoln First Bank dated August 20, 1991 -- Incorporated
                  by Reference to Exhibit 6.5 of the Company's Report on Form
                  10-SB/A-1 dated September 17, 1996.

10.12             Termination Agreement among Scantek Medical Corp., Mr. Sagi,
                  361 Acquisition Corp., Dal Brynelsen, Douglas E. McRae and
                  Scantek Medical Ltd. dated August 12, 1991 -- Incorporated by
                  Reference to Exhibit 6.6 of the Company's Report on Form
                  10-SB/A-1 dated September 17, 1996.

10.13             Acquisition Agreement (Amendment No. 2) between SMC Corp., Mr.
                  Sagi, 361 Acquisition Corp., Brynelsen, Scantek Medical Ltd.
                  and Scantek Medical, Inc. dated March 7, 1995 -- Incorporated
                  by Reference to Exhibit 6.7 of the Company's Report on Form
                  10-SB/A-1 dated September 17, 1996.

10.14             HumaScan Inc. Licensing Agreement between Scantek Medical,
                  Inc. and HumaScan, Inc. dated October 20, 1995 -- Incorporated
                  by Reference to Exhibit 6.8 of the Company's Report on Form
                  10-SB/A-1 dated September 17, 1996.

10.15             Amendment to the HumaScan Inc. Licensing Agreement between
                  Scantek Medical, Inc. and HumaScan, Inc. dated April 29, 1996
                  -- Incorporated by Reference to Exhibit 6.9 of the Company's
                  Report on Form 10-SB/A-1 dated September 17, 1996.

10.16             Lease between Scantek Medical, Inc. and Kabert Realty
                  Corporation for Storage and Office Space -- Incorporated by
                  Reference to Exhibit 6.10 of the Company's Report on Form
                  10-SB/A-1 dated September 17, 1996.

10.17             Lease between Scantek Medical, Inc. and Carol Yang for Office
                  Space -- Incorporated by Reference to Exhibit 6.11 of the
                  Company's Report on Form 10-SB/A-1 dated September 17, 1996.



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<PAGE>



10.18             Lease between Scantek Medical, Inc. and Pablito, L.L.C. for
                  Warehouse and Office Space dated June 13, 1997 - Incorporated
                  by Reference to Exhibit 10.18 of the Company's Form 10-KSB for
                  the year ended June 30, 1997.

10.19             Letters of Employment for Mr. Zsigmond Sagi and Ms. Patricia
                  Furness dated February 26, 1993 -- Incorporated by Reference
                  to Exhibit 6.12 of the Company's Report on Form 10-SB/A-1
                  dated September 17, 1996.

10.20             Amendment to the HumaScan Inc. Licensing Agreement between
                  Scantek Medical, Inc. and HumaScan, Inc. dated May 31, 1996 --
                  Incorporated by Reference to Exhibit 6.13 of the Company's
                  Report on Form 10-SB/A-1 dated September 17, 1996.

10.21             Licensing Agreement with Health Technologies International
                  Inc. and Scantek Medical Inc. dated August 15, 1996 --
                  Incorporated by Reference to Exhibit 10.21 of the Company's
                  Form 10-KSB for the year ended June 30, 1997.

10.22             Amendment to Licensing Agreement dated August 15, 1996 between
                  Health Technologies International Inc. and Scantek Medical,
                  Inc. dated April 30, 1997 -- Incorporated by Reference to
                  Exhibit 10.22 of the Company's Form 10-KSB for the year ended
                  June 30, 1997.

10.23             Licensing Agreement with Scantek Medical, Inc. and Sandell
                  Corp. S.A. dated September 22, 1997 -- Incorporated by
                  Reference to Exhibit 10.23 of the Company's Form 10-KSB for
                  the year ended June 30, 1997.

10.24             Amendment to Licensing Agreement between HumaScan, Inc. and
                  Scantek Medical Inc. dated May 15, 1998 -- Incorporated by
                  Reference to Exhibit 10.1 of the Company's Form 8-K filed May
                  27, 1998.

10.25             Amendment to Licensing Agreement with Scantek Medical, Inc.
                  and Sandell Corp. S.A. dated February 18, 1998 -- Incorporated
                  by Reference to Exhibit 10.25 of the Company's Form 10-KSB for
                  the year ended June 30, 1998.

10.26             Settlement Agreement between Scantek Medical, Inc and
                  HumaScan, Inc. dated March 11, 1999 -- Incorporated by
                  reference to Exhibit 10.1 of the Company's Form 8-K filed
                  April 2, 1999.

10.27             Amendment to Lease Agreement between Scantek Medical, Inc. and
                  Pablito, L.L.C. dated April 15, 1999--Incorporated by
                  reference to Exhibit 10.27 of the Company's Form 10-KSB for
                  the year ended June 30, 1999.

10.28             Distribution Agreement with Scantek Medical, Inc. and Nugard
                  HealthCare Ltd. dated July 14, 1999. --Incorporated by
                  reference to Exhibit 10.28 of the Company's Form 10-KSB for
                  the year ended June 30, 1999.


                                      -46-
<PAGE>


10.29             A Business Implantation Agreement with Scantek Medical S.A.
                  and the Government of Pernambuco dated November 19, 1999 - -
                  Incorporated by reference to Exhibit 10.29 of the Company's
                  Form 10-KSB for the year ended June 30, 2000.

10.30             Consulting Agreement with Scantek Medical Inc. and
                  Multiconsulteria S/C LTDA dated November 1999 - - Incorporated
                  by reference to Exhibit 10.30 of the Company's Form 10-KSB for
                  the year ended June 30, 2000.


10.31             Letter of Approval for funding with Scantek Medical
                  Inc./Scantek Medical do Brasil Ltda and North East Brazil
                  Federal Program of Sudene Finor Article 9 dated May 11, 2000 -
                  - Incorporated by reference to Exhibit 10.31 of the Company's
                  Form 10-KSB for the year ended June 30, 2000.


10.32             Letter of Intent Agreement with Scantek Medical Inc. and
                  Scantek Medical do Brasil Ltda and Instituto Materno Infantil
                  de Pernambuco dated May 31, 2000 - - Incorporated by reference
                  to Exhibit 10.32 of the Company's Form 10-KSB for the year
                  ended June 30, 2000.


10.33             Suape Land Purchase Agreement with Scantek Medical do Brasil
                  Ltda and the State of Pernambuco dated May 25, 2000 - -
                  Incorporated by reference to Exhibit 10.33 of the Company's
                  Form 10-KSB for the year ended June 30, 2000.


10.34             Letter of Commitment for BreastCare(TM)usage and purchase
                  order with Scantek Medical do Brasil Ltda and Unimed
                  Recife-Cooperativa de Trabalho Medico dated June 1, 2000 - -
                  Incorporated by reference to Exhibit 10.34 of the Company's
                  Form 10-KSB for the year ended June 30, 2000.


11                A statement regarding the computation of earnings per share is
                  omitted because such computation can be clearly determined
                  from the material contained in this Annual Report on Form
                  10-KSB.

21                Subsidiaries of the Registrant: (i) Scantek Medical S.A.,
                  Inc., incorporated in Uruguay; and (ii) Scantek Medical do
                  Brasil, LTDA, incorporated in Brazil.

99.1              Reinstatement of Patent No. RE.4,624,264 United States,
                  Extension to November 25, 2003, dated August 12, 1997 --
                  Incorporated by reference of the Company's Form 10-KSB for the
                  year ended June 30, 1998.





                                      -47-



<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.

                             SCANTEK MEDICAL INC.

                             By: /s/ ZSIGMOND L. SAGI
                              -----------------------------
                                Zsigmond L. Sagi, President

                             Date: October 15, 2001





















                                                     -48-


<PAGE>



         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 and on the dates indicated.



/s/ ZSIGMOND L. SAGI
--------------------------------------
Zsigmond L. Sagi
President, Chairman of the Board,
Chief Executive Officer
and Director

/s/ PATRICIA B. FURNESS
--------------------------------------
Patricia B. Furness
Vice President, Corporate Secretary
and Director

/s/ PAUL NELSON
--------------------------------------
Paul Nelson
Director


/s/ MAURICE SIEGEL
--------------------------------------
Maurice Siegel
Vice-President and Director




















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