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

                                   FORM 10-QSB


(MARK ONE)

[X]  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
     OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000

[ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
     OF 1934 FOR THE TRANSITION PERIOD FROM __________ TO __________


COMMISSION FILE NUMBER:


                         LUNA MEDICAL TECHNOLOGIES, INC.
        (Exact name of small business issuer as specified in its charter)

<TABLE>
<CAPTION>
<S>                                 <C>                               <C>
NEVADA                                                                                          98-0207745
(State or other jurisdiction of     (Primary Standard Industrial      (I.R.S. Employer Identification No.)
incorporation or organization)       Classification Code Number)


Suite 400, 900 West Hastings Street, Vancouver, British Columbia, Canada                           V6C 1E5
(Address of principal executive offices)                                                        (Zip Code)
</TABLE>

                                 (604) 687-0719
                (Issuer's Telephone Number, including Area Code)



                              Thomas E. Stepp, Jr.
                              Stepp & Beauchamp LLP
                           1301 Dove Street, Suite 460
                         Newport Beach, California 92660
                             Telephone: 949.660.9700
                             Facsimile: 949.660.9010
            (Name, Address and Telephone Number of Agent for Service)


                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                   PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. [ ] Yes
[ ] No

                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practical date. As of June 30, 2000, there were
8,095,660 shares of the issuer's $.001 par value common stock issued and
outstanding.


<PAGE>


                         PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

                           ACCOUNTANT'S REVIEW REPORT

The Board of Directors
Luna Medical Technologies, Inc.
Vancouver, BC Canada

We have reviewed the accompanying consolidated balance sheet of Luna Medical
Technologies, Inc. as of June 30, 2000 and the related statements of operations
and comprehensive income, stockholders' equity (deficit), and cash flows for the
three months ended June 30, 2000 and 1999. All information included in these
financial statements is the representation of the management of Luna Medical
Technologies, Inc.

We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit in accordance with
generally accepted auditing standards, the objective of which is the expression
of an opinion regarding the financial statements taken as a whole. Accordingly,
we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements in order for them to be in
conformity with generally accepted accounting principles.

The financial statements for the year ended March 31, 2000 were audited by us
and we expressed an unqualified opinion on it in our report dated July 12, 2000.
We have not performed any auditing procedures since that date.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has an accumulated deficit and negative
working capital. These conditions raise substantial doubt about the Company's
ability to continue as a going concern. The success of the Company is dependent
on successfully marketing its licensed product. Management's plans regarding
those issues are discussed in Note 2. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.


Williams & Webster, P.S.
Certified Public Accountants
Spokane, Washington
August 15, 2000


                                       2
<PAGE>


                                  BALANCE SHEET


<TABLE>
<CAPTION>
                                                                        June 30,      March 31,
                                                                         2000           2000
                                                                      (Unaudited)
                                                                      -----------    ----------
<S>                                                                    <C>          <C>
A S S E T S
   CURRENT ASSETS
      Cash                                                              $  2,951      $ 63,403
      Accounts receivable, net of allowance                                  403           706
      GST receivable                                                      15,505        10,476
      Prepaid expenses                                                     2,482         9,421
      Inventory                                                              312           223
                                                                        --------      --------
          Total Current Assets                                            21,653        84,229
                                                                        --------      --------
   PROPERTY, PLANT AND EQUIPMENT
      Office equipment                                                     2,543         6,045
      Less depreciation                                                     (424)         (504)
                                                                        --------      --------
          Total Property, Plant and Equipment                              2,119         5,541
                                                                        --------      --------
   OTHER ASSETS
      Licensing agreement                                                      1             1
      Trademark, net of amortization                                       2,458         2,500
                                                                        --------      --------
          Total Other Assets                                               2,459         2,501
                                                                        --------      --------

       TOTAL ASSETS                                                     $ 26,231      $ 92,271
                                                                        ========      ========

L I A B I L I T I E S   &   S T O C K H O L D E R S '   E Q U I T Y  (D E F I C I T)
   CURRENT LIABILITIES
      Accounts payable                                                 $  73,172    $  26,307
      Accounts payable - related parties                                  68,253       59,169
      Accrued expenses                                                   100,243        3,339
      Deposits from investors                                             15,000           --
      Short-term loans                                                     1,011           --
      Short-term loans - related parties                                   2,042        2,083
                                                                       ---------    ---------
          Total Current Liabilities                                      259,721       90,898
                                                                       ---------    ---------

   COMMITMENTS AND CONTINGENCIES                                              --           --
                                                                       ---------    ---------

      TOTAL LIABILITIES                                                  259,721       90,898
                                                                       ---------    ---------

   STOCKHOLDERS' EQUITY (DEFICIT)
      Preferred stock, 5,000,000 shares authorized, $.001 par value;
          no shares issued and outstanding                                    --           --
      Common stock, 50,000,000 shares authorized, $.001 par value;
          8,095,660 and 8,040,660 shares issued and outstanding,
          respectively                                                     8,096        8,041
      Additional paid-in-capital                                         434,459      434,459
      Stock subscriptions receivable                                         (55)          --
      Accumulated deficit                                               (684,516)    (448,379)
      Accumulated other comprehensive income                               8,526        7,252
                                                                       ---------    ---------
          Total Stockholders' Equity (Deficit)                          (233,490)       1,373
                                                                       ---------    ---------

      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)             $  26,231    $  92,271
                                                                       =========    =========
</TABLE>


                                       3
<PAGE>


                             STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
                                                      Three Months    Three Months
                                                          Ended          Ended
                                                      June 30, 2000  June 30, 1999
                                                       (Unaudited)    (Unaudited)
                                                       -----------    -----------
<S>                                                    <C>            <C>
REVENUE                                                $     5,261    $    15,547

COST OF GOODS SOLD                                           4,341          9,282
                                                       -----------    -----------

GROSS PROFIT                                                   920          6,265
                                                       -----------    -----------

EXPENSES
        Depreciation and amortization                          251           --
        Consulting                                         143,975         11,437
        Professional fees                                   46,118         28,849
        Marketing expense                                   30,987         24,787
        General and administrative expense                   8,441          7,831
        Rent                                                 6,551          3,000
        Travel expense                                         959            593
        Stock issuance costs                                  --             --
                                                       -----------    -----------
                Total Expenses                             237,282         76,497
                                                       -----------    -----------

LOSS FROM OPERATIONS                                      (236,362)       (70,232)
                                                       -----------    -----------

OTHER INCOME AND EXPENSES
        Gain on disposal of assets                             287           --
        Interest expense                                       (62)          --
                                                       -----------    -----------
                Total Other Income and Expenses                225           --
                                                       -----------    -----------

LOSS BEFORE INCOME TAXES                                  (236,137)       (70,232)

INCOME TAXES                                                  --             --
                                                       -----------    -----------

NET LOSS                                                  (236,137)       (70,232)

OTHER COMPREHENSIVE INCOME
        Foreign currency translation gain                    1,274           --
                                                       -----------    -----------

COMPREHENSIVE LOSS                                     $  (234,863)   $   (70,232)
                                                       ===========    ===========

        NET LOSS PER COMMON SHARE                      $     (0.03)   $     (0.01)
                                                       ===========    ===========

        WEIGHTED AVERAGE NUMBER OF BASIC AND DILUTED
                COMMON STOCK SHARES OUTSTANDING          8,078,737      7,310,660
                                                       ===========    ===========
</TABLE>


                                       4
<PAGE>

                        STATEMENT OF STOCKHOLDERS' EQUITY


<TABLE>
<CAPTION>
                                                   Common Stock
                                              ---------------------  Additional    Stock        Compre-                   Total
                                                Number                 Paid-In  Subscriptions   hensive   Accumulated  Stockholders'
                                              of Shares     Amount     Capital   Receivable     Income      Deficit       Equity
                                              ---------   ---------   ---------  ----------    ---------   ---------    ---------
<S>                                           <C>         <C>         <C>         <C>          <C>         <C>          <C>
Balance, March 31, 1999                       7,310,660       7,311      70,189      (5,000)        --       (29,097)      43,403

Subscription received                              --          --          --         5,000         --          --          5,000

Issuance of common stock for
        cash at $0.50 per share                 630,000         630     314,370        --           --          --        315,000

Issuance of common stock in
        exchange for debt at $0.50
        per share                               100,000         100      49,900        --           --          --         50,000

Net loss for year ending
        March 31, 2000                             --          --          --          --          7,252    (419,282)    (412,030)
                                              ---------   ---------   ---------   ---------    ---------   ---------    ---------

Balance, March 31, 2000                       8,040,660       8,041     434,459        --          7,252    (448,379)       1,373
                                              ---------   ---------   ---------   ---------    ---------   ---------    ---------

Issuance of common stock for
        subscription at $.001 per share          55,000          55        --           (55)        --          --           --

Net loss for the three months
        ended June 30, 2000                        --          --          --          --          1,274    (236,137)    (234,863)
                                              ---------   ---------   ---------   ---------    ---------   ---------    ---------

Balance, June 30, 2000 (Unaudited)            8,095,660   $   8,096   $ 434,459   $     (55)   $   8,526   $(684,516)   $(233,490)
                                              =========   =========   =========   =========    =========   =========    =========
</TABLE>





                                       5
<PAGE>


                             STATEMENT OF CASH FLOWS


<TABLE>
<CAPTION>
                                                              Three Months    Three Months
                                                                 Ended            Ended
                                                             June 30, 2000    June 30, 1999
                                                              (Unaudited)      (Unaudited)
                                                              ------------    ------------
<S>                                                           <C>             <C>
Cash flows from operating activities:
        Net loss                                              $   (236,137)   $    (70,232)
        Adjustments to reconcile net loss
                to net cash used by operating activities:
                Depreciation and amortization                          251            --
                Non-cash transactions                                3,502            --
                Gain on disposition of assets                         (287)           --
        Changes in assets and liabilities:
                Accounts receivable                                    303          (2,221)
                GST receivable                                      (5,029)         (2,471)
                Prepaid expenses                                     6,939          22,090
                Inventory                                              (89)            (29)
                Accounts payable                                    55,949          37,278
                Accrued liabilities                                 96,904         (16,453)
                                                              ------------    ------------
Net cash used in operating activities                              (77,694)        (32,038)
                                                              ------------    ------------

Cash flows from investing activities:
        Investment in intangibles                                     --              (710)
                                                              ------------    ------------
Net cash used by investing activities                                 --              (710)
                                                              ------------    ------------

Cash flows from financing activities:
        Proceeds from stock subscriptions receivable                  --             5,000
        Proceeds from investor deposits                             15,000            --
        Proceeds from short-term loan payable                          970          22,337
                                                              ------------    ------------
Net cash provided by financing activities                           15,970          27,337
                                                              ------------    ------------

Change in cash                                                     (61,724)         (5,411)

        Foreign currency translation gain                            1,272            --

Cash, beginning of period                                           63,403           9,897
                                                              ------------    ------------

Cash, end of period                                           $      2,951    $      4,486
                                                              ============    ============

Supplemental disclosures:
        Interest paid                                         $       --      $       --
        Income taxes paid                                     $       --      $       --

Non-cash activities:
        Exchanged office equipment for release from payable   $      3,502    $       --
        Issued stock for subscription receivable              $         55    $       --
</TABLE>



                                       6
<PAGE>

                          NOTES TO FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

Luna Medical Technologies, Inc., formerly Luna Technologies, Inc., (hereinafter
"the Company") was incorporated January 19, 1999 under the laws of the State of
Nevada for the purpose of engaging in any lawful activity. The financial
statements include all activity of the Company and its wholly owned subsidiary,
Luna Fertility Indicator, Inc. The Company has entered into an exclusive
worldwide license agreement with Luna Products, Inc., the manufacturer of the
Luna Fertility Indicator, to distribute the Indicator. The Company sells its
product across Canada, at retail, wholesale and to distributorships, with 90% of
the sales being to distributors. The Company maintains an office in Vancouver,
British Columbia. The Company has elected a fiscal year-end of March 31.

On May 31, 1999, the Company amended its articles of incorporation to reflect
the name change to Luna Medical Technologies, Inc.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of significant accounting policies of Luna Medical Technologies,
Inc. is presented to assist in understanding the Company's financial statements.
The financial statements and notes are representations of the Company's
management, which is responsible for their integrity and objectivity. These
accounting policies conform to generally accepted accounting principles and have
been consistently applied in the preparation of the financial statements.

The Company was formed on January 19, 1999 and was in the development stage
through March 31, 1999. The year ending March 31, 2000 is the first year during
which it is considered an operating company.

Accounting Method

The Company's financial statements are prepared using the accrual method of
accounting.

Consolidation Policy

The accompanying consolidated financial statements include the accounts of the
Company and its wholly owned subsidiary. Inter-company transactions and balances
have been eliminated in the consolidation.

Loss Per Share

Basic loss per share was computed by dividing the net loss by the weighted
average number of shares outstanding during the period. The weighted average
number of shares was calculated by taking the number of shares outstanding and
weighting them by the amount of time that they were outstanding. Diluted loss
per share is the same as basic loss per share, as the inclusion of common stock
equivalents would be anti-dilutive.

Provision for Taxes

At June 30, 2000, the Company had net operating losses of approximately
$680,000. No provision for taxes or tax benefit has been reported in the
financial statements, as there is not a measurable means of assessing future
profits or losses.

Use of Estimates

The process of preparing financial statements in conformity with generally
accepted accounting principles requires the use of estimates and assumptions
regarding certain types of assets, liabilities, revenues, and expenses. Such
estimates primarily relate to unsettled transactions and events as of the date
of the financial statements. Accordingly, upon settlement, actual results may
differ from estimated amounts.

Inventory

Inventory consists of the Luna Fertility Indicator, and is stated at cost,
determined by the first-in first-out method. The Company maintains a minimal
supply of inventory, as it has a short turnaround time with its supplier.

Advertising

Advertising costs are charged to operations in the year incurred.



                                       7
<PAGE>

Impairment of Long-lived Assets

The Company evaluates the recoverability of long-lived assets when events and
circumstances indicate that such assets might be impaired. The Company
determines impairment by comparing the undiscounted future cash flows estimated
to be generated by these assets to their respective carrying amounts. At June
30, 2000, no impairment to assets was deemed to have occurred.

Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity of three
months or less at the date of acquisition to be cash equivalents.

Revenue Recognition

Revenues and cost of revenues are recognized when title to the product passes.
Title passes when the product leaves the Company's location in Vancouver,
British Columbia.

Derivative Instruments

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This new standard establishes accounting
and reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. It requires
that an entity recognize all derivatives as either assets or liabilities in the
consolidated balance sheet and measure those instruments at fair value.

At June 30, 2000, the Company has not engaged in any transactions that would be
considered derivative instruments or hedging activities.

Compensated Absences

The Company has no employees. At such time as the Company hires personnel, its
employees will be entitled to paid vacation, paid sick days and personal days
off depending on job classification, length of service, and other factors. The
Company's policy will be to recognize the cost of compensated absences when
actually paid to employees.

Reclassifications

Certain amounts from prior periods have been reclassified to conform with the
current period presentation. This reclassification has resulted in no changes to
the Company's accumulated deficit previously reported.

Translation of Foreign Currency

The Company has adopted Financial Accounting Standard No. 52. Foreign currency
translation resulted in an aggregate exchange gain of $8,526 as of June 30,
2000. The Company recorded this transaction in the Statement of Stockholders'
Equity as other comprehensive income.

Interim Financial Statements

The interim financial statements as of and for the quarter ended June 30, 2000,
included herein, have been prepared for the Company without audit. These
statements reflect all adjustments, which are, in the opinion of


                                       8
<PAGE>

management, necessary to present fairly the results of operations for these
periods. All such adjustments are normal recurring adjustments. The results of
operations for the periods presented are not necessarily indicative of the
results to be expected for the full fiscal year.

Going Concern

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the accompanying financial
statements, the Company incurred a net loss of $236,137 and has negative working
capital for the three-month period ended June 30, 2000. The Company is currently
marketing its licensed product which will, if successful, mitigate these factors
which raise substantial doubt about the Company's ability to continue as a going
concern. The financial statements do not include any adjustments relating to the
recoverability and classification of recorded assets, or the amounts and
classification of liabilities that might be necessary in the event the Company
cannot continue in existence. Management intends to seek additional capital from
new equity issuances that will provide funds needed to increase liquidity, fund
internal growth and fully implement its business plan.

Segment Information

The Company has adopted SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information," which requires disclosures about products
and services, geographic areas and major customers. The adoption of SFAS No. 131
did not affect the Company's results of operations or financial position, but
did affect the disclosure of segment information as illustrated in Note 12.

NOTE 3 - SUBSIDIARIES

Formation of Luna Fertility Indicator, Inc.

On May 10, 1999, the Company incorporated a wholly owned subsidiary, Luna
Fertility Indicator, Inc., a British Columbia Corporation, to market and
distribute the licensed product.

NOTE 4 - CONCENTRATIONS

Credit Risk For Cash Held At Banks

The Company maintains cash accounts at two banks in Vancouver, British Columbia,
Canada. The Canadian dollar accounts are insured up to a maximum of $60,000 per
account. However, the United States dollar account is not insured.

Supplier

Luna Products, Inc. ("LPI") is the sole supplier of the Company's product. This
firm is not a related party.

NOTE 5 - FIXED ASSETS

Office equipment is stated at cost. Depreciation expense is computed using the
straight-line method over the useful life of the asset, and amounted to $208 for
the three-month period ended June 30, 2000. Accumulated depreciation differs
from depreciation expense due to foreign currency translation (Note 2).



                                       9
<PAGE>

NOTE 6 - INTANGIBLE ASSETS

License Agreement

On February 1, 2000, the Company's subsidiary signed a fifteen-year license
agreement with Luna Products, Inc. (LPI), providing the Company with an
exclusive world-wide right to distribute the Luna Fertility Indicator. This
agreement replaced all previous agreements, and sets the cost, minimum annual
purchase requirements, minimum marketing expense requirements and inventor
royalty fee of $1 per unit sold of the Luna Fertility Indicator. The license
agreement with LPI was stated at a value of $1.

Trademark

The Company capitalized the expenses of acquiring the Luna trademark and will
amortize the expenses over a fifteen-year period, which represents its estimated
useful life, using the straight-line method. Amortization expense for the
three-month period ended June 30, 2000 amounted to $43. Accumulated amortization
differs from amortization expense due to foreign currency translation (Note 2).

NOTE 7 - SHORT-TERM LOANS

Short-term loans - related parties consist of the following at June 30, 2000 and
March 31, 2000:

                                                 June 30, 2000   March 31, 2000
                                                 -------------   --------------
Campbell Capital Advisory, Inc. (CCA)            $          83    $          84
Javelin Enterprises                                      1,959            1,999
                                                 -------------    -------------
     Total                                       $       2,042    $       2,083
                                                 =============    =============

The CCA loan payable is unsecured, has no stated maturity and bears no interest.
The Company intends to pay the balance when funds become available. CCA is a
related company under the control of the Company's president (see Note 10).

The Javelin note payable is unsecured, has no stated maturity and bears 10 %
interest per annum. Total interest accrued during the three-month period ending
June 30, 2000 amounted to $49. During December 1999, the Company issued 80,000
shares of common stock as partial satisfaction of the note. Javelin Enterprises
is a stockholder of the Company (see Note 10).

During the three-month period ended June 30, 2000, the Company borrowed $1,011
from Vas Enterprises, an unrelated company. The loan accrued interest at a rate
of 12 % per annum, which amounted to $8.

NOTE 8 - COMMON STOCK

Upon incorporation, 7,310,660 shares of common stock were sold, 7,170,000 at
$0.001 per share, and 140,660 at $0.50 per share, under Regulation D, Rule 504.

During the year ended March 31, 2000 the Company issued 630,000 shares of common
stock for cash at $0.50 per share. The Company also issued 100,000 shares of
common stock in settlement of outstanding debt at $0.50 per share.

During the three months ended June 30, 2000, the Company issued 55,000 shares at
$.001 per share for a subscription receivable. The Company also accepted cash
subscriptions to issue an additional 70,000 shares of common stock at a cash
price of $0.50 per share. These shares will be issued subsequently.



                                       10
<PAGE>

During the quarter ended June 30, 2000, the Company reached an agreement to
issue 200,000 shares of stock in payment of consulting fees amounting to
$100,000. These fees are currently recorded in the financial statements as
accrued expenses. The Company plans to issue these shares prior to September 30,
2000.

No shares of preferred stock were issued as of June 30, 2000.

NOTE 9 - WARRANTS AND OPTIONS

The Company issued one warrant with each share of common stock subscribed for
during a subscription period in autumn of 1999. The warrants have an exercise
price of $1.00 per share and expire December 1, 2000. As of June 30, 2000, no
warrants had been exercised and there are 410,000 warrants issued and
outstanding.

The Company does not have a formal stock option plan. However, the Company
issued options to two consultants during the year ended March 31, 2000. The
options had no value due to the fact that the exercise price was in excess of
the fair market value at the grant date. On May 8, 2000, the Company cancelled
this agreement with required 30 day notice, and the consultants relinquished
their claim to these options.

NOTE 10 - RELATED PARTIES

The president and chief executive officer of the Company, Gordon C. McDougall,
is also the president and stockholder of Campbell Capital Advisory, Inc. (CCA),
which had advanced funds to the Company to begin operations and to retain the
services of an attorney. As of June 30, 2000, the Company owes CCA $84. In
addition, CCA provides management services for a quarterly fee of $15,000 plus
$12,000 for reimbursed expenses. For the three-month period ended June 30, 2000,
the Company incurred a total of $15,000 in management fees and $4,055 in
reimbursed expenses. As of June 30, 2000 there is an outstanding accounts
payable of $59,156 to CCA.

The Company executed a promissory note in favor of a stockholder, for funds
loaned to the Company. As partial satisfaction of the note, 80,000 shares of
common stock were issued. As of March 31, 2000, the balance owing on the note is
$1,960, plus interest of $2,107.

NOTE 11 - COMMITMENTS AND CONTINGENCIES

Foreign Operations

The accompanying balance sheet includes $26,231 relating to the Company's assets
in Canada. Although this country is considered politically and economically
stable, it is always possible that unanticipated events in foreign countries
could disrupt the Company's operations.

Rent

The Company rents office space on a month-to-month basis.

License Agreement

There is a royalty agreement in effect with Luna Products, Inc. This agreement
calls for the payment of $1 per unit sold of the Luna Fertility Indicator. See
Note 6.



                                       11
<PAGE>

Management Service Agreement

The Company's subsidiary signed a two-year agreement for management services.
The agreement expires August 31, 2001 at which time it may continue on a
year-to-year basis for ten years. The agreement requires a base monthly fee of
$5,000 CND, plus a 5 % bonus of the Company's subsidiary's operating profits.

NOTE 12 - SEGMENT INFORMATION

As described in Note 2, the Company adopted SFAS No. 131 in its fiscal year
2000. The Company's operations are classified into two principal reporting
segments that provide different products or services. Separate management of
each section is required because each business unit is subject to different
marketing, and production strategies.

The table below presents information about the Company's reportable segments:


<TABLE>
<CAPTION>
                                           Three-months ended June 30, 2000
                               ----------------------------------------------------------
                                  Luna Medical       Luna Fertility
                               Technologies, Inc.    Indicator, Inc.        Consolidated
                               ------------------    ---------------      ---------------
<S>                             <C>                  <C>                  <C>
External Revenue                $          --        $         5,261      $         5,261
Operating loss                  $       191,860      $        44,277      $       236,137
Interest income                 $          --        $          --        $          --
Depreciation and amortization   $           208      $            43      $           251
Interest expense                $            62      $          --        $            62
Total assets                    $        12,031      $        14,200      $        26,231
</TABLE>

The first segment, Luna Medical Technologies, Inc. is a holding company for the
second segment and does not rely on direct revenues. The second segment, Luna
Fertility Indicator, Inc., an operating company, derives revenues from the
marketing and distribution of the licensed product.

The accounting policies for the two reportable segments are the same as those
described in the summary of significant accounting policies. The Company
allocates resources to its operating segment, and evaluates performance of this
segment based on operating income.

NOTE 13 - YEAR 2000 ISSUES

Like other companies, Luna Medical Technologies, Inc. could be adversely
affected if the computer systems it, or its suppliers or customers, uses do not
properly process and calculate date-related information and data from the period
surrounding and including January 1, 2000. This is commonly known as the "Year
2000" issue. Additionally, this issue could impact non-computer systems and
devices such as production equipment, elevators, etc. The costs related to Year
2000 compliance are expensed as incurred. At this time, there have been no known
effects to the Company in regards to the Year 2000 issue.

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

Business of the Company. Luna Medical Technologies, Inc., a Nevada corporation,
formerly entitled Luna Technologies, Inc., was incorporated in the State of
Nevada on January 19, 1999. In May, 1999, the Company changed its name to Luna
Medical Technologies, Inc. Our executive offices are located at Suite 400, 900
West Hastings Street, Vancouver, British Columbia, Canada V6C 1E5. Our telephone
number is (604) 687-0719. Our facsimile number is (604) 622-5575.



                                       12
<PAGE>

In May, 1999, the Company caused to be incorporated in British Columbia, Luna
Fertility Indicator, Inc., a wholly-owned subsidiary of this Company. The
primary business of Luna Fertility Indicator, Inc., is marketing and
distributing the Luna Fertility Indicator.

For purposes of clarification, anytime the symbol "US" is used within this
Annual Report of Form 10-QSB, it refers to the currency of the United States.
Anytime the symbol "CDN" is used, it refers to the currency of Canada.

On or about February 1, 2000, our subsidiary Luna Fertility Indicator, Inc.,
renegotiated a licensing agreement that we had entered into with Luna Products,
Inc., a Canadian corporation ("LPI") in or about January 1999. Pursuant to the
agreement with LPI, Luna Fertility Indicator, Inc., was granted the worldwide
right to market a lightweight, re-usable home fertility test known as the Luna
Fertility Indicator (the "Fertility Indicator"). Within this agreement, Luna
Fertility Indicator, Inc., agreed, among other things, (i) to pay the cost of
any government approval it sought in connection with the Fertility Indicator;
and (ii) to expend direct marketing and promotional costs of not less than
CDN$250,000.00. To facilitate the transaction, we agreed to forgive a
US$40,000.00 loan we made to LPI. Luna Fertility Indicator, Inc., also agreed to
pay Mr. James Emmerson, a director of LPI, a royalty of CDN$1.00 for every
Fertility Indicator sold. The initial term of the agreement is for 15 years from
February 1, 2000. In addition, the agreement provides for two renewal terms of 5
years on the same terms and conditions governing the initial 15-year term.

The concept behind the Fertility Indicator has been used in Europe for some
time. Although no product exactly like the Fertility Indicator is being sold in
Europe, we believe that the medical principles behind the Fertility Indicator
involving the analysis of a woman's saliva to determine fertility have been the
subject of clinical tests to verify the safety of that concept. However, we have
not conducted our own testing regarding the accuracy of the Fertility Indicator
and we cannot attest to the extent, nature, accuracy or validity of any third
party tests. Quite simply, a woman's body fluids indicate the changes in
hormones during different phases of her fertility cycle. When the dried fluids
are viewed through a powerful magnifier, patterns in the crystallized fluids
indicate the stage of her fertility cycle. The Fertility Indicator relies on the
medical fact that saliva crystallizes in the same special way as uterine
cervical mucus, due to the action of the estrogens, presenting the appearance of
fern-type branches. In 1948, Dr. Ridborg first discovered physiological
variations in the crystallized arrangement of saliva (or cervical uterine mucus)
related to ovulation. Later, Doctors Evelyn L. and John J. Billings identified
this scientific discovery as an indicator of female fertility. We cannot attest
to the accuracy, extent, nature or validity of those tests conducted by Evelyn
and John Billings.

In 1969, at the Royal Academy of Medicine in Barcelona, Spain, Dr. Biel
documented his investigations evidencing the relationship between hormonal
changes during the menstrual cycle and crystallization of female saliva during
ovulation, which followed an identical pattern in uterine cervical mucus.
Specifically, a woman's saliva and uterine cervical mucus only crystallize
during a period of from 6 to 8 days, during the fertile stage of the menstrual
and ovulation cycle. It is important to note that individual advances and delays
in ovulation do not affect this method's precision, as the method relies on
ovulation itself rather than a projected cycle date. We cannot attest to the
accuracy, extent, nature or validity of those tests conducted by Dr. Biel.

The secretion of estrogen and progesterone changes daily during a woman's
menstrual cycle, influencing the characteristics, which can be observed in the
dried body fluids, in particular, saliva and cervical fluid. These observable
characteristics include an increase in filaceousness (that is, the appearance of
thread-type anatomical structures) and specific changes in the crystalline
patterns during the days preceding ovulation. The increase of estrogen during
the whole of the first stage of the menstrual cycle produces changes in the
consistency and crystallization of saliva, in the same way as in uterine
cervical mucus. The estrogens only produce crystallization of these fluids when
they reach a certain concentration. This concentration is reached 3 to 4 days
prior to ovulation.

The simple procedure to produce and examine these crystalline patterns is by
placing a saliva (or cervical mucus fluid) sample on a slide to evaporate and
view through a small, powerful, hand-held microscope. By repeated in-home
testing, a woman can track her complete ovulation cycle without the nuisance of
urine tests, temperature tests and monthly calendar tracking, or costly visits
to a fertility or health care service. It is totally private, non-invasive, and
chemical free method of testing for fertility.

The Fertility Indicator takes up slightly more space than a lipstick and can be
used any private place with access to natural or clear light. A woman simply
places a sample of her saliva on the clean slide, allows the saliva to dry, then
holds the


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<PAGE>

slide up to a 40-watt or greater light source and looks at the saliva pattern
through the eyepiece. The woman then compares her saliva patterns indicated in a
book of charts provided free of charge with the Fertility Indicator. Comparing
the saliva patterns will indicate her state of fertility. If the woman is in the
biologically active, fertile phase, her saliva will crystallize and fibrous
"fern-type" patterns will be clearly viewed in the small Indicator in-home small
microscope. Then she can rinse off the slide and put it away until the next use.

We anticipate that the Fertility Indicator will be used as a guide to determine
the different phases of the fertility cycle and as an aid to encourage
conception. We do not intend for this device to be used or considered as a
contraceptive or method of birth control.

The Company's Subsidiary. On or about May 11, 1999, the Company caused to be
incorporated, in British Columbia, Luna Fertility Indicator, Inc. Luna Fertility
Indicator, Inc., is currently a wholly-owned subsidiary of the Company. The
primary business of Luna Fertility Indicator, Inc., is marketing and
distributing the Fertility Indicator.

Marketing and Channels of Distribution. Our subsidiary, Luna Fertility
Indicator, Inc., has entered into a management services contract with Melissa
Gervais, Inc. ("Gervais, Inc."). For an initial term of 10 years, Gervais, Inc.
will provide in-house marketing and public relations services and will
co-ordinate an advertising campaign in targeted media such as medical journals,
women's magazines, religious publications and other selected media. We will
attempt to market the Luna Fertility Indicator in major chain drug stores using
selected regional distributors.

Bathurst Sales ("Bathurst") of Downsview, Ontario, Canada's leading distributor
of cosmetics and personal care products, has been distributing the Luna
Fertility Indicator to its customers including London Drugs, Shoppers Drug Mart,
Pharma Plus Drugmarts, Lawton's Drug Stores and Uniprix since November 1999.
Bathurst distributes products such as Revlon, John Frieda, Elizabeth Arden,
Rubbermaid, AM Cosmetics and Vogue International, and its current clients are
those to whom we will market and promote the Luna Fertility Indicator. Bathurst
is informed of the dates of our advertising programs to co-ordinate any
co-operative advertising plans that its clients may have for the period.
Bathurst has orally agreed to distribute the Luna Fertility Indicator and
negotiations are ongoing to reduce the terms, conditions and covenants to
writing. Luna Fertility Indicator, Inc., has also entered into distribution
arrangements with companies in New Zealand and South Africa. However, the
specific terms and conditions of such distribution arrangements are the subject
of ongoing negotiations.

We have developed new and attractive ways to market the Luna Fertility
Indicator, including new packaging and marketing materials which will enhance
the appeal of the Luna Fertility Indicator. The Luna Fertility Indicator is now
being represented in Canada by two distributors. The first distributor,
Bathurst, as mentioned in the preceding paragraph, sells various products to
traditional drug stores. The second distributor, Inno-Vite, sells various
products to health food stores such as Caper's, Vitamin House, Choices,
Nutrition House, GNC and Noah's Natural Foods. We continue to negotiate with the
companies interested in our Luna Fertility Indicator in other markets throughout
the world. We anticipate that distribution arrangements will be finalized within
six (6) months of securing the necessary governmental approvals in those foreign
markets.

We are also involved in the advertising and promotion of the Luna Fertility
Indicator on the Internet. Our Internet website is www.lunafert.com. Our website
contains general information on how the Luna Fertility Indicator works,
frequently asked questions, the chart, where to purchase the Luna Fertility
Indicator (such information lists locations in only those jurisdictions where
the Luna Fertility Indicator may be sold) and the Company. In March 2000, we
launched our e-commerce website where we will sell the Luna Fertility Indicator.
We plan to take all of the necessary precautions to ensure secure transmission
of confidential information, including, but not necessarily limited to, the
reliance on encryption and authentication technology.

Liquidity. The Company has been in the development stage since January 19, 1999
(inception). From the date sales commenced in March 1999 to June 30, 2000, the
Company had realized US$117,993 in revenues from sales of the Fertility
Indicator. The cost of those sales amounted to US$80,302, resulting in a gross
profit of US$37,691. The Consolidated Statement of Loss for the three-month
period ended June 30, 2000 indicates a net loss of US$236,137. At June 30, 2000,
the Company had current assets of US$21,653. The majority of which is
represented by US$2,951 in cash; US$15,505 in Goods and Services Tax
recoverable; US$2,482 in prepaid expenses; and US$403 in accounts receivable. At
June 30, 2000, the Company had current liabilities of US$259,721. At June 30,
2000, current liabilities exceeded current assets by US$238,068. The Company is
not aware of any trends, demands, commitments or uncertainties that will


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result in the Company's liquidity decreasing or increasing in a material way.
The Company does currently hold short-term notes payable in the amount of
US$3,053, however, those notes are unsecured. The US$83 loan payable to Campbell
Capital Advisory, Inc., a private Canadian corporation controlled by the
Company's President, Gordon McDougall, bears no interest and has no fixed
repayment terms. The US$1,959 loan payable to Javelin Enterprises and the
US$1,011 loan payable to Vas Enterprises Inc. bear interest at 10% and 12% per
annum, respectively, and are repayable on demand and on or before August 1,
2000, respectively.

Currently, the Company's sources of liquidity include the sale of its common
stock, through loans and through revenue raised by sales of the Fertility
Indicator. The Company believes, however, that the revenue stream produced
through sales of the Fertility Indicator is increasing overall, and will provide
sufficient resources to meet its financial obligations for the next 12-month
period.

The Company believes that between its revenue stream and its current cash
resources it will be able to maintain its current operations. However, should
these resources prove to be insufficient, the Company may be required to raise
additional funds or arrange for additional financing over the next 12 months to
adhere to its development schedule. Such additional capital may be received from
additional private or public financings, as well as borrowings and other
resources. If adequate cash is not available, the Company may be required to
curtail its operations significantly or to obtain funds by entering into
arrangements with collaborative partners or others that may require the Company
to relinquish rights that the Company would not otherwise relinquish. No
assurance can be given, however, that the Company will have access to additional
cash in the future, or that funds will be available on acceptable terms to
satisfy the cash requirements of the Company.

                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

None

Item 2.  Change in Securities

In or around March, 2000, the Company sold 375,000 shares of its $.001 par value
common stock for $160,055.00. The shares were issued in reliance upon the
exemption from the registration requirements of the Securities Act of 1933
("Act") specified by the provisions of Regulation S of the Act promulgated by
the Securities and Exchange Commission in that all of the purchasers of shares
were "non-U.S. citizens" as that term is defined in relevant securities law.

Item 3.  Defaults Upon Senior Securities

None

Item 4.  Submission of Matters to Vote of Security Holders

None

Item 5.  Other Information

None

Item 6.  Exhibits and Reports on Form 8-K

The Company filed a report on Form 8-K with the Commission announcing the
appointment of Brad Desaulniers as President and a director of the Company.

The Company filed a report on Form 8-K with the Commission announcing the
resignation of Brad Desaulniers as President and a director of the Company.


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                                   SIGNATURES

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

Dated:   August __, 2000                 LUNA MEDICAL TECHNOLOGIES, INC.


                                         By:      /s/    Gordon McDougall
                                                  ------------------------------
                                                  Gordon McDougall
                                         Its:     President



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