##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-QSB

(Mark One)



|[X] |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|--- |  | ---------------------------------------------------------------------------------------
|    |  | FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2001.                                          

OR



|[   ] |  | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
|----- |  | ----------------------------------------------------------------------------------
|      |  | FOR THE TRANSITION FROM ____________ TO ____________.                             

COMMISSION FILE NUMBER 000-27421

EMERGENCY FILTRATION PRODUCTS, INC.

---

(Exact name of registrant as specified in its charter)


|                                                              |  |                                    
|------------------------------------------------------------- |  | -----------------------------------
|NEVADA                                                        |  | 87-0561647                         
|                                                              |  |                                    
|(State or other jurisdiction ofincorporation or organization) |  | (I.R.S. EmployerIdentification No.)

|                                                        |  |  |            | 
|------------------------------------------------------- |  |  | ---------- | 
|4335 South Industrial Road, Suite 440
Las Vegas, Nevada |  |  | 89103      | 
|                                                        |  |  |            | 
|(Address of principal executive offices)                |  |  | (Zip code) | 

Issuers telephone number: (702) 798-4541

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   [   ]

State the number of shares outstanding of each of the issuers classes of
common equity, as of the latest practicable date:



| |  | At June 30, 2001, there were outstanding 10,947,460 shares of the
Registrants Common Stock, $.001 par value.
| |  | -------------------------------------------------------------------------------------------------------------

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





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TABLE OF CONTENTS



|                             |                                                                                                |                                              |  |  |  |  |  | 
|---------------------------- | ---------------------------------------------------------------------------------------------- | -------------------------------------------- |  |  |  |  |  | 
|PART I FINANCIAL INFORMATION
|                             | Item I. Financial Statements                                                                  
|                             |                                                                                                | Balance Sheets                              
|                             |                                                                                                | Statements of Operations                    
|                             |                                                                                                | Statements of Stockholders Equity (Deficit)
|                             |                                                                                                | Statements of Cash Flows                    
|                             |                                                                                                | Notes to the Financial Statements           
|                             | Item II. Managements Discussion and Analysis of Financial Condition and Results of Operations
|PART II OTHER INFORMATION   
|                             | Item 1  Legal Proceedings                                                                    
|                             | Item 2  Changes in the Rights of the Companys Security Holders                              
|                             | Item 3  Defaults by the Company on its Senior Securities                                     
|                             | Item 4  Submission of Matter to Vote of Security Holders                                     
|                             | Item 5  Other Information                                                                    
|                             | Item 6  Exhibits and Reports on Form 8-K                                                     
|SIGNATURE                   



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##### Table of Contents






PART I

FINANCIAL INFORMATION




Item I.     Financial Statements




EMERGENCY FILTRATION PRODUCTS, INC.
Balance Sheets

ASSETS

|                                |                                        |                              |   |             |         |              |   |         |         | 
|------------------------------- | -------------------------------------- | ---------------------------- | - | ----------- | ------- | ------------ | - | ------- | ------- | 
|                                |                                        |                              |   | June 30,    |         | December 31,
|                                |                                        |                              |   | 2001        |         | 2000        
|                                |                                        |                              |   |             |         |             
|                                |                                        |                              |   | (Unaudited) |         |              |   |        
|CURRENT ASSETS                  |                                        |                              |   |             |         |              |   |        
|                               
|                               
|                               
|                               
|                                | Cash                                   |                              | $ | 11          |         |              | $ | 6,985   |        
|                               
|                               
|                               
|                               
|                                | Accounts receivable, net (Note 1)      |                              |   | 187,797     |         |              |   | 67,962  |        
|                               
|                               
|                               
|                               
|                                | Prepaid expenses                       |                              |   | 1,120       |         |              |   | 1,513   |        
|                               
|                               
|                               
|                               
|                                | Inventory (Note 1)                     |                              |   | 80,008      |         |              |   | 84,394  |        
|                                |                                        |                              |   |             |         |              |   |        
|                                |                                        | Total Current Assets         |   |             | 268,936 |              |   |         | 160,854 | 
|                                |                                        |                              |   |             |         |              |   |        
|PROPERTY AND EQUIPMENT (Note 1) |                                        |                              |   |             |         |              |   |        
|                               
|                               
|                               
|                               
|                                | Molds                                  |                              |   | 112,850     |         |              |   | 109,650 |        
|                               
|                               
|                               
|                               
|                                | Furniture and office equipment         |                              |   | 35,613      |         |              |   | 33,989  |        
|                               
|                               
|                               
|                               
|                                | Software                               |                              |   | 7,390       |         |              |   |        |        
|                               
|                               
|                               
|                               
|                                | Accumulated depreciation               |                              |   | (79,874     | )       |              |   | (69,415 | )      
|                                |                                        |                              |   |             |         |              |   |        
|                                |                                        | Total Property and Equipment |   |             | 75,979  |              |   |         | 74,224  | 
|                                |                                        |                              |   |             |         |              |   |        
|OTHER ASSETS                    |                                        |                              |   |             |         |              |   |        
|                               
|                               
|                               
|                               
|                                | Deferred stock issuance costs (Note 1) |                              |   | 181,390     |         |              |   |        |        
|                               
|                               
|                               
|                               
|                                | Deposits                               |                              |   | 4,141       |         |              |   | 4,141   |        
|                               
|                               
|                               
|                               
|                                | Patent and trademark, net (Note 2)     |                              |   | 150,492     |         |              |   | 154,190 |        
|                                |                                        |                              |   |             |         |              |   |        
|                                |                                        | Total Other Assets           |   |             | 336,023 |              |   |         | 158,331 | 
|                                |                                        |                              |   |             |         |              |   |        
|                                |                                        | TOTAL ASSETS                 |   | $           | 680,938 |              |   | $       | 393,409 | 
|                                |                                        |                              |   |             |         |              |   |        

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

2



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##### Table of Contents



EMERGENCY FILTRATION PRODUCTS, INC.
Balance Sheets (Continued)

LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)

|                                              |                                                                                                                                    |                                                      |   |             |          |              |   |            |          |  
|--------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------- | - | ----------- | -------- | ------------ | - | ---------- | -------- | -
|                                              |                                                                                                                                    |                                                      |   | June 30,    |          | December 31,
|                                              |                                                                                                                                    |                                                      |   | 2001        |          | 2000        
|                                              |                                                                                                                                    |                                                      |   |             |          |             
|                                              |                                                                                                                                    |                                                      |   | (Unaudited) |          |              |   |           
|CURRENT LIABILITIES                           |                                                                                                                                    |                                                      |   |             |          |              |   |           
|                                             
|                                             
|                                             
|                                             
|                                              | Accounts payable                                                                                                                   |                                                      | $ | 192,088     |          |              | $ | 108,151    |         
|                                             
|                                             
|                                             
|                                             
|                                              | Accounts payable  related parties (Note 3)                                                                                        |                                                      |   | 407,350     |          |              |   | 364,374    |         
|                                             
|                                             
|                                             
|                                             
|                                              | Accrued expenses                                                                                                                   |                                                      |   | 41,277      |          |              |   | 28,459     |         
|                                             
|                                             
|                                             
|                                             
|                                              | Note payable (Note 4)                                                                                                              |                                                      |   | 4,612       |          |              |   | 17,988     |         
|                                             
|                                             
|                                             
|                                             
|                                              | Note payable  related (Note 3)                                                                                                    |                                                      |   | 146,500     |          |              |   | 11,197     |         
|                                              |                                                                                                                                    |                                                      |   |             |          |              |   |           
|                                              |                                                                                                                                    | Total Current Liabilities                            |   |             | 791,827  |              |   |            | 530,169  |  
|                                              |                                                                                                                                    |                                                      |   |             |          |              |   |           
|LONG-TERM DEBT                                |                                                                                                                                    |                                                      |   |             |          |              |   |           
|                                             
|                                             
|                                             
|                                             
|                                              | Note payable  related (Note 3)                                                                                                    |                                                      |   |            |          |              |   | 135,303    |         
|                                              |                                                                                                                                    |                                                      |   |             |          |              |   |           
|                                              |                                                                                                                                    | Total Long-Term Debt                                 |   |             |         |              |   |            | 135,303  |  
|                                              |                                                                                                                                    |                                                      |   |             |          |              |   |           
|                                              |                                                                                                                                    | Total Liabilities                                    |   |             | 791,827  |              |   |            | 665,472  |  
|                                              |                                                                                                                                    |                                                      |   |             |          |              |   |           
|COMMITMENTS AND CONTINGENCIES (Notes 2 and 6) |                                                                                                                                    |                                                      |   |             |          |              |   |           
|                                             
|                                             
|                                             
|                                             
|STOCKHOLDERS EQUITY (DEFICIT)                |                                                                                                                                    |                                                      |   |             |          |              |   |           
|                                             
|                                             
|                                             
|                                             
|                                              | Common stock, par value $0.001; authorized
50,000,000 shares; 10,947,460 and 9,567,758 shares
issued and outstanding, respectively |                                                      |   | 10,947      |          |              |   | 9,568      |         
|                                             
|                                             
|                                             
|                                             
|                                              | Additional paid-in capital                                                                                                         |                                                      |   | 5,349,336   |          |              |   | 4,931,054  |         
|                                             
|                                             
|                                             
|                                             
|                                              | Accumulated deficit                                                                                                                |                                                      |   | (5,471,172  | )        |              |   | (5,212,685 | )       
|                                              |                                                                                                                                    |                                                      |   |             |          |              |   |           
|                                              |                                                                                                                                    | Total Stockholders Equity (Deficit)                 |   |             | (110,889 | )            |   |            | (272,063 | )
|                                              |                                                                                                                                    |                                                      |   |             |          |              |   |           
|                                              |                                                                                                                                    | TOTAL LIABILITIES AND STOCKHOLDERS
EQUITY (DEFICIT) |   | $           | 680,938  |              |   | $          | 393,409  |  
|                                              |                                                                                                                                    |                                                      |   |             |          |              |   |           

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

3



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EMERGENCY FILTRATION PRODUCTS, INC.
Statements of Operations
(Unaudited)

|                       |                                              |                              |         |                    |         |                  |          |         |         |      |          |         |         |   |          |         |         |  
|---------------------- | -------------------------------------------- | ---------------------------- | ------- | ------------------ | ------- | ---------------- | -------- | ------- | ------- | ---- | -------- | ------- | ------- | - | -------- | ------- | ------- | -
|                       |                                              |                              |         | For the            |         | For the         
|                       |                                              |                              |         | Three Months Ended |         | Six Months Ended
|                       |                                              |                              |         | June 30,           |         | June 30,        
|                       |                                              |                              |         |                    |         |                 
|                       |                                              |                              |         | 2001               |         | 2000             |          | 2001    |         | 2000
|                       |                                              |                              |         |                    |         |                  |          |         |         |     
|NET SALES              |                                              | $                            | 260,122 |                    |         | $                | 13,532   |         |         | $    | 421,852  |         |         | $ | 18,843   |        
|                       |                                              |                              |         |                    |         |                  |          |         |         |      |          |         |         |   |          |        
|EXPENSES               |                                              |                              |         |                    |         |                  |          |         |         |      |          |         |         |   |          |        
|                      
|                      
|                      
|                      
|                       | Cost of sales                                |                              |         | 138,122            |         |                  |          | 5,928   |         |      |          | 248,741 |         |   |          | 8,638   |        
|                      
|                      
|                      
|                      
|                       | Depreciation and amortization                |                              |         | 7,767              |         |                  |          | 8,274   |         |      |          | 15,919  |         |   |          | 16,154  |        
|                      
|                      
|                      
|                      
|                       | Research and development                     |                              |         | 9,040              |         |                  |          | 5,050   |         |      |          | 12,347  |         |   |          | 41,050  |        
|                      
|                      
|                      
|                      
|                       | Additional costs through granting
of options |                              |         |                   |         |                  |          |        |         |      |          |        |         |   |          | 105,113 |        
|                      
|                      
|                      
|                      
|                       | General and administrative                   |                              |         | 194,639            |         |                  |          | 324,473 |         |      |          | 395,082 |         |   |          | 678,253 |        
|                       |                                              |                              |         |                    |         |                  |          |         |         |      |          |         |         |   |          |        
|                       |                                              | Total Expenses               |         |                    | 349,568 |                  |          |         | 343,725 |      |          |         | 672,089 |   |          |         | 849,208 |  
|                       |                                              |                              |         |                    |         |                  |          |         |         |      |          |         |         |   |          |        
|LOSS FROM OPERATIONS   |                                              |                              | (89,446 | )                  |         |                  | (330,193 | )       |         |      | (250,237 | )       |         |   | (830,365 | )      
|                       |                                              |                              |         |                    |         |                  |          |         |         |      |          |         |         |   |          |        
|OTHER INCOME (EXPENSE) |                                              |                              |         |                    |         |                  |          |         |         |      |          |         |         |   |          |        
|                      
|                      
|                      
|                      
|                       | Interest expense                             |                              |         | (4,064             | )       |                  |          | (241    | )       |      |          | (8,250  | )       |   |          | (623    | )      
|                       |                                              |                              |         |                    |         |                  |          |         |         |      |          |         |         |   |          |        
|                       |                                              | Total Other Income (Expense) |         |                    | (4,064  | )                |          |         | (241    | )    |          |         | (8,250  | ) |          |         | (623    | )
|                       |                                              |                              |         |                    |         |                  |          |         |         |      |          |         |         |   |          |        
|NET LOSS               |                                              | $                            | (93,510 | )                  |         | $                | (330,434 | )       |         | $    | (258,487 | )       |         | $ | (830,988 | )      
|                       |                                              |                              |         |                    |         |                  |          |         |         |      |          |         |         |   |          |        
|BASIC LOSS PER SHARE   |                                              | $                            | (0.01   | )                  |         | $                | (0.04    | )       |         | $    | (0.02    | )       |         | $ | (0.10    | )      
|                       |                                              |                              |         |                    |         |                  |          |         |         |      |          |         |         |   |          |        

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

4



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##### Table of Contents






EMERGENCY FILTRATION PRODUCTS, INC.
Statements of Stockholders Equity (Deficit)

|                                                                                 |  |              |           |            |  |             |       |         |  |   |           |  |  |   |            |  
|-------------------------------------------------------------------------------- |  | ------------ | --------- | ---------- |  | ----------- | ----- | ------- |  | - | --------- |  |  | - | ---------- | -
|                                                                                 |  | Common Stock |           | Additional |  |             |       |        
|                                                                                 |  |              |           | Paid-In    |  | Accumulated
|                                                                                 |  | Shares       |           | Amount     |  | Capital     |       | Deficit
|                                                                                 |  |              |           |            |  |             |       |        
|Balance, December 31, 1998                                                       |  |              | 7,078,107 |            |  | $           | 7,078 |         |  | $ | 3,191,923 |  |  | $ | (3,137,388 | )
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Common stock issued for
cash at $1.00 per share                                  |  |              | 601,061   |            |  |             | 601   |         |  |   | 600,460   |  |  |   |           |  
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Common stock issued on
exercise of stock options
at $0.75 per share              |  |              | 67,000    |            |  |             | 67    |         |  |   | 50,183    |  |  |   |           |  
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Common stock issued for
services at $1.00 per share                              |  |              | 77,597    |            |  |             | 78    |         |  |   | 77,519    |  |  |   |           |  
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Additional capital contribution                                                  |  |              |          |            |  |             |      |         |  |   | 562       |  |  |   |           |  
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Net loss for the year ended
December 31, 1999                                    |  |              |          |            |  |             |      |         |  |   |          |  |  |   | (983,509   | )
|                                                                                 |  |              |           |            |  |             |       |         |  |   |           |  |  |   |            |  
|Balance, December 31, 1999                                                       |  |              | 7,823,765 |            |  |             | 7,824 |         |  |   | 3,920,647 |  |  |   | (4,120,897 | )
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Common stock issued for cash
at prices ranging from $0.18
to $0.75 per share     |  |              | 853,835   |            |  |             | 854   |         |  |   | 254,967   |  |  |   |           |  
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Common stock issued for
services at prices ranging
from $0.40 to $1.05 per share |  |              | 782,158   |            |  |             | 782   |         |  |   | 518,091   |  |  |   |           |  
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Common stock issued through
exercise of options at $0.75
per share               |  |              | 88,000    |            |  |             | 88    |         |  |   | 65,912    |  |  |   |           |  
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Common stock issued for
patents at $1.00 per share                               |  |              | 20,000    |            |  |             | 20    |         |  |   | 19,980    |  |  |   |           |  
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Additional expense recorded
from granting of options                             |  |              |          |            |  |             |      |         |  |   | 151,457   |  |  |   |           |  
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Net loss for the year ended
December 31, 2000                                    |  |              |          |            |  |             |      |         |  |   |          |  |  |   | (1,091,788 | )
|                                                                                 |  |              |           |            |  |             |       |         |  |   |           |  |  |   |            |  
|Balance, December 31, 2000                                                       |  |              | 9,567,758 |            |  | $           | 9,568 |         |  | $ | 4,931,054 |  |  | $ | (5,212,685 | )
|                                                                                 |  |              |           |            |  |             |       |         |  |   |           |  |  |   |            |  

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

5



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##### Table of Contents



EMERGENCY FILTRATION PRODUCTS, INC.
Statements of Stockholders Equity (Deficit) (Continued)

|                                                                      |  |              |            |            |  |             |        |         |  |   |           |   |  |   |            |  
|--------------------------------------------------------------------- |  | ------------ | ---------- | ---------- |  | ----------- | ------ | ------- |  | - | --------- | - |  | - | ---------- | -
|                                                                      |  | Common Stock |            | Additional |  |             |        |        
|                                                                      |  |              |            | Paid-In    |  | Accumulated
|                                                                      |  | Shares       |            | Amount     |  | Capital     |        | Deficit
|                                                                      |  |              |            |            |  |             |        |        
|Balance, December 31, 2000                                            |  |              | 9,567,758  |            |  | $           | 9,568  |         |  | $ | 4,931,054 |   |  | $ | (5,212,685 | )
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Common stock issued for
services at $0.50 per share
(unaudited)       |  |              | 186,446    |            |  |             | 186    |         |  |   | 93,036    |   |  |   |           |  
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Common stock issued for
cash at $0.17 and $0.18 per
share (unaudited) |  |              | 1,193,256  |            |  |             | 1,193  |         |  |   | 212,829   |   |  |   |           |  
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Additional costs through
issuance of options (unaudited)              |  |              |           |            |  |             |       |         |  |   | 161,390   |   |  |   |           |  
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Stock offering costs                                                  |  |              |           |            |  |             |       |         |  |   | (48,973   | ) |  |   |           |  
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Net loss for the six months
ended June 30, 2001
(unaudited)           |  |              |           |            |  |             |       |         |  |   |          |   |  |   | (258,487   | )
|                                                                      |  |              |            |            |  |             |        |         |  |   |           |   |  |   |            |  
|Balance, June 30, 2001
(unaudited)                                    |  |              | 10,947,460 |            |  | $           | 10,947 |         |  | $ | 5,349,336 |   |  | $ | (5,471,172 | )
|                                                                      |  |              |            |            |  |             |        |         |  |   |           |   |  |   |            |  

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

6



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##### Table of Contents






EMERGENCY FILTRATION PRODUCTS, INC.
Statements of Cash Flows
(Unaudited)

|                                                     |                                                                               |                                                                                |                                           |          |                          |          |      |          |         |          |  
|---------------------------------------------------- | ----------------------------------------------------------------------------- | ------------------------------------------------------------------------------ | ----------------------------------------- | -------- | ------------------------ | -------- | ---- | -------- | ------- | -------- | -
|                                                     |                                                                               |                                                                                |                                           |          | For the Six Months Ended
|                                                     |                                                                               |                                                                                |                                           |          | June 30,                
|                                                     |                                                                               |                                                                                |                                           |          |                         
|                                                     |                                                                               |                                                                                |                                           |          | 2001                     |          | 2000
|                                                     |                                                                               |                                                                                |                                           |          |                          |          |     
|CASH FLOWS FROM OPERATING ACTIVITIES                 |                                                                               |                                                                                |                                           |          |                          |          |      |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Net loss                                                                      |                                                                                | $                                         | (258,487 | )                        |          | $    | (830,988 | )      
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Adjustments to reconcile net loss to net cash
(used by) operating activities: |                                                                                |                                           |          |                          |          |      |          |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                               | Depreciation and amortization                                                  |                                           |          | 15,919                   |          |      |          | 16,154  |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                               | Common stock issued for services                                               |                                           |          | 44,249                   |          |      |          | 396,566 |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                               | Expense on options granted                                                     |                                           |          |                         |          |      |          | 105,113 |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Changes in operating assets and liabilities:                                  |                                                                                |                                           |          |                          |          |      |          |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                               | (Increase) decrease in inventory                                               |                                           |          | 4,386                    |          |      |          | 6,721   |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                               | (Increase) decrease in prepaid expenses                                        |                                           |          | 393                      |          |      |          | 958     |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                               | (Increase) decrease in accounts receivable
and accounts receivable related     |                                           |          | (119,835                 | )        |      |          | 588     |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                               | (Increase) decrease in other assets                                            |                                           |          | (20,000                  | )        |      |          |        |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                               | Increase (decrease) in cash overdraft                                          |                                           |          |                         |          |      |          | (1,176  | )       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                               | Increase (decrease) in accrued expenses                                        |                                           |          | 12,818                   |          |      |          |        |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                               | Increase (decrease) in accounts payable and
accounts payable  related parties |                                           |          | 126,913                  |          |      |          | 183,986 |         
|                                                     |                                                                               |                                                                                |                                           |          |                          |          |      |         
|                                                     |                                                                               |                                                                                | Net Cash (Used by) Operating Activities   |          |                          | (193,644 | )    |          |         | (122,078 | )
|                                                     |                                                                               |                                                                                |                                           |          |                          |          |      |         
|CASH FLOWS FROM INVESTING ACTIVITIES                 |                                                                               |                                                                                |                                           |          |                          |          |      |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Patent costs                                                                  |                                                                                |                                           | (1,762   | )                        |          |      | (8,809   | )      
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Acquisition of equipment                                                      |                                                                                |                                           | (12,214  | )                        |          |      |         |        
|                                                     |                                                                               |                                                                                |                                           |          |                          |          |      |         
|                                                     |                                                                               |                                                                                | Net Cash (Used by) Investing Activities   |          |                          | (13,976  | )    |          |         | (8,809   | )
|                                                     |                                                                               |                                                                                |                                           |          |                          |          |      |         
|CASH FLOWS FROM FINANCING ACTIVITIES                 |                                                                               |                                                                                |                                           |          |                          |          |      |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Proceeds from issuance of stock                                               |                                                                                |                                           | 214,022  |                          |          |      | 144,000  |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Payment on notes and leases payable                                           |                                                                                |                                           | (13,376  | )                        |          |      | (12,212  | )      
|                                                     |                                                                               |                                                                                |                                           |          |                          |          |      |         
|                                                     |                                                                               |                                                                                | Net Cash Provided by Financing Activities |          |                          | 200,646  |      |          |         | 131,788  |  
|                                                     |                                                                               |                                                                                |                                           |          |                          |          |      |         
|NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS |                                                                               |                                                                                | (6,974                                    | )        |                          |          | 901  |         
|                                                    
|                                                    
|                                                    
|                                                    
|CASH AT BEGINNING OF PERIOD                          |                                                                               |                                                                                | 6,985                                     |          |                          |          |     |         
|                                                     |                                                                               |                                                                                |                                           |          |                          |          |      |         
|CASH AT END OF PERIOD                                |                                                                               | $                                                                              | 11                                        |          |                          | $        | 901  |         
|                                                     |                                                                               |                                                                                |                                           |          |                          |          |      |         

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

7



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##### Table of Contents



EMERGENCY FILTRATION PRODUCTS, INC.
Statements of Cash Flows (Continued)
(Unaudited)

|                                    |                                      |              |   |                          |       |      |   |         |     | 
|----------------------------------- | ------------------------------------ | ------------ | - | ------------------------ | ----- | ---- | - | ------- | --- | 
|                                    |                                      |              |   | For the Six Months Ended
|                                    |                                      |              |   | June 30,                
|                                    |                                      |              |   |                         
|                                    |                                      |              |   | 2001                     |       | 2000
|                                    |                                      |              |   |                          |       |     
|SUPPLEMENTAL CASH FLOW INFORMATION: |                                      |              |   |                          |       |      |   |        
|                                   
|                                   
|                                   
|                                   
|                                    | Cash paid for:                       |              |   |                          |       |      |   |         |    
|                                   
|                                   
|                                   
|                                   
|                                    |                                      | Interest     |   | $                        | 2,439 |      |   | $       | 623 | 
|                                   
|                                   
|                                   
|                                   
|                                    |                                      | Income taxes |   | $                        |      |      |   | $       |    | 
|                                   
|                                   
|                                   
|                                   
|NON-CASH FINANCING ACTIVITIES:      |                                      |              |   |                          |       |      |   |        
|                                   
|                                   
|                                   
|                                   
|                                    | Common stock issued for services     |              | $ | 44,249                   |       |      | $ | 396,566 |    
|                                   
|                                   
|                                   
|                                   
|                                    | Common stock issued for patent costs |              | $ |                         |       |      | $ | 15,000  |    

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

8



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##### Table of Contents






EMERGENCY FILTRATION PRODUCTS, INC.
Notes to the Financial Statements
June 30, 2001 and December 31, 2000

NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



| |  | a. Organization                                                                                                                                                                                                                                                                                                                                     
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Emergency Filtration Products, Inc. (the Company) was incorporated in
the State of Nevada on November 1, 1991 as Lead Creek Unlimited. In
March 1996, pursuant to a Plan of Reorganization, the Company changed
its name to Emergency Filtration Products, Inc.                                                                                     
|
| |  | Between November 1, 1991 and February 9, 1996, the Company had no line
of business. As of the latter date, the Company entered into an
agreement to acquire title to a technology in the emergency
respiration equipment field. The Company is currently engaged in the
development, production and sale of this equipment.                         
|
| |  | b. Accounting Method                                                                                                                                                                                                                                                                                                                                
|
| |  | The Companys financial statements are prepared using the accrual
method of accounting. The Company has elected a December 31, year
end.                                                                                                                                                                                                            
|
| |  | c. Cash and Cash Equivalents                                                                                                                                                                                                                                                                                                                        
|
| |  | The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents.                                                                                                                                                                                                                  
|
| |  | d. Accounts Receivable                                                                                                                                                                                                                                                                                                                              
|
| |  | Accounts receivable are shown net of the allowance for doubtful
accounts of $2,867 and $3,122 at June 30, 2001 and December 31, 2000.                                                                                                                                                                                                               
|
| |  | e. Provision for Taxes                                                                                                                                                                                                                                                                                                                              
|
| |  | At December 31, 2000, the Company had net operating loss carryforwards
of approximately $4,100,000 that may be offset against future taxable
income through 2020. No tax benefit has been reported in the
financial statements, because the potential tax benefits of the loss
carryforwards are offset by a valuation allowance of the same amount.
|
| |  | f. Property and Equipment                                                                                                                                                                                                                                                                                                                           
|
| |  | Property and equipment are stated at cost. Expenditures for small
tools, ordinary maintenance and repairs are charged to operations as
incurred. Major additions and improvements are capitalized.
Depreciation is computed using the straight-line and accelerated
methods over estimated useful lives as follows:                                 

|                               |  |              |  | 
|------------------------------ |  | ------------ |  | 
|Molds                          |  | 7 years     
|                              
|                              
|                              
|                              
|Furniture and office equipment |  | 5 to 7 years
|                              
|                              
|                              
|                              
|Software                       |  | 3 years     

9



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##### Table of Contents



EMERGENCY FILTRATION PRODUCTS, INC.
Notes to the Financial Statements
June 30, 2001 and December 31, 2000

NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)



| |  | g. Inventory                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Inventory is stated at the lower of cost (computed on a first-in,
first-out basis) or market. The inventory consists of raw materials
used in the assembly and production of the emergency respiration
equipment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | h. Estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | i. Basic Loss Per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | The computation of basic loss per share of common stock is based on
the weighted standard average number of shares outstanding during the
period of the financial statements. Common stock equivalents,
consisting of stock options, have not been included in the calculation
as their effect is antidilutive for the periods presented.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | j. Change in Accounting Principle                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | The Company has adopted the provisions of FASB Statement No. 138
Accounting for Certain Derivative Instruments and Hedging Activities,
(an amendment of FASB Statement No. 133.) Because the Company had
adopted the provisions of FASB Statement No. 133, prior to June 15,
2000, this statement is effective for all fiscal quarters beginning
after June 15, 2000. The adoption of this principle had no material
effect on the Companys consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | The Company has adopted the provisions of FASB Statement No. 140
Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities (a replacement of FASB Statement No.
125.) This statement provides accounting and reporting standard for
transfers and servicing of financial assets and extinguishments of
liabilities. Those standards are based on consistent application of a
financial-components approach that focuses on control. Under that
approach, the transfer of financial assets, the Company recognized the
financial and servicing assets it controls and the liabilities it has
incurred, derecognizes financial assets when control has been
surrendered, and derecognizes liabilities when extinguished. This
statement provides consistent standards for distinguishing transfers
of financial assets that are sales from transfers that are secured
borrowings. This statement is effective for transfers and servicing
of financial assets and extinguishments of liabilities occurring after
March 31, 2001. This statement is effective for recognition and
reclassification of collateral and for disclosures relating to
securitization transactions and collateral for fiscal years ending
after December 15, 2000. The adoption of this principle had no
material effect on the Companys consolidated financial statements.

10



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##### Table of Contents



EMERGENCY FILTRATION PRODUCTS, INC.
Notes to the Financial Statements
June 30, 2001 and December 31, 2000

NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)



| |  | j. Change in Accounting Principle (Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The Company has adopted the provisions of FIN 44 Accounting for
Certain Transactions Involving Stock Compensation (an interpretation
of APB Opinion No. 25.) This interpretation is effective July 1,
2000. FIN 44 clarifies the application of Opinion No. 25 for only
certain issues. It does not address any issues related to the
application of the fair value method in Statement No. 123. Among
other issues, FIN 44 clarifies the definition of employee for purposes
of applying Opinion 25, the criteria for determining whether a plan
qualifies as a noncompensatory plan, the accounting consequence of
various modifications to the terms of a previously fixed stock option
or award, and accounting for an exchange of stock compensation awards
in a business combination. The adoption of this principle had no
material effect on the Companys consolidated financial statements.
|
| |  | k. Advertising                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | The Company follows the policy of charging the costs of advertising to
expense as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | l. Revenue Recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | Revenue is recognized upon shipment of goods to the customer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | m. Equity Securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | Equity securities issued for services rendered have been accounted for
at the fair market value of the securities on the date of issuance.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | n. Stock Options                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | The Company applies Accounting Principles Board (APB) 25,
Accounting for Stock Issued to Employees, and related
interpretations in accounting for all stock option plans. Under APB
25, compensation cost is recognized for stock options granted to
employees when the option price is less than the market price of the
underlying common stock on the date of grant.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | FASB Statement 123, Accounting for Stock-Based Compensation (SFAS
No. 123), requires the Company to provide proforma information
regarding net income (loss) and net income (loss) per share as if
compensation costs for the Companys stock option plans and other
stock awards had been determined in accordance with the fair value
based method prescribed in SFAS No. 123. The Company estimates the
fair value of each stock award at the grant date by using the
Black-Scholes options pricing model.                                                                                                                                                                                                                                                                                                                                                                                      

11



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##### Table of Contents



EMERGENCY FILTRATION PRODUCTS, INC.
Notes to the Financial Statements
June 30, 2001 and December 31, 2000

NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)



| |  | o. Deferred Stock Issuance Costs                                                                                                                                                                                                                                                                                                                                                                    
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Stock issuance costs include direct costs incurred with third parties
that are directly attributable to equity financing transactions. As
discussed in Note 6, the Company entered into an agreement with an
unrelated investment firm to raise $5,000,000. The costs associated
with the offering have been deferred and will be recorded as stock
offering costs upon the closing of the offering.
|
| |  | p. Unaudited Financial Statements                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | The accompanying unaudited financial statements include all of the
adjustments which, in the opinion of management, are necessary for a
fair presentation. Such adjustments are of a normal recurring nature.                                                                                                                                                                                       

NOTE 2  PATENT



| |  | The Company entered into an agreement to acquire the rights to certain
intellectual property, which property includes title to the patent on
a component of an emergency CPR assistance device, called a dual
filtered rotary isolation valve. Rights pertaining thereto include
the right to maintain, sell and improve the device, and to license
those rights. The Company has agreed to pay a 5% royalty on any sales
related to the patented intellectual property. Royalty expense on
this patent for the periods ended June 30, 2001 and December 31, 2000
was $7,871 and $8,014, respectively. Additional costs related to the
patent were capitalized during the periods ended June 30, 2001 and
December 31, 2000 which consist of legal and filing fees incurred to
maintain the patent throughout the world. Amortization is computed
over an estimated life of 15 years. Impairment of the patent is
analyzed annually. The patent was published by the U.S. Patent Office
on November 15, 1996, the U.S. Patent number is 5,575,279.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | On June 28, 2000, the Company entered into a Contract for Assignment
of the rights to a BVM Bag invention. The BVM Bag is a portable
emergency safety resuscitator, subject to Patent number 6,062,217.
The Company acquired the rights, title and interest in the BVM Bag for
the following:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     



| | 1. |  | Issuance of 120,000 shares of restricted common stock.
At December 31, 2000, only 20,000 of the 100,000 had been issued
(valued at $1.00 per share), thus, a $100,000 liability was
recorded until the remaining 100,000 shares are issued.                                                                                                               
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2. |  | 50,000 stock options each year on December 31,
commencing on December 31, 2000, exercisable at a 50% discount of
the average bid price over the preceding six-month period.
Additional expense of $1,239 was recorded for the year ended
December 31, 2000 as a result of the initial 50,000 options
granted.                                             
|
| | 3. |  | In the event the Company is sold or merged with another
entity, the seller shall receive an additional 50,000 shares of
restricted shares or participate as a member of the negotiating
team concerning the sale or merger for the purpose of negotiating
a royalty on the Patent that shall not be less than 2.5% of gross
sales of the patented product.

12



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##### Table of Contents



EMERGENCY FILTRATION PRODUCTS, INC.
Notes to the Financial Statements
June 30, 2001 and December 31, 2000

NOTE 2  PATENT (Continued)



| |  | The agreement, including the annual 50,000 stock options, shall last
until the date that the patent covering the BVM Bag Invention expires.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Patent costs at June 30, 2001 and December 31, 2000 are as follows:                                                                        

|                         |  |             |         |              |  |   |         |  
|------------------------ |  | ----------- | ------- | ------------ |  | - | ------- | -
|                         |  | June 30,    |         | December 31,
|                         |  | 2001        |         | 2000        
|                         |  |             |         |             
|                         |  | (Unaudited) |         |              |  |  
|Capitalized costs        |  | $           | 166,650 |              |  | $ | 164,888 |  
|                        
|                        
|                        
|                        
|Accumulated amortization |  |             | (16,158 | )            |  |   | (10,698 | )
|                         |  |             |         |              |  |   |         |  
|Net Patent Costs         |  | $           | 150,492 |              |  | $ | 154,190 |  
|                         |  |             |         |              |  |   |         |  

NOTE 3   RELATED PARTY TRANSACTIONS



| |  | At December 31, 1999, $135,000 was recorded by the Company which
represented an amount claimed to be owed to a shareholder and former
officer of the Company for unpaid wages and reimbursements. The
shareholder also claimed that he had legal rights to certain
trademarks of the Company until he was paid in full. On June 2, 2000,
the Company entered into a Settlement Agreement and Mutual Release
with the shareholder, settling on an amount of $146,500. The amount
accrues interest at 10% per annum. Principal and interest are to be
paid in monthly installments of $1,800 beginning on July 1, 2000 until
paid. The Company has not paid the monthly payments timely as
originally agreed upon and the shareholder has given notice to the
Company of the default demanding full payment immediately.
Accordingly, the entire amount is being shown as a current liability
until renegotiations are entered into between the shareholder and the
Company. The balance on the note at June 30, 2001 and December 31,
2000 was as follows:
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                    |  |             |          |              |  |   |         |  
|--------------------------------------------------- |  | ----------- | -------- | ------------ |  | - | ------- | -
|                                                    |  | June 30,    |          | December 31,
|                                                    |  | 2001        |          | 2000        
|                                                    |  |             |          |             
|                                                    |  | (Unaudited) |          |              |  |  
|Total amount owed                                   |  | $           | 159,155  |              |  | $ | 153,344 |  
|                                                   
|                                                   
|                                                   
|                                                   
|Less: accrued interest included in accrued
expenses |  |             | (12,655  | )            |  |   | (6,844  | )
|                                                   
|                                                   
|                                                   
|                                                   
|Less: current portion                               |  |             | (146,500 | )            |  |   | (11,197 | )
|                                                    |  |             |          |              |  |   |         |  
|Long-term note payable  related                    |  | $           |         |              |  | $ | 135,303 |  
|                                                    |  |             |          |              |  |   |         |  



| |  | At June 30, 2001 and December 31, 2000, the Company owed another
related party $-0- and $10,000, respectively. An additional $100,000
is included in accounts payable  related parties at June 30, 2001 and
December 31, 2000, as a result of the patent acquisition as explained
in Note 2.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

13



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##### Table of Contents



EMERGENCY FILTRATION PRODUCTS, INC.
Notes to the Financial Statements
June 30, 2001 and December 31, 2000

NOTE 3  RELATED PARTY TRANSACTIONS (Continued)



| |  | Certain employees, officers and shareholders are also owed amounts in
past due wages and expense reimbursements as of June 30, 2001 and
December 31, 2000. In addition, certain shareholders of the Company
have advanced funds to the Company in order to cover operating costs.
The total amount owed to these related parties as of June 30, 2001 and
December 31, 2000 was $307,350 and $254,374, respectively. The
amounts are non-interest bearing, unsecured and due on demand. Total
accounts payable  related parties at June 30, 2001 and December 31,
2000 was $407,350 and $364,374, respectively.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

NOTE 4  NOTE PAYABLE



| |  | A note was signed by the Company to an insurance company for product
liability insurance for a one year period from October 2000 to October
2001. The remaining amount due at June 30, 2001 and December 31, 2000
was $4,612 and $17,988, respectively.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

NOTE 5  GOING CONCERN



| |  | The Companys financial statements are prepared using generally
accepted accounting principles applicable to a going concern which
contemplates the realization of assets and liquidation of liabilities
in the normal course of business. The Company has incurred
significant losses which have resulted in an accumulated deficit of
$5,212,685 at December 31, 2000 which raises substantial doubt about
the Companys ability to continue as a going concern. The
accompanying financial statements do not include any adjustments
relating to the recoverability and classification of asset carrying
amounts or the amount and classification of liabilities that might
result from the outcome of this uncertainty. It is the intent of
management to create additional revenues through the development and
sales of its emergency respiration equipment and to rely upon
additional equity financing if required to sustain operations until
revenues are adequate to cover the costs.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

NOTE 6  COMMITMENTS AND CONTINGENCIES



| |  | Leases                                                                                                                                              
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The Company is leasing office space in Las Vegas, Nevada for three
years beginning October 15, 1998. The monthly rental payment is
currently $4,141.
|
| |  | Minimum future lease payments on the lease as of June 30, 2001 are as
follows:                                                                      

|             |                     |        |        |        | 
|------------ | ------------------- | ------ | ------ | ------ | 
|Year Ending  |                     |        |        |       
|December 31, |                     | Amount
|             |                     |       
|             | 2001                |        | $      | 14,494 | 
|            
|            
|            
|            
|             | 2002                |        |        |       | 
|            
|            
|            
|            
|             | 2003                |        |        |       | 
|            
|            
|            
|            
|             | 2004 and thereafter |        |        |       | 
|             |                     |        |        |       
|Total        |                     | $      | 14,494 |       
|             |                     |        |        |       

14



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##### Table of Contents



EMERGENCY FILTRATION PRODUCTS, INC.
Notes to the Financial Statements
June 30, 2001 and December 31, 2000

NOTE 6   COMMITMENTS AND CONTINGENCIES (Continued)



| |  | Private Placement Agreement                                                                                                                                                                                                                                                                
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | On February 23, 2001, the Company entered into an agreement with
Pacific Investors, Ltd., an unrelated investment firm, for financial
advising and placement agent services in a private placement to raise
$5,000,000. Compensation for Pacific Investors services include the
following:



| | a. |  | A non-refundable retainer of $50,000 to be paid in
three installments.
| | -- |  | ----------------------------------------------------------------------

|        |  |                                         
|------- |  | ----------------------------------------
|Amount  |  | Due Date                                
|        |  |                                         
|$10,000 |  | Upon execution of agreement             
|       
|       
|       
|       
|$10,000 |  | April 15, 2001                          
|       
|       
|       
|       
|$30,000 |  | June 1, 2001 (not paid at June 30, 2001)



| | b. |  | A non-refundable retainer of a warrant to purchase 3%
of the outstanding common stock (328,424 warrants) at a strike
price of $0.01 with a term of ten years.                                                         
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | c. |  | An advisory fee equal to 7.5% of the principal amount
raised in the private placement.                                                                                                                                
|
| | d. |  | A warrant to purchase 10% of the securities of this
offering to be granted upon the closing of the financing with a
term of ten years and a strike price equal to the price of shares
issued in the private placement.
|
| | e. |  | A senior debt fee equal to 2% of the principal amount
of any senior debt or credit facility entered into after March 1,
2001.                                                                                         

NOTE 7  STOCK OPTIONS



| |  | A summary of the status of the Companys stock options as of June 30,
2001 and changes during the period ending June 30, 2001 are presented
below:
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------

|                               |                  |  |           |            |       |   |            |       |            |   |      |       |  
|------------------------------ | ---------------- |  | --------- | ---------- | ----- | - | ---------- | ----- | ---------- | - | ---- | ----- | -
|                               |                  |  |           |            |       |   | Weighted   |       | Weighted  
|                               |                  |  |           |            |       |   | Average    |       | Average   
|                               |                  |  |           |            |       |   | Exercise   |       | Grant Date
|                               |                  |  | Options   |            | Price |   | Fair Value
|                               |                  |  |           |            |       |   |           
|Outstanding, December 31, 2000 |                  |  | 7,750,000 |            |       | $ | 0.89       |       |            | $ | 0.06 |      
|                              
|                              
|                              
|                              
|                               | Granted          |  |           | 1,948,424  |       |   |            | 0.53  |            |   |      | 0.08  |  
|                              
|                              
|                              
|                              
|                               | Expired/Canceled |  |           | (2,465,000 | )     |   |            | (0.75 | )          |   |      | (0.06 | )
|                              
|                              
|                              
|                              
|                               | Exercised        |  |           |           |       |   |            |      |            |   |      |      |  
|                               |                  |  |           |            |       |   |            |       |            |   |      |      
|Outstanding, June 30, 2001     |                  |  | 7,233,424 |            |       | $ | 0.82       |       |            | $ | 0.07 |      
|                               |                  |  |           |            |       |   |            |       |            |   |      |      
|Exercisable, June 30, 2001     |                  |  | 7,233,424 |            |       | $ | 0.82       |       |            | $ | 0.07 |      
|                               |                  |  |           |            |       |   |            |       |            |   |      |      

15



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##### Table of Contents



EMERGENCY FILTRATION PRODUCTS, INC.
Notes to the Financial Statements
June 30, 2001 and December 31, 2000

NOTE 7  STOCK OPTIONS (Continued)



| |  | During 1998 and 1999, the Company granted stock options to various
individuals for a total of 3,905,000 restricted common shares at
exercise prices ranging from $0.60 to $5.00 per share. During the
year ended December 31, 1999, 67,000 options were exercised at $0.75
per share for total proceeds of $50,250. During the year ended
December 31, 2000, additional stock options were granted for a total
of 4,000,000 restricted common shares at exercise prices ranging from
$0.37 to $0.75 per share, 88,000 options were exercised at $0.75 per
share for total proceeds of $66,000, and 300,000 shares were extended
to have an expiration of December 31, 2003. During the six months
ended June 30, 2001, 1,620,000 options were granted with an exercise
price of $0.53 and an expiration of January 8, 2004, 328,424 options
were granted with an exercise price of $0.01 per share that expire on
February 23, 2011, and 2,465,000 shares expired on January 8, 2001.
The total amount of outstanding stock options at June 30, 2001 is
summarized as follows:
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|          |  |       |       |            |  |                  
|--------- |  | ----- | ----- | ---------- |  | -----------------
|Shares    |  | Price |       | Expiration
|          |  |       |       |           
|100,000   |  |       | $2.50 |            |  | January 13, 2002 
|         
|         
|         
|         
|150,000   |  |       | $1.00 |            |  | January 13, 2002 
|         
|         
|         
|         
|75,000    |  |       | $4.00 |            |  | January 13, 2002 
|         
|         
|         
|         
|75,000    |  |       | $5.00 |            |  | January 13, 2002 
|         
|         
|         
|         
|150,000   |  |       | $1.00 |            |  | February 3, 2002 
|         
|         
|         
|         
|50,000    |  |       | $2.50 |            |  | February 3, 2002 
|         
|         
|         
|         
|50,000    |  |       | $4.00 |            |  | February 3, 2002 
|         
|         
|         
|         
|100,000   |  |       | $1.00 |            |  | March 18, 2002   
|         
|         
|         
|         
|1,800,000 |  |       | $0.75 |            |  | January 3, 2003  
|         
|         
|         
|         
|35,000    |  |       | $1.00 |            |  | March 19, 2003   
|         
|         
|         
|         
|50,000    |  |       | $0.75 |            |  | April 25, 2003   
|         
|         
|         
|         
|2,000,000 |  |       | $0.75 |            |  | October 1, 2003  
|         
|         
|         
|         
|50,000    |  |       | $0.37 |            |  | December 31, 2003
|         
|         
|         
|         
|1,620,000 |  |       | $0.53 |            |  | January 8, 2004  
|         
|         
|         
|         
|100,000   |  |       | $0.49 |            |  | June 28, 2004    
|         
|         
|         
|         
|100,000   |  |       | $0.49 |            |  | June 28, 2004    
|         
|         
|         
|         
|100,000   |  |       | $0.49 |            |  | June 28, 2004    
|         
|         
|         
|         
|300,000   |  |       | $0.49 |            |  | June 28, 2004    
|         
|         
|         
|         
|328,424   |  |       | $0.01 |            |  | February 23, 2011
|          |  |       |       |            |  |                  
|7,233,424 |  |       |       |            |  |                  
|          |  |       |       |            |  |                  



| |  | Deferred stock offering costs of $161,390 was recorded during the
period ended June 30, 2001 pursuant to the Black-Scholes calculation
pertaining to the fair value of the options granted during the period.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

16



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##### Table of Contents









Item II.    Managements Discussion and Analysis of Financial Condition and Results of Operations

Financial Condition

Since the Companys inception, the Company has been involved in the
development of its technology. During this time revenues have not been
adequate to cover operating expenses. Without adequate revenues to offset
expenditures, the Company has reported a loss in each of its years of
existence. To date, the Company has funded itself by way of a series of
private equity placements. As of the quarter ended 6/30/2001, the Company had
offset its accumulated deficit in this manner. The most valuable asset of the
Company is its intellectual property and technology. The Company has acquired
the rights to certain intellectual property, which property includes title to
the patent on a component of an emergency CPR assistance device, called a
dual-filtered rotary isolation valve. Rights pertaining thereto include the
right to maintain, sell and improve the device, and to license those rights.
Although the Company believes its technology to be very valuable in the real
sense, this value is not quantified as such on the Companys Balance Sheet.

Operational Results

During the quarter ended 6/30/2001, the Company reported revenues of
$260,122. Revenues have been in part from the sale of the emergency CPR
assistance device and the Company is now focusing on securing licensing
agreements and on a marketing-driven sales effort in order to increase revenues
that will ultimately cover total expenditures. Additionally, the Company
fulfilled orders for Superstat, a modified collagen hemostat, for which the
Company has exclusive distribution rights to the U.S. government and military.
The Company recently secured exclusive distribution rights to foreign
governments and militaries.

The cost of goods sold increased as a percentage of sales in the second
quarter of 2001 versus the second quarter of 2000. This increase is due
primarily to the increased volume of business and the increase in sales of
Superstat as a percentage of overall sales.

Total expenditures increased minimally in the second quarter of 2001 as
compared to the second quarter of 2000.

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##### Table of Contents



General and administrative costs decreased from $324,473 to $194,639
during the quarters ended June 30, 2000 and 2001, respectively, as a result of
decreased expenditures for professional and consulting services.

Research and development costs increased from $5,050 to $9,040 during the
quarters ended June 30, 2000 and 2001, respectively, due to the increased costs
associated with the development of the Companys future products.

Capital Funding

The Company currently is unable to generate sufficient cash from
operations to sustain its business efforts as well as to accommodate its growth
plans. Until it is able to generate sufficient cash flow, the Company will
seek capital funding from outside resources. The Company presently has not
concluded what form, whether debt or equity, such funding will be derived
through.

The Companys cost-efficient business model emphasizes: (1) in-house
research and development; (2) accumulation of intellectual property assets;
(3) ownership of key production equipment; and (4) outsourcing of all
manufacturing, distribution, warehousing, and order fulfillment. Accordingly,
the Company benefits from low overhead, as well as the pricing advantages
inherent in proprietary specialty products.

The Companys management is now completing transformation from a
technology-driven research and development business to a marketing-driven
proprietary products company. Product development efforts remain an important
priority, but are now balanced by an increasing focus on elements of production
and sales.

The Companys current product line includes:



| |  |  | RespAide CPR Isolation Mask. The company has received Food
and Drug Administration (FDA) approval for its RespAide CPR
isolation mask incorporating the VIV filter, and recently commenced
volume manufacturing and distribution of complete units and
replacement filters (the RespAide filter needs to be replaced after
each use). In test by Nelson Laboratories, RespAide was found to
be greater than 99.9% effective against bacterial and viral
transmission  the highest rating testing labs will issue for
medical devices, and believed by management of the Company to be
superior to any competing product on the market.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Disposable Filters for BVMs. The same filter used in the
RespAide product is ideal for preventing contamination of bag
valve masks which are single-use ventilators.                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

18



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##### Table of Contents





| |   |  | The disposable filter keeps the equipment contaminant-free, thereby
allowing a BVM to be safely reused with a new filter  a considerable
economic benefit due to the lower replacement and disposal costs of
the filter versus discarding the entire BVM unit. The Company has
received FDA approval.                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Ventilator Circuits. To extend its market reach from
emergency response sites to the vast number of respiratory
procedures conducted within medical facilities, the Company has
introduced two new configurations of its VIV technology: (1) a
one-way ventilator circuit that eliminates the exhalation ports of
patients breath in favor of permitting a T-valve attachment of
monitoring CO(2) levels  suitable for any inline ventilator
connection; and (2) a two-way ventilator circuit for applications
where ambient air flow must pass evenly in both directions while
still protecting equipment and hoses. This is suitable for use in
anesthesia and general respiratory procedures. The company has
applied for FDA approval.

In addition, the Company has designed another configuration of the
technology for the BVM market that incorporates a self-contained nebulizer, a
filter, and a bag with built-in CO(2) monitoring capabilities. Patents have
been granted for this product. The Company is currently conducting prototype
development and expects to launch the product in the fourth quarter of 2001.

The market for air purification filters for protection against communicable
diseases has grown rapidly since the mid-1980s   from practically nil, to an
estimated 1,460,000,000 in 1997. Demand has been driven largely by such
factors as the spread of AIDS and Hepatitis C, the resurgence of Tuberculosis
in many urban settings, and growing concerns in the medical community about new
drug-resistant strains of bacteria. Such concerns are clearly evident in the
results of recent independent surveys indicating that approximately 45% of
doctors, 57% of EMTs, 80% of nurses, and substantially all paramedics surveyed
would refuse to perform mouth-to-mouth resuscitation on an adult stranger
without barrier protection. Indeed, many of the respondents indicated that
they had already walked away from situations in the community requiring
mouth-to-mouth resuscitation.

In addition to emergency ambulance services, police departments, firefighters,
hospitals, doctors, the military, and major CPR training organizations such as
the American Heart Association, management believes that the market also
includes government and private sector entities that will choose, or may be
required by law to keep CPR isolation masks on hand.

The Company currently holds military national stocking numbers for the
RespAide CPR isolation mask and replacement

19



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##### Table of Contents



filters. These stocking numbers make both products acceptable for inventory in
all four branches of the military and the U.S. Coast Guard. The Company has
been fulfilling orders from the Defense Supply Center Philadelphia for these
products.

To reach the market, the Company has entered into contractual arrangements
with a number of U.S. and international medical product distributors.
Additionally, the Company is actively pursuing licensing agreements with other
companies that have market penetration.

The Company intends to firmly establish its reputation for supplying the
best medical air filters available, and then begin aggressively commercializing
the technology in the enormous HVAC category. The Company estimates that the
addition of HVAC applications will increase the total addressable market for
dual-filtered vapor isolation valve technology.

Competition

The medical device industry is a highly competitive sector of the health
care industry and there are a large number of established and well-financed
entities with significantly greater financial resources, technical expertise
and in depth managerial capabilities than the Company. Although the Company
has achieved patent protection for the RespAide, there is no assurance that
other entities may not compete in or enter the medical and commercial market in
competition with the Company.

This discussion may contain certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Actual
results could differ materially from those forward-looking statements. The
factors that may cause actual results to differ materially is that the Company
has no arrangement, agreement or understanding with respect to engaging in a
merger with, joint venture with or acquisition of, a private or public company
and that there can be no assurance that the Company will be successful in
identifying and evaluating suitable business opportunities or including a
business combination.




PART II

OTHER INFORMATION




Item 1  Legal Proceedings

The Company entered into a payment plan with Bruce E. Batchelor, a
shareholder and former officer of the Company, for unpaid wages and
reimbursement for expenses. The Company agreed to pay the principal sum of
$146,500 in monthly installments of $1,800 or more in July, 2000. The Company
has not paid the

20



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##### Table of Contents



monthly payments in a timely manner and is in default according to the
terms of the agreement.

Other than described above, there are no legal proceedings threatened or
pending, except such ordinary routine matters which may be incidental to the
business currently being conducted by the Company.




|                                                                 |  |     
|---------------------------------------------------------------- |  | ----
|Item 2  Changes in the Rights of the Companys Security Holders |  | None




|                                                          |  |     
|--------------------------------------------------------- |  | ----
|Item 3  Defaults by the Company on its Senior Securities |  | None




|                                                          |  |     
|--------------------------------------------------------- |  | ----
|Item 4  Submission of Matter to Vote of Security Holders |  | None




Item 5  Other Information

The board held two meetings during the current quarter, including both
regularly scheduled and special meetings and actions by unanimous written
consent. At a special meeting on June 4, 2001, Sherman Lazrus was appointed
Interim Chief Executive Officer to replace Michael J. Crnkovich.

The board of directors has not established any audit committee. In
addition, the Company does not have any other compensation or executive or
similar committees. The Board of Directors acts as the audit committee. The
Company recognizes that an audit committee, when formally established, will
play a critical role in the financial reporting system of the Company by
overseeing and monitoring managements and the independent auditors
participation in the financial reporting process.

Until such time as an audit committee has been established, the full board
of directors undertakes those tasks normally associated with an audit committee
to include, but not by way of limitation, the (i) review and discussion of the
audited financial statements with management, (ii) discussions with the
independent auditors the matters required to be discussed by the Statement On
Auditing Standards No. 61, as may be modified or supplemented, and (iii)
received from the auditors disclosures regarding the auditors Independents
Standards Board Standard No. 1, as may be modified or supplemented.




Item 6  Exhibits and Reports on Form 8-K

The following reports on Form 8-K are incorporated herein by reference:

(1) 8-K filed 6/7/2001

21



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##### Table of Contents



The following documents are filed as part of this report:



| | 1) |  | Unaudited Financial
Statements filed as part of this report with the
related consolidated statements of operations and
accumulated deficit, and cash flow for the quarter
then ended.
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




SIGNATURE

Pursuant to the requirements 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.



|                       |                                     |                    
|---------------------- | ----------------------------------- | -------------------
|Dated: August 10, 2001 | Emergency Filtration Products, Inc.
|                       |                                     | (Registrant)       
|                       |                                     |                    
|                       |                                     |                    
|                       | By:                                 | /s/ Peter Clark    
|                       |                                     |                    
|                       |                                     | Peter Clark        
|                       |                                     | Corporate Secretary

22