U.S. SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-KSB

[X]  Annual report under Section 13 or 15 (d) of the Securities  Exchange Act of
     1934 (No fee required, effective October 7, 1996.)

For the fiscal year ended December 31, 2002

[_]  Transition report under Section 13 or 15(d) of the Securities  Exchange Act
     of 1934 (No fee required)

For the transition period from _____________ to _____________ .

Commission file number 33-20582

                      Equity Technologies & Resources, Inc.
                -----------------------------------------------
                 (Name of Small Business Issuer in Its Charter)

            Delaware                                  75-2276137
---------------------------------             ---------------------------------
(State or Other Jurisdiction of                    (I.R.S. Employer
 Incorporation or Organization)                   Identification No.)

325 West Main Street, Suite 240
Lexington, Kentucky                                             40507
---------------------------------             ---------------------------------
   (Address of Principal Executive Offices)               (Zip Code)

             1050 Chinoe Road, Suite 304, Lexington, Kentucky 40502
          ----------------------------------------------------------
           (former Address of Principal Executive Offices) (Zip Code)

                              (859) 268-4446
              ----------------------------------------------
             (Issuer's Telephone Number, Including Area Code)


Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act:

                Class A Common Stock, par value $0.0001 per share
                -----------------------------------------------
                                (Title of Class)

Check whether the issuer:  (1) 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 [X]

Check if there is no 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's revenues for the year ended December 31, 2002, were $0.

The aggregate market value of the voting stock held by  non-affiliates  computed
by  reference  to the price at which the stock was sold,  or the average bid and
asked prices of such stock, as of December 31, 2002, was $2,721,872.

The number of shares  outstanding of the issuer's common equity,  as of December
31, 2002 was 143,893,594 shares.

Transitional Small Business Disclosure Format (check one): Yes [_] No [X]

<PAGE>


                                TABLE OF CONTENTS

PART I

Item 1.    Description of Business............................................3

Item 2.    Description of Property............................................4

Item 3.    Legal Proceedings..................................................4

Item 4.    Submission of Matters to a Vote of Security Holders................5


PART II

Item 5.    Market for Common Equity and Related Stockholder Matters...........5

Item 6.    Management's Discussion and Analysis or Plan of Operation..........6

Item 7.    Financial Statements..............................................10

Item 8.    Changes in and Disagreements With Accountants on
           Accounting and Financial Disclosure...............................10

PART III

Item 9.    Directors, Executive Officers, Promoters, and Control Persons;
           Compliance with Section 16(a) of the Exchange Act.................39

Item 10.   Executive Compensation............................................39

Item 11.   Security Ownership of Certain Beneficial Owners and Management....40

Item 12.   Certain Relationships and Related Transactions....................41

Item 13.   Exhibits and Reports on Form 8-K..................................41

Item 14.   Controls and Procedures...........................................41

           Signature.........................................................42







<PAGE>


PART I

Item 1. Business.

GENERAL

Equity Technologies & Resources, Inc. ("Equity", or "the Company") is a Delaware
corporation,  the  successor  to  Equity  AU,  Inc.,  which was  engaged  in the
exploration and mining of certain minerals in Arkansas.  The principal corporate
offices are now located at 325 West Main Street, Suite 240, Lexington,  Kentucky
40508 and its telephone  number is (859)  268-4446.  Equity AU, Inc.  ceased all
mining  activity in December  1996. The  corporation  changed its name to Equity
Technologies & Resources,  Inc. in 2000 which was an integral part of the change
in focus of the Company.  In December 2000,  Verified  Prescription  Safeguards,
Inc. was acquired by Equity Technologies & Resources, Inc. Verified Prescription
Safeguards,  Inc.,  intends to develop an electronic system to provide solutions
for the prescription drug and healthcare industry.

HISTORY AND CURRENT ACTIVITY

In February 1995, then Chairman of the Company,  James Arch ("Mr. Arch") reached
an  agreement  with a  shareholder  and  investor,  Stephen  Guarino,  to invest
significant  equity capital into the Company.  Mr. Arch thereafter  granted full
management and financial  control to Mr.  Guarino.  The then current  President,
Kingman L. Hitz  resigned,  and all  operations  were  moved to Mena,  Arkansas.
Director  Gail  W.  Holderman  resigned  shortly  thereafter.  Mr.  Guarino  was
appointed  with the official  title of  President  in May of 1995,  and was also
appointed as a Director,  along with William Hanlon and Roger Tichenor.  Kingman
Hitz had not received  notice of any meetings,  and  subsequently  resigned as a
director in July of 1995.  In early 1996, a  partnership  controlled by Mr. Arch
foreclosed  on the Company's  property and equipment  which had been pledged for
loans received from the partnership.

In June 1996, Mr. Guarino,  Mr. Hanlon,  and Mr. Tichenor  resigned all of their
positions  with the  Company,  and Mr. Arch  entered  into  agreements  with Mr.
Guarino and Mr.  Tichenor to purchase all of the Class A Common shares which had
been previously issued to them.

Mr. Arch elected to resume  operations  at Mena,  Arkansas on June 1, 1996.  Ore
production was commenced in early September 1996. Management determined that the
operation could not be profitable and operations were terminated.

In November 1998 Frank G. Dickey, Jr. ("Mr.  Dickey") became President of Equity
AU,  Inc.  Unable to find a  suitable  company  for merger or  acquisition,  the
Company changed its name to Equity Technologies & Resources, Inc., and continued
to  seek  a  merger  or  acquisition  candidate.   In  December  2000,  Verified
Prescription Safeguards,  Inc. was acquired. It intends to develop an electronic
system to provide solutions for the prescription drug and healthcare industry.

On August 14,  2002,  Mr.  Dickey  resigned as  President  and CEO and was named
Chairman of the Board.  He was  replaced by James  Kemper  Millard.  In December
2002, Mr. Dickey resigned as Chairman of the Board and was replaced by Mr. Arch.


                                       3
<PAGE>


Government Regulation.

We cannot  anticipate the government  regulations,  if any, to which the Company
may be subject  until our  business  operations  commence.  The use of assets to
conduct a business could subject it to environmental,  public health and safety,
land use, trade, or other governmental  regulations and state or local taxation.
Once operations begin,  management will endeavor to ascertain,  to the extent of
the limited resources of the Company, the effects of such government  regulation
on the prospective business of the Company. In certain  circumstances,  however,
such as the acquisition of an interest in a new or start-up  business  activity,
it may not be  possible  to predict  with any degree of  accuracy  the impact of
government  regulation.  The  inability  to ascertain  the effect of  government
regulation on a prospective  business  activity will make the  acquisition of an
interest in such business a higher risk.

Competition

The  Company  will be  involved  in  intense  competition  with  other  business
entities,  many of which will have a competitive edge over the Company by virtue
of their stronger financial resources and prior experience in business. There is
no assurance that the Company will be successful in obtaining  suitable business
opportunities.

Employees

The Company is a development  stage company and currently has no employees.  Our
executive officer devotes as much time to the affairs of the Company as he deems
appropriate.  Management of the Company expects to use  consultants,  attorneys,
and  accountants  as  necessary,  and does not  anticipate  a need to engage any
full-time  employees  as  long  as  business  needs  are  being  identified  and
evaluated.  The need for employees and their  availability  will be addressed in
connection with a decision  concerning  whether or not to acquire or participate
in a specific business venture.

Reports to Security Holders

The Company is not required to deliver an annual report to security  holders and
will  not  voluntarily  deliver  a copy of the  annual  report  to the  security
holders.  Should the Company choose to create an annual report,  it will contain
audited financial statements.  The Company files all of its required information
with the Securities and Exchange Commission ("Commission").

The public may read and copy any  materials  that are filed by the Company  with
the Commission at the  Commission's  Public  Reference Room at 450 Fifth Street,
N.W., Washington, D.C. 20549. The public may obtain information on the operation
of the Public  Reference Room by calling the Commission at  1-800-SEC-0330.  The
statements  and forms filed by the Company with the  Commission  have been filed
electronically  and  are  available  for  viewing  or  copy  on  the  Commission
maintained   Internet  site  that  contains  reports,   proxy,  and  information
statements,  and other information  regarding  issuers that file  electronically
with  the  Commission.  The  Internet  address  for this  site can be found  at:
http://www.sec.gov.

Item 2. Properties.

The Company's executive offices are located at 325 West Main Street,  Suite 240,
Lexington, Kentucky 40508. It's telephone number is (859) 268-4446.

Title to certain tracts of land in Polk County, Arkansas are still registered to
Equity AU, Inc.

Item 3. Legal Proceedings.

There are no pending legal proceedings in which the Company is involved.


                                       4
<PAGE>


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

No  matter  was  submitted  to a  vote  of the  security  holders,  through  the
solicitation  of proxies or otherwise,  during the fourth quarter ended December
31, 2002.

Item 5. Market for Common Equity & Related Stockholder Matters.

The Company's  common stock is quoted on the Over the Counter  Bulletin Board, a
service maintained by the National  Association of Securities Dealer, Inc. under
the  symbol,  "ETCR.PK".  Trading  in the common  stock in the  over-the-counter
market has been limited and sporadic and the  quotations set forth below are not
necessarily  indicative  of actual  market  conditions.  Further,  these  prices
reflect  inter-dealer prices without retail mark-up,  mark-down,  or commission,
and may not necessarily reflect actual transactions. The high and low bid prices
for the common stock for each  quarter of the years ended  December 31, 2002 and
2001 are as follows:

                                            High         Low

Fiscal 2001:
Quarter Ended March 31, 2001               $0.33        $0.05
Quarter Ended June 30, 2001                $0.32        $0.04
Quarter Ended September 30, 2001           $0.37        $0.03
Quarter Ended December 31, 2001            $0.07        $0.02

Fiscal 2002:
Quarter Ended March 31, 2002               $0.06        $0.02
Quarter Ended June 30, 2002                $0.19        $0.03
Quarter Ended September 30, 2002           $0.09        $0.01
Quarter Ended December 31, 2002            $0.04        $0.01

Fiscal 2003:
Quarter Ended March 31, 2003               $0.14        $0.01


Holders

As of December 31, 2002,  there were  approximately  1,000 record holders of the
Company's Class A common stock representing 143,893,594 shares outstanding.  The
Board  of  Directors   believes  that  the  number  of   beneficial   owners  is
substantially  greater than the number of record  holders  because a significant
portion of our outstanding Common Stock is held in broker "street names" for the
benefit of individual investors. The holders of the common stock are entitled to
one vote for each share  held of record on all  matters  submitted  to a vote of
stockholders. Holders of the common stock have no preemptive rights and no right
to convert their common stock into any other securities. There are no redemption
or sinking fund provisions applicable to the common stock.

Dividends

The Company has paid no cash  dividends to date and does not  anticipate  paying
any for the foreseeable  future. As of the date hereof, the Company has not paid
or declared any cash  dividends.  The Company can give no assurance that it will
generate future  earnings from which cash dividends can be paid.  Future payment
of  dividends  by the  Company,  if any,  is at the  discretion  of the Board of
Directors and will depend,  among other criteria,  upon the Company's  earnings,
capital  requirements,  and its  financial  condition as well as other  relative
factors. Management has followed the policy of retaining any and all earnings to
finance  the  development  of  its  business.  Such a  policy  is  likely  to be
maintained  as long as necessary to provide  working  capital for the  Company's
operations.

Recent Sales of Unregistered Securities

On November 4, 2002, the Company issued  2,500,000  shares of restricted  common
stock to FV  Investments,  Inc. as  collateral  for loans,  which were valued at
$50,000 representing the fair market value on the date of issuance. These shares
were issued pursuant to the exemption from registration provided by Section 4(2)
of the Securities Act of 1933.


                                       5
<PAGE>


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

Caution concerning forward-looking statements

Statements   made  or   incorporated   in  this  report   include  a  number  of
forward-looking statements within the meaning of Section 27(a) of the Securities
Act  of  1933  and  Section  21(e)  of the  Securities  Exchange  Act  of  1934.
Forward-looking  statements include,  without limitation,  statements containing
the words "anticipates",  "believes",  "expects", "intends", "future", and words
of similar import which express management's belief,  expectations or intentions
regarding the Company's future performance or future events or trends.  Reliance
should not be placed on  forward-looking  statements  because they involve known
and unknown  risks,  uncertainties  and other  factors,  which may cause  actual
results,  performance or achievements  of the Company to differ  materially from
anticipated future results,  performance or achievements expressly or implied by
such  forward-looking   statements.  In  addition,  the  Company  undertakes  no
obligation to publicly update or revise any forward-looking  statement,  whether
as a result of new information, future events or otherwise.

Plan of Operation

The  Company's  plan of operation for the next twelve months is to secure viable
contracts with one or more states to initiate pilot projects to demonstrate  the
effectiveness  of  its   provisionally-patented   prescription   drug  diversion
electronic monitoring system so as to retain the state(s) as ongoing partners in
developing a national monitoring system. Equity Technologies & Resources,  Inc.,
is a  development  stage  company  and has no current  business  operations.  In
December  2000,  the  Company  acquired  all of the  common  stock  in  Verified
Prescription  Safeguards,  Inc.,  with the intention of developing an electronic
system to provide solutions for the prescription  drug and healthcare  industry.
The Company has a viable  business plan and  anticipates  the  opportunities  to
obtain favorable funding from sources outside its principal  shareholders during
the next twelve months. On July 30, 2003, the Commonwealth of Kentucky,  awarded
a contract to VPS Holding,  LLC,  ("VPSH") a Kentucky limited  liability company
incorporated on August 29, 2002, by the sole member and manager,  James Millard,
the current  President and CEO of the Company.  The contract awarded allows VPSH
to lead a pilot project, in Perry and Harlan counties, at medical, clinical, and
pharmacy facilities.  The project will be conducted by a consortium of companies
under license to VPSH, that includes Envoii, Inc., a San Francisco,  California,
software developer,  and Computer Information Systems, Inc., a London, Kentucky,
consulting firm and solutions provider for information technology, both of which
are  privately-held  corporations.  In order to  perform  under  the  terms  and
conditions of this state contract, VPSH, will license the technologies from each
corporation for a nominal fee. Any benefits or revenues  derived from the use of
technology  acquired by VPSH, shall pass directly through to the Company,  under
the terms of a Joint Venture Agreement.

The license to use and develop technology,  intellectual  property, and know-how
related to prescription drug monitoring systems and all other matters pertaining
to the healthcare  industry was obtained  pursuant to the terms of an Assignment
and License dated April 23, 2003, from the Company.  This Assignment and License
was granted with the understanding  that VPSH would enter into an agreement with
Envoii  Healthcare,  LLC, a Nevada limited liability  company,  to undertake the
funding  and   development  of  the  Verified   Prescription   Safeguards   (TM)
prescription  drug  monitoring  system and in  consideration  of  payments to be
received by the Company.  Envoii  Healthcare,  LLC, owns the exclusive rights in
the healthcare channel of trade rights to the EnvoiiTM system.

A Joint  Venture  Agreement  was  executed by VPSH and Envoii  Healthcare,  LLC,
wherein Envoii  Healthcare,  LLC, in conjunction  with Envoii,  Inc.,  agreed to
undertake the development of the real-time  prescription  drug monitoring system
and  raise  the  necessary  funding  for the  project.  This  Agreement  and the
Assignment  and  License  were  under  negotiation  prior to  submission  of the
response to the  Kentucky  Request for  Proposal on April 9, 2003,  but executed
thereafter, both of which have subsequently been provided and fully disclosed to
the Commonwealth of Kentucky.


                                       6
<PAGE>


Under the terms of the Joint Venture Agreement, contract revenues, if any, other
than  the  grant  for  the  pilot  project   resulting  from  the   development,
implementation,  and/or  sale of  real-time  controlled  substance  prescription
monitoring technology to any third party including governmental entities, are to
be distributed to Envoii  Healthcare,  LLC (75%),  VPSH (25%),  with the Company
receiving  100% of the benefits and revenues  distributed  to VPSH. The contract
with the  Commonwealth  of Kentucky  governs the  division of proceeds  from the
pilot project grant funding.

During the next twelve months,  the Company  expects to complete the development
of the Verified Prescription Safeguards, Inc., system and become operational. In
the event,  however,  that the  expectations  of management do not  materialize,
within the next twelve months,  we may be forced to deal with customary  minimal
costs involved in the maintenance of corporate  franchise and filing reports and
reporting  obligations  under the Securities  Exchange Act of 1934.  Should this
become necessary, the maximum amount of such advances is estimated not to exceed
$30,000.  These expenses would involve legal and auditing expenses. The expenses
of our  audit,  legal  and  professional  requirements  (including  expenses  in
connection  with complying  with the Securities  Exchange Act of 1934) have been
and continue to be advanced by our shareholders  and management.  It is possible
that any advances by management  may be paid by issuing  shares of the Company's
common stock.  If further  funding is required,  such  auditing  services by the
independent accountant may not be the subject of deferred compensation.

Liquidity and Capital Resources

As of  December  31,  2002,  the  Company  had no  significant  assets and a net
stockholder's  deficiency.  Management  believes that the Company has sufficient
resources  to meet the  anticipated  needs  of the  Company's  operations  as it
anticipates  that its major  shareholders  will contribute  sufficient  funds to
satisfy the cash needs of the Company through  calendar year ending December 31,
2003. However,  there can be no assurances to that effect, as the Company has no
revenues  and the  Company's  need for  capital  may change  dramatically  if it
acquires an interest in a business  opportunity during that period.  There is no
assurance  that the  President  and  others  can or will,  continue  to fund the
company and no assurance as to when or if the company or its subsidiary  will be
able to begin operations.

The  Company  has no  current  plans  for the  purchase  or sale of any plant or
equipment. The Company has no current plans to make any changes in the number of
employees

Going Concern

The Company has limited  operations and has not been able to develop an ongoing,
reliable  source of revenues to fund its  existence.  The  Company's  day-to-day
expenses  have been covered by cash  obtained  from the issuance of stock and by
proceeds from notes  payable.  The adverse  effect on the  Company's  results of
operation due to its lack of capital resources can be expected to continue until
such time as the  Company  is able to  generate  additional  capital  from other
sources. These conditions raise substantial doubt about the Company's ability to
continue as a going concern.

Management has implemented, or developed plans to implement, a number of actions
to address these  conditions  including the acquisition of VPS, which management
believes will provide  opportunities for growth within the prescription drug and
healthcare industry.  Management's plans include obtaining working capital funds
by seeking additional funding from shareholders,  debt financing, and/or private
placements  of its  common  stock to meet such  needs.  Without  realization  of
additional  capital, it would be unlikely for the Company to continue as a going
concern.  The Company  anticipates that its major  shareholders  will contribute
sufficient  funds to satisfy  the cash needs of the  Company for the next twelve
months.  However,  there can be no assurances to that effect, as the Company has
no revenues and the Company's need for additional  funding will be necessary for
the Company's  development  plans. If the Company cannot obtain needed funds, it
may be forced to curtail or cease its  activities.  Therefore,  for at least the
next twelve months the Company has viable plans to continue as a going  concern.
There can be no assurance that additional  funding will be available when needed
or, if available, that the terms of such financing will not adversely affect the
Company's results from operations.


                                       7
<PAGE>


The consolidated  financial statements do not include any adjustments to reflect
the possible future effects on the  recoverability  and classification of assets
or the  amounts  and  classification  of  liabilities  that may result  from the
outcome of this uncertainty.  The continuation of the Company as a going concern
is dependent upon the success of the Company in obtaining  additional funding or
the success of its future  operations.  The  Company's  ability to achieve these
objectives  cannot  be  determined  at this  time.  The  accompanying  financial
statements should not be regarded as typical for normal operating periods.

Critical accounting policies.

The financial statements were prepared in accordance with accounting  principles
generally  accepted in the United  States,  which  requires  management  to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues  and  expenses,   and  related  disclosure  of  contingent  assets  and
liabilities.  On an on-going  basis,  we  evaluate  our  estimates  and base our
estimates on various  assumptions  that are believed to be reasonable  under the
circumstances,  the results of which form the basis for making  judgments  about
the carrying values of assets and liabilities that are not readily apparent from
other sources.  Actual results may differ from these  estimates  under different
assumptions  or  conditions.  We  currently  do not  feel we have  any  critical
accounting policies.

Recent accounting pronouncements

The  Financial  Accounting  Standards  Board  ("FASB") has issued the  following
pronouncements,  none of which are expected to have a significant  affect on the
financial statements:

April 2002 - SFAS No. 145,  "Rescission  of FASB  Statements  No. 4, 44, and 64,
Amendment of FASB Statement No. 13, and Technical  Corrections."  Under SFAS No.
4, all  gains  and  losses  from  extinguishment  of debt  were  required  to be
aggregated and, if material, classified as an extraordinary item, net of related
income tax effect. This Statement eliminates SFAS No. 4 and, thus, the exception
to applying  APB No. 30 to all gains and losses  related to  extinguishments  of
debt.  As a result,  gains and  losses  from  extinguishment  of debt  should be
classified as extraordinary  items only if they meet the criteria in APB No. 30.
Applying the  provisions of APB No. 30 will  distinguish  transactions  that are
part of an  entity's  recurring  operations  from  those  that  are  unusual  or
infrequent  or that meet the criteria  for  classification  as an  extraordinary
item.  Under SFAS No. 13, the required  accounting  treatment  of certain  lease
modifications that have economic effects similar to sale-leaseback  transactions
was  inconsistent  with the required  accounting  treatment  for  sale-leaseback
transactions.  This  Statement  amends  SFAS No. 13 to require  that those lease
modifications   be   accounted   for  in  the  same  manner  as   sale-leaseback
transactions.  This  statement  also makes  technical  corrections  to  existing
pronouncements.  While those  corrections are not substantive in nature, in some
instances, they may change accounting practice.

June 2002 - SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal
Activities."  This Statement  addresses  financial  accounting and reporting for
costs associated with exit or disposal  activities and nullifies Emerging Issues
Task Force (EITF) Issue No. 94-3,  "Liability  Recognition for Certain  Employee
Termination  Benefits  and Other  Costs to Exit an Activity  (including  Certain
Costs  Incurred in a  Restructuring)."  The  principal  difference  between this
Statement  and EITF  94-3  relates  to its  requirements  for  recognition  of a
liability  for a cost  associated  with  an  exit  or  disposal  activity.  This
Statement  requires  that a  liability  for a cost  associated  with  an exit or
disposal activity be recognized when the liability is incurred. Under EITF 94-3,
a liability  was  recognized  at the date of an entity's  commitment  to an exit
plan.  This  Statement is  effective  for exit or disposal  activities  that are
initiated after December 31, 2002.

October 2002 - SFAS No. 147, "Acquisitions of Certain Financial Institutions, an
amendment  of FASB  Statements  No. 72 and 144 and FASB  Interpretation  No. 9,"
which  applies to the  acquisition  of all or part of a  financial  institution,
except for a transaction  between two or more mutual  enterprises.  SFAS No. 147


                                       8
<PAGE>


removes  the  requirement  in SFAS  No.  72 and  Interpretation  9  thereto,  to
recognize and amortize any excess of the fair value of liabilities  assumed over
the fair value of tangible and  identifiable  intangible  assets  acquired as an
unidentifiable intangible asset. This statement requires that those transactions
be accounted for in accordance with SFAS No. 141,  "Business  Combinations," and
SFAS No.  142,  "Goodwill  and  Other  Intangible  Assets."  In  addition,  this
statement  amends SFAS No. 144,  "Accounting  for the  Impairment or Disposal of
Long-Lived Assets," to include certain financial institution-related  intangible
assets.  This  statement is  effective  for  acquisitions  for which the date of
acquisition  is on or  after  October  1,  2002,  and is not  applicable  to the
Company.

November 2002 - FASB issued FASB Interpretation No. 45 ("FIN 45"),  "Guarantor's
Accounting  and  Disclosure  Requirements  for  Guarantees,  Including  Indirect
Guarantees  of  Indebtedness  of Others."  FIN 45 requires  that a liability  be
recorded in the  guarantor's  balance  sheet upon  issuance of a  guarantee.  In
addition,  FIN 45 requires  disclosures  about the guarantees that an entity has
issued,  including a rollforward of the entity's product  warranty  liabilities.
Initial  recognition  and  measurement  provisions  of  the  Interpretation  are
applicable  on a  prospective  basis to  guarantees  issued  or  modified  after
December 31, 2002.  The  disclosure  requirements  are  effective  for financial
statements of interim or annual periods ending after December 15, 2002.

December    2002   -   SFAS   No.    148,    "Accounting    for   Stock    Based
Compensation-Transition  and  Disclosure."  This statement was issued to provide
alternative methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee  compensation.  In addition,  this
Statement  amends  the  disclosure  requirements  of  Statement  123 to  require
prominent  disclosures in both annual and interim financial statements about the
method of accounting for stock-based employee compensation and the effect of the
method used on reported  results.  This  statement  is effective  for  financial
statements for fiscal years ending after December 15, 2002.  This statement does
not  have  any  impact  on the  Company  because  the  Company  does not plan to
implement the fair value method.

January 2003 - FASB issued FASB Interpretation No. 46 ("FIN 46"), "Consolidation
of Variable Interest Entities, an Interpretation of ARB No. 51." FIN 46 requires
certain variable interest entities to be consolidated by the primary beneficiary
of  the  entity  if  the  equity  investors  in  the  entity  do  not  have  the
characteristics  of a controlling  financial  interest or do not have sufficient
equity at risk for the  entity to  finance  its  activities  without  additional
subordinated  financial support from other parties.  FIN 46 is effective for all
new variable  interest  entities created or acquired after January 31, 2003. For
variable  interest  entities  created or acquired prior to February 1, 2003, the
provisions  of FIN 46 must be applied  for the first  interim  or annual  period
beginning after June 15, 2003.

April  2003 - SFAS No.  149,  "Accounting  for  Amendment  of  Statement  133 on
Derivative  Instruments  and Hedging  Activities,"  which  amends and  clarifies
financial accounting and reporting for derivative instruments, including certain
derivative  instruments  embedded in other contracts and for hedging  activities
under FASB Statement No. 133, Accounting for Derivative  Instruments and Hedging
Activities.  This Statement is generally effective for contracts entered into or
modified   after  June  30,  2003,   and  all   provisions   should  be  applied
prospectively. This statement does not affect the Company.


May 2003 - SFAS No. 150,  "Accounting  for Certain  Financial  Instruments  with
Characteristics of both Liabilities and Equity," which establishes standards for
how an  issuer  classifies  and  measures  certain  financial  instruments  with
characteristics  of both  liabilities  and equity.  It  requires  that an issuer
classify a financial  instrument  that is within its scope as a liability (or an
asset  in  some  circumstances).  This  Statement  is  effective  for  financial
instruments  entered  into or modified  after May 31,  2003,  and  otherwise  is
effective at the beginning of the first interim period  beginning after June 15,
2003. It is to be implemented by reporting the cumulative  effect of a change in
an accounting  principle for financial  instruments  created before the issuance
date of the Statement and still  existing at the beginning of the interim period
of adoption.  Restatement is not  permitted.  This statement does not affect the
Company.


                                       9
<PAGE>


Item 7. Financial Statements and Supplementary Data.

The Following financial statements and documents are filed herewith on the pages
listed below beginning on page F-1, as part of Item 7 of this report.

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

None.






                [Balance of this page intentionally left blank.]




                                       10
<PAGE>




                      EQUITY TECHNOLOGIES & RESOURCES, INC.
                       Index to the Financial Statements
--------------------------------------------------------------------------------


Independent Auditors' Report................................................F-2

Consolidated Balance Sheet at December 31, 2002.............................F-3


Consolidated  Statements of  Operations  for the years ended
December 31, 2002 and 2001 and for the period from inception
of the  development  stage (January 1, 1994) to December 31,
2002........................................................................F-4

Consolidated Statements of Stockholders'  Deficiency for the
period from inception of the  Development  Stage (January 1,
1994) to December 31, 2002..................................................F-5

Consolidated  Statements  of Cash Flows for the years  ended
December 31, 2002 and 2001 and for the period from inception
of the  development  stage (January 1, 1994) to December 31,
2002........................................................................F-11

Notes to the Financial Statements...........................................F-13


<PAGE>





                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
Equity Technologies & Resources, Inc. and Subsidiary

We  have  audited  the  accompanying   consolidated   balance  sheet  of  Equity
Technologies  & Resources,  Inc. and  Subsidiary (a  Development  Stage Company)
("the Company") as of December 31, 2002 and the related consolidated  statements
of  operations,  stockholders'  deficiency  and cash  flows for the years  ended
December 31, 2002 and 2001, and for the period from inception of the development
stage on January 1, 1994 through December 31, 2002.  These financial  statements
are the  responsibility of the Company's  management.  Our  responsibility is to
express  an opinion  on these  financial  statements  based on our  audits.  The
related consolidated  statements of operations,  stockholders'  deficiency,  and
cash flows of the Company from inception of the development  stage on January 1,
1994  through  December 31, 2000 were audited by other  auditors  whose  reports
expressed an unqualified opinion with a going concern  explanatory  paragraph on
those  statements.  Our opinion on the  consolidated  statements of  operations,
stockholders'  deficiency and cash flows from inception of the development stage
on January 1, 1994 through  December 31, 2002,  insofar as it relates to amounts
for prior periods  through  December 31, 2000, is based solely on the reports of
other auditors.

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

In our  opinion,  based on our audits and the  reports  of other  auditors,  the
consolidated  financial  statements  referred to above  present  fairly,  in all
material  respects,  the  consolidated  financial  position of the Company as of
December 31, 2002, and the  consolidated  results of their  operations and their
cash flows for the periods  indicated,  in conformity  with  generally  accepted
accounting principles in the United States of America.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going  concern.  As discussed in Note 2, the
Company is a development  stage  company with no revenues and  recurring  losses
since its  inception,  which  raises  substantial  doubt  about its  ability  to
continue as a going concern.  Management's plans in regards to these matters are
discussed in Note 2. The  consolidated  financial  statements do not include any
adjustments that might result from the outcome of this uncertainty.

/s/ Clancy and Co., P.L.L.C.
Clancy and Co., P.L.L.C.
Phoenix, Arizona

May 23, 2003, except Note 11, which is
dated as of September 19, 2003

                                      F-2

<PAGE>



<TABLE>
<CAPTION>
              EQUITY TECHNOLOGIES & RESOURCES, INC. AND SUBSIDIARY
                          (A Development Stage Company)

                           Consolidated Balance Sheet
                                December 31, 2002

<S>                                                                          <C>
ASSETS
Current Assets
   Cash                                                                      $           472
                                                                             ----------------

Total current assets                                                                     472
                                                                             ----------------

Total  Assets                                                                $           472
                                                                             ================

LIABILITIES AND  STOCKHOLDERS' DEFICIENCY
Current Liabilities
   Notes payable, bank (Note 3)                                              $        11,679
   Accounts payable and accrued liabilities                                          141,659
   Dividends payable (Note 5)                                                         12,750
   Notes payable (Note 4)                                                             56,500
   Notes payable - related party (Note 4)                                            658,841
   Accrued interest (Note 4)                                                         218,768
                                                                             ----------------
Total current liabilities                                                          1,100,197

Total Liabilities

Commitments and contingencies (Note 3-6, 10)

Stockholders' Deficiency

Preferred Stock, Class A, $0.001 par value, 2,000,000 shares   authorized,
    issued and outstanding, none                                                           0
Preferred Stock, Class B, $0.001 par value, 300,000 shares authorized,
    70,000 shares issued and outstanding                                                  70
Preferred Stock, Class C, $0.001 par value, 100,000 shares authorized,
    issued and outstanding, none                                                           0
Common Stock, Class A, $0.0001 par value, 300,000,000 shares authorized,
    143,893,594 issued and outstanding                                                14,389
Common Stock, Class B, $0.01 par value, 100,000 shares authorized, 100,000
    issued and outstanding                                                             1,000
Additional paid-in capital                                                        21,180,798
Accumulated deficit prior to the development stage                                (8,390,740)
Deficit accumulated during the development stage                                 (13,905,242)
                                                                             ----------------
Total Stockholders' Deficiency                                                    (1,099,725)
                                                                             ----------------
Total Liabilities and Stockholders' Deficiency                               $           472
                                                                             ================
</TABLE>


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

                                      F-3

<PAGE>


<TABLE>
<CAPTION>
              EQUITY TECHNOLOGIES & RESOURCES, INC. AND SUBSIDIARY
                          (A Development Stage Company)

                      Consolidated Statements of Operations
               For the years ended December 31, 2002 and 2001, and
             For the period from inception of the development stage
                     (January 1, 1994) to December 31, 2002

                                                                                                     Deficit
                                                                                                   Accumulated
                                                               Year Ended        Year Ended         During the
                                                            December 31, 2002  December 31, 2001  Development Stage
                                                            ------------------------------------------------------

<S>                                                         <C>                <C>                <C>
Revenues                                                    $               -  $               -  $             -

General and administrative expenses                                 1,522,099          4,474,923        9,622,400
                                                            ------------------------------------------------------

Loss from continuing operations                                    (1,522,099)        (4,474,923)      (9,622,400)

Other Income (Expense)
   Interest expense                                                  (198,507)           (51,988)        (318,338)
   Interest income                                                          -                  -               59
                                                            ------------------------------------------------------
Total other income (expense)                                         (198,507)           (51,988)        (318,279)
                                                            ------------------------------------------------------

Loss from continuing operations                                    (1,720,606)        (4,526,911)      (9,940,679)

Loss from discontinued operations (Note 9)                                  -                  -       (3,837,987)
                                                            ------------------------------------------------------

Net loss available to common stockholders                   $      (1,720,606)  $     (4,526,911) $   (13,778,666)
                                                            ======================================================

Dividends on preferred stock (Notes 5)                      $               -   $              -  $       (32,517)
                                                            ======================================================

Basic and diluted loss per share of common stock:
   Loss from continuing operations                          $           (0.02)  $          (0.17) $         (0.65)
   Loss from discontinued operations                                        -                  -            (0.25)
                                                            ------------------------------------------------------
   Net loss                                                 $           (0.02)  $          (0.17) $         (0.90)
                                                            ======================================================

Weighted average number of common shares outstanding
   Basic and diluted                                               78,775,306         26,593,076       15,368,710
                                                            ======================================================
</TABLE>





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

                                      F-4

<PAGE>

<TABLE>
<CAPTION>
              EQUITY TECHNOLOGIES & RESOURCES, INC. AND SUBSIDIARY
                          (A Development Stage Company)

               Consolidated Statements of Stockholders' Deficiency
             for the period from inception of the development stage
                     (January 1, 1994) to December 31, 2002

                                            Preferred     Preferred     Preferred      Preferred       Preferred       Preferred
                                              Stock         Stock         Stock          Stock           Stock           Stock
                                             Class A       Class A       Class B        Class B         Class C         Class C
                                              Shares       Amount         Shares         Amount         Shares           Amount
                                           ----------------------------------------------------------------------------------------

<S>                                         <C>           <C>          <C>           <C>             <C>               <C>
Balance, January 1, 1994                      148,000     $    148        78,500     $       78               -        $        -

Preferred stock issued for cash at $1.00
     per share                                      -            -       203,500            204           6,000                 6
Preferred stock issued for services at
     $1.00 per share                                -            -         6,200              6           4,200                 4
                                           ----------------------------------------------------------------------------------------
Balance, December 31, 1994, 1995, and 1996    148,000          148       288,200            288          10,200                10

Shares converted to Class A common stock            -            -        (5,000)            (5)              -                 -
Shares converted to Class A common stock            -            -       (11,000)           (11)              -                 -
Canceled shares                               (98,000)         (98)     (272,200)          (272)        (10,200)              (10)
                                           ----------------------------------------------------------------------------------------
Balance, December 31, 1997, 1998, and 1999     50,000           50             -              -               -                 -

Shares issued as consideration for
     purchase of subsidiary, December 15,
     2000 (Note 1)                                  -            -        40,000             40               -                 -
                                           ----------------------------------------------------------------------------------------
Balance, December 31, 2000                     50,000           50        40,000             40               -                 -

Preferred stock dividend, July 16, 2001
     (Note 5)                                  13,169           13             -              -               -                 -
Shares issued in exchange for 300,000
     shares of Growth Fund Partnership,
     Inc., June 2001 (Note 5)                       -            -        30,000             30               -                 -
                                           ----------------------------------------------------------------------------------------
Balance, December 31, 2001                     63,169           63        70,000             70               -                 -

Cancellation of Series A Preferred            (50,000)         (50)            -              -               -                 -
Additional preferred stock dividend (Note 5)    4,069            4             -              -               -                 -
Cancellation of preferred shares deemed
     ineligible - held by affiliates
     (Note 5)                                    (186)           -             -              -               -                 -
Preferred stock converted to Class A
     common stock (Note 5)                    (10,197)         (10)            -              -               -                 -
Preferred stock forfeitures (Note 5)           (6,855)          (7)            -              -               -                 -
                                           ----------------------------------------------------------------------------------------
Balance, December 31, 2002                          -            -        70,000      $      70               -                 -
                                           ========================================================================================
</TABLE>




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

                                      F-5

<PAGE>


<TABLE>
<CAPTION>
              EQUITY TECHNOLOGIES & RESOURCES, INC. AND SUBSIDIARY
                          (A Development Stage Company)

               Consolidated Statements of Stockholders' Deficiency
             for the period from inception of the development stage
                     (January 1, 1994) to December 31, 2002


                                            Common Stock  Common Stock  Common Stock   Common Stock    Additional
                                               Class A       Class A       Class B       Class B         Paid-in       Accumulated
                                               Shares        Amount        Shares         Amount         Capital         Deficit
                                            ---------------------------------------------------------------------------------------

<S>                                           <C>         <C>            <C>           <C>           <C>             <C>
Balance, January 1, 1994                          11,425  $         1        100,000   $     1,000   $  11,217,203   $  (8,390,740)

Common stock issued for services at $135.87
     per share                                       700            -              -             -          95,106               -
Common stock issued for services at $499.70
     per share                                        92            -              -             -          45,979               -
Common stock issued for services at $553.66
     per share                                        32            -              -             -          17,717               -
Net loss, year ended December 31, 1994                 -            -              -             -               -      (3,563,526)
                                            ---------------------------------------------------------------------------------------
Balance December 31, 1994                         12,249            1        100,000         1,000      11,376,005     (11,954,266)
Common stock issued for cash at $34.02 per
     share                                         5,416            1              -             -         184,299               -
Common stock issued for services at $52.50
     per share                                       500            -              -             -          26,250               -
Common stock issued for dividends at $553.66
     per share                                        32            -              -             -          17,717         (17,717)
Common stock issued for dividends at $548.15
     per share                                        27            -              -             -          14,800         (14,800)
Net loss, year ended December 31, 1995                 -            -              -             -               -        (212,633)
                                            ---------------------------------------------------------------------------------------
Balance, December 31, 1995                        18,224            2        100,000         1,000      11,619,071     (12,199,416)

Net loss, year ended December 31, 1996                 -            -              -             -               -         (61,828)
                                            ---------------------------------------------------------------------------------------
Balance, December 31, 1996                        18,224            2        100,000         1,000      11,619,071     (12,261,244)

Common stock issued in exchange for
     preferred series B stock at $312.50 per
     share                                            16            -              -             -           5,000               -
Fractional shares issued                               6            -              -             -               1               -
Common stock issued for services at $3.00
     per share                                     4,000            -              -             -          12,000               -
Common stock issued for debt at $10.00 per
     share                                         5,150            1              -             -          51,499               -
Common stock issued for services at $4.95
     per share                                    20,590            2              -             -         101,998               -
Common stock issued for services at $3.00
     per share                                       400            -              -             -           1,200               -
Common stock issued in exchange for
     preferred series B stock at $343.75 per
     share                                            32            -              -             -          11,000               -
Capital contribution-cancellation of shares         (168)           -              -             -         388,793               -
Net loss, year ended December 31, 1997                 -            -              -             -               -        (115,504)
                                            ---------------------------------------------------------------------------------------
Balance, December 31, 1997                        48,250            5        100,000         1,000      12,190,562     (12,376,748)

Reversal of cancellation of common A shares
                                                   4,280            -              -             -               -               -
Common stock issued at $3.15 per share to
     repay note payable                            1,737            -              -             -           5,470               -
Common stock issued to officer at $3.15 per
     share for consulting services                   137            -              -             -             431               -
</TABLE>

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

                                      F-6
<PAGE>


<TABLE>
<CAPTION>
              EQUITY TECHNOLOGIES & RESOURCES, INC. AND SUBSIDIARY
                          (A Development Stage Company)

               Consolidated Statements of Stockholders' Deficiency
             for the period from inception of the development stage
                     (January 1, 1994) to December 31, 2002

                                            Common Stock  Common Stock  Common Stock   Common Stock    Additional
                                               Class A       Class A       Class B       Class B         Paid-in       Accumulated
                                               Shares        Amount        Shares         Amount         Capital         Deficit
                                            --------------------------------------------------------------------------------------

<S>                                           <C>          <C>            <C>           <C>           <C>             <C>
Common stock issued to officer at $3.15 per
     share for consulting services                  22,480             2            -             -         71,152               -
Common stock issued to officer at $3.15 per
     share for consulting services                   2,563             -            -             -          8,083               -
Common stock issued to officer to payoff note
     payable for consulting services               120,000            12            -             -         58,446               -
Net loss, year ended December 31, 1998                   -             -            -             -                       (150,873)
                                            --------------------------------------------------------------------------------------
Balance, December 31, 1998                         199,447            19      100,000         1,000     12,334,144     (12,527,621)
Net loss, year ended December 31, 1999                   -             -            -             -              -        (178,877)
                                            --------------------------------------------------------------------------------------
Balance, December 31, 1999                         199,447            19      100,000         1,000     12,334,144     (12,706,498)

Common stock issued at $7.00 per share for
     services rendered, June 2000                  166,628            17            -             -      1,166,381               -
Common stock issued at $0.14 per share for
     services rendered, August 2000              1,350,000           135            -             -        188,865               -
Common stock issued at $0.14 per share for
     services rendered, August 7, 2000           6,000,000           600            -             -        839,400               -
Common stock canceled, August 2000                (120,000)          (12)           -             -        (58,446)        (61,542)
Fractional shares issued                               832             -            -             -              -               -
Common stock canceled                             (100,000)          (10)           -             -             10               -
Preferred shares issued as consideration for
     purchase of subsidiary, (Note 1)                    -             -            -             -            (40)              -
Common stock issued for cash at $0.25 per
     share, November 2000                           90,000             9            -             -         22,491               -
Common stock issued for services at $0.29 per
     share, December 2000                          275,000            28            -             -         79,722               -
Common stock issued for services at $0.375
     per share, December 2000                      100,000            10            -             -         37,489               -
Common stock issued for services at $0.375
     per share, December 2000                      160,000            16            -             -         59,984               -
Net loss, year ended December 31, 2000,
     restated (Note 10)                                  -             -            -             -              -      (3,280,425)
                                            --------------------------------------------------------------------------------------
Balance, December 31, 2000, restated             8,121,907           812      100,000         1,000     14,670,000     (16,048,465)

Common stock issued for services at $0.20 per
     share, January 4, 2001                        600,000            60            -             -        119,940               -
Common stock issued for cash at $0.25 per
     share, January 5, 2001                         45,000             4            -             -         11,246               -
Common stock issued for cash at $0.20 per
     share, February 23, 2001                        2,500             -            -             -            500               -
Common stock issued for services at $0.28 per
     share, March 6, 2001                          200,000            20            -             -         55,980               -
Common stock issued for services at $0.06 per
     share, March 23, 2001                         200,000            20            -             -         11,980               -
Common stock canceled, March 28, 2001             (100,000)          (10)           -             -             10               -
</TABLE>

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

                                      F-7
<PAGE>


<TABLE>
<CAPTION>
              EQUITY TECHNOLOGIES & RESOURCES, INC. AND SUBSIDIARY
                          (A Development Stage Company)

               Consolidated Statements of Stockholders' Deficiency
             for the period from inception of the development stage
                     (January 1, 1994) to December 31, 2002

                                                Common Stock  Common Stock   Common Stock  Common Stock    Additional
                                                   Class A       Class A       Class B        Class B       Paid-in     Accumulated
                                                   Shares        Amount         Shares        Amount        Capital       Deficit
                                                ----------------------------------------------------------------------------------
<S>                                             <C>                <C>         <C>          <C>          <C>            <C>
Correction in common stock issued at $0.20 per
     share, April 2, 2001                           (100,000)          (10)            -             -       (19,990)           -
Common stock issued for services at $0.05 per
     share, April 5, 2001                              50,000             5            -             -          2,495           -
Common stock issued for services at $0.10 per
     share, April 10, 2001                            350,000            35            -             -         34,965           -
Common stock issued for services at $0.05 per
     share, April 30, 2001                            100,000            10            -             -          4,990           -
Common stock issued for 100% ownership of
     newly formed subsidiary, May 9, 2001           7,200,000           720            -             -          (720)           -
Common stock issued for services at $0.04 per
     share, May 11, 2001                              400,000            40            -             -         15,960           -
Common stock issued for services at $0.11 per
     share, May 15, 2001                              600,000            60            -             -         65,940           -
Common stock issued for services at $0.09 per
     share, May 21, 2001                              400,000            40            -             -         35,960           -
Common stock issued for services at $0.16 per
     share, May 31, 2001                              550,000            55            -             -         87,945           -
Common stock issued for services at $0.17 per
     share, June 5, 2001                              200,000            20            -             -         33,980           -
Common stock issued for services at $0.16 per
     share, June 18, 2001                             500,000            50            -             -         79,950           -
Common stock issued for services at $0.15 per
     share, June 20, 2001                           2,150,000           215            -             -        322,285           -
Common stock issued for cash at $0.001 per
     share, July 12, 2001                              10,000             1            -             -            999           -
Common stock issued for services at $0.24 per
     share, July 12, 2001                           4,379,500           438            -             -      1,050,642           -
Common stock issued for services at $0.20 per
     share, July 24, 2001                           6,450,000           645            -             -      1,289,355           -
Common stock issued for services at $0.20 per
     share, July 24, 2001                             800,000            80            -             -        159,920           -
Common stock issued for services at $0.14 per
     share, August 15, 2001                           700,000            70            -             -         97,930           -
Common stock issued as collateral for loans,
     (August 4, 2000)                               5,927,713           593            -             -          (593)           -
Common stock issued for services at $0.09 per
     share, August 31, 2001                           150,000            15            -             -         13,485           -
Common stock issued for services at $0.08 per
     share, September 4, 2001                         500,000            50            -             -         39,950           -
Common stock issued for services at $0.06 per
     share, September 6, 2001                         500,000            50            -             -         29,950           -
</TABLE>

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

                                      F-8
<PAGE>


<TABLE>
<CAPTION>
              EQUITY TECHNOLOGIES & RESOURCES, INC. AND SUBSIDIARY
                          (A Development Stage Company)

               Consolidated Statements of Stockholders' Deficiency
             for the period from inception of the development stage
                     (January 1, 1994) to December 31, 2002

                                                Common Stock  Common Stock   Common Stock  Common Stock    Additional
                                                   Class A       Class A       Class B        Class B       Paid-in     Accumulated
                                                   Shares        Amount         Shares        Amount        Capital       Deficit
                                                ----------------------------------------------------------------------------------
<S>                                             <C>            <C>           <C>           <C>           <C>           <C>

Common stock issued for services at $0.03
     per share, September 24, 2001                  500,000            50             -              -          14,950           -
Common stock canceled                           (7,200,000)          (720)            -              -             720           -
Common stock canceled                             (500,000)           (50)            -              -              50           -
Shares issued in exchange for 300,000
     shares of Growth Fund Partnership,
     Inc., June 2001                                     -              -             -              -            (30)           -
Common stock issued for insurance
     guarantee at $0.03 per share, October
     17, 2001                                    2,500,000            250             -              -          74,750           -
Common stock issued for services at $0.07
     per share, October 19, 2001                   130,000             13             -              -           9,087           -
Common stock issued for collateral on loan
     at $0.07 per share, October 19, 2001
                                                 4,800,000            480             -              -         335,520           -
Common stock issued for services rendered
     at $0.07 per share, October 25, 2001
                                                   750,000             75             -              -          52,425           -
Common stock issued for collateral on
     loans at $0.5 per share, November 6,
     2001                                        2,000,000            200             -              -          99,800           -
Common stock issued for collateral on loan
     at $0.03 per share, November 12, 2001
                                                 1,200,000            120             -              -          35,880           -
Common stock issued for services rendered
     at $0.03 per share, November 12, 2001
                                                 1,500,000            150             -              -          44,850           -
Common stock issued for insurance
     guarantee at $0.03 per share,
     November 12, 2001                             500,000             50             -              -          14,950           -
Common stock issued for services at $0.06
     per share, November 19, 2001                  200,000             20             -              -          11,980           -
Common stock issued for services at $0.04
     per share, December 12, 2001                  600,000             60             -              -          23,940           -
Common stock issued for services at $0.04
     per share, December 19, 2001                  200,000             20             -              -           7,980           -
Common stock issued for services at $0.05
     per share, December 31, 2001                  500,000             50             -              -          24,950           -
Preferred stock dividend (Note 5)                        -              -             -              -            (13)           -
Accounts payable and accrued expenses
     converted to capital                                -              -             -              -         743,837           -
Net loss, year ended December 31, 2001,
     restated (Note 10)                                  -              -             -              -               -  (4,526,911)
                                            ---------------------------------------------------------------------------------------
Balance, December 31, 2001, restated            48,566,620          4,856       100,000          1,000      19,710,680 (20,575,376)
</TABLE>

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

                                      F-9
<PAGE>


<TABLE>
<CAPTION>
              EQUITY TECHNOLOGIES & RESOURCES, INC. AND SUBSIDIARY
                          (A Development Stage Company)

               Consolidated Statements of Stockholders' Deficiency
             for the period from inception of the development stage
                     (January 1, 1994) to December 31, 2002

                                                Common Stock  Common Stock   Common Stock  Common Stock    Additional
                                                   Class A       Class A       Class B        Class B       Paid-in     Accumulated
                                                   Shares        Amount         Shares        Amount        Capital       Deficit
                                                ----------------------------------------------------------------------------------
<S>                                             <C>            <C>           <C>           <C>           <C>          <C>
Additional preferred stock dividend (Note
     5)                                                  -             -             -              -             (4)            -
Common stock issued for consulting
     services rendered at $0.04 per
     share, January 2, 2002                        500,000            50             -              -          19,950            -
Common stock issued for financial
     consulting services rendered at
     $0.03 per share, February 24, 2002           200,000             20             -              -           5,980            -
Common stock issued for collateral on
     loans at $0.08 per share, June 21,
     2002                                       14,000,000         1,400             -              -       1,118,600            -
Cancellation of previously issued common
     stock in 2001 for collateral on
     loans, June 27, 2002                       (2,000,000)         (200)            -              -         (99,800)           -
Common stock issued for consulting
     services rendered at $0.03 per
     share, August 2, 2002                       7,300,000           730             -              -         218,270            -
Preferred stock conversion in September
     2002, for holders of record, July
     16, 2001 (Note 5)                          72,826,974         7,283             -              -          (7,273)           -
Common stock issued for collateral on
     loans at $0.02 per share, November
     4, 2002                                     2,500,000           250             -              -          49,750            -
Cancellation of Series A preferred shares
     and related dividends payable                       -             -             -              -          85,000            -
Preferred stock forfeitures (Note 5)                     -             -             -              -               7            -
Accrued expenses converted to capital                    -             -             -              -          79,638            -
Net loss, year ended December 31, 2002                   -             -             -              -               -   (1,720,606)
                                           ----------------------------------------------------------------------------------------
Balance, December 31, 2002                     143,893,594     $  14,389       100,000     $    1,000    $ 21,180,798 $(22,295,982)
                                           ========================================================================================

Accumulated deficit:
   Prior to the development stage                                                                                     $ (8,390,740)
                                                                                                                      =============
   During the development stage                                                                                       $(13,905,242)
                                                                                                                      =============
</TABLE>








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

                                      F-10

<PAGE>


<TABLE>
<CAPTION>
              EQUITY TECHNOLOGIES & RESOURCES, INC. AND SUBSIDIARY
                          (A Development Stage Company)

                      Consolidated Statements of Cash Flows
                For the years ended December 31, 2002 and 2001,
           and for the period from inception of the development stage
                     (January 1, 1994) to December 31, 2002

                                                                                                          Deficit
                                                                                                          Accumulated
                                                                      Year Ended       Year Ended         During the
                                                                   December 31, 2002  December 31, 2001 Development Stage
                                                                   -----------------  ----------------- ------------------
<S>                                                                <C>                <C>               <C>
Cash flows from operating activities
Net loss                                                           $     (1,720,606)  $     (4,526,911) $     (13,905,242)
Adjustments to reconcile net loss to net cash used in operating
activities:
     Common stock issued for services or collateral on loans              1,315,000          4,288,180          8,260,643
     Write off federal tax lien and related accrued expenses                (68,836)                 -            (68,836)
     Preferred stock issued for services                                          -                  -             10,400
     Depreciation and amortization                                                -                  -             70,532
     Bad debt expense                                                             -              4,059            140,299
     Loss on disposal of assets and partnership interests                         -                  -          2,364,508
     Discontinued operations                                                      -                  -            456,078
Changes in assets and liabilities
   (Increase) decrease in accounts receivable                                     -                  -             20,921
    Increase (decrease) in accounts payable                                 104,905            122,007            979,090
    Increase (decrease) in accrued expenses                                 222,280             49,571            366,834
                                                                   -------------------------------------------------------
Total adjustments                                                         1,573,349          4,463,817         12,600,469
                                                                   -------------------------------------------------------
Net cash flows used in operating activities                                (147,257)           (63,094)        (1,304,773)

Cash flows from investing activities
   Increase in notes receivable                                                   -                  -            (11,059)
   Sale of land                                                                   -                  -             (3,201)
   Other                                                                          -                  -             64,000
                                                                   -------------------------------------------------------
Net cash flows provided by (used in) investing activities                         -                  -             49,740

Cash flows from financing activities
   Sale of common stock for cash                                                  -             12,750            323,050
   Sale of preferred stock for cash                                               -                  -            209,500
   Proceeds from notes payable                                              185,622             61,300            787,957
   Principal payments on notes payable                                      (38,505)           (10,997)           (65,002)
                                                                   -------------------------------------------------------
Net cash flows provided by financing activities                             147,117             63,053          1,255,505
                                                                   -------------------------------------------------------

Increase (decrease) in cash and cash equivalents                               (140)              (41)               472
Cash and cash equivalents, beginning of period                                  612               653                  -
                                                                   -------------------------------------------------------
Cash and cash equivalents, end of period                           $            472   $           612   $            472
                                                                   =======================================================

Cash paid for:
   Interest                                                        $         62,747   $        35,000   $        106,756
                                                                   =======================================================
   Income taxes                                                    $              -   $             -   $              -
                                                                   =======================================================
</TABLE>

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

                                      F-11
<PAGE>


<TABLE>
<CAPTION>
              EQUITY TECHNOLOGIES & RESOURCES, INC. AND SUBSIDIARY
                          (A Development Stage Company)

                      Consolidated Statements of Cash Flows
                For the years ended December 31, 2002 and 2001,
           and for the period from inception of the development stage
                     (January 1, 1994) to December 31, 2002

                                                                                                          Deficit
                                                                                                          Accumulated
                                                                      Year Ended       Year Ended         During the
                                                                   December 31, 2002  December 31, 2001 Development Stage
                                                                   -----------------  ----------------- ------------------
<S>                                                                <C>                <C>               <C>
Supplemental noncash investing and financing activities:
   Accounts payable and accrued expenses converted to capital
                                                                   $         79,638   $        743,837  $        823,475
                                                                   =======================================================
   Common stock issued for services or collateral on loans         $      1,315,000   $      4,288,180  $      8,260,643
                                                                   =======================================================
   Preferred stock issued for services                                            -                  -  $         10,400
                                                                   =======================================================
   Common stock issued for dividends                                              -                  -  $         50,234
                                                                   =======================================================
   Paid-in capital through cancellation of preferred stock and
         related dividends payable                                 $         85,000                  -  $        465,400
                                                                   =======================================================
   Common stock issued for debt                                                   -                  -  $        115,428
                                                                   =======================================================
</TABLE>









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

                                      F-12

<PAGE>

              EQUITY TECHNOLOGIES & RESOURCES, INC. AND SUBSIDIARY
                          (A Development Stage Company)

                        Notes to the Financial Statements
                                December 31, 2002

NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements presented are those of Equity Technologies
&  Resources,  Inc.  and  its  wholly-owned  subsidiary,  Verified  Prescription
Safeguards, Inc. Collectively, they are referred to herein as "the Company."

Organization and Nature of Operations.

Organization  - The  Company  was  organized  on March 4,  1988,  as a  Delaware
corporation under the name Sherry Lynn Corporation. The Company was organized as
a public company for the purpose of finding a suitable combination partner.

On December 6, 1988,  the Company  changed  its name to Equity  Gold,  Inc.  The
number of shares of common stock authorized to be issued changed from 50,000,000
to 150,000,000 with a par value of $0.001 per share of common stock.

On December 14,  1989,  the Company  merged with Gold  Equity,  Inc., a Delaware
corporation. The surviving corporation was Equity Gold, Inc.

On February 7, 1989, the Company changed its name to Equity AU, Inc.

On April 14, 1989, the Company changed the number of authorized shares of common
stock to 99,900,000.

On November 7, 1991, the Company authorized  2,000,000 shares of preferred stock
with a par value of $1.00 each.

On February 19, 1992, the Company authorized 99,900,000 shares of Class A common
shares with a par value of $0.001 per share and 100,000 shares of Class B common
shares with a par value of $0.01 per share.

From the original  inception of the Company to the inception of the  development
stage on  January  1, 1994,  the  Company  was  heavily  involved  in mining and
exploration  activities  principally  in  Arkansas.  The  Company  generated  an
accumulated   deficit  of  $8.4  million  prior  to  the  Company  entering  the
development stage.

In January 2000, the Company elected to change its official name from Equity AU,
Inc. to Equity Technologies & Resources, Inc.

On August 2, 2002, the Company amended its articles of  incorporation  to change
the  authorized  capital stock of the Company.  The aggregate  number of Class A
common shares authorized for issuance is 300,000,000  shares with a par value of
$0.0001;  the aggregate number of Class B common shares  authorized for issuance
is 100,000 with a par value of $0.01;  the aggregate number of Class A preferred
shares  authorized  for  issuance is 2,000,000  with a par value of $0.001;  the
aggregate number of Class B preferred shares  authorized for issuance is 300,000
shares with a par value of $0.001; and the aggregate number of Class C preferred
shares authorized for issuance is 100,000 shares with a par value of $0.001

The amendment was recorded by the State of Delaware on January 23, 2003. All per
share and share  information  have been  retroactively  restated  to reflect the
changes in par value.

Nature of  operations  - The Company  was  originally  engaged in  research  and
development  of a process to extract gold and other  precious  metals on various
real properties  located in Arkansas.  Partnerships were formed prior to 1994 by
the Company or by affiliates of the Company to raise  working  capital,  acquire
mineral  claims,  rights,  facilities  and equipment and to explore for precious

                                      F-13

<PAGE>


metals. In 1994, general partners of the partnerships  notified the Company that
they  were  terminated  and  dissolved.  The  Company  has  had  no  significant
operations  since  August 1993 and entered the  development  stage on January 1,
1994. During September 1996, the Company resumed  operations and again suspended
operations in December 1996. As a result of the dissolution of the partnerships,
the Company ceased its operations and entered the development  stage as per SFAS
No. 7. (See Note 2.)

On December 15,  2000,  the Company  acquired all of the issued and  outstanding
common stock of Verified Prescription  Safequards,  Inc. ("VPS") in exchange for
40,000  shares of the  Company's  Class B voting  preferred  stock (Note 5). The
acquisition  of VPS was  accounted for as a purchase per  Accounting  Principles
Board No.  ("APB") 16. At the time the  purchase  was  consummated,  VPS held no
assets or liabilities.  The  consolidated  entity elected to change its business
plan  toward  the  development  and  marketing  of  Internet  prescription  drug
technology.  (See Note 11.)  Management  intends  to use the  majority  of funds
obtained toward this development.  The purchase price of the acquired subsidiary
was determined  among the parties to be 40,000 shares of Class B preferred stock
redeemable  at $500 per share  ($20,000,000).  The  preferred  shares issued are
redeemable  for cash only at $500 per share  payable from 50% of net revenues of
the  subsidiary for the next seven years.  The conversion  feature of the issued
preferred  shares  allows  them to be  converted  into cash,  pursuant to future
revenues, but does not allow them to be converted into common stock at any time.

In May 2001, the Company acquired a newly formed wholly-owned  subsidiary,  ETCR
M&A, Inc. ("ETCR M&A"), a Florida corporation,  in exchange for 7,200,000 shares
of the Company's  common stock.  ETCR M&A held no assets or  liabilities  at the
time of purchase and thus, the acquisition was recorded at $0 value. In November
2001,  these shares were  canceled and the Company does not  currently  hold any
interest in ETCR M&A.

The Company is currently  engaged in the  development  and marketing of Internet
prescription drug technology.

Summary of Significant Accounting Policies.

Accounting method - The Company's consolidated financial statements are prepared
using the accrual  method of  accounting.  The Company has elected a December 31
year-end.

Principles of consolidation - The accompanying consolidated financial statements
include  those of Equity  Technologies  & Resources,  Inc. and its  wholly-owned
subsidiary,  Verified  Prescription  Safeguards,  Inc. ("VPS"). All intercompany
accounts and transactions have been eliminated.

Use of estimates - The  preparation of financial  statements in conformity  with
generally  accepted  accounting  principles  in the  United  States  of  America
requires  management to make estimates and assumptions  that affect the reported
amounts  of assets and  liabilities  and  disclosure  of  contingent  assets and
liabilities at the date of the financial  statements and the reported amounts of
revenues and expenses  during the reporting  period.  Management  makes its best
estimate of the ultimate outcome for these items based on historical  trends and
other information available when the financial statements are prepared.  Changes
in estimates  are  recognized in accordance  with the  accounting  rules for the
estimate,  which  is  typically  in the  period  when  new  information  becomes
available to management.  Actual results could differ from those estimates. Cash
and cash equivalents - The Company considers all highly liquid  investments with
a  maturity  of  three  months  or less  from the  date of  purchase  to be cash
equivalents. As of December 31, 2002, there were no cash equivalents.

Concentration of credit risk - The Company  maintains cash balances at financial
institutions that are insured by the FDIC up to $100,000.

Income taxes - The Company  accounts for income  taxes under the  provisions  of
Statement of Financial  Accounting  Standards  ("SFAS") No. 109  "Accounting for
Income Taxes." Under SFAS No. 109,  deferred  income tax assets and  liabilities
are computed for differences  between the financial  statements and tax bases of
assets and liabilities that will result in taxable or deductible  amounts in the
future,  based on enacted tax laws and rates  applicable to the periods in which
the differences are expected to affect taxable income.  Valuation allowances are

                                      F-14

<PAGE>

established  when necessary,  to reduce deferred income tax assets to the amount
expected to be  realized.  No  deferred  tax asset has been  recognized  for the
operating loss  carryforward as it is more likely than not that all or a portion
of the net operating loss will not be realized and any valuation allowance would
reduce the benefit to zero.

Long-lived  assets - The Company records  impairment losses on long-lived assets
used in operation when indicators of impairment are present and the undiscounted
cash flows  estimated  to be generated by those assets are less than the assets'
carrying amount.

Earnings  per share - Basic  earnings or loss per share is based on the weighted
average number of common shares outstanding.  Diluted earnings or loss per share
is based on the  weighted  average  number  of  common  shares  outstanding  and
dilutive common stock equivalents.  Basic earnings/loss per share is computed by
dividing  income/loss  (numerator)  applicable  to  common  stockholders  by the
weighted  average  number of common  shares  outstanding  (denominator)  for the
period.  All earnings or loss per share amounts in the financial  statements are
basic  earnings  or loss per share,  as defined by SFAS No. 128,  "Earnings  Per
Share." Diluted earnings or loss per share does not differ materially from basic
earnings or loss per share for all  periods  presented.  Convertible  securities
that  could  potentially  dilute  basic loss per share are not  included  in the
computation  of diluted loss per share  because to do so would be  antidilutive.
All per share and per share  information are adjusted  retroactively  to reflect
stock splits and changes in par value.

Comprehensive  Income - The Company includes items of other comprehensive income
by their nature in a financial statement and displays the accumulated balance of
other  comprehensive  income  separately  from retained  earnings and additional
paid-in capital in the equity section of the balance sheet.

Capital  Structure - The Company  discloses its capital  structure in accordance
with SFAS No. 129,  "Disclosure of Information  about Capital  Structure," which
establishes  standards  for  disclosing  information  about an entity's  capital
structure.

Recent  accounting  pronouncements  - The Financial  Accounting  Standards Board
("FASB") has issued the following pronouncements,  none of which are expected to
have a significant affect on the financial statements:

April 2002 - SFAS No. 145,  "Rescission  of FASB  Statements  No. 4, 44, and 64,
Amendment of FASB Statement No. 13, and Technical  Corrections."  Under SFAS No.
4, all  gains  and  losses  from  extinguishment  of debt  were  required  to be
aggregated and, if material, classified as an extraordinary item, net of related
income tax effect. This Statement eliminates SFAS No. 4 and, thus, the exception
to applying  APB No. 30 to all gains and losses  related to  extinguishments  of
debt.  As a result,  gains and  losses  from  extinguishment  of debt  should be
classified as extraordinary  items only if they meet the criteria in APB No. 30.
Applying the  provisions of APB No. 30 will  distinguish  transactions  that are
part of an  entity's  recurring  operations  from  those  that  are  unusual  or
infrequent  or that meet the criteria  for  classification  as an  extraordinary
item.  Under SFAS No. 13, the required  accounting  treatment  of certain  lease
modifications that have economic effects similar to sale-leaseback  transactions
was  inconsistent  with the required  accounting  treatment  for  sale-leaseback
transactions.  This  Statement  amends  SFAS No. 13 to require  that those lease
modifications   be   accounted   for  in  the  same  manner  as   sale-leaseback
transactions.  This  statement  also makes  technical  corrections  to  existing
pronouncements.  While those  corrections are not substantive in nature, in some
instances, they may change accounting practice.

June 2002 - SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal
Activities."  This Statement  addresses  financial  accounting and reporting for
costs associated with exit or disposal  activities and nullifies Emerging Issues
Task Force (EITF) Issue No. 94-3,  "Liability  Recognition for Certain  Employee
Termination  Benefits  and Other  Costs to Exit an Activity  (including  Certain
Costs  Incurred in a  Restructuring)."  The  principal  difference  between this

                                      F-15

<PAGE>

Statement  and EITF  94-3  relates  to its  requirements  for  recognition  of a
liability  for a cost  associated  with  an  exit  or  disposal  activity.  This
Statement  requires  that a  liability  for a cost  associated  with  an exit or
disposal activity be recognized when the liability is incurred. Under EITF 94-3,
a liability  was  recognized  at the date of an entity's  commitment  to an exit
plan.  This  Statement is  effective  for exit or disposal  activities  that are
initiated after December 31, 2002.

October 2002 - SFAS No. 147, "Acquisitions of Certain Financial Institutions, an
amendment  of FASB  Statements  No. 72 and 144 and FASB  Interpretation  No. 9,"
which  applies to the  acquisition  of all or part of a  financial  institution,
except for a transaction  between two or more mutual  enterprises.  SFAS No. 147
removes  the  requirement  in SFAS  No.  72 and  Interpretation  9  thereto,  to
recognize and amortize any excess of the fair value of liabilities  assumed over
the fair value of tangible and  identifiable  intangible  assets  acquired as an
unidentifiable intangible asset. This statement requires that those transactions
be accounted for in accordance with SFAS No. 141,  "Business  Combinations," and
SFAS No.  142,  "Goodwill  and  Other  Intangible  Assets."  In  addition,  this
statement  amends SFAS No. 144,  "Accounting  for the  Impairment or Disposal of
Long-Lived Assets," to include certain financial institution-related  intangible
assets.  This  statement is  effective  for  acquisitions  for which the date of
acquisition  is on or  after  October  1,  2002,  and is not  applicable  to the
Company.

November 2002 - FASB issued FASB Interpretation No. 45 ("FIN 45"),  "Guarantor's
Accounting  and  Disclosure  Requirements  for  Guarantees,  Including  Indirect
Guarantees  of  Indebtedness  of Others."  FIN 45 requires  that a liability  be
recorded in the  guarantor's  balance  sheet upon  issuance of a  guarantee.  In
addition,  FIN 45 requires  disclosures  about the guarantees that an entity has
issued,  including a rollforward of the entity's product  warranty  liabilities.
Initial  recognition  and  measurement  provisions  of  the  Interpretation  are
applicable  on a  prospective  basis to  guarantees  issued  or  modified  after
December 31, 2002.  The  disclosure  requirements  are  effective  for financial
statements of interim or annual periods ending after December 15, 2002.

December    2002   -   SFAS   No.    148,    "Accounting    for   Stock    Based
Compensation-Transition  and  Disclosure."  This statement was issued to provide
alternative methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee  compensation.  In addition,  this
Statement  amends  the  disclosure  requirements  of  Statement  123 to  require
prominent  disclosures in both annual and interim financial statements about the
method of accounting for stock-based employee compensation and the effect of the
method used on reported  results.  This  statement  is effective  for  financial
statements for fiscal years ending after December 15, 2002.  This statement does
not  have  any  impact  on the  Company  because  the  Company  does not plan to
implement the fair value method.

January 2003 - FASB issued FASB Interpretation No. 46 ("FIN 46"), "Consolidation
of Variable Interest Entities, an Interpretation of ARB No. 51." FIN 46 requires
certain variable interest entities to be consolidated by the primary beneficiary
of  the  entity  if  the  equity  investors  in  the  entity  do  not  have  the
characteristics  of a controlling  financial  interest or do not have sufficient
equity at risk for the  entity to  finance  its  activities  without  additional
subordinated  financial support from other parties.  FIN 46 is effective for all
new variable  interest  entities created or acquired after January 31, 2003. For
variable  interest  entities  created or acquired prior to February 1, 2003, the
provisions  of FIN 46 must be applied  for the first  interim  or annual  period
beginning  after June 15,  2003.  April  2003 - SFAS No.  149,  "Accounting  for
Amendment of Statement 133 on Derivative  Instruments  and Hedging  Activities,"
which amends and clarifies  financial  accounting  and reporting for  derivative
instruments,   including  certain  derivative   instruments  embedded  in  other
contracts and for hedging  activities  under FASB Statement No. 133,  Accounting
for Derivative  Instruments and Hedging Activities.  This Statement is generally
effective for contracts  entered into or modified  after June 30, 2003,  and all
provisions should be applied  prospectively.  This statement does not affect the
Company.

                                      F-16

<PAGE>

May 2003 - SFAS No. 150,  "Accounting  for Certain  Financial  Instruments  with
Characteristics of both Liabilities and Equity," which establishes standards for
how an  issuer  classifies  and  measures  certain  financial  instruments  with
characteristics  of both  liabilities  and equity.  It  requires  that an issuer
classify a financial  instrument  that is within its scope as a liability (or an
asset  in  some  circumstances).  This  Statement  is  effective  for  financial
instruments  entered  into or modified  after May 31,  2003,  and  otherwise  is
effective at the beginning of the first interim period  beginning after June 15,
2003. It is to be implemented by reporting the cumulative  effect of a change in
an accounting  principle for financial  instruments  created before the issuance
date of the Statement and still  existing at the beginning of the interim period
of adoption.  Restatement is not  permitted.  This statement does not affect the
Company.  Pending  accounting  pronouncements  - It is anticipated  that current
pending  accounting  pronouncements  will  not  have an  adverse  impact  on the
financial statements of the Company.

NOTE 2 - GOING CONCERN

The Company has limited  operations and has not been able to develop an ongoing,
reliable  source of revenues to fund its  existence.  The  Company's  day-to-day
expenses  have been covered by cash  obtained  from the issuance of stock and by
proceeds from notes  payable.  The adverse  effect on the  Company's  results of
operation due to its lack of capital resources can be expected to continue until
such time as the  Company  is able to  generate  additional  capital  from other
sources. These conditions raise substantial doubt about the Company's ability to
continue as a going concern.

Management has implemented, or developed plans to implement, a number of actions
to address these  conditions  including the acquisition of VPS, which management
believes will provide  opportunities for growth within the prescription drug and
healthcare industry.  Management's plans include obtaining working capital funds
by seeking additional funding from shareholders,  debt financing, and/or private
placements  of its  common  stock to meet such  needs.  Without  realization  of
additional  capital, it would be unlikely for the Company to continue as a going
concern.  The Company  anticipates that its major  shareholders  will contribute
sufficient  funds to satisfy  the cash needs of the  Company for the next twelve
months.  However,  there can be no assurances to that effect, as the Company has
no revenues and the Company's need for additional  funding will be necessary for
the Company's  development  plans. If the Company cannot obtain needed funds, it
may be forced to curtail or cease its  activities.  Therefore,  for at least the
next twelve months the Company has viable plans to continue as a going  concern.
There can be no assurance that additional  funding will be available when needed
or, if available, that the terms of such financing will not adversely affect the
Company's results from operations.

The consolidated  financial statements do not include any adjustments to reflect
the possible future effects on the  recoverability  and classification of assets
or the  amounts  and  classification  of  liabilities  that may result  from the
outcome of this uncertainty.  The continuation of the Company as a going concern
is dependent upon the success of the Company in obtaining  additional funding or
the success of its future  operations.  The  Company's  ability to achieve these
objectives  cannot  be  determined  at this  time.  The  accompanying  financial
statements should not be regarded as typical for normal operating periods.

NOTE 3 - NOTES PAYABLE, BANK

Notes payable,  bank at December 31, 2002 totaling $11,679 represents a note due
to First  Security  Bank of  Lexington,  Kentucky,  between the  Company,  James
Millard (current  President) and Frank Dickey, Jr. (former  President),  bearing
interest at 5.75% per annum,  maturing on February 13, 2004,  with principal and
interest due at maturity.

                                      F-17

<PAGE>

NOTE 4 - NOTES PAYABLE

Notes  payable of the Company are as follows at December 31,
2002: Unsecured notes payable to a related party,  $165,500,
past due, bearing interest at 12%, with a late fee of 10% of
the  principle  due;  $41,400  due in one year,  bearing 10%
interest.                                                          $    206,900

Unsecured  notes payable to a related party dated August 28,
2000,  past due,  bearing  interest at 12% per annum through
February 28, 2002,  and at $500 per day  thereafter.  Due on
demand and  personally  guaranteed by the former  officer of
the Company. (See Note 11 (b))                                          139,003

Unsecured  notes  payable to a related party dated August 1,
2000, past due, bearing interest at 10% per annum.                      120,000

Unsecured,  non-interest  bearing  notes  payable to various
related parties. Due on demand.                                         192,938

Unsecured  notes payable dated  December 4, 1999,  past due,
bearing  interest at 12% per annum  (default rate of 18% per
annum), with a late fee of 10% of the principal due.                     20,000

Non-interest  bearing  notes  payable  to  various  parties,
secured by guarantees of common stock. Due on demand.                    30,500

Unsecured promissory note bearing interest at 10%, past due.
Interest payable annually in either stock or cash, or both.               6,000
                                                                  --------------

Total                                                                    715,341
Less related party amounts                                             (658,841)
                                                                  --------------
Total notes payable                                               $      56,500
                                                                  ==============


Substantially all of the Company's notes are in default. Accrued interest on the
above notes at December  31, 2002 was  $218,768,  of which  $205,688  represents
related party accrued interest.

NOTE 5 - CAPITAL STOCK

Preferred Stock - Class A
The Company is authorized  to issue  2,000,000  shares of  non-voting  preferred
shares,  at a par value of $0.001 per share.  These shares accrue a 10% dividend
annually.  These preferred shares are convertible into Class A common stock at a
conversion rate of 5.5 common shares for each preferred share.  During 2002, the
Company  canceled 50,000 shares of issued and  outstanding  common stock held by
affiliates  of the  Company,  and the related  cumulative  dividends  payable of
$35,000.  The amounts were credited to additional  paid-in  capital for $85,000.
Dividends paid during 1995 amounted to $17,717 for 1993 and $14,800 for 1994. No
dividends have been paid since 1995.

On June 28, 2001,  the Board of  Directors  of the Company  approved a preferred
stock dividend for the benefit of the Company's common  stockholders.  One share
of Class A, non-voting,  convertible  preferred stock, with a face value of $500
was  issued for every 500 shares of common  stock to  shareholders  of record on
July 16,  2001.  The fair  market  value of the  preferred  stock  dividend  was
determined to be zero because the Company is a development stage company with no
significant  assets, no cash flows from operating  activities,  recurring losses
since inception, and net stockholders'  deficiency.  Accordingly,  the preferred
stock dividend was accounted for by transferring $17, representing the par value
of the Class A preferred stock, to additional paid-in capital.

                                      F-18

<PAGE>

The  preferred  stock was  convertible  into common stock during the  thirty-day
period immediately  following the one-year  anniversary of the record date, July
16, 2002. Each share of preferred stock was convertible into common stock with a
total value of $500 at the conversion  rate of 90% of the average of the closing
bid and asking price for the common stock of the Company  during the twenty days
immediately  preceding the specific date the preferred  shareholder gives notice
to convert.  No  officers,  directors,  or holders of fewer than 500 shares,  or
fraction thereof, were eligible for the preferred stock dividend or conversion.

During the year ended  December 31,  2001,  there were  originally  13,169 total
preferred shares issued in connection therewith. Subsequent thereto, the Company
issued an additional  4,069 preferred shares that erroneously did not get issued
to  shareholders  of record on July 16, 2001, and canceled 186 preferred  shares
that were deemed ineligible to be issued by the Company because the holders were
either officers, directors or affiliates of the Company.

Total  preferred  shares  converted  to common  stock were 10,197 or  72,826,974
shares of common  stock.  (See Note 5 caption  "Common  Stock - Class A").  Each
share of preferred stock was convertible into 7,142 shares of common stock based
on the computed  conversion ratio of 90% of the Company's  average 20-day market
price  beginning 20 trading days prior to the conversion  date of July 16, 2002.
The  Company's  average  market price within this period was $0.08 and therefore
the conversion  ratio was $0.07.  All preferred  shareholders had thirty days to
convert to common stock and if not  converted,  the preferred  shares expired on
August 16, 2002. The holding period was deemed to begin on July 16, 2001.  Total
forfeited preferred shares were 6,855.

Preferred Stock - Class B

The company is authorized to issue 300,000 shares of voting preferred shares, at
a par value of $0.001 per share and as of December 31,  2002,  there were 70,000
shares outstanding that were issued as follows:

(1)  In December  2000,  the Company  issued  40,000  shares of voting,  Class B
     preferred stock in exchange for all of the  outstanding  shares of Verified
     Prescription  Safeguards,  Inc.  (Note 1) These  preferred  shares  are not
     convertible into shares of common stock. These shares accrue a 10% dividend
     payable annually on June 30 of each year. The cumulative amount of dividend
     was $8,000 at December 31, 2002.

(2)  In June 2001, the Company issued 30,000 shares of voting, Class B preferred
     stock in exchange  for  300,000  shares of Growth  Fund  Partnership,  Inc.
     ("Growth  Fund") common stock.  The Company agreed to pay a dividend on the
     Class B preferred stock on June 1, 2003 in cash equal to two percent of the
     value of the Class B Preferred Stock, or in restricted Class A common stock
     equal  to  three  percent  of the  value of the  Class B  Preferred  Stock.
     Additionally, in the event the Company uses the common stock of Growth Fund
     to anchor or establish a credit  facility in its favor,  the Company agrees
     to pay Growth Fund one-half of the cash dividend  referred to above, or one
     percent  of the  value of the Class B  Preferred  Stock at  closing  of the
     credit  facility,  notice of which  shall be given by the Company to Growth
     fund at least ten days prior thereto.  The  acquisition was recorded at $0.
     The  cumulative  amount of dividends was $4,750 at December 31, 2002.  (See
     Note 11 (d))

Preferred Stock - Class C

The Company is authorized to issue 100,000 shares of non-voting preferred shares
at a par value of $1.00 per share.  These preferred  shares are convertible into
Class A common stock at a conversion rate of 12 common shares for each preferred
share and accrue a 10% dividend  annually.  Management  canceled all outstanding
shares and related  dividends  payable in 1997 and there remain no shares issued
and outstanding as of December 31, 2002.

Common Stock - Class A (See Note 7)

The Company is authorized to issue  300,000,000  Class A common shares, at a par
value of $0.0001 per share. These shares have full voting rights.

                                      F-19

<PAGE>

In October 1997,  the Company issued 1,830  post-split  shares of Class A common
stock  for  cash  and  mining   rights.   These  shares  were  canceled  due  to
non-performance  of the terms of the agreements.  297 shares were used to settle
debt of the Company.  1,503 shares were  returned in June 1998.  At December 31,
1999, 25 remained outstanding.

In September 1997, the Company authorized a reverse stock split of 100-for-1 and
current  shares  outstanding  have been  retroactively  restated  to reflect the
split.

The  Company  issued  32 and 27 shares  as  dividends  in 1995 for 1993 and 1994
dividends accrued.

In May 1995,  the Company  issued in error 1,923 shares to a related  party that
were  returned  to  the  Company  and  canceled   during  1996.   There  was  no
consideration exchanged in the issuance or cancellation of these shares.

In June 2000,  the Company issued 166,628 shares of its series A common stock to
related parties at $0.14 per share as consideration for services  rendered.  The
shares were valued at the fair market value at the time of the issuance.

In July 2000, the Company elected to reverse-split its series A common shares on
a 1:50 basis, leaving 366,900 shares issued and outstanding after the split. All
previously  issued shares have been  retroactively  restated in the accompanying
statement of stockholders' deficiency to reflect this stock split.

In August  2000,  the Company  issued  1,350,000  post-split  shares of Series A
common stock for services  rendered.  The shares were valued at $0.14 per share,
which was the fair market value of the shares at the date of the issuance.

On August 7, 2000, the Company issued  6,000,000  shares of Class A common stock
(par  value  $0.001) to the  former  President  of the  Company  for  consulting
services  rendered,  valued at the fair market  value on the date of issuance of
$0.14 per share. The shares were exempt from  registration  pursuant to Sections
4(2) or 3(b) under the Securities Act. No underwriting or other commissions were
paid in connection with the issuance of these shares.

In August 2000, the Company  reacquired  6,000,000 shares of common stock from a
director in exchange for a promissory note for $120,000 payable to the director.
The promissory note for $120,000 is included in notes  payable-related party and
is classified as a current liability.  The 6,000,000 (120,000 post-split) shares
were subsequently canceled.

In October 2000,  the Company  elected to cancel  100,000 shares of its Series A
common stock.

In November  2000,  the Company  issued  90,000  shares of its common  stock for
$22,500 in cash.

In December of 2000,  the Company issued 535,000 shares in exchange for services
rendered. The shares were valued at $0.29-$0.375 per share based upon the market
value of the stock at the issuance dates.

On January 4, 2001,  the Company  issued 600,000 shares of common stock at $0.20
per share for services rendered.

On January 5, 2001,  the Company  issued  45,000 shares of common stock at $0.25
per share for cash.  The shares  were valued at the fair market rate on the date
of issuance.

On February 23, 2001,  the Company  issued 2,500 shares of common stock at $0.20
per share for cash.  The shares were valued at the fair market value on the date
of issuance.

On March 6, 2001, the Company issued 200,000 shares of common stock for services
rendered $0.28 per share. The shares were valued at the fair market value on the
date of issuance.

                                      F-20

<PAGE>

On March 23,  2001,  the  Company  issued  200,000  shares  of common  stock for
services  rendered at $0.06 per share. The shares were valued at the fair market
value on the date of issuance.

On March 28, 2001, the Company canceled 100,000 shares of common stock.

On April 2, 2001, the Company canceled 100,000 shares of common stock previously
issued for services rendered.

On April 5, 2001,  the Company issued 50,000 shares of common stock at $0.05 per
share for services rendered.  The shares were valued at the fair market value on
the date of issuance.

On April 10, 2001,  the Company  issued  350,000 shares of common stock at $0.10
per share for services rendered. The shares were valued at the fair market value
on the date of issuance.

On April 30, 2001,  the Company  issued  100,000 shares of common stock at $0.05
per share for services rendered. The shares were valued at the fair market value
on the date of issuance.

On May 9, 2001,  the Company issued  7,200,000  shares of common stock at$ 0 for
100% acquisition of ECTR M&A, Inc., a newly formed  subsidiary with no assets or
liabilities.  These shares were  canceled in November  2001 and the Company does
not currently hold any interest in ETCR.

On May 11, 2001,  the Company issued 400,000 shares of common stock at $0.04 per
share for services rendered.  The shares were valued at the fair market value on
the date of issuance.

On May 15, 2001,  the Company issued 600,000 shares of common stock at $0.11 per
share for services rendered.  The shares were valued at the fair market value on
the date of issuance.

On May 21, 2001,  the Company issued 400,000 shares of common stock at $0.09 per
share for services rendered.  The shares were valued at the fair market value on
the date of issuance.

On May 31, 2001,  the Company issued 550,000 shares of common stock at $0.16 per
share for services rendered.  The shares were valued at the fair market value on
the date of issuance.

On June 5, 2001,  the Company issued 200,000 shares of common stock at $0.17 per
share for services rendered.  The shares were valued at the fair market value on
the date of issuance.

On June 18, 2001, the Company issued 500,000 shares of common stock at $0.16 per
share for services rendered.  The shares were valued at the fair market value on
the date of issuance.

On June 20, 2001, the Company issued  2,150,000  shares of common stock at $0.15
per share for  services  rendered,  of which  500,000  shares were issued to the
current  President  of the  Company.  The shares  were valued at the fair market
value on the date of issuance.

On July 12, 2001,  the Company issued 10,000 shares of common stock at $.001 per
share for cash of $1,000.

On July 12, 2001, the Company issued  4,379,500  shares of common stock at $0.24
per share for services  rendered,  of which 3,829,500  shares were issued to the
former President of the Company. The shares were valued at the fair market value
on the date of issuance.

                                      F-21

<PAGE>

On July 24, 2001, the Company issued  6,450,000  shares of common stock at $0.20
per share for  services  rendered,  of which  2,950,000  shares  were  issued to
related parties as follows:  (1,450,000 shares to the former President;  500,000
shares to the  current  President;  and  1,000,000  shares to a director  of the
Company).  The  shares  were  valued  at the  fair  market  value on the date of
issuance.

On July 24, 2001, the Company issued 800,000 shares of common stock at $0.20 per
share for services rendered.  The shares were valued at the fair market value on
the date of issuance.

On August 15, 2001,  the Company  issued 700,000 shares of common stock at $0.14
per share for services rendered. The shares were valued at the fair market value
on the date of issuance.

In August 2001,  5,927,713 additional shares were issued to an entity controlled
by the former  President  of the  Company  representing  post-split  shares from
August 2000 that never got issued as collateral for loans.

On August 31, 2001,  the Company  issued 150,000 shares of common stock at $0.09
per share for services rendered. The shares were valued at the fair market value
on the date of issuance.

On September 4, 2001, the Company issued 500,000 shares of common stock at $0.08
per share for services rendered. The shares were valued at the fair market value
on the date of issuance.

On September 6, 2001, the Company issued 500,000 shares of common stock at $0.06
per share for services rendered. The shares were valued at the fair market value
on the date of issuance.

On September  24, 2001,  the Company  issued  500,000  shares of common stock at
$0.03 per share for services rendered. The shares were valued at the fair market
value on the date of issuance.

October 17, 2001, the Company issued  2,500,000  shares of common stock at $0.03
per share for an insurance  guarantee on a policy. The shares were valued at the
fair market value on the date of issuance.

On October 19,  2001,  the Company  issued  4,930,000  shares of common stock at
$0.07 per share for services  rendered  (130,000  shares) and as collateral on a
related party loan (4,800,000 shares). The shares were valued at the fair market
value on the date of issuance.

On October 25, 2001,  the Company issued 750,000 shares of common stock at $0.07
per share for services rendered. The shares were valued at the fair market value
on the date of issuance.

On November 6, 2001,  the Company  issued  2,000,000  shares of common  stock at
$0.05 per share for  collateral  on loans.  The shares  were  valued at the fair
market value on the date of issuance.

On November 12, 2001,  the Company  issued  3,200,000  shares of common stock at
$0.03  per share for  services  rendered  (1,500,000  shares),  collateral  on a
related  party loan  (1,200,000  shares),  and an insurance  guarantee  (500,000
shares).  The  shares  were  valued  at the  fair  market  value  on the date of
issuance.

On November 19, 2001, the Company issued 200,000 shares of common stock at $0.06
per share for services rendered. The shares were valued at the fair market value
on the date of issuance.

On December 12, 2001, the Company issued 600,000 shares of common stock at $0.04
per share for services rendered. The shares were valued at the fair market value
on the date of issuance.

                                      F-22

<PAGE>

On December 19, 2001, the Company issued 200,000 shares of common stock at $0.04
per share for services rendered. The shares were valued at the fair market value
on the date of issuance.

On December 31, 2001, the Company issued 500,000 shares of common stock at $0.05
per share for services rendered. The shares were valued at the fair market value
on the date of issuance.

On January 2, 2002,  the Company  issued 500,000 shares of common stock at $0.04
per  share  for  consulting   services  rendered  in  connection  with  its  VPS
subsidiary.  The  shares  were  valued at the fair  market  value on the date of
issuance.

On February 24, 2002, the Company issued 200,000 shares of common stock at $0.03
per share for financial consulting services rendered.  The shares were valued at
the fair market value on the date of issuance.

On June 21, 2002, the Company issued  14,000,000 shares of common stock at $0.08
per  share as  collateral  for past due  loans,  7,500,000  of which  were for a
related  party.  The shares were valued at the fair market  value on the date of
issuance.

On June 27, 2002, the Company canceled 2,000,000 shares of common stock that had
been  previously  issued on  November 6, 2001.  The shares were  canceled at the
original valuation amount.

On August 2, 2002, the Company issued  7,300,000 shares of common stock at $0.03
per share for  services  rendered as follows:  1,500,000  issued to an unrelated
party for international  consulting  services rendered;  4,000,000 issued to the
current President and director for consulting  services rendered;  and 1,800,000
to the current Chairman and director of the Company for services  rendered.  The
shares were valued at the fair market value on the date of issuance.

During September 2002, the Company issued  72,826,974 shares of common stock for
the  conversion  of  10,197  shares  of  preferred  stock.  (See  Note 5 caption
"Preferred Stock - Class A")

On November 4, 2002,  the Company  issued  2,500,000  shares of common  stock at
$0.02 per share as collateral for loans  outstanding.  The shares were valued at
the fair market value on the date of issuance.

Common Stock - Class B

The Company is authorized  to issue 100,000  shares of its Class B common shares
at a par value of $0.01 per share.  The Class B shares have the right to elect a
majority of the Board of  Directors of the  Company.  There were 100,000  shares
issued and  outstanding  as of December 31, 2002,  which are held by the current
Chairman and director of the Company.

NOTE 6 - CONTINGENCIES AND COMMITMENTS

(a)  Federal tax lien.  The Company  previously  owed  approximately  $69,000 in
federal taxes,  including accrued  penalties and interest.  On April 12, 2002, a
"Certificate  of  Release  of  Federal  Tax  Lien"  was  received  from the U.S.
Department of the Treasury. The financial statements for the year ended December
31,  2002,  include the  reversal of the  accrual as a non-cash  item,  which is
included in general and administrative expenses on the statement of operations.

(b) Cancellation of stock.

(1)  On December  31,  1997,  the Company  canceled 168 Class A shares of common
     stock.  These shares had been  authorized for issue during prior years.  No
     details  were  available  as to  whom  the  shares  should  be  issued  to.
     Management canceled these shares,  which resulted in contributed capital of
     $8,394.
(2)  On  December  31,  1997,  the  Company  canceled  98,000  shares of Class A
     preferred  stock,  272,200  shares of Class B preferred  stock,  and 10,200
     shares of Class C  preferred  stock.  No  record of owners of these  shares
     could be determined.  The results of the  cancellation  of these shares was
     contributed capital of $380,400. All dividends associated with the canceled
     shares were also canceled. The Company may be liable to the owners of these
     shares, should the owners of these shares be identified.

                                      F-23

<PAGE>

(3)  During the year ended  December 31, 2002,  the Company  canceled  50,000 of
     Class A preferred stock and related dividends payable of $35,000, which was
     held by an affiliate of the Company.

(c) Claims from creditors.

(1)  At December 31, 1998, a creditor  made a claim for  approximately  $20,000.
     Management  contends the amount is not owed due to  non-performance  by the
     lessor. The amount has been due since February 1994.

(2)  At December 31, 1998, a creditor  made a claim for  approximately  $19,000.
     Management  contends the amount is not owed due to  non-performance  by the
     creditor. The amount has been due since June 1996.

(d)  Notes  payable -  Substantially  all of the  Company's  notes  payable  are
currently in default status.

(e) Resignation of Principal  Officer and Director - During the third quarter of
2002,  a principal  officer and  director of the Company  resigned  following an
indictment  for  securities  fraud and related  charges.  The former officer and
director  subsequently  pled guilty to one of the charges.  No charges or claims
were or have since been made  against  the  Company  or its other  officers  and
directors.  The Company is of the opinion that this  incident  will not have any
material adverse impact on the Company. (See Note 11 (c))

(f) Class B  preferred  stock  dividend - Pursuant to an  agreement  with Growth
Fund,  the Company  agreed to pay a dividend  on the Class B preferred  stock on
June 1, 2003 in cash equal to two  percent of the value of the Class B Preferred
Stock, or in restricted Class A common stock equal to three percent of the value
of the Class B Preferred Stock. (See Note 11 (d))

(g) Purchase  commitment  cancellation.  On July 19, 2001,  the Company signed a
purchase order to purchase 1,000  MEDTURFTM  appliances  over the next 24 months
from MB Software  Corporation  at $450 per unit.  The Company  paid $7,250 to MB
Software,  Inc.  pursuant to the purchase order and the letter of intent between
Medeway,  Inc.  ("Medeway")  and the Company (also dated July 19,  2001),  which
represented  one-half  of  the  total  amount  payable  for  10  appliances  and
programming work to be performed, with the balance of $7,250 to be paid upon the
delivery of said  appliances.  The  MEDTURFTM  appliance is a  combination  of a
computer  appliance  and point of sale  device,  and is designed  for  physician
practices,  pharmacies,  and home use. The MEDTURFTM appliance has a proprietary
'touchscreen'  application  installed.  Medeway is the owner of the intellectual
property,  which is being  used by over 4,500  physicians  under  contract  with
Medeway and/or its affiliates. The Company planned to install the patent-pending
system of VPS, the  Company's  wholly-owned  subsidiary,  which is  developing a
system for electronically  transmitting  prescriptions  using the Internet.  The
purchase order and letter of intent have subsequently been canceled and there is
no future purchase commitment due.

(h) Consulting agreements.

(1)  On August 1, 2001,  the Company  entered into an agreement  for  consulting
     services  with HEB, LLC, a Nevada  limited  liability  company,  based on a
     one-year  term and a fee of $100,000,  payable upon  services  rendered and
     presentation of an invoice. The consulting services included organizing and
     assisting the Company,  including any subsidiaries or affiliates,  in areas
     including,  but not limited to,  identifying and  implementing  appropriate
     incentive  participation programs for prescribing  physicians,  pharmacies,
     pharmaceutical  companies,  HMO's and insurers. As of December 31, 2002, no
     amount has been provided for in these  financial  statements as no services
     have been rendered.

                                      F-24

<PAGE>

(2)  During August 2001,  the Company  entered into an agreement for  consulting
     services and issued  250,000  shares of common stock as payment of services
     rendered.  The balance due under the  agreement  is $70,000,  however,  the
     consultant  has not  performed  any  work  and  the  Company  contends  the
     consultant is in breach of contract due to non-performance.  No accrual has
     been provided for in these financial statements.

NOTE 7 - RELATED PARTY TRANSACTIONS

Arkansas American Mining and Exploration, Inc. ("AAME") was owned and controlled
by the founders of the Company.  In 1988, AAME exchanged mining claims,  milling
facility and a core  drilling  rig, for the  Company's  common  stock.  In 1994,
Arkansas  Mineral  Partners  Ltd.,  a  partnership  owed by James Arch, a former
President of the Company,  loaned the Company  $152,000 secured by the Company's
land, buildings, and equipment.  This note, plus interest, was due in the fourth
quarter of 1996.  The Company  defaulted on the note. The property and equipment
were claimed by the note holder and written off by the Company.  All obligations
of the Company have been fully satisfied.

During 1995, the Company paid $25,000 for services  rendered by Stephen Guarino,
former Director,  President and CEO of the Company,  and issued 2,500,000 shares
of Class A common stock for additional services valued at $26,225.

During  1997,  the Company  issued  1,029,500  shares of Class A common stock to
James Arch, a former  President and current director of the Company for services
valued at $102,000. An agreement was made with this former officer for continued
consulting services which agreement is no longer in effect.

On December 23, 1998,  the Company  borrowed  $61,000 from  Kentrust,  Inc.,  an
entity whose CEO is Frank G. Dickey, Jr., a former director and President of the
Company. The note carried a 10% interest rate, and was due on December 23, 1999.
In 1999,  the Company  borrowed an  additional  $104,500  from  Kentrust at 10%.
During 2000, the entire $165,500 became overdue and began accruing interest at a
rate of 12% per  annum.  A $16,550  penalty  for late  payment  was also  levied
against the Company. The note does not have any new repayment date. During 2001,
Kentrust loaned the Company an additional $41,400, which is accruing interest at
10% per annum,  with repayment due on or before December 31, 2001. The principal
balance  on this  note is past due and  outstanding  at  December  31,  2002 was
$206,900.  Accrued interest on these notes as of December 31, 2002, was $82,248.
Included in accrued  expenses at December  31, 2000,  was $570,000  representing
amounts due to certain  officers  pursuant to various  employment  contracts  as
follows: the former President and majority  stockholder,  Frank Dickey, Jr., for
his services  provided during the period  November 1, 1998 through  December 31,
2000 as  President  ($300,000)  and during the  period  January 1, 1999  through
December 31, 2000 as Chief  Financial  Officer  ($120,000);  and Laura G. White,
Vice  President  for her  services  provided  during the period  January 1, 2000
through  December 31, 2000 ($90,000) for Vice President and Investor  Relations,
and during the period  January 1, 1999 to December  31, 1999 for her services as
Secretary  ($60,000).  The  employment  contracts  were  scheduled  to expire in
December 2002. During 2001,  management  terminated the contracts due to lack of
working  capital and converted  the payroll  liabilities  to additional  paid-in
capital due to the  Company's  lack of operating  cash flow.  Additionally,  the
Company  converted  accrued expenses of $173,837 to additional  paid-in capital,
which  represented  the  balance of unpaid  expenses  incurred  for the lease of
office space,  furniture and equipment,  and vehicle at $7,637 per month for the
period of January 1, 2000 to December 31, 2001, from its former  president.  The
Company  continues  to charge  $7,637 per month for these  incidental  expenses,
which are reflected as a charge to the statement of operations with an offset to
additional  paid-in  capital for any  amounts not paid during the current  year.
During 2002, the Company  charged net accrued  expenses of $79,638 to additional
paid-in capital.

As more fully described in Note 5 - Capital Stock,  several equity  transactions
occurred between the Company and related parties.

                                      F-25

<PAGE>

NOTE 8 - INCOME TAXES

There is no current or deferred tax expense due to the  Company's  loss position
and the benefits of timing  differences have not been previously  recorded.  The
deferred tax  consequences  of  temporary  differences  in  reporting  items for
financial  statement  and income tax purposes are  recognized,  as  appropriate.
Realization  of the future tax  benefits  related to the  deferred tax assets is
dependent on many factors,  including the Company's  ability to generate taxable
income  within  the net  operating  loss  carryforward  period.  Management  has
considered  these  factors  in  reaching  its  conclusion  as to  the  valuation
allowance for  financial  reporting  purposes and has recorded a 100%  valuation
allowance against the deferred tax asset.

A reconciliation  of expected federal income tax expense  (benefit) based on the
U.S. Corporate income tax rate of 34% to actual expense (benefit) is as follows:

                                         2002        2001         Inception
                                      ----------- ------------- -------------
Expected federal income tax benefit   $  585,000  $  1,539,000  $  7,580,000
Increase in valuation allowance         (585,000)   (1,539,000)   (7,580,000)
                                      ----------- ------------- -------------
Income tax expense (benefit)                   -             -             -
                                      =========== ============= =============

At December 31, 2002, non-current deferred tax asset of approximately $7,580,000
results from the deferred tax benefit of net  operating  loss  carryforwards  of
approximately $22,000,000, which have a 100% valuation allowance, as the ability
of the Company to generate sufficient taxable income in the future is uncertain.
There are no other significant deferred tax assets or liabilities.

As  of  December  31,  2002,  the  Company  has  available  net  operating  loss
carryforwards  for federal  income tax  purposes of  approximately  $22,000,000,
which  expire  through  2022.  Pursuant  to the Tax Reform  Act of 1986,  annual
utilization of the Company's net operating loss  carryforwards may be limited if
a cumulative  change in ownership of more than 50% is deemed to occur within any
three-year period.


NOTE 9 - DISCONTINUED OPERATIONS

In  June  1995,  the  Company  suspended  its  mining  research  activities  and
development  work in  Arkansas.  The  following  is a  summary  of the loss from
discontinued  operations  resulting from the suspended  operations of its mining
operations located in Arkansas.  The consolidated financial statements have been
retroactively  restated to reflect this event.  There was no activity since that
date.


                                      F-26

<PAGE>

Loss  from  discontinued  operations  for  the  period  from  inception  of  the
development stage on January 1, 1994 through December 31, 2002 is as follows:

SALES                                                  $                -
COST OF SALES                                                      33,817
                                                       -------------------
GROSS MARGIN                                                      (33,817)
                                                       -------------------

OPERATING EXPENSES                                              1,399,405
                                                       -------------------

LOSS FROM OPERATIONS                                           (1,433,222)
                                                       -------------------

OTHER INCOME (EXPENSE)
  Other income                                                          41
  Interest expense                                                 (40,953)
  Other expense                                                    (30,185)
  Gain on sale of land                                              30,840
  Loss on disposal of assets                                       (75,667)
  Loss on partnership interests                                 (2,288,841)
                                                       -------------------
     Total Other Income (Expense)                               (2,404,765)
                                                       -------------------

LOSS BEFORE INCOME TAX EXPENSE                                  (3,837,987)
                                                       -------------------

INCOME TAX EXPENSE                                                       -


LOSS FROM DISCONTINUED OPERATIONS                      $        (3,837,987)
                                                       ===================

DIVIDEND ON PREFERRED STOCK                            $           (32,517)
                                                       ===================

NOTE 10 - PRIOR PERIOD ADJUSTMENT

Deficit accumulated during the development stage at the end of 2000 and 2001 has
been adjusted to correct an  understatement  of  liabilities  of $67,310 for the
year ended December 31, 2000 and an  overstatement of liabilities of $21,307 for
the year ended December 31, 2001.  The cumulative net effect of the  restatement
was $46,003  representing  an increase in net loss and  liabilities  for 2000 by
$67,310  and a decrease  in net loss and  liabilities  for 2001 by  $21,307  and
$10,997, respectively.  Beginning accumulated deficit for 2002 has been adjusted
for the effects of the restatements on prior years.  There was no loss per share
or income tax effect.

NOTE 11 - SUBSEQUENT EVENTS

(a) On July 30, 2003, the  Commonwealth  of Kentucky,  awarded a contract to VPS
Holding,  LLC,  ("VPSH") a Kentucky limited  liability  company  incorporated on
August 29, 2002,  by the sole member and  manager,  James  Millard,  the current
President  and CEO of the Company.  The contract  awarded  allows VPSH to lead a
pilot project, in Perry and Harlan counties, at medical,  clinical, and pharmacy
facilities.  The project will be conducted  by a consortium  of companies  under
license to VPSH,  that  includes  Envoii,  Inc.,  a San  Francisco,  California,
software developer,  and Computer Information Systems, Inc., a London, Kentucky,
consulting firm and solutions provider for information technology, both of which
are  privately-held  corporations.  In order to  perform  under  the  terms  and
conditions of this state contract, VPSH, will license the technologies from each
corporation for a nominal fee. Any benefits or revenues  derived from the use of
technology  acquired by VPSH, shall pass directly through to the Company,  under
the terms of a Joint Venture Agreement.

                                      F-27

<PAGE>

The license to use and develop technology,  intellectual  property, and know-how
related to prescription drug monitoring systems and all other matters pertaining
to the healthcare  industry was obtained  pursuant to the terms of an Assignment
and License dated April 23, 2003, from the Company.  This Assignment and License
was granted with the understanding  that VPSH would enter into an agreement with
Envoii  Healthcare,  LLC, a Nevada limited liability  company,  to undertake the
funding  and   development  of  the  Verified   Prescription   Safeguards   (TM)
prescription  drug  monitoring  system and in  consideration  of  payments to be
received by the Company.  Envoii  Healthcare,  LLC, owns the exclusive rights in
the healthcare channel of trade rights to the EnvoiiTM system.

A Joint  Venture  Agreement  was  executed by VPSH and Envoii  Healthcare,  LLC,
wherein Envoii  Healthcare,  LLC, in conjunction  with Envoii,  Inc.,  agreed to
undertake the development of the real-time  prescription  drug monitoring system
and  raise  the  necessary  funding  for the  project.  This  Agreement  and the
Assignment  and  License  were  under  negotiation  prior to  submission  of the
response to the  Kentucky  Request for  Proposal on April 9, 2003,  but executed
thereafter, both of which have subsequently been provided and fully disclosed to
the Commonwealth of Kentucky.

Under the terms of the Joint Venture Agreement, contract revenues, if any, other
than  the  grant  for  the  pilot  project   resulting  from  the   development,
implementation,  and/or  sale of  real-time  controlled  substance  prescription
monitoring technology to any third party including governmental entities, are to
be distributed to Envoii  Healthcare,  LLC (75%),  VPSH (25%),  with the Company
receiving  100% of the benefits and revenues  distributed  to VPSH. The contract
with the  Commonwealth  of Kentucky  governs the  division of proceeds  from the
pilot project grant funding.

(b) On July 31, 2003, the Company  refinanced its outstanding  notes payable and
accrued interest due to FV Investments, LLC, a related party, for $300,000, with
interest at 12% per annum,  commencing  August 1, 2003,  due and payable on July
31, 2005. Upon default, the interest rate increases to 17% per annum until paid.
The note becomes due on demand in the event of a bankruptcy proceeding involving
the Company.  The note is secured by sufficient  shares of the Company's Class A
common stock as well as interests in other related entities.

(c) The former officer and director pled guilty to one of the  securities  fraud
and related  charges.  No charges or claims were or have since been made against
the Company or its other officers and  directors.  The Company is of the opinion
that this  incident  will not have any material  adverse  impact on the Company.
(See Note 6 (e))

(d) On August 15, 2003, a demand was made by Growth Fund  Partnership,  Inc. for
the dividend payment,  which the Company did not pay. As of the date of issuance
of these financial statements, no other claims for payment have been made.

                                      F-28

<PAGE>



ITEM 9: Directors, Executive Officers, Promoters and Control Persons; Compliance
        with Section 16(a) of the Exchange Act


The following table sets forth certain  information  regarding the Directors and
Executive Officers of the Company:

                                                          Year First
Name                       Age       Position              Elected
----                       ---       --------              -------
James Arch                 79        Chairman                1996

James K. Millard           54        President & CEO         2000


Executive Officers are elected on an annual basis and serve at the discretion of
the Board of Directors  unless  otherwise  provided by contract.  Directors  are
elected on an annual basis.

James K. Millard,  Vice  President,  has been with the Company  since 2000.  Mr.
Millard is also  President  of  Verified  Prescription  Safeguards,  Inc. He was
formerly with e-Corp, Inc., and WKYT-TV, both located in Lexington, Kentucky.

James Arch has been a Director  of the  Company  since 1996 when the Company was
known as Equity AU, Inc.

Section 16(a) Beneficial Ownership Reporting Compliance

James Kemper Millard failed to file a Form 3 despite being the president,  chief
executive  and  financial  officer,  and director of the  Company.  The required
filings inadvertently were not filed, but were filed during 2003.

Item 10: Executive Compensation

Remuneration paid to Executives.

Certain officers have had employment contracts,  however, none have received any
compensation.  The following  table and the  accompanying  notes provide summary
information for each of the last three fiscal years concerning cash and non-cash
compensation paid or accrued by the Company's current and past officers over the
past three years. Until the company has funds or revenue,  the officers will not
draw any compensation nor receive any other benefits.  The Company does not have
a current  employment  agreement with its President and Chief Executive Officer.
The  following  are the annual  salaries  of the  officers.  The company has not
adopted any  insurance,  retirement,  pension,  profit  sharing or other similar
program.

The company may offer stock bonuses,  stock  options,  profit sharing or pension
plans to key employees or executive  officers of the Company in such amounts and
upon such  conditions  as the Board of  Directors  may, in its sole  discretion,
determine.





                [Balance of this page intentionally left blank.]





                                       39
<PAGE>


<TABLE>
<CAPTION>
                       SUMMARY COMPENSATION TABLE
                                                Annual Compensation                              Long Term Compensation
                                                                                            Awards                   Payouts
                                                                     Other
                                                                     Annual                    Securities
                                                                  Compensation    Restricted   Underlying   LTIP      All Other
                                                          Bonus       ($)       Stock Award(s)   Options   payouts Compensation
Name and Principal Position          Year    Salary ($)      ($)                      ($)(3)       SARs(#)     ($)       ($)
------------------------------------ ----- ------------- -------- ------------- -------------- ----------- ------- ---------------
<S>                                  <C>    <C>           <C>       <C>           <C>            <C>        <C>       <C>
Frank G. Dickey, Jr. (4)             2002      -            -          -              -             -         -         -
 Former President                    2001      -            -          -          $1,209,080        -         -         -
                                     2000   $150,000        -          -            $840,000        -         -         -
                                                                                      -
Frank G. Dickey, Jr. (4)             2002      -            -          -              -             -         -         -
 Former President, Chief Executive   2001      -            -          -              -             -         -         -
 and Financial Officer               2000   $60,000         -          -              -             -         -         -

  James Millard (1)                  2002      -            -          -           $120,000         -         -         -
President & CEO                      2001      -            -          -           $175,000         -         -         -
                                     2000      -            -          -              -             -         -         -

Laura White (2)                      2002      -            -          -              -             -         -         -
Former Secretary/V.P. Investor       2001      -            -          -              -             -         -         -
Relations                            2000   $90,000         -          -              -             -         -         -

James Arch                           2002      -            -          -           $54,000          -         -         -
 Chairman of the Board               2001      -            -          -           $200,000         -         -         -
                                     2000      -            -          -              -             -         -         -
</TABLE>

(1)  Only been with the company since 2000
(2)  Only been with the company since 1999; resigned 2002
(3)  Represents the amount of restricted  common stock issued at the fair market
     value of the shares on the date of issuance.
(4)  Resigned 2002.

Compensation of Directors

No remuneration was paid to the Company's directors during its fiscal year ended
December 31, 2002.

Board of Directors Committees

The  board  of  directors  has not  yet  established  an  audit  committee  or a
compensation  committee.  An  audit  committee  typically  reviews,  acts on and
reports  to the  board  of  directors  with  respect  to  various  auditing  and
accounting matters, including the recommendations and performance of independent
auditors,  the scope of the annual  audits,  fees to be paid to the  independent
auditors, and internal accounting and financial control policies and procedures.
Certain stock exchanges  currently  require  companies to adopt a formal written
charter that establishes an audit committee that specifies the scope of an audit
committee's  responsibilities  and the  means  by  which it  carries  out  those
responsibilities.  In order to be listed on any of these  exchanges,  we will be
required to establish an audit committee.

The board of directors has not yet established a compensation committee.

Item 11. Security Ownership of Certain Beneficial Owners and Management

The following  table sets forth  information as of December 31, 2002,  regarding
the  beneficial  ownership  of Class A common  stock of the Company by: (1) each
shareholder  known  by the  Company  to  beneficially  own  more  than 5% of the
outstanding  shares of Class A Common  Stock;  (2) each director of the Company;
(3) each named executive  officer;  and (4) the directors and executive officers
of the Company as a group.  The persons  named in the table have sole voting and
investment  power with  respect to all  shares of capital  stock  owned by them,
unless otherwise noted.



                                       40
<PAGE>


Name of Beneficial                  Amount and Nature          Percent
Owner of Group (1)               of Beneficial Ownership      of Class
-------------------             ------------------------     ---------
James K. Millard (1)                   5,000,000                3.5%

James Arch (1)                         2,800,000                1.9%

FV Investments, Inc.
P.O. Box 2164
Lexington, KY 40588                   15,873,500               11.0%

Daunt Enterprises, Inc.
Julian Rossini
310 Avendia Milano
Sarasota, FL 34242                     7,891,910                5.5%

All Directors and Executive
Officers as a Group                    7,800,000                5.4%
(Two in number)

(1)  The address for each person or entity listed above is 325 West Main Street,
     Suite 240, Lexington, Kentucky 40508.

As of December 31, 2002,  there were  143,893,594  shares of common stock issued
and outstanding.

Item 12. Certain Relationships and Related Transactions

On December 23, 1998,  the Company  borrowed  $61,000 from  Kentrust,  Inc.,  an
entity whose CEO is Frank G. Dickey, Jr., a former director and President of the
Company. The note carried a 10% interest rate, and was due on December 23, 1999.
In 1999,  the Company  borrowed an  additional  $104,500  from  Kentrust at 10%.
During 2000, the entire $165,500 became overdue and began accruing interest at a
rate of 12% per  annum.  A $16,550  penalty  for late  payment  was also  levied
against the Company. The note does not have any new repayment date. During 2001,
Kentrust loaned the Company an additional $41,400, which is accruing interest at
10% per annum, which is past due. Accrued interest on these notes as of December
31, 2002, was $82,248.

On August 2, 2002, the Company issued 5,900,000 shares of common stock valued at
$0.03  per share for  services  rendered  as  follows:  4,000,000  issued to the
current President and director for consulting  services rendered;  and 1,800,000
to the current Chairman and director of the Company for services  rendered.  The
shares were valued at the fair market value on the date of issuance.

Item 13. Exhibits and Reports on Form 8-K

1. Reports on Form 8-K - None

2. Exhibits

Exhibit 31 - Section 302 Cerification of the Sarbanes-Oxley Act of 2002

Exhibit 32 - Section 906 Certification of the Sarbanes-Oxley Act of 2002


Item 14. Controls and Procedures

The  President,  who is also  the  chief  executive  officer  and the  principal
financial officer of the Registrant, has concluded based on his evaluation as of
a date within 90 days prior to the date of the filing of this  Report,  that the
Registrant's  disclosure  controls and  procedures  are effective to ensure that
information  required to be disclosed by the  Registrant in the reports filed or
submitted  by it under the  Securities  Act of 1934,  as amended,  is  recorded,
processed,  summarized  and reported  within the time  periods  specified in the
Securities and Exchange  Commission's  rules and forms, and include controls and
procedures  designed to ensure that information  required to be disclosed by the
Registrant in such reports is accumulated and  communicated to the  Registrant's
management,  including the president,  as appropriate to allow timely  decisions
regarding required disclosure.

There were no significant changes in the Company's internal controls or in other
factors that could significantly affect these controls subsequent to the date of
such evaluation.


                                       41
<PAGE>


                                   SIGNATURES

In  accordance  with  Section 13 and 15(d) of the Exchange  Act, the  Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                      EQUITY TECHNOLOGIES & RESOURCES, INC.
                          ----------------------------
                                  (Registrant)

Date: September 29, 2003

                        /s/  James Kemper Millard
                        ------------------------------------------------------
                        James Kemper Millard, CEO, CFO, President and Director

                        ------------------------------------------------------
                        James Arch, Director and Chairman

Pursuant to the requirements of the Exchange Act, this report has been signed by
the following persons in the capacities and on the dates indicated.

Signature                           Title                          Date

/s/  James Kemper Millard
-------------------------
James Kemper Millard        CEO, CFO, President and Director  September 29, 2003

/s/ James Arch
-------------------------
James Arch                  Director and Chairman             September 29, 2003


                                       42