<PAGE>

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

                                   FORM 10-KSB

(Mark One)

         (X)      ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
                 SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)

                     For the fiscal year ended June 30, 1998

                                       OR

         ( )      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
              THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

                          Commission file number 0-7655


                          LIFE RESOURCES, INCORPORATED
                 (NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)

          Oregon                                                 93-0475404
-------------------------------                              -------------------
(State or other jurisdiction of                              (I.R.S.  Employer
 incorporation or organization)                              Identification No.)

101 East Redlands Boulevard, Suite 211
        Redlands, California                                       92373
--------------------------------------                       -------------------
      (Address of principal                                      (Zip Code)
        executive offices)

Issuer's telephone number, including area code                  (909)  793-3000
                                                              ------------------


Securities registered pursuant to section 12(b) of the Act:

                                                    Name of each exchange
         Title of each class                         on which registered
         -------------------                       -----------------------

                  None                                      None


                                       1
<PAGE>

Securities registered pursuant to Section 12(g) of the Act:

                          Common Stock, $.01 par value
                          ----------------------------
                                (Title of class)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months and
(2) has been subject to such filing requirements for the past 90 days.
Yes                        No       x
   ---------------           ---------------

Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. ( )

The issuer had no revenues for the fiscal year ended June 30, 1998.

Issuer has 5,292,095 shares of common stock outstanding as of June 30, 1998.
Issuer is unaware of any brokerage firm making a market in its common stock
during the past five years.


                                       2
<PAGE>

                                     PART I
                                     ------

ITEM 1.  DESCRIPTION OF BUSINESS
-------  -----------------------

Life Resources Incorporated (the "Registrant") was formed in April 1970 through
the merger of Fidelity Capital Corporation, a California corporation
incorporated in March 1970, and Trailerdyne, Inc., an Oregon corporation
incorporated in June 1959. Assets consisted of real estate holdings in San
Bernardino County, California.

In 1970, the Registrant acquired Sam Andy Foods, Inc., which was engaged in
packaging and sales of dehydrated foods, and later changed the name to United
Commodities International, a wholly-owned subsidiary. In 1971, the Registrant
acquired 81% of the outstanding shares of Ski Park City West, Inc., a Utah
corporation, which owned and operated a ski resort in Park City, Utah and had
several real estate holdings. The Registrant disposed of all of its interest in
the stock and the ski resort operation in December 1972.

In 1973, the Registrant purchased the assets of the preformed tumbling media
division of Norton Industries, located in Massachusetts, and all of the stock of
Fortune Industries, a Michigan corporation that manufactured preformed tumbling
media abrasive products, and combined the two operations into LRI Industries, a
wholly-owned subsidiary.

In October, 1976, the Registrant sold all of the assets of United Commodities
International.

Between 1976 and 1981, the Registrant sold all of its remaining real estate
holdings.

In June, 1983, the Registrant sold all of the assets, properties, and business
of LRI Industries for cash and notes. On June 30, 1994, the balance of the Note
Receivable was $253,600, before deduction of unamortized discount. On November
28, 1994, the Registrant accepted a reduced payment of $95,000 to settle the
note.

During fiscal 1998, 1997 and 1996, the Registrant had no ongoing operating
business. Operations consist of payment of its liabilities.

At a meeting held on May 20, 1993, the Board of Directors agreed to acquire two
parcels of real property ("Parcel 1" and "Parcel 2") located in Loma Linda,
California, at the corner of Barton Road and New Jersey (collectively, the
Property) from J. Robert West and Donna H. West, husband and wife.

On June 16, 1993, the Registrant acquired real property located in Loma Linda,
California, the Property from J. Robert West and Donna H. West. In exchange for
the Property, the Company issued to J. Robert West and Donna H. West 100,000,000
shares of common stock, valued at $.01 per share. After the transfer, J. Robert
West owned 103,569,298 shares, which represented a 94.5 percent ownership
interest in the Company's voting securities.


                                       3
<PAGE>

ITEM 1.  DESCRIPTION OF BUSINESS (continued)
-------  -----------------------

At the date of transfer, the Registrant recorded the Property at J. Robert
West's historical cost basis of $1,855,029. At June 30, 1998 and 1997, the
property was subject to outstanding obligations of $906,695 and $945,209
respectively, including an obligation of $372,000 owed to a company wholly owned
by J. Robert West.

The Company planned to continue to develop the project on Parcel 1 of the
Property by completing the mechanical and engineering plans and obtaining
permits from the City of Loma Linda. Funds to complete this development and
service the debt were to be sought from outside sources. Parcel 2 was to be held
for later development.

In February 1999, Parcel 1 and Parcel 2 were sold for $1,500,000. As a result of
the sale of the parcels, the Company does not expect to pursue future real
estate development projects. Accordingly, the Company continues to have no
operating revenues and does not anticipate any revenues from business operations
until the Company develops or acquires new business lines.

In October 1994, the Board of Directors authorized, and the Company effected, an
issuance of 21,093,679 shares of common stock to certain individuals (who later
became Board members) who will be important to the future success of the
Company. This issuance of stock represented 19.3 percent ownership of the
Company's voting securities. Since the equity book value of the Company was
negative, and since the Company has no ongoing operations, the compensatory
value of the stock was deemed to have no value. Consequently, no amounts were
booked to reflect the issuance of these shares.

In February 1995, the Company issued a private placement of 1,200,000 shares of
Common Stock to a private investor. The issuance was made for $120,000 and
represented 0.9 percent ownership of the Company's Common Stock. The price paid
for the stock was not representative of any then measurable value of the
Company. The issuance was made pursuant to Regulation D, which is exempt from
registration based on Section 4(2) of the Federal Securities Act of 1933.

On June 30, 1995, the Company's Board of Directors approved a twenty-five for
one reverse stock split of the Company's common stock. A total of 126,543,399
shares of common stock were retired in connection with the reverse stock split.
The stated value of each share was not changed from $.01.

All share and per share amounts disclosed in transactions completed prior to
June 30, 1995 have been restated in the Company's consolidated financial
statements (Item 7) to retroactively reflect the reverse stock split.

On March 1, 1996, the Registrant purchased certain assets and liabilities of J.
Robert West, M.D., Inc. dba Awest Dermatology and Surgery Medical Group
("Awest"). This event was reported as executed by the Registrant in a Form 8-K
filing dated March 1, 1996.

                                       4
<PAGE>

ITEM 1.  DESCRIPTION OF BUSINESS (continued)
------   -----------------------

This transaction was not executed and, as such, both parties have agreed to
postpone this transaction to a future date. It is the intent of the parties to
reconsider the transaction in the future.

Both parties, including the Registrant, have agreed to continue ongoing,
separate operations until such time that final arrangements for the transaction
can be resolved.

ITEM 2.  DESCRIPTION OF PROPERTY

The corporate office of the Registrant is located at 101 East Redlands
Boulevard, Suite 211, Redlands, California 92373. The office is furnished by the
Chairman of the Board at no cost to the Company. Registrant believes that the
facility is well maintained and adequate for present operations.

In May of 1993, J. Robert West offered the Property to the Company. The terms
for the Company's acquisition of the Property from J. Robert West were as
follows:

1.       The total purchase price for the Property was $2,722,000 (the "Purchase
         Price") and was based on the appraisal of R.B. Broadbelt, M.A.I., dated
         January 15, 1993. The appraiser was retained by J. Robert West and not
         by the Board of Directors and is addressed to J. Robert West and not to
         the Company, its Board, or stockholders. The Board received no separate
         independent appraisal. The appraiser was paid $7,500 by J. Robert West.
         According to the Appraisal, Parcel 1 was valued at $1,292,000 and
         Parcel 2 was valued at $1,430,000 as of November 24, 1992, for a
         combined fair market value of $2,722,000.

2.       The Purchase Price was payable as follows:

         a.       Company issued to J. Robert West and Donna H. West a total of
                  100,000,000 shares (4,000,000 post-reverse split shares) of
                  its common stock valued at $.01 per share for a total value of
                  $1,000,000. Several factors were considered by the Board of
                  Directors in establishing the value of the shares, including,
                  but not limited to, the fact that the shares to be issued
                  would transfer control to J. Robert West. As a practical
                  matter, however, J. Robert West already exerted substantial
                  control over the Company's operations given his 37.4% interest
                  as the largest stockholder. The Board of Directors also
                  determined that the value of the shares offered to J. Robert
                  West in return for the Property was fair, given the fact that
                  the book value of the shares was less than $.01 per share and
                  the appraised value of the Property, less liabilities, was
                  $1,000,000. Furthermore, the Board of Directors determined
                  that the acquisition was in the best interest of the Company,
                  because it provided a substantial contribution of a capital
                  asset to the Company and business opportunities for the
                  Company in the development and operation of the Property.

                                       5
<PAGE>

ITEM 2.  DESCRIPTION OF PROPERTY (continued)
-------  -----------------------

                  J. Robert West has been the sole supplier of funds required
                  from outside the Company. Such funds have been loaned to the
                  Company. The value of $.01 per share was established by the
                  Board of Directors, J. Robert West abstaining, as the maximum
                  then fair market value of the Company's shares based on the
                  following: (i) the above-mentioned facts, (ii) the shares had
                  a book value of less than $.01 per share, and (iii) there has
                  been no active market or market price for the sale of the
                  stock.

         b.       The Company assumed existing mortgage liabilities encumbering
                  the Property totaling approximately $1,722,000 (the balance of
                  the Purchase Price). The existing liabilities against the
                  Property consisted of three loans collateralized by Parcel 1
                  and two loans collateralized by Parcel 2. The mortgage
                  liability balances at June 30, 1998 are as follows:



<PAGE>


         Description                                                 Loan Amount
         -----------                                                 -----------

          (1)      Note payable to bank, collateralized by
                   Parcel 1, interest and principal due monthly
                   in installments of $4,377 at a variable
                   interest rate of 2.5% above the bank's prime
                   lending rate (an effective rate of 11% at
                   June 30, 1998). The note was due May 5,
                   1996. In September 1996, the registrant
                   refinanced with the bank, with a final
                   payment due in November 1998. The note was
                   repaid on February 1, 1999.                     $    237,478

          (2)      Note payable to bank, collateralized by
                   Parcel 2, interest and principal due monthly
                   in installments of $5,595 at a variable
                   interest rate of 2.5% above the bank's prime
                   lending rate (an effective rate of 11% at
                   June 30, 1998). The note was due on May 5,
                   1996. In September, 1996, the registrant
                   refinanced with the bank, with a final
                   payment due in November, 1998. The note was
                   repaid on February 1, 1999.                          263,217


                                       6
<PAGE>

ITEM 2.  DESCRIPTION OF PROPERTY (continued)
------   -----------------------


         (3)      Note payable to an individual,
                  collateralized by Parcel 1, payable interest
                  only, due monthly at 11% per annum, due on
                  demand or June 30, 1998. The note was repaid
                  on February 1, 1999.                                   34,000

         (4)      Subordinated note payable to a director and
                  controlling shareholder, collateralized by
                  Parcel 1, interest (7% per annum) and
                  principal due and payable on June 30, 1999.
                  The note's maturity date has been extended
                  until June 30, 2001.                                  372,000
                                                                   -------------
                  Total                                            $    906,695
                                                                   =============


         Loan (4) was originally a loan from J. Robert West, M.D. Inc., to J.
         Robert West. These loans were collateralized by trust deeds on the
         Property. The Company assumed all obligations on the Property.

         Offsite improvements, as required by the City of Loma Linda, were
         completed for the two parcels prior to acquisition by the Company,
         including water and sewer lines, street improvements, curb and gutter,
         fire hydrants, sidewalks, and storm drains. Perimeter block and
         retaining walls required for the project were also completed. A precise
         plan of design for a medical office building and parking lot for Parcel
         1 were completed and approved by the City of Loma Linda. Mechanical and
         working drawings were in progress and were submitted to the City for
         approval. During the fiscal year ended June 30, 1998, no development
         took place. In February 1999, the two parcels were sold for $1,500,000.

         Proceeds received from the sale of the Property will be used primarily
         for working capital and reduction of debt.

         On June 30, 1995 the combined fair market value of the properties was
         ascertained to be $1,635,029. The land was written down $220,000 to its
         fair market value as of that date.

         On June 30, 1996 the combined fair market value of the properties was
         ascertained to be $1,065,000. The land was written down $570,029 to its
         fair market value as of that date. The write down of the land to fair
         market value did not include any costs of disposal as the Company was
         still considering development of the property.

                                       7
<PAGE>

ITEM 2.  DESCRIPTION OF PROPERTY (continued)
-------  -----------------------

         On June 30, 1997 and 1998, the combined fair market value of the
         properties was still ascertained to be $1,065,000, their recorded book
         value.

         On February 1, 1999, the properties were sold for $1,500,000. A gain of
         approximately $428,000 from the sale will be recognized in the
         Company's consolidated financial statements for the fiscal year ending
         June 30, 1999.

ITEM 3.  LEGAL PROCEEDINGS
-------  -----------------

         None.

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

         None.


                                       8
<PAGE>

                                     PART II
                                     -------

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

         The Registrant is unaware of any brokerage firm making a market in its
         common stock during the past five years. The Company does not have any
         stock option, stock purchase, or any other compensation or incentive
         plan now in effect or in effect within the last ten years.

         Following is the approximate number of holders of record of each class
         of equity securities of the Registrant as of June 30, 1998, determined
         from the Registrant's records of stock transfers.

                                                             NUMBER OF RECORD
                TITLE OF CLASS                                    HOLDERS
                --------------                               ----------------
         Common stock, $.01 par value                             1,187


ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
-------  ---------------------------------------------------------

         Interest expense decreased $11,443 (6.1%) to $175,437 in fiscal 1998 as
         compared to $186,880 in fiscal 1997. Interest on shareholder loans
         increased $10,777 due to increased borrowings of approximately $110,000
         from the Company's president during the current year. This increase was
         offset by lower interest expense in fiscal 1998 on notes payable to a
         bank.

         General and administrative expense consists principally of professional
         fees, property taxes, bank charges and corporation license fees. These
         expenses increased $25,628 (988.7%) to $28,220 in fiscal 1998 as
         compared to $2,592 in fiscal 1997. The increase in expenses during
         fiscal 1998 as compared to fiscal 1997 was due primarily to a credit to
         expenses of approximately $40,000 during fiscal 1997. In fiscal 1997,
         an affiliated corporation, A.V. Western Medical Group, assumed
         approximately $40,000 in legal fees accrued by the Company at June 30,
         1996 in connection with the potential acquisition of physician groups.
         There were no credits to expenses in fiscal 1998. Accounting fees
         decreased approximately $20,700 during fiscal 1998, as acquisition
         activities were postponed during the second quarter of fiscal 1997.
         Property tax expense increased approximately $7,400 in fiscal 1998 due
         to an increase in the valuation of properties. Appraisal fees decreased
         approximately $2,000 in fiscal 1998. Other general and administrative
         expenses increased approximately $1,000 in fiscal 1998.

         The Company incurred a net loss of $204,467 in fiscal 1998 as compared
         to a net loss of $190,272 in fiscal 1997. Net loss increased $14,195
         (7.5%) in fiscal 1998 as no expenses were assumed by an affiliate in
         fiscal 1998.

                                       9
<PAGE>

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION. (continued)
------   ----------------------------------------------------------

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

         At June 30, 1998 and June 30, 1997, the Registrant's liabilities
         exceeded its assets by $1,753,127 and $1,548,660, respectively. There
         were no capital expenditures during fiscal 1998.

         At June 30, 1998, the primary asset of the Company was land held for
         development or sale of $1,065,000 which generated no positive cash
         flow. The only current asset of the Company was non liquid prepaid
         income taxes of $1,600.

         The primary liabilities of the Company at June 30, 1998 consisted of
         loans from Citizens Business Bank, Bill W. Simmons Family Trust dated
         1990, and J. Robert West, M.D., Inc. which totaled $2,303,666. Current
         liabilities consist of a cash overdraft, accounts payable, accrued
         liabilities and interest, and the current portion of long-term debt,
         which totaled $593,201.

         A Director of the Company, J. Robert West, has been making loans to the
         Company to fund Company activities. The loans were established under
         yearly term notes with accrued interest being added to principal at
         each annual renewal date.

         Since the Company has had no ongoing business for the two most recent
         fiscal years, there has been no impact of inflation and changing prices
         on the Registrant's income from continuing operations.

         In February 1999, the Company sold its land parcels for $1,500,000. As
         a result of the sale of the parcels, the Company does not expect to
         pursue future real estate development projects. Accordingly, the
         Company continues to have no operating revenues and does not anticipate
         any revenues from business operations until the Company develops or
         acquires new business lines.

         Proceeds from the sale of the land parcels were used to satisfy the
         Company's primary cash commitments for the next fiscal year ending June
         30, 1999 which were to service the debt owed to Citizens Business Bank
         and the Billy Simmons Family Trust dated 1990. The cash requirement for
         these debts, including principal and interest, was approximately
         $564,400 for the fiscal year ending June 30, 1999.


                                       10
<PAGE>

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (continued)
------   ---------------------------------------------------------

         Remaining proceeds received from the sale of the land, after primary
         cash commitments have been satisfied, will be used for working capital,
         reduction of debt, mergers or acquisitions, or any other purposes that
         the Board of Directors believes to be in the best interests of the
         Company. It is anticipated that J. Robert West, a director and
         controlling shareholder of the Company, will continue to loan needed
         funds to the Company when additional resources are required. However,
         Dr. West has no formal agreement with the Company and is not obligated
         to do so. Additional sources of funds that may be required are expected
         to be derived from possible partnerships, joint ventures, equity
         funding to the Company and/or financial institutions, although there is
         no assurance such sources will materialize.

         Since February 1999, and for the foreseeable future, the Company's sole
         activity is expected to be the identification and evaluation of
         suitable business opportunities which could result in an acquisition by
         or a combination with the Company. In addition, other types of business
         transactions might be considered and entered into by the Company.


                                       11
<PAGE>


ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (continued)
------   ---------------------------------------------------------

CAUTIONARY STATEMENT PURSUANT TO SAFE HARBOR PROVISIONS OF THE PRIVATE
SECURITIES REFORM ACT OF 1995

During the year ended June 30, 1998, the Company began the process of
identifying, evaluating and implementing changes to computer programs necessary
to address the year 2000 issue. This issue affects computer systems that have
time-sensitive programs that may not properly recognize the year 2000. This
could result in system failures or miscalculations. The Company is currently
addressing its internal year 2000 issue with modifications to existing programs
and conversions to new programs. The Company is also communicating with lenders,
vendors and others with which it conducts business to help them identify and
resolve the year 2000 issue.

The total cost associated with the required modifications and conversions is not
expected to be material to the Company's consolidated results of operations and
financial position and will be expensed as incurred.

If necessary modifications and conversions by the Company and those with which
it conducts business are completed in a timely manner, the year 2000 issue is
not expected by management of the Company to have a material adverse affect on
the Company's consolidated results of operations and financial position.

Certain statements in this report may be forward-looking in nature or
forward-looking statements as defined in the Private Securities Litigation
Reform Act of 1995. Forward-looking statements in this Form 10-K SB relate to
the Company's year 2000 compliance efforts, including expectations about
compliance timetables and costs.

Actual results may differ from those expressed or implied in forward-looking
statements. With respect to any forward-looking statements contained in this
report, the Company believes that its results are subject to a number of risk
factors, including the ability of the Company to identify and address
successfully year 2000 issues in a timely manner, and at costs that are
reasonably in line with projections, and the ability of the Company's vendors to
identify and address successfully their own year 2000 issues in a timely manner.

Any forward-looking statements in this report should be evaluated in light of
these important risk factors.


                                       12
<PAGE>

ITEM 7.  FINANCIAL STATEMENTS
-------  --------------------



                          INDEX TO FINANCIAL STATEMENTS



                                                                         PAGE(S)


REPORT OF INDEPENDENT ACCOUNTANT                                         14 - 15



CONSOLIDATED BALANCE SHEET                                                 16
JUNE 30, 1998



CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JUNE 30, 1998 AND 1997                                 17



CONSOLIDATED STATEMENTS OF SHAREHOLDERS'
DEFICIT FOR THE YEARS ENDED JUNE 30, 1998 AND 1997                         18



CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 1998 AND 1997                                 19



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998                                                            20 - 29



FINANCIAL STATEMENT SCHEDULE - SCHEDULE III                                37


                                       13
<PAGE>


                        REPORT OF INDEPENDENT ACCOUNTANT






To the Shareholders and Board of Directors
Life Resources Incorporated and Subsidiaries


I have audited the accompanying consolidated balance sheet of Life Resources
Incorporated and Subsidiaries (the "Company") as of June 30, 1998, and the
related consolidated statements of operations, shareholders' deficit, and cash
flows for each of the two years in the period ended June 30, 1998. I have also
audited the consolidated financial statement schedule listed in the index at
Item 13. These consolidated financial statements and consolidated financial
statement schedule are the responsibility of the Company's management. My
responsibility is to express an opinion on these consolidated financial
statements and consolidated financial statement schedule based on my audits.

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

In my opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Life
Resources Incorporated and Subsidiaries as of June 30, 1998, and the results of
their operations and their cash flows for each of the two years in the period
ended June 30, 1998, in conformity with generally accepted accounting
principles. Also, in my opinion, such consolidated financial statement schedule,
when considered in relation to the basic consolidated financial statements taken
as a whole, presents fairly in all material respects, the information set forth
therein.


                                       14
<PAGE>



The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in Note 1 to the
consolidated financial statements, the Company's cash flows, which are dependent
upon the continued financial support of a director of the Company, and its
accumulated deficit raise substantial doubt about the Company' ability to
continue as a going concern. Management's plans in regard to these matters are
also described in Note 1. The consolidated financial statements do not include
any adjustments that might result from the outcome of this uncertainty.



/s/ Bennett Block Accountancy Corporation

Torrance, California
March 27, 2000


                                       15
<PAGE>

                  LIFE RESOURCES INCORPORATED AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                  JUNE 30, 1998


                                     ASSETS

CURRENT ASSETS
    Prepaid income taxes                                            $     1,600
                                                                    ------------

         TOTAL CURRENT ASSETS                                             1,600

LAND HELD FOR DEVELOPMENT OR SALE                                     1,065,000
                                                                    ------------

         TOTAL ASSETS                                               $ 1,066,600
                                                                    ============

                      LIABILITIES AND SHAREHOLDERS' DEFICIT

CURRENT LIABILITIES
    Cash overdraft                                                  $     2,346
    Accounts payable and accrued expenses                                47,825
    Accrued interest                                                      8,335
    Current portion of long-term debt                                   534,695
                                                                    ------------

         TOTAL CURRENT LIABILITIES                                      593,201

ACCRUED INTEREST, SHAREHOLDER                                           457,555

LONG-TERM DEBT, SHAREHOLDER                                           1,768,971
                                                                    ------------

         TOTAL LIABILITIES                                            2,819,727

COMMITMENTS AND CONTINGENCIES (Notes 7, 8 and 9)

SHAREHOLDERS' DEFICIT
    Common stock, $.01 par value; 200,000,000
    shared authorized; 5,292,095 shares issued
    and outstanding                                                      52,921
    Additional paid-in-capital                                        4,180,865
    Accumulated deficit                                              (5,986,913)
                                                                    ------------

TOTAL SHAREHOLDERS' DEFICIT                                          (1,753,127)
                                                                    ------------

TOTAL LIABILITIES AND SHAREHOLDERS'  DEFICIT                        $ 1,066,600
                                                                    ============

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

                                       16
<PAGE>

                  LIFE RESOURCES INCORPORATED AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                   FOR THE YEARS ENDED JUNE 30, 1998 AND 1997


                                                      FOR THE YEARS ENDED
                                                            JUNE 30,
                                                --------------------------------
                                                    1998                1997
                                                ------------        ------------
EXPENSES:
  General and administrative                    $    28,220         $     2,592
  Interest, shareholder                             122,823             112,046
  Interest, other                                    52,614              74,834
                                                ------------        ------------
                                                    203,657             189,472
                                                ------------        ------------

LOSS BEFORE INCOME TAXES                           (203,657)           (189,472)

PROVISION FOR INCOME TAXES                              810                 800
                                                ------------        ------------

         NET LOSS                               $  (204,467)        $  (190,272)
                                                ============        ============

NET LOSS PER COMMON SHARE -
BASIC AND DILUTED                               $      (.04)        $      (.04)
                                                ============        ============


WEIGHTED AVERAGE NUMBER OF
  SHARES OUTSTANDING - BASIC AND
  DILUTED                                       $ 5,292,095         $ 5,292,095
                                                ============        ============

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

                                       17
<PAGE>
<TABLE>

                                 LIFE RESOURCES INCORPORATED AND SUBSIDIARIES
                               CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
                                  FOR THE YEARS ENDED JUNE 30, 1998 AND 1997

<CAPTION>


                             COMMON STOCK
                     -----------------------------      Additional                           Total
                      Number of                          Paid-in        Accumulated      Shareholders'
                       Shares           Amount           Capital           Deficit          Deficit
                     ------------     ------------     ------------     ------------      ------------
<S>                    <C>            <C>              <C>               <C>               <C>
BALANCE
  July 1, 1996         5,292,095      $    52,921      $ 4,180,865       $(5,592,174)      $(1,358,388)

  Net loss                    --               --               --         (190,272)         (190,272)
                     ------------     ------------     ------------     ------------      ------------


BALANCE
  June 30, 1997        5,292,095           52,921        4,180,865       (5,782,446)       (1,548,660)

  Net loss                    --               --               --         (204,467)         (204,467)
                     ------------     ------------     ------------     ------------      ------------


BALANCE
  June 30, 1998        5,292,095      $    52,921      $ 4,180,865      $(5,986,913)      $(1,753,127)
                     ============     ============     ============     ============      ============


                             The accompanying notes are an integral part of these
                                      consolidated financial statements.
</TABLE>

                                                      18
<PAGE>
<TABLE>

                            LIFE RESOURCES INCORPORATED AND SUBSIDIARIES
                                CONSOLIDATED STATEMENTS OF CASH FLOWS
                             FOR THE YEARS ENDED JUNE 30, 1998 AND 1997
<CAPTION>

                                                                   FOR THE YEARS ENDED
                                                                         JUNE 30,
                                                               --------------------------
                                                                  1998            1997
                                                               ----------      ----------
<S>                                                            <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
    Net loss                                                   $(204,467)      $(190,272)
                                                               ----------      ----------

ADJUSTMENTS TO RECONCILE NET LOSS FOR ITEMS
 CURRENTLY NOT AFFECTING OPERATING CASH FLOWS:
    Amortization of loan costs                                        --             400
    Prepaid income taxes                                          (1,600)             --
    Accounts payable and accrued liabilities                      15,021         (39,092)
    Accrued interest                                             116,854         117,119
                                                               ----------      ----------
                                                                 130,275          78,427
                                                               ----------      ----------
         NET CASH USED BY
          OPERATING ACTIVITIES                                   (74,192)       (111,845)
                                                               ----------      ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Principal payments on long-term debt                         (38,514)        (90,060)
    Proceeds from issuance of long-term debt, shareholder        110,355         201,792
                                                               ----------      ----------

         NET CASH PROVIDED BY
          FINANCING ACTIVITIES                                    71,841         111,732
                                                               ----------      ----------

NET DECREASE IN CASH AND CASH EQUIVALENTS                         (2,351)           (113)

CASH EQUIVALENTS, beginning of year                                    5             118
                                                               ----------      ----------

CASH EQUIVALENTS (OVERDRAFT), end of year                      $  (2,346)      $       5
                                                               ==========      ==========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
 INFORMATION:

CASH PAID DURING THE YEAR FOR:
    Interest                                                   $  53,190       $  70,001
    Taxes                                                      $   2,410       $     800

</TABLE>

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


                                                 19
<PAGE>

                  LIFE RESOURCES INCORPORATED AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 1998



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Principles of Consolidation
         ---------------------------

         The consolidated financial statements include the accounts of Life
         Resources Incorporated and its wholly-owned subsidiaries, LRI
         Industries and United Commodities International (the "Company"). All
         significant intercompany accounts and transactions have been eliminated
         in consolidation.

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

         The Company's consolidated financial statements have been prepared on a
         going concern basis which contemplates the realization of assets and
         liquidation of liabilities in the ordinary course of business.

         The Company has few remaining assets and liabilities as of June 30,
         1998, and has no continuing revenue-producing activities. In addition,
         at June 30, 1998, the Company has a substantial accumulated deficit.
         Also, the Company has received substantial financial assistance from a
         director and controlling shareholder, the continuation of which cannot
         be assured. These conditions raise substantial doubt about the
         Company's ability to continue as a going concern.

         The consolidated financial statements do not include any adjustments
         that might be necessary should the Company be unable to continue in
         existence.

         Management's Estimates:
         -----------------------

         The preparation of the consolidated financial statements in conformity
         with generally accepted accounting principles necessarily 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 for each reporting period.
         Actual results could differ from those estimates.

         Management's Plans:
         -------------------

         As discussed in Note 3, the Company acquired real property (the
         "Property"), consisting of two parcels, in Loma Linda, California
         during 1993. The Company planned to develop Parcel 1 by completing
         mechanical and engineering plans and obtaining permits from the City of
         Loma Linda. Parcel 2 was to be held for later development. In February
         1999, both parcels were sold (Note 8).


                                       20
<PAGE>

                  LIFE RESOURCES INCORPORATED AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 1998


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         Since February 1999, and for the foreseeable future, the Company's sole
         activity is expected to be the identification and evaluation of
         suitable business opportunities which could result in an acquisition by
         or a combination with the Company. In addition, other types of business
         transactions might be considered and entered into by the Company.

         The Company has had no operating revenues, and the Company does not
         anticipate any revenues from business operations until the Company
         develops or acquires new business lines. Proceeds received from the
         sale of the parcels were used primarily for working capital and
         reduction of debt. It is anticipated that J. Robert West, a director
         and controlling shareholder of the Company, will continue to loan
         needed funds to the Company, when additional resources are required.
         However, Dr. West has no formal agreement with the Company to do so.
         Additional sources of funds that may be required are expected to be
         derived from possible partnerships, joint ventures, equity funding to
         the Company and/or financial institutions, although there is no
         assurance such sources will materialize.

         On March 1, 1996, the Registrant purchased certain assets and
         liabilities of J. Robert West M.D., Inc., dba Awest Dermatology and
         Surgery Medical Group ("Awest"). This event was reported as executed by
         the Company in a Form 8-K filing dated March 1, 1996.

         This transaction was not executed and, as such, both parties have
         agreed to postpone this transaction to a future date. It is the intent
         of the parties to reconsider the transaction in the future.

         Both parties, including the Registrant, have agreed to continue
         ongoing, separate operations until such time that final arrangements
         can be resolved.

         Cash and Cash Equivalents
         -------------------------

         Cash and cash equivalents include cash on hand and on deposit and
         highly liquid debt instruments with original maturities of three months
         or less. Substantially all cash is on deposit with one financial
         institution.

         Income Taxes:
         -------------

         The Company accounts for income taxes under the provisions of Statement
         of Financial Accounting Standards No. 109, "Accounting for Income
         Taxes". Under this method, deferred income taxes are recognized for the
         tax consequences in future years of differences between the tax basis
         of assets and liabilities and their financial reporting amounts at each
         year-end based on enacted tax laws and statutory rates applicable to
         the periods in which the differences are expected to affect taxable
         income. Valuation allowances are established, when necessary, to reduce
         deferred tax assets to the amount expected to be realized. Income tax
         expense is the tax payable for the period and the change during the
         period in deferred tax assets and liabilities.

                                       21
<PAGE>

                  LIFE RESOURCES INCORPORATED AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 1998


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         Impairment of Long-Lived Assets
         -------------------------------

         During the year ended June 30, 1997, the Company adopted SFAS No. 121,
         "Accounting for the Impairment of Long-Lived Assets and Long-Lived
         Assets to Be Disposed Of." Historically, the Company has complied with
         the requirements of SFAS No. 121. This Statement requires that
         long-lived assets and certain identifiable intangibles to be held and
         used by an entity be reviewed for impairment whenever events or changes
         in circumstances indicate that the carrying amount of an asset may not
         be recoverable. Also, in general, long-lived assets and certain
         identifiable intangibles to be disposed of should be reported at the
         lower of carrying amount or fair value less costs to sell. The
         implementation of SFAS No. 121 has not had any effect on the Company's
         financial position or results of operations.

         Accounting for Stock-Based Compensation
         ---------------------------------------

         SFAS No. 123, "Accounting for Stock-Based Compensation" was adopted by
         the Company during the year ended June 30, 1997 as required by this
         Statement. Under this standard, companies are encouraged but not
         required, to adopt the fair value method of accounting for employee
         stock-based transactions. Under the fair value method, compensation
         cost is measured at the grant date based on the fair value of the award
         and is recognized over the service period, which is usually the vesting
         period. Companies are permitted to continue to account for employee
         stock-based transactions under Accounting Principles Board Opinion
         (APB) No. 25, "Accounting for Stock Issued to Employees", but are
         required to disclose pro forma net income and earnings per share as if
         the fair value method had been adopted. The implementation of SFAS No.
         123 has not had any effect on the Company's financial position or
         results of operations.

         Earnings Per Share
         ------------------

         SFAS No. 128, "Earnings per Share", was issued on March 3, 1997 and
         became effective for the Company's current fiscal year. This
         pronouncement provides a different method of calculating earnings per
         share than is currently used in accordance with APB No. 15, earnings
         per Share". SFAS No. 128 provides for the calculation of Basic and
         Diluted earnings per share. Basic earnings per share includes no
         dilution and is computed by dividing income available to common
         shareholders by the weighted average number of common shares
         outstanding for the period. Diluted earnings per share reflects the
         potential dilution of securities that could share in the earnings of an
         entity, similar to fully diluted earnings per share. Because of prior
         period losses, other potentially dilutive securities have an
         antidilutive effect in all periods. Accordingly, calculations under the
         new standard, which were adopted during the year ended June 30, 1998,
         were not significantly different from those calculated under APB No.
         15.

                                       22
<PAGE>

                  LIFE RESOURCES INCORPORATED AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 1998


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         Recent Accounting Pronouncements
         --------------------------------

         Reporting Comprehensive Income
         ------------------------------

         SFAS No. 130, "Reporting Comprehensive Income" issued by the Financial
         Accounting Standards Board, is effective for financial statements with
         fiscal years beginning after December 15, 1997. SFAS No. 130
         establishes standards for reporting and displaying comprehensive income
         and its components in a full set of general purpose financial
         statements. In addition to net income, comprehensive income includes
         changes in equity during a period, except those resulting from
         investments by and distributions to owners. The Company's
         implementation of SFAS No. 130 during the next fiscal year ending June
         30, 1999 is not expected to have any effect on the reporting and
         display of the Company's financial position or results of operations.

         Segment Information
         -------------------

         SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
         Information," issued by the Financial Accounting Standards Board, is
         effective for financial statements with fiscal years beginning after
         December 15, 1997. SFAS No. 131 requires that public companies report
         certain information about operating segments, products, services,
         geographical areas in which they operate and their major customers in
         annual and interim financial statements. The Company will adopt the new
         standard during the next fiscal year ending June 30, 1999. Reporting
         and disclosures under SFAS No. 131 are not expected to be materially
         different from reporting and disclosures made by the Company prior to
         the adoption of SFAS No. 131.

         Pensions and Other Post Retirement Benefits
         -------------------------------------------

         SFAS No. 132, "Employers' Disclosures about Pensions and Other
         Postretirement Benefits", issued by the Financial Accounting Standards
         Board is also effective for financial statements with fiscal years
         beginning after December 15, 1997. It revises employers' disclosure
         requirements for pensions and other postretirement benefits and
         eliminates certain disclosures that are no longer as useful as they
         were when SFAS No. 87, SFAS No. 88, and SFAS No. 106 were issued.
         Adoption of SFAS No. 132 did not have an effect on the Company's
         financial position or results of operations.

         New Accounting Pronouncements
         -----------------------------

         The Financial Accounting Standards Board has established the following
         new pronouncements, none of which have (will) materially affect the
         Company: SFAS No. 133, "Accounting for Derivative Instruments and
         Hedging Activities (effective for years beginning after June 15,
         2000)", SFAS No. 134, "Accounting for Mortgage-Backed Securities
         Retained after the Securitization of Mortgage Loans Held for Sale by a
         Mortgage Banking Enterprise - an amendment of SFAS No. 65 (effective
         for fiscal quarters beginning after December 15, 1998)", SFAS No. 135,
         "Rescission of SFAS No. 75 and Technical Corrections (effective for

                                       23
<PAGE>

                  LIFE RESOURCES INCORPORATED AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 1998


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         fiscal years ending after December 15, 1999)", SFAS No. 136, "Transfer
         of Assets to a Not-for-Profit Organization or Charitable trust that
         Raises Contributions for Others (generally effective for financial
         statements issued for fiscal periods beginning after December 15,
         1999)", SFAS No. 137, "Accounting for Derivative Instruments and
         Hedging Activities - Deferral of the Effective date of SFAS No. 133 -
         an amendment of SFAS No. 133 (effective June 1999)", SFAS No. 138,
         "Accounting for Certain Derivative Instruments and Certain Hedging
         Activities - an amendment of SFAS No. 133 (effective for years
         beginning after June 15, 2000)", SFAS No. 139, "Rescission of SFAS No.
         53 and amendments to SFAS No. 63, 89, and 121 (effective for fiscal
         years beginning after December 15, 2000)" and SFAS No. 140, "Accounting
         for Transfers and Servicing of Financial Assets and Extinguishment of
         Liabilities - a replacements of SFAS No. 125 (effective for certain
         disclosures for fiscal years ending after December 15, 2000)."

NOTE 2 - LONG-TERM DEBT

         Long-term debt consists of the following at June 30, 1998:

         Note payable to bank, collateralized by Parcel 1,
         interest and principal due monthly in installments of
         $4,377 at a variable rate of 2.5% above the bank's
         prime lending rate (an effective rate of 11% at June
         30, 1998). The note was due May 5, 1996. In
         September, 1996, the Company refinanced with the
         bank, with a final payment due in November, 1998. The
         note was repaid on February 1, 1999.                    $      237,478

         Note payable to bank, collateralized by Parcel 2,
         interest and principal due monthly in installments of
         $5,595 at a variable rate of 2.5% above the bank's
         prime lending rate (an effective rate of 11% at June
         30, 1998). The note was due May 5, 1996. In
         September, 1996, the Company refinanced with the
         bank, with a final payment due in November, 1998. The
         note was repaid on February 1, 1999.                           263,217

         Note payable to an individual, collateralized by
         Parcel 1 (Note 3), payable interest only, due monthly
         at 11% per annum, due on demand or June 30, 1998. The
         note was repaid on February 1, 1999.                            34,000


                                       24
<PAGE>

                  LIFE RESOURCES INCORPORATED AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 1998


NOTE 2 - LONG-TERM DEBT (continued)


         Subordinated note payable to a director and
         controlling shareholder, collateralized by Parcel 1,
         until February 1, 1999, thereafter unsecured,
         interest (7% per annum) and principal were due and
         payable on June 30, 1999. The note's maturity date
         has been extended until June 30, 2001.                         372,000

         Unsecured note payable to a director and controlling
         shareholder, interest (7% per annum) and principal
         due and payable on June 30, 1999. The note's maturity
         date has been extended until June 30, 2001.                  1,259,071

         Unsecured note payable to a director and controlling
         shareholder, interest (9% per annum) and principal
         due and payable on June 30, 1999. The note's maturity
         date has been extended until June 30, 2001.                    137,900
                                                                 ---------------
                                                                      2,303,666
         Less, current portion                                         (534,695)
                                                                 ---------------
                                                                 $    1,768,971
                                                                 ===============

         Maturities of long-term debt at June 30, 1998 are as follows:


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

                  1999                                           $      534,695
                  2000                                                        -
                  2001                                                1,768,971
                                                                 ---------------
                                                                 $    2,303,666
                                                                 ===============

                                       25
<PAGE>

                  LIFE RESOURCES INCORPORATED AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 1998


NOTE 3 - RELATED PARTY TRANSACTIONS

         During the years ended June 30, 1998 and 1997, fees of $5,385 and
         $1,000, respectively, were paid to an accounting firm which employs a
         member of the Board of Directors who is also the President's family
         member.

         During the years ended June 30, 1998 and 1997, fees of $182 and $978,
         respectively, were paid to a law firm which employs a former member of
         the Board of Directors.

         On June 16, 1993, the Company acquired two parcels of real property
         located in Loma Linda, California, from a director and controlling
         shareholder. In exchange for the property, the Company issued to the
         director 4,000,000 shares (100,000,000 pre-reverse split shares) of the
         Company's common stock. After the transfer, the director owned
         4,142,772 shares (103,569,298 pre-reverse split shares) for a 94.5
         percent ownership interest in the Company's voting securities. At the
         date of transfer, the Company recorded the property at the director's
         historical cost basis of $1,855,029.

         On June 30, 1995 the combined fair market value of the properties was
         ascertained to be $1,635,029. The land was written down $220,000 to its
         fair market value as of that date.

         In September, 1996, the combined fair market value of the properties
         was ascertained to be $1,065,000. The land was written down $570,029 to
         its fair market value as of that date. The write down of the land did
         not include any costs of disposal as the Company was still considering
         development of the property.


                                       26
<PAGE>

                  LIFE RESOURCES INCORPORATED AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 1998


NOTE 4 - INCOME TAXES

         Deferred taxes consist of the following at June 30, 1998:

                 Deferred tax asset:
                   Net operating loss                           $      608,727
                   Valuation allowance                                (608,727)
                                                                ---------------
                      Net Deferred Taxes                        $            -
                                                                ===============


         The difference between the federal statutory tax rate of 34% and the
         Company's effective rate of 0% is the result of incurring net operating
         losses without current tax benefit for all years presented.

         Net operating loss carryforwards for federal and state income tax
         purposes at June 30, 1998 were approximately $1,591,500 and $764,900,
         respectively. These carryforwards expire beginning in 1998.

         The Company experienced an ownership change as defined in Internal
         Revenue Code ("IRC") Section 382. Therefore, the utilization of net
         operating loss carryforwards may be limited, subject to the provisions
         of IRC Section 382.

NOTE 5 - COMMON STOCK

         On June 30, 1995, the Company's Board of Directors approved a twenty
         five-for-one reverse stock split of the Company's common stock. A total
         of 126,543,399 shares of common stock were retired in connection with
         the reverse stock split. The stated par value of each share was not
         changed from $.01. A total of $1,265,434 was reclassified from the
         Company's common stock account to the Company's additional
         paid-in-capital account.

         All share and per share amounts disclosed in transactions completed
         prior to June 30, 1995 have been restated in the consolidated financial
         statements to retroactively reflect the reverse stock split.

NOTE 6 - FAIR VALUE OF FINANCIAL INSTRUMENTS

         SFAS No. 107, "Disclosures About Fair Value of Financial Instruments"
         requires that the Company disclose estimated fair values for its
         financial instruments.

                                       27
<PAGE>

                  LIFE RESOURCES INCORPORATED AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 1998


NOTE 6 - FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)

         The following summary presents a description of the methodologies and
         assumptions used to determine such amounts.

         Fair value estimates are made at a specific point in time and are based
         on relevant market information and information about the financial
         instrument; they are subjective in nature and involve uncertainties and
         matters of judgement, and therefore, cannot be determined with
         precision. These estimates do not reflect any premium or discount that
         could result from offering for sale at one time the Company's entire
         holdings of a particular instrument. Changes in assumptions could
         significantly affect the estimates. Since the fair value is estimated
         at June 30, 1998, the amounts that will actually be realized or paid at
         settlement of the instruments could be significantly different.

         The carrying amount of cash and cash equivalents is assumed to be its
         fair value because of the liquidity of the instruments. Accounts
         payable and accrued liabilities approximate fair value because of the
         short maturity of these instruments. The carrying amounts of the notes
         payable to the bank and to a third party individual are assumed to be a
         reasonable estimate of fair value since the rates specified in the
         notes approximate current market rates. It was not practicable to
         estimate the fair value of the interest and notes payable to a director
         and controlling shareholder as payments on these obligations are not
         based on fixed payment terms.

NOTE 7-  COMMITMENTS AND CONTINGENCIES

         At June 30, 1998, the Company was contingently liable for guarantees of
         indebtedness owed by a director and controlling shareholder of
         $108,000. The fair value of this contingent liability was material to
         the Company's financial statements. On February 1, 1999, the Company
         paid $104,295 of indebtedness owed by the director and controlling
         shareholder in full satisfaction of these guarantees.

NOTE 8-  SUBSEQUENT EVENT

         On February 1, 1999, the Company sold the two parcels of land it held
         for development or sale in Loma Linda, California. Proceeds from the
         sale totaled $1,500,000, which consisted of cash of $765,913 and a note
         receivable from the buyer of $734,087. On June 16, 1993, the Company
         acquired the parcels from a director and controlling shareholder at a
         cost basis of $1,855,029. The properties were subsequently determined
         to be impaired and were written down $790,029 in prior years to their
         ascertained fair market value of $1,065,000 at June 30, 1998. A gain of
         approximately $428,000, recognized in connection with the disposition
         of the real estate, will be reflected in the Company's consolidated
         financial statements for the year ending June 30, 1999.

                                       28
<PAGE>

                  LIFE RESOURCES INCORPORATED AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 1998


NOTE 9-  YEAR 2000 COMPLIANCE

         During the year ended June 30, 1998, the Company began the process of
         identifying, evaluating and implementing changes to computer programs
         necessary to address the year 2000 issue. This issue affects computer
         systems that have time-sensitive programs that may not properly
         recognize the year 2000. This could result in major system failures or
         miscalculations. The Company is currently addressing its internal year
         2000 issue with modifications to existing programs and conversions to
         new programs. The Company is also communicating with lenders, vendors
         and others with which it conducts business to help them identify and
         resolve the year 2000 issue.

         The total cost associated with the required modifications and
         conversions is not expected to be material to the Company's
         consolidated results of operations and financial position and will be
         expensed as incurred.

         If modifications and conversions by the Company and those with which it
         conducts business are completed in a timely manner, the year 2000 issue
         is not expected by management of the Company to have a material adverse
         effect on the Company's consolidated results of operations and
         financial position.


                                       29
<PAGE>

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

         None.





                                       30
<PAGE>

                                    PART III
                                    --------

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

A.       IDENTIFICATION OF DIRECTORS. The following information is furnished
         concerning each director of the Registrant:

<TABLE>
<CAPTION>

                                                               DATE ON WHICH
                                       POSITIONS                  DIRECTOR                 THE TERM
                                      AND OFFICES               CONTINUOUSLY              AS DIRECTOR
NAME                   AGE          WITH REGISTRANT             SERVED SINCE                EXPIRES
----                   ---          ---------------             ------------                -------
<S>                    <C>          <C>                          <C>                       <C>
J. Robert West         69           Chairman of the
                                    Board of Directors                  (1)                      (2)
                                    and President                April 1970                June 1999

Mark L. Ashlock        40           None                         May 1995                  June 1999

Tad R. Callister       52           None                         May 1995                  June 1999

C. Rick Foster         48           None                         May 1993                  June 1999

Brad Hainsworth        64           None                         May 1995                  June 1999

Milton M. Miner        39           Secretary                    May 1995                  June 1999

Richard A. Pierce      51           None                         May 1995                  June 1999

</TABLE>

         (1)      J. Robert West was a director of Fidelity Capital Corporation,
                  a California corporation, since its organization in January
                  1970. Subsequently, Fidelity Capital Corporation merged into
                  the Registrant.

         (21)     Mark L. Ashlock, Tad R. Callister, Brad Hainsworth and Richard
                  A. Pierce resigned their directorships on February 1, 1999 to
                  pursue other interests, both of a personal and professional
                  nature.

         There are no arrangements or understandings between the current
         directors and any other person pursuant to which such individual was
         selected as a director.

                                       31
<PAGE>

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

B.       IDENTIFICATION OF EXECUTIVE OFFICERS. The following information is
         furnished concerning each executive officer of the Registrant and
         certain other significant personnel, as of June 30, 1998:

<TABLE>
<CAPTION>

                                     POSITIONS              HELD POSITION         THE TERM
                                    AND OFFICES             CONTINUOUSLY          OF OFFICE
NAME                   AGE        WITH REGISTRANT              SINCE               EXPIRES
----                   ---        ---------------              -----               -------
<S>                    <C>        <C>                         <C>                  <C>
J. Robert West         69         Chairman of the
                                  Board of Directors          April 1970           June 1999
                                  President                   May 1971             June 1999

Milton M. Miner        39         Secretary                   May 1993             June 1999

</TABLE>


C.       IDENTIFICATION OF CERTAIN SIGNIFICANT EMPLOYEES. There are no employees
         of the Registrant.

D.       FAMILY RELATIONSHIPS. Milton M. Miner is a member of J. Robert West's
         immediate family.

E.       BUSINESS EXPERIENCE OF DIRECTORS AND OFFICERS. The following is a table
         indicating the business experience during the past five years of each
         director and executive officer and certain other significant personnel,
         including their principal occupations and employment during that
         period:

                                    PRINCIPAL OCCUPATION
                                       AND EMPLOYMENT
NAME                               DURING LAST FIVE YEARS
----                               ----------------------

J. Robert West            Chairman of the Board and President of Registrant;
                          Dermatologist

Mark L. Ashlock           CPA in private practice, resigned directorship on
                          February 1, 1999

Tad R. Callister          Attorney in private practice, resigned directorship on
                          February 1, 1999

C. Rick Foster            CPA in private practice

Brad Hainsworth           Professor of public relations at Brigham Young
                          University, resigned directorship on February 1, 1999

Milton M. Miner           CPA in private practice

Richard A. Pierce         Health care consultant in private practice, resigned
                          directorship on  February 1, 1999

                                       32
<PAGE>


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

         The By-Laws of the Registrant and Oregon Business Corporation Act
         Sections 57.255 and 57.260 provide that directors and officers of the
         Registrant shall be indemnified for all costs incurred by or caused by
         them in connection with settlements or lawsuits arising from their
         actions as officers or directors, except for their own negligence,
         knowing unauthorized acts, or defalcations not ratified, confirmed or
         adopted or the benefit thereof received by the Registrant.

F.       Involvement in Certain Legal Proceedings.
         -----------------------------------------

         None of the following events have occurred during the past five years
         as, against, or to any director or officer of the Registrant.

         (1)      A petition under the Bankruptcy Act or any state insolvency
                  law was filed by or against, or a receiver, fiscal agent or
                  similar officer was appointed by a court for the business or
                  property of such person or any partnership in which he was a
                  general partner at or within two years before the time of such
                  filing, or any corporation or business association of which he
                  was an executive officer at or within two years before the
                  time of such filing;

         (2)      Such person was convicted in a criminal proceeding (excluding
                  traffic violations and other minor offenses) or is the subject
                  of a criminal proceeding which is presently pending;

         (3)      Such person was the subject of any order, judgment, or decree
                  of any court of competent jurisdiction permanently or
                  temporarily enjoining him from acting as an investment
                  adviser, underwriter, broker, or dealer in securities, or as
                  an affiliated person, director, or employee of any investment
                  company, bank, savings and loan association, or insurance
                  company, or from engaging in or continuing any conduct or
                  practice in connection with any such activity or in connection
                  with the purchase or sale of any security, or was the subject
                  of any order of a federal or state authority barring or
                  suspending, for more than 60 days, the right of such person to
                  be engaged in any such activity or to be associated with
                  persons in any such activity which order has not been reversed
                  or suspended.

         The following person was a beneficial owner of more than ten percent of
         the equity securities of the Registrant at any time during the fiscal
         year:

                  J. Robert West
                  1540 Marion Road
                  Redlands, CA  92374


                                       33
<PAGE>


ITEM 10.  EXECUTIVE COMPENSATION
--------  ----------------------

         No Director or Officer of the Registrant was paid direct or indirect
         remuneration during the Registrant's last fiscal year. It is not
         anticipated that any officer or director will receive any remuneration
         directly or indirectly for the Registrant's current fiscal year.

         The Registrant does not have an annuity, pension, profit sharing, or
         other deferred compensation plan. Accordingly, no annuity, pension,
         profit sharing, or other retirement benefits have been paid or are
         proposed to be paid to any officer of the Registrant.

         As of June 30, 1998, the Registrant did not have a Qualified or
         Unqualified Stock Option Plan for any officers, directors, or key
         employees to purchase the Registrants' $.01 par value common stock.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------  --------------------------------------------------------------

         A.       PRINCIPAL SECURITY HOLDERS. The following information is
                  furnished as of June 30, 1998, as to the voting securities of
                  the Registrant owned of record or beneficially by each person
                  who owns of record, or is known by the Registrant to own
                  beneficially more than 10% of its securities:
<TABLE>
<CAPTION>

                                 TITLE OF CLASS       TYPE OF OWNERSHIP        SHARES OWNED       % OF CLASS

         <S>                         <C>            <C>                          <C>                <C>
         J. Robert West              Common         Record and Beneficial        4,295,319          81.2%
         1540 Marion Road
         Redlands, CA  92374


         B.       MANAGEMENT. The following information is furnished as to each
                  class of equity securities of the Registrant beneficially
                  owned directly or indirectly by all directors and officers of
                  the Registrant as a group on June 30, 1998:

                                TITLE OF CLASS               AMOUNT BENEFICIALLY OWNED              % OF CLASS

                                     Common                             4,980,867                        94.1%
</TABLE>


ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------  ----------------------------------------------

         Related transactions between the Registrant and J. Robert West,
         Chairman of the Board and President, are described in Item 1.


                                       34
<PAGE>


ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS (continued)
--------  ----------------------------------------------

         As of June 30, 1998 and 1997, the Company had loan balances outstanding
         to J. Robert West of $1,259,071 and $1,148,716, respectively. The loan
         balances bear interest at 7% per anum, with principal and interest due
         on June 30, 1999. The loan's maturity date has been extended until June
         30, 2001.

         As of June 30, 1998 and 1997, the Company had a loan outstanding to J.
         Robert West of $372,000. The loan bears interest at 7% per annum, with
         principal and interest due and payable on June 30, 1999. The loan's
         maturity date has been extended until June 30, 2001.

         As of June 30, 1998 and 1997, the Company had a loan outstanding to J.
         Robert West of $137,900. The loan bears interest at 9% per annum, with
         principal and interest due and payable on June 30, 1999. The loan's
         maturity date has been extended until June 30, 2001.

         As of June 30, 1998 and 1997, the Company was contingently liable for
         guarantees of indebtedness owed by J. Robert West of $108,000. On
         February 1, 1999, the Company fully satisfied these guarantees by
         paying $104,295 of indebtedness owed by J. Robert West.


                                       35
<PAGE>

                                     PART IV
                                     -------

ITEM 13.  EXHIBITS, LISTS AND REPORTS ON FORM 8-K
--------  ---------------------------------------

         A.       (1)      FINANCIAL STATEMENTS. The financial statements
                           required to be filed hereunder are listed on page 13
                           herein.

                  (2)      Documents filed as part of this report include the
                           following financial statement schedule:

                                                                        Page No.
                                                                        --------

                           III. Real Estate and Accumulated Depreciation    29

                  (3)      Exhibits

                           Exhibit Number          Description of Document
                           --------------          -----------------------

                                    3*             Articles of Incorporation and
                                                   bylaws

                                   27              Financial Data Schedule

                  (4)      Reports on Form 8-K

                           None.

                  *Incorporated by reference to the Life Resources Incorporated
                  1975 form 10-K.


                                       36





                                       38
<PAGE>
<TABLE>

                                                            EXHIBIT 27
                                                            ----------

                                           LIFE RESOURCES, INCORPORATED AND SUBSIDIARIES
                                                   FINANCIAL STATEMENT SCHEDULE
                                                           SCHEDULE III
                                             REAL ESTATE AND ACCUMULATED DEPRECIATION

<CAPTION>

                                                            COSTS CAPITALIZED          GROSS AMOUNT AT WHICH
                             INITIAL COSTS TO COMPANY   SUBSEQUENT TO ACQUISITION    CARRIED AT CLOSE OF PERIOD
                             ------------------------   -------------------------    --------------------------

                                        Building and                     Carrying                Building and
Description   Encumbrances     Land     Improvements   Improvements       Costs        Land      Improvements      Total
-----------   ------------     ----     ------------   ------------  --------------    ----      ------------    --------
<S>           <C>           <C>             <C>                  <C>        <C>      <C>              <C>       <C>
Unimproved    Chino Valley  $1,855,029      $0                   $0         $0       $1,065,000       $0        $1,065,000
 Land           Bank
              $539,209

              Billy Simmons
              $34,000

              J. Robert West
              $372,000



Note to
 Schedule III

Balance at
 June 30, 1996                                               1,065,000
                    Acquisitions                                     0
                    Deductions                                       0
                    Write Down of Land                               0
                                                          -------------

Balance at
 June 30, 1997                                               1,065,000
                    Acquisitions                                     0
                    Deductions                                       0
                    Write Down of Land                               0
                                                          -------------

Balance at
  June 30, 1998                                           $  1,065,000
                                                          =============

</TABLE>

                                                                     (continued)

 Accumulated     Date of          Date      Depreciation/
Depreciation   Construction      Acquired         Life
-------------  --------------    --------    --------------
     $0             None       June 16, 1993       N/A


NOTE:  NO OTHER FINANCIAL STATEMENT SCHEDULES ARE REQUIRED TO BE PRESENTED.


                                                                37
<PAGE>


                                   SIGNATURES






Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, this report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates indicated.


                           LIFE RESOURCES INCORPORATED
                           ---------------------------
                                  (Registrant)




By /s/ J. Robert West
   ------------------------------------------
     J. Robert West
     Chairman of the Board and President

Date:  December 28, 2000



By /s/ Milton M. Miner
   -------------------------------------
     Milton M. Miner
     Secretary


Date:  December 28, 2000


                                       38