--------------------------------------------------------------------------------

                     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, 2001

         [ ] 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.)

   1050 Chinoe Road, Suite 304, Lexington, Kentucky            40502
   ------------------------------------------------          ----------
      (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 $.001 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 [X] No [ ]

         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. [ ]

<PAGE>

Note 1:  Form 10K

         This form 10K reflects the audited financial statements of Equity
Technologies & Resources, Inc. for the year ended December 31, 2001 performed by
Clancy & Co. 1300 E. Missouri Ave., Suite B200, Phoenix, Arizona 85014.

         The issuer's revenues for the year ended December 31, 2001 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, 2001 was $1,915,498.

         The number of shares outstanding of the issuer's common equity, as of
December 31, 2001 was 42,816,620 shares.

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

<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 1050 Chinoe Road, Suite 304, Lexington, Kentucky
40502 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 of 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 of 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.

                                        2
<PAGE>

         In November 1998 Frank G. Dickey, Jr. 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.

Item 2.  Properties.

         The Company's executive offices are located at 1050 Chinoe Road, Suite
304, Lexington, Kentucky 40502. 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.

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

         On July 21, 2000  the  Company   held  a special meeting  of
Shareholders and Directors. The record owners of more than eighty (80%) percent
of the outstanding shares of common stock approved a one to fifty (1:50) reverse
split of its outstanding Class A Common Stock. The reverse split was effected on
August 4, 2000.

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.OB".   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, 2001 and 2000 are as follows:

                                                         High           Low
Fiscal 2000:
Quarter Ended March 31, 2000                              (1)          (1)
Quarter Ended June 30, 2000                               (1)          (1)
Quarter Ended September 30, 2000                          (1)          (1)
Quarter Ended December 31, 2000                         $1.25        $0.19

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

(1) no available data

         As of March 18, 2002,  there were  approximately  800 record holders of
the common stock representing 43,516,620 shares outstanding. The Company has not
paid any cash dividends on its Common Stock, and it currently  intends to retain
any future earnings to fund the development and growth of its business.

         The  Company  has paid no  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 August 7, 2000 the Company issued 6,000,000 shares to the President
of the Company for services rendered. The shares were exempt from registration
pursuant to Sections 4(2) or 3(b) under the Securities Act.

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

         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.

                                        3
<PAGE>

RESULTS OF OPERATIONS

For the Year Ended December 31, 2001 compared to the Year Ended
December 31, 2000.

         During the year ended December 31, 2001 the Company had no operations.
General and administrative expenses were $4,474,923 for the year of 2001.
Expenses include the rental of office space, system development, and consulting
fees to keep the corporation current. The Company recorded a net loss of
$4,548,218 in 2001, compared to $3,213,113 in 2000. This increase was the result
of the number of shares of common stock issued for services rendered.

For the Year Ended December 31, 2001 compared to the Year Ended December 31,
2000. During the year ended December 31, 2001 the Company had no operations.
General and administrative expenses increased $1,306,449, or 29%, to $4,474,923
during fiscal 2001 from $3,168,474 during fiscal 2000.

LIQUIDITY AND CAPITAL RESOURCES

         At December 31, 2001, the Company had $612 in assets and total
stockholders deficit of $(1,501,591) compared with total assets of $4,712 and
total stockholders deficit of $(1,259,303) at December 31, 2000. The Company
borrowed $5,300 from the President and $51,000 from other sources for general
operating expenses. The President and others have been paying the expenses of
the Company until the company or its subsidiary can commence business. 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 Independent Auditor's Report for the year ending December 31, 2001
("Report") states that the uncertainty of certain conditions raise substantial
doubt about the ability of the company to continue as a going concern. With
regard to this issue, the "Report" cites past losses, lack of revenue and
working capital and whether the company will be able to raise sufficient funds
to achieve profitable status. It is the position of the Company that it will
generate resources sufficient to fund all costs associated with the development
of Verified Prescription Safeguards, Inc. electronic system. It is further
believed that a consistent revenue stream will be in place during calendar year
2002.

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.

         On July 27, 2001, Equity Technologies & Resources, Inc. (the "Company")
dismissed HJ & Associates,  L.L.C. as its independent  public  accountants.  The
dismissal was approved by the Board of Directors. HJ & Associates, L.L.C. issued
an unqualified audit opinion on the 2000 and 1999 year-end financial statements,
modified as to an  uncertainty  regarding the ability of the Company to continue
as a going concern.  The Company has engaged Clancy and Co., P.L.L.C. as its new
independent public accountants  effective as of the date of the dismissal of its
former accountants.

         During the two most recent  fiscal  years,  the Company has not had any
disagreements  on any matter of accounting  principles  or practices,  financial
statement  disclosure,  or  auditing  scope  or  procedure  with  either  of its
independent accountants.

                                        4
<PAGE>

ITEM 9:  Directors and Executive Officers of the Registrant

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

                                                                     Year First
Name                       Age       Position                         Elected
----                       ---       --------                         -------

Frank G. Dickey, Jr.       58        President/CFO, Director            1998

James K. Millard           53        Vice-President                     2000

Laura G. White             64        Vice-President,                    2000
                                      Ass't. Sec., Director

James Arch                 78        Director                           1996

         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.

         Frank G. Dickey, Jr., President/CFO and Director has been with the
Company since 1998. Mr. Dickey is also Chairman of the Board of Directors and
CEO of Verified Prescription Safeguards, Inc. He is an attorney with the firm of
Frank G. Dickey, Jr. and Associates, in Lexington, Kentucky.

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

         Laura G. White, Vice President, Assistant Secretary, and Director has
been with the Company since 1999. She is also Assistant Secretary and a Vice
President of Verified Prescription Safeguards, Inc. She was formerly employed as
Director of Media Relations with the Commonwealth of Kentucky, Transporation
Cabinet and the Kentucky Association of Realtors.

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

ITEM 10: Executive Compensation

         All officers have had employment contracts and have current employment
contracts, however, none have received any compensation. Until the company has
funds or revenue, the officers will not draw any compensation nor receive any
other benefits. 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 Direcotrs may, in its sole
discretion, determine.

                                        5
<PAGE>

                              Annual Compensation


Name and Principal
Position                      Year       Salary         Bonus        Other
------------------            ----       --------     ----------    -------

Frank G. Dickey, Jr.          1999         -0-           -0-          -0-
President                     2000         -0-           -0-          -0-
                              2001         -0-           -0-          -0-
                              2002         -0-           -0-          -0-

Frank G. Dickey, Jr.          2000         -0-           -0-          -0-
Chief Financial Officer       2001         -0-           -0-          -0-
                              2002         -0-           -0-          -0-

James K. Millard              2000         -0-           -0-          -0-
Vice-President                2001         -0-           -0-          -0-
                              2002         -0-           -0-          -0-

Laura G. White                1999         -0-           -0-          -0-
Asst't. Sec/V.P.              2000         -0-           -0-          -0-
                              2001         -0-           -0-          -0-
                              2002         -0-           -0-          -0-

ITEM 11: Security Ownership of Certain Beneficial Owners and Management

         The following table sets forth information as of December 31, 2001,
regarding the beneficial ownership of capital stock of the Company by: (1) Each
person known by the Company to beneficially own more than 5% of the outstanding
shares of Common Stock; (2) each director of the Company; (3) the President of
the Company; and (4) the directors and executive officers of the Company as a
group. The persons named in the bale have sole voting and investment power with
respect to all shares of capital stock owned by them, unless otherwise noted.

Name of Beneficial                  Amount and Nature                  Percent
Owner of Group (1)               of Beneficial Ownership              of Class
-------------------              ------------------------             ---------
Frank G. Dickey, Jr.                    7,946,450                      18.5%

James K. Millard                        1,000,000                       2.3%

Laura G. White                             48,240                        *

James Arch                              1,000,000                       2.3%

Kentrust, Inc.                          5,161,000                      12.0%

All Directors and Executive
Officers as a Group                     9,994,690                      23.2%
(four in number)

* Less than .01%.

(1) The address for each person or entity listed above is 1050 Chinoe Road,
Suite 304, Lexington, Kentucky 40502.

ITEM 12: Certain Relationships and Related Transactions

         During 2001,  Kentrust,  Inc.,  an entity whose CEO is Frank G. Dickey,
Jr., a director  and current  President  of the  Company,  loaned the Company an
additional $41,400,  which is accruing interest at 10% per annum, with repayment
due on or before December 31, 2001.

         On December 23, 1998, the Company borrowed $61,000 from Kentrust,  Inc.
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.

         The principal  balance for both of these notes was at December 31, 2001
was $206,900.  Accrued  interest on these notes as of December 31, 2001 and 2000
was $57,176 and $37,316, respectively.


ITEM 13: Exhibits and Reports on Form 8-K

         1.       Reports on Form 8-K - None

         2.       Exhibits - None

                                       6
<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                         EQUITY TECHNOLOGIES & RESOURCES, INC.
                                                   (Registrant)



                                          BY:  /s/  Frank G. Dickey, Jr.
                                              -----------------------------
                                              Frank G. Dickey, Jr., President

Dated: April 15, 2002

                                        7
<PAGE>

                                TABLE OF CONTENTS


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

Independent Auditors' Report.............................................    F-3

Consolidated Balance Sheet at December 31, 2001..........................    F-4

Consolidated Statements of Operations for the Years Ended
December 31, 2001 and 2000 and for the Period From Inception
(January 1, 1994) to December 31, 2001...................................    F-5

Consolidated Statements of Stockholders' Equity for the Period
From Inception (January 1, 1994) to December 31, 2001.................. . F-6-10

Consolidated Statements of Cash Flows for the Years Ended
December 31, 2001 and 2000 and for the Period From Inception
(January 1, 1994) to December 31, 2001.................................. F-11-12

Notes to the Financial Statements....................................... F-13-22

                                      F-1
<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, 2001 and the related consolidated  statements
of  operations,  stockholders'  equity and cash  flows for the year then  ended.
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 audit.

We conducted our audit in accordance with generally  accepted auditing standards
in the United States. 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 audit
provides a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the consolidated  financial  position of the
Company  as of  December  31,  2001,  and  the  consolidated  results  of  their
operations  and their cash flows for the year then  ended,  in  conformity  with
generally accepted accounting principles in the United States.

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 recurring losses since its inception
on January 4, 1994, 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
April 8, 2002

                                      F-2
<PAGE>

                          INDEPENDENT AUDITORS' REPORT


To the Board of Directors
Equity Technologies & Resources, Inc. and Subsidiary
(A Development Stage Company)
Lexington, Kentucky

We  have  audited  the  accompanying   consolidated   balance  sheet  of  Equity
Technologies & Resources,  Inc. and Subsidiary (a development  stage company) as
of December  31, 2000 and the related  consolidated  statements  of  operations,
stockholders' equity (deficit),  and cash flows for the years ended December 31,
2000 and 1999 and from  inception  of the  development  stage on January 1, 1994
through  December 31, 2000.  These  consolidated  financial  statements  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these  consolidated  financial  statements  based on our audits.  The
related consolidated  statements of operations,  stockholders'  equity, and cash
flows of Equity  Technologies  & Resources,  Inc. and  Subsidiary (a development
stage  company)  from  inception  of the  development  stage on  January 1, 1994
through  December 31, 1995 were audited by other  auditors  whose report,  dated
July 3, 1996, expressed an unqualified opinion on those statements.  Our opinion
on the  consolidated  statements of  operations,  stockholders'  equity and cash
flows  from  inception  of the  development  stage on  January  1, 1994  through
December 31, 2000,  insofar as it relates to amounts for prior  periods  through
December 31, 1995, is based solely on the report of other audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the consolidated financial position of Equity
Technologies & Resources,  Inc. and Subsidiary (a development  stage company) as
of December 31, 2000 and the consolidated  results of their operations and their
cash flows for the years ended December 31, 2000 and 1999, and from inception of
the development stage on January 1, 1994 through December 31, 2000 in conformity
with accounting principles generally accepted 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 7 to the
consolidated  financial  statements,  the Company is a development stage company
with  recurring  losses  which  raises  substantial  doubt  about its ability to
continue as a going concern.  Management's  plans in regard to these matters are
also described in Note 7. The consolidated  financial  statements do not include
any adjustments that might result from the outcome of this uncertainty.

/s/ HJ & Associates, LLC

HJ & Associates, LLC
Salt Lake City, Utah
April 14, 2001

                                      F-3
<PAGE>
<TABLE>
<CAPTION>
                              EQUITY TECHNOLOGIES & RESOURCES, INC.
                                  (A Development Stage Company)
                                   CONSOLIDATED BALANCE SHEET
                                        DECEMBER 31, 2001


ASSETS                                                                     2001
                                                                      -------------
<S>                                                                   <C>
Current Assets
   Cash                                                               $         612
   Prepaid Expenses                                                               0
                                                                      -------------
Total Current Assets                                                            612
                                                                      -------------

Total  Assets                                                         $         612
                                                                      =============

LIABILITIES AND  STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
   Accounts Payable                                                   $     225,591
   Accrued Expenses                                                         739,962
   Dividends Payable (Note 5)                                                40,750
   Notes Payable (Note 4)                                                   131,500
   Notes Payable - Related Party (Note 4)                                   364,400
                                                                      -------------
Total Current Liabilities                                                 1,502,203
                                                                      -------------

Total Liabilities                                                         1,502,203

Stockholders' Equity (Deficit)

Preferred Stock, Class A, $1.00 Par Value, 2,000,000 shares
    authorized, 50,000 shares issued and outstanding                         50,000
Preferred Stock, Class B, $1.00 Par Value, 300,000 shares
    authorized, 70,000 shares issued and outstanding                         70,000
Preferred Stock, Class C, $1.00 Par Value, 100,000 shares
    authorized, -0- shares issued and outstanding                                 -
Common Stock, Class A, $0.001 Par Value, 99,900,000 shares
    authorized, 42,816,620 and 2,121,207 issued and outstanding
    at December 31, 2001 and 2000, respectively                              42,817
Common Stock, Class B, $0.01 Par Value, 100,000 shares authorized,
    100,000 issued and outstanding                                            1,000
Additional Paid in Capital                                               18,863,965
Accumulated Deficit Prior to the Development Stage                       (8,390,740)
Deficit Accumulated During the Development Stage                        (12,138,633)
                                                                      -------------
Total Stockholders' Equity (Deficit)                                     (1,501,591)
                                                                      -------------
Total Liabilities and Stockholders' Equity                            $         612
                                                                      =============
</TABLE>

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

                                      F-3
<PAGE>
<TABLE>
<CAPTION>
                                       EQUITY TECHNOLOGIES & RESOURCES, INC.
                                           (A Development Stage Company)
                                       CONSOLIDATED STATEMENTS OF OPERATIONS
                                FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000, AND
                       FOR THE PERIOD FROM INCEPTION (JANUARY 1, 1994) TO DECEMBER 31, 2001

                                                                                                              Deficit
                                                                                                            Accumulated
                                                                        Year Ended        Year Ended         During the
                                                                        December 31,     December 31,       Development
                                                                            2001             2000              Stage
                                                                        ------------     ------------      -------------
<S>                                                                     <C>              <C>               <C>
Revenues                                                                $          -     $          -      $           -

General and Administrative Expenses                                        4,474,923        3,168,474          8,025,301
                                                                        ------------     ------------      -------------

Loss From Operations                                                      (4,474,923)      (3,168,474)        (8,025,301)

Other Income (Expense)
   Interest Expense                                                          (73,295)         (44,700)          (148,828)
   Interest Income                                                                 0               59                 59
                                                                        ------------     ------------      -------------
Total Other Income (Expense)                                                 (73,295)         (44,641)          (148,769)
                                                                        ------------     ------------      -------------

Loss From Continuing Operations                                           (4,548,218)      (3,213,115)        (8,174,070)

Loss on Discontinued Operations (Note 7)                                           -                -         (3,870,504)
                                                                        ------------     ------------      -------------

Net Loss Available to Common Stockholders                               $ (4,548,218)    $ (3,213,115)     $ (12,044,574)
                                                                        ============     ============      =============

Dividends on Preferred Stock (Notes 5 and 7)                            $          -     $          -      $     (32,517)
                                                                        ============     ============      =============

Basic and Diluted Loss Per Share of Common Stock:
   Loss from Continuing Operations                                      $      (0.22)    $      (2.34)     $       (0.39)
                                                                        ============     ============
   Loss from Discontinued Operations                                               -                -              (0.19)
                                                                                                           -------------
   Net Loss                                                             $     (.0.22)    $      (2.34)     $       (0.59)
                                                                        ============     ============      =============

Weighted Average Number of Common Shares Outstanding
   Basic and Diluted                                                      20,656,775        1,371,955         20,656,775
                                                                        ============     ============      =============
</TABLE>
   The accompanying notes are an integral part of these financial statements.

                                      F-4
<PAGE>
<TABLE>
<CAPTION>
                                      EQUITY TECHNOLOGIES & RESOURCES, INC.
                                           (A Development Stage Company)
                                  CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                       FOR THE PERIOD FROM INCEPTION (JANUARY 1, 1994) TO DECEMBER 31, 2001

                                            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     $ 148,000         78,500    $   78,500                -     $          -
                                          ----------     ---------        -------     ---------     ------------     ------------
Preferred Stock Issued for
  Cash at $1.00 Per Share                          -             -        203,500       203,500            6,000            6,000
Preferred Stock Issued for
  Services at $1.00 Per Share                      -             -          6,200         6,200            4,200            4,200
                                          ----------     ---------        -------     ---------     ------------     ------------
Balance, December 31, 1994, 1995, 1996       148,000       148,000        288,200       288,200           10,200           10,200
Shares Converted to Class A Common Stock           -             -        (5,000)       (5,000)                -                -
Shares Converted to Class A Common Stock           -             -       (11,000)      (11,000)                -                -
Canceled Shares                             (98,000)      (98,000)      (272,200)     (272,200)         (10,200)         (10,200)
                                          ----------     ---------        -------     ---------     ------------     ------------
Balance, December 31, 1997, 1998, 1999        50,000        50,000              -             -                -                -
Shares Issued as Consideration for
 Purchase of Subsidiary (Note 1)                   -             -         40,000        40,000                -                -
                                          ----------     ---------        -------     ---------     ------------     ------------
Balance, December 31, 2000                    50,000        50,000         40,000        40,000                -                -

Shares Issued in Exchange for
  300,000 shares of Growth Fund
  Partnership, Inc.                                -             -         30,000        30,000                -                -
                                          ----------     ---------        -------     ---------     ------------     ------------
Balance, December 31, 2001                    50,000        50,000         70,000        70,000                -                -
                                          ==========     =========        =======     =========     ============     ============

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

                                      F-5
<PAGE>
<CAPTION>
                                      EQUITY TECHNOLOGIES & RESOURCES, INC.
                                           (A Development Stage Company)
                                  CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                       FOR THE PERIOD FROM INCEPTION (JANUARY 1, 1994) TO DECEMBER 31, 2001


                                          Common Stock   Common Stock   Common Stock  Common Stock   Additional       Retained
                                             Class A        Class A       Class B        Class B       Paid In        Earnings
                                              Shares         Amount        Amount        Amount        Capital       (A Deficit)
                                          ------------   -------------  -------------  ------------  -----------     -----------
<S>                                           <C>          <C>            <C>         <C>           <C>             <C>
Balance, January 1, 1994                      11,425       $    12        100,000     $   1,000     $ 11,217,192    $  (8,390,740)
Common Stock Issued for Services at
  $135.87 Per Share                              700             1              -             -           95,105                -
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            13        100,000         1,000       11,375,993      (11,954,266)
Common Stock Issued for Cash at
  $34.02 Per Share                             5,416             5              -             -          184,295                -
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            18        100,000         1,000       11,619,055      (12,199,416)
Net Loss, Year Ended December 31, 1996             -             -              -             -                           (61,828)
                                          ----------     ---------        -------     ---------     ------------     ------------
                                                                                                               -
Balance, December 31, 1996                    18,224            18        100,000         1,000       11,619,055      (12,261,244)
Common Stock Issued in Exchange for
  Preferred Series B Stock at $312.50
  Per Share                                       16             -              -             -            5,000                -


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

                                       F-6
<PAGE>
<CAPTION>
                                       EQUITY TECHNOLOGIES & RESOURCES, INC.
                                           (A Development Stage Company)
                                  CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                       FOR THE PERIOD FROM INCEPTION (JANUARY 1, 1994) TO DECEMBER 31, 2001

                                          Common Stock   Common Stock   Common Stock  Common Stock   Additional       Retained
                                             Class A        Class A       Class B        Class B       Paid In        Earnings
                                              Shares         Amount        Amount        Amount        Capital       (A Deficit)
                                          ------------   -------------  -------------  ------------  -----------     -----------
<S>                                       <C>            <C>              <C>        <C>            <C>              <C>
Fractional Shares Issued                            6            -              -             -                1                -
Common Stock Issued for Services
  at $3.00 Per Share                           4,000             4              -             -           11,996                -
Common Stock Issued for Debt at
  $10.00 Per Share                             5,150             5              -             -           51,495                -
Common Stock Issued for Services at
  $4.95 Per Share                             20,590            21              -             -          101,979                -
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            48        100,000         1,000       12,190,519      (12,376,748)
Reversal of Cancellation of Common A
  Shares                                       4,280             4              -             -               (4)               -
Common Stock Issued at $3.15 Per Share
  to Repay Note Payable                        1,737             2              -             -            5,468                -
Common Stock Issued to Officer at $3.15
  Per Share for Consulting Services              137             -              -             -              431                -
Common Stock Issued to Officer at $3.15
  Per Share for Consulting Services           22,480            22              -             -           71,132                -
Common Stock Issued to Officer at $3.15
  Per Share for Consulting Services            2,563             3              -             -            8,080                -
Common Stock Issued to Officer to Payoff
  Note Payable for Consulting Services       120,000           120              -             -           58,338                -
Net Loss, Year Ended December 31, 1998             -             -              -             -         (150,873)               -
                                          ----------     ---------        -------     ---------     ------------     ------------

Balance, December 31, 1998                   199,447           199        100,000         1,000       12,333,964      (12,527,621)
Net Loss, Year Ended December 31, 1999             -             -              -             -         (178,877)               -
                                          ----------     ---------        -------     ---------     ------------     ------------

Balance, December 31, 1999                   199,447           199        100,000         1,000       12,333,964      (12,706,498)
Common Stock Issued at $7.00 Per Share
  for Services Rendered                      166,628           168              -             -        1,166,230                -
Common Stock Issued at $0.14 Per Share
  for Services Rendered                      550,000           550              -             -           76,450                -
Common Stock Issued at $0.14 Per Share
  For Services Rendered                    6,000,000         6,000              -             -          834,000                -
Common Stock Canceled                     (6,000,000)       (6,000)             -             -          (52,458)         (61,542)
Fractional Shares Issued                         832             -              -             -                -                -

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

                                       F-7
<PAGE>
<CAPTION>
                                       EQUITY TECHNOLOGIES & RESOURCES, INC.
                                           (A Development Stage Company)
                                  CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                       FOR THE PERIOD FROM INCEPTION (JANUARY 1, 1994) TO DECEMBER 31, 2001

                                          Common Stock   Common Stock   Common Stock  Common Stock   Additional       Retained
                                             Class A        Class A       Class B        Class B       Paid In        Earnings
                                              Shares         Amount        Amount        Amount        Capital       (A Deficit)
                                          ------------   -------------  -------------  ------------  -----------     -----------
<S>                                       <C>            <C>              <C>        <C>            <C>              <C>
Common Stock Issued for Services at
 $0.14 Per Share for Services Rendered       800,000           800              -             -          111,200                -
Common Stock Canceled                       (120,000)         (120)             -             -              120                -
Common Stock Canceled                       (100,000)         (100)             -             -              100                -
Common Stock Issued for Services at
 $0.29 Per Share                             275,000           275              -             -           79,475                -
Preferred Shares Issued as Consideration
  for Purchase of Subsidiary                       -             -              -             -          (40,000)               -
Common Stock Issued for Cash at
  $0.25 Per Share                             90,000            90              -             -           22,410                -
Common Stock Issued for Services at
  $0.375 Per Share                           100,000           100              -             -           37,399                -
Common Stock Issued for Services at
  $0.375 Per Share                           160,000           160              -             -           59,840                -
Net Loss, Year Ended December 31, 2000             -             -              -    (3,213,115)               -                -
                                          ----------     ---------        -------     ---------     ------------     ------------

Balance, December 31, 2000                 2,121,907         2,122       100,000          1,000       14,628,730      (15,981,155)
Common Stock Issued for Services at
  $0.20 Per Share, February 23, 2001           2,500             3             -              -              497                -
Common Stock Issued for Services at
  $0.25 Per Share, January 5, 2001            45,000            45             -              -           11,205                -
Common Stock Issued for Services at
  $0.20 Per Share, January 4, 2001           600,000           600             -              -          119,400                -
Common Stock Issued for Services at
  $0.28 Per Share, March 6, 2001             200,000           200             -              -           55,800                -
Common Stock Issued for Services at
  $0.06 Per Share, March 23, 2001            200,000           200             -              -           11,800                -
Common Stock Canceled, April 2, 2001        (100,000)         (100)            -              -              100                -
Correction in Common Stock Issued at
  $0.20 Per Share, April 2, 2001            (100,000)         (100)            -              -          (19,900)               -
Common Stock Issued for Services at
  $0.05 Per Share, April 5, 2001              50,000            50             -              -            2,450                -
Common Stock Issued for Services at
  $0.10 Per Share, April 10, 2001            350,000           350             -              -           34,650                -
Common Stock Issued for Services at
  $0.05 Per Share, April 30, 2001            100,000           100             -              -            4,900                -
Common Stock Issued for 100% Ownership
  of Newly Formed Subsidiary,
  May 9, 2001                              7,200,000         7,200             -              -           (7,200)               -
Common Stock Issued for Services at
  $0.04 Per Share, May 11, 2001              400,000           400             -              -           15,600                -
Common Stock Issued for Services at
  $0.11 Per Share, May 15, 2001              600,000           600             -              -           65,400                -

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

                                       F-8
<PAGE>
<CAPTION>
                                       EQUITY TECHNOLOGIES & RESOURCES, INC.
                                           (A Development Stage Company)
                                  CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                       FOR THE PERIOD FROM INCEPTION (JANUARY 1, 1994) TO DECEMBER 31, 2001


                                          Common Stock   Common Stock   Common Stock  Common Stock   Additional       Retained
                                             Class A        Class A       Class B        Class B       Paid In        Earnings
                                              Shares         Amount        Amount        Amount        Capital       (A Deficit)
                                          ------------   -------------  -------------  ------------  -----------     -----------
<S>                                       <C>            <C>              <C>        <C>            <C>              <C>
Common Stock Issued for Services at
  $0.09 Per Share, May 21, 2001              400,000           400              -             -           35,600                -
Common Stock Issued for Services at
  $0.16 Per Share, May 31, 2001              550,000           550              -             -           87,450                -
Common Stock Issued for Services at
  $0.16 Per Share, June 18, 2001             500,000           500              -             -           79,500                -
Common Stock Issued for Services at
  $0.15 Per Share, June 20, 2001           2,150,000         2,150              -             -          320,350                -
Common Stock Issued for Services at
  $0.17 Per Share, June 5, 2001              200,000           200              -             -           33,800                -
Common Stock Issued for Cash at $0.001
  Per Share, July 12, 2001                    10,000            10              -             -              990                -
Common Stock Issued for Services at
  $0.24 Per Share, July 12, 2001           2,579,500         2,579              -             -          616,501                -
Common Stock Issued for Services at
  $0.24 Per Share, July 12, 2001           1,800,000         1,800              -             -          430,200                -
Common Stock Issued for Services at
  $0.20 Per Share, July 24, 2001           6,450,000         6,450              -             -        1,283,550                -
Common Stock Issued for Services at
  $0.20 Per Share, July 24, 2001             800,000           800              -             -          159,200                -
Common Stock Issued for Services at
  $0.14 Per Share, August 15, 2001           700,000           700              -             -           97,300                -
Common Stock Issued as Collateral
  for Loans, (August 4, 2000)              5,927,713         5,928              -             -           (5,928)               -
Common Stock Issued for Services at
  $0.09 Per Share, August 31, 2001           150,000           150              -             -           13,350                -
Common Stock Issued for Services at
  $0.08 Per Share, September 4, 2001         500,000           500              -             -           39,500                -
Common Stock Issued for Services at
  $0.06 Per Share, September 6, 2001         500,000           500              -             -           29,500                -
Common Stock Issued for Services at
  $0.03 Per Share, September 24, 2001        500,000           500              -             -           14,500                -
Common Stock Canceled                     (7,200,000)       (7,200)             -             -            7,200                -
Common Stock Canceled                       (500,000)         (500)             -             -              500                -
Common Stock Issued for Cash at $0.02
  Per Share, September 29, 2001              250,000           250              -             -            4,750                -
Shares Issued in Exchange for 300,000
  Shares of Growth Fund Partnership, Inc.          -             -              -             -          (30,000)               -
Common Stock Issued for Insurance
  Guarantee at $0.03 Per Share,
  October 17, 2001                         2,500,000         2,500              -             -           72,500                -

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

                                       F-9
<PAGE>
<CAPTION>
                                       EQUITY TECHNOLOGIES & RESOURCES, INC.
                                           (A Development Stage Company)
                                  CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                       FOR THE PERIOD FROM INCEPTION (JANUARY 1, 1994) TO DECEMBER 31, 2001



                                          Common Stock   Common Stock   Common Stock  Common Stock   Additional       Retained
                                             Class A        Class A       Class B        Class B       Paid In        Earnings
                                              Shares         Amount        Amount        Amount        Capital       (A Deficit)
                                          ------------   -------------  -------------  ------------  -----------     -----------
<S>                                       <C>            <C>              <C>        <C>            <C>              <C>
Common Stock Issued for Services at
  $0.07 Per Share, October 19, 2001          130,000           130              -             -            8,970                -
Common Stock Issued for Collateral on
  Loan at $0.07 Per Share,
  October 19, 2001                         4,800,000         4,800              -             -          331,200                -
Common Stock Issued for Services
  Rendered at $0.07 Per Share,
  October 25, 2001                           750,000           750              -             -           51,750                -
Common Stock Issued for Services at
  $0.5 Per Share, November 6, 2001         2,000,000         2,000              -             -           98,000                -
Common Stock Issued for Collateral
  on Loan at $0.03 Per Share,
  November 12, 2001                        1,200,000         1,200              -             -           34,800                -
Common Stock Issued for Services
  Rendered at $0.03 Per Share,
  November 12, 2001                        1,500,000         1,500              -             -           43,500                -
Common Stock Issued for Insurance
  Guarantee at $0.03 Per Share,
  November 12, 2001                          500,000           500              -             -           14,500                -
Common Stock Issued for Services at
  $0.06 Per Share, November 19, 2001         200,000           200              -             -           11,800                -
Common Stock Issued for Services at
  $0.04 Per Share, December 12, 2001         600,000           600              -             -           23,400                -
Common Stock Issued for Services at
  $0.04 Per Share, December 19, 2001         200,000           200              -             -            7,800                -
Common Stock Issued for Services at
  $.05 Per Share, December 31, 2001          500,000           500              -             -           24,500                -
Net Loss, Year Ended December 31, 2001             -             -              -    (4,548,218)               -                -
                                          ----------     ---------        -------     ---------     ------------     ------------
Balance, December 31, 2001                42,816,620     $  42,817        100,000     $   1,000     $ 18,863,965     $(20,529,373)
                                          ==========     =========        =======     =========     ============     ============

Accumulated Deficit:
   Prior to the Development Stage                                                                                    $ (8,390,740)
                                                                                                                     ============
   During the Development Stage                                                                                      $(12,138,633)
                                                                                                                     ============

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

                                      F-10
<PAGE>
<TABLE>
<CAPTION>
                                       EQUITY TECHNOLOGIES & RESOURCES, INC.
                                           (A Development Stage Company)
                                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                            FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000, AND FOR THE
                           PERIOD FROM INCEPTION (JANUARY 1, 1994) TO DECEMBER 31, 2001



                                                                      Year Ended       Year Ended       Loss Accumulated
                                                                     December 31,     December 31,         During the
                                                                         2001             2000          Development Stage
                                                                         ----             ----          -----------------
<S>                                                                   <C>              <C>               <C>
Cash Flows From Operating Activities
Net Loss                                                              $  (4,548,218)   $  (3,213,115)    $ (12,138,633)
Adjustments to Reconcile Net Loss to Net Cash Used in Operating
Activities:
     Common Stock Issued for Services                                     4,288,180        2,372,646         6,945,643
     Preferred Stock Issued for Services                                          -                -            10,400
     Depreciation and Amortization                                                -                -            70,532
     Bad Debt Expense                                                         4,059            7,000           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                                 122,007          659,160           874,185
    Increase (Decrease) in Accrued Expenses                                  59,881           40,410           162,554
                                                                      -------------    -------------     -------------
Total Adjustments                                                         4,474,127        3,079,216        11,045,120
                                                                      -------------    -------------     -------------
Net Cash Flows Used In Operating Activities                                 (74,091)        (133,899)       (1,093,513)

Cash Flows From Investing Activities
   Increase in Notes Receivable                                                   -          (11,059)          (11,059)
   Sale of Land                                                                   -                -            (3,201)
   Other                                                                          -                             64,000
                                                                                  -                             ------
Net Cash Flows Provided By (Used in) Investing Activities                         -          (11,059)           49,740

Cash Flows From Financing Activities
   Sale of Common Stock for Cash                                             17,750           22,500           328,050
   Sale of Preferred Stock for Cash                                               -                -           209,500
   Proceeds from Long-Term Debt                                              56,300          132,100           522,335
   Principle Payments on Long-Term Debt                                           -          (10,000)          (15,500)
                                                                      -------------    -------------     -------------
Net Cash Flows Provided By Financing Activities                              74,050          144,600         1,044,385
                                                                      -------------    -------------     -------------

Increase (Decrease) in Cash and Cash Equivalents                                (41)            (358)              612
Cash and Cash Equivalents, Beginning of Year                                    653            1,011                 -
                                                                      -------------    -------------     -------------
Cash and Cash Equivalents, End of Year                                $         612    $         653     $         612
                                                                      =============    =============     =============

Cash paid for:
   Interest                                                           $      28,000    $           -     $      36,509
                                                                      =============    =============     =============
   Income Taxes                                                       $           -    $           -     $           -
                                                                      =============    =============     =============
</TABLE>
   The accompanying notes are an integral part of these financial statements.

                                      F-11
<PAGE>
<TABLE>
<CAPTION>
                                       EQUITY TECHNOLOGIES & RESOURCES, INC.
                                           (A Development Stage Company)
                                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                            FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000, AND FOR THE
                           PERIOD FROM INCEPTION (JANUARY 1, 1994) TO DECEMBER 31, 2001



                                                                      Year Ended       Year Ended       Loss Accumulated
                                                                     December 31,     December 31,         During the
                                                                         2001             2000          Development Stage
                                                                         ----             ----          -----------------
<S>                                                                   <C>              <C>               <C>
Supplemental noncash investing and financing activities:
   Common Stock Issued for Services                                   $   4,288,180    $   2,372,646     $   6,945,643
   Preferred Stock Issued for Services                                            -                -     $      10,400
   Common Stock Issued for Dividends                                              -                -     $      50,234
   Paid-in Capital Through Cancellation of Preferred Stock                        -                -     $     380,400
   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.
                          (A Development Stage Company)
                        NOTES TO THE FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000

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.  The  Company  authorized  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.

The Company 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 metals.  In 1994, the Company was notified
by general partners of the partnerships that they were terminated and dissolved.
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 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. 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.  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"), a Florida  corporation,  in exchange for 7,200,000 shares of
the Company's  common stock.  ETCR 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.

                                      F-13
<PAGE>

                      EQUITY TECHNOLOGIES & RESOURCES, INC.
                          (A Development Stage Company)
                        NOTES TO THE FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000

ETCR M&A, Inc. 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.

The Company 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 metals.  In 1994, the Company was notified
by general partners of the partnerships 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. The Company can make
no assumptions as to if and when operations will resume again.

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. All intercompany accounts and
transactions have been eliminated.

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

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.

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
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.

Intangible Assets - Intangible assets represent patents and are recorded at cost
in  accordance  with  Accounting   Principles  Board  ("APB")  Opinion  No.  17,
"Intangible  Assets."  The Company  amortizes  the  intangible  assets using the
straight-line method over the term of the specific agreements.  Continually, the
Company  evaluates  whether  the  estimated  useful  life  used to  amortize  an
intangible asset is appropriate

                                      F-14
<PAGE>

                      EQUITY TECHNOLOGIES & RESOURCES, INC.
                          (A Development Stage Company)
                        NOTES TO THE FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000

due to changing facts and  circumstances  resulting in increases or decreases in
the asset's estimated useful life, and records the change prospectively.

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 such as  preferred  stock,
including  preferred  dividends,  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:

SFAS No.141, "Business Combinations." SFAS No. 141 requires that all business
combinations be accounted for under the purchase method of accounting. SFAS No.
141 also changes the criteria for the separate recognition of intangible assets
acquired in a business combination. SFAS No. 141 is effective for all business
combinations initiated after June 30, 2001.

SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 142 addresses
accounting and reporting for intangible assets acquired, except for those
acquired in a business combination. SFAS No. 142 presumes that goodwill and
certain intangible assets have indefinite useful lives. Accordingly, goodwill
and certain intangibles will not be amortized but rather will be tested at least
annually for impairment. SFAS No. 142 also addresses accounting and reporting
for goodwill and other intangible assets subsequent to their acquisition. SFAS
No. 142 is effective for fiscal years beginning after December 15, 2001.

SFAS No. 143, "Accounting for Asset Retirement Obligations." SFAS No. 143
addresses financial accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and the associated asset retirement
costs. SFAS No. 143 is effective for financial statements issued for fiscal
years beginning after June 15, 2002.

                                      F-15
<PAGE>

                      EQUITY TECHNOLOGIES & RESOURCES, INC.
                          (A Development Stage Company)
                        NOTES TO THE FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000

FASB  issued  SFAS No.  144,  "Accounting  for the  Impairment  or  Disposal  of
Long-Lived Assets." This statement addresses financial  accounting and reporting
for the impairment or disposal of long-lived  assets.  SFAS No. 144 is effective
for financial  statements  issued for fiscal years  beginning after December 15,
2001, and interim periods within those fiscal years.

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
Verified Prescription  Safeguards,  Inc., 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 private placements of its common
stock to meet such needs. The Company relies on one of its majority shareholders
to fund working  capital to meet operating  needs.  Therefore,  for at least the
next twelve months the Company has viable plans to continue as a going  concern.
Additional funding will be necessary for the Company's  development plans. 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 adjustment 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 - CONTINGENCIES AND COMMITMENTS

The  Company  owed  approximately  $65,000 in federal  taxes and is  included in
accrued  expenses  and is  classified  as a  current  liability.  Penalties  and
interest  continue to accrue.  Unless the Company  obtains  adequate  funding or
financing or  establishes a profitable  business,  the Company will have to make
plans to pay the taxes,  which could have a significant  impact on the Company's
business or results of operations.

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.

                                      F-16
<PAGE>

                      EQUITY TECHNOLOGIES & RESOURCES, INC.
                          (A Development Stage Company)
                        NOTES TO THE FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000

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.

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.

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.  During  the year  ended
December  31,  2000,  the Company  received a loan from an  unrelated  party for
$75,000.  As part of the agreement,  the Company guaranteed payment from a third
party to the same  creditor for an  additional  $75,000.  Should the third party
default  on the loan,  the  Company  may be held  liable  for the  $75,000  plus
interest.

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 4 - NOTES PAYABLE

Notes payable of the Company are as follows at December 31:

                                                                 2001
                                                            ------------
Unsecured notes payable to a related
party, past due, bearing 12% interest.                      $    206,900

Unsecured promissory notes bearing interest at
10%. Interest payable annually in either stock or
cash, or both. The lenders may earn bonus
distributions based on the productivity of mining
operations. Due on demand.                                         6,000

Non-interest bearing notes payable to various
parties, secured by guarantees of common stock.
Due on demand.                                                   125,500

Unsecured, non-interest bearing notes payable to
various parties. Due on demand                                   157,500
                                                            ------------
Total                                                            495,900
Less related party notes                                        (364,400)
                                                            ------------
Total notes payable                                              131,500
Less current portion                                            (131,500)
                                                            ------------
Total Long-Term Debt                                        $          -
                                                            ============

                                      F-17
<PAGE>

                      EQUITY TECHNOLOGIES & RESOURCES, INC.
                          (A Development Stage Company)
                        NOTES TO THE FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000


NOTE 5 - CAPITAL STOCK

Preferred Stock - Series A
The Company is authorized  to issue  2,000,000  shares of  non-voting  preferred
shares,  at a par value of $1.00 per share.  These shares  accrue a 10% dividend
annually.  The cumulative amount of dividend was $35,000 and $30,000 at December
31, 2001 and 2000,  respectively.  These preferred  shares are convertible  into
Class A  common  stock  at a  conversion  rate of 5.5  common  shares  for  each
preferred share. There were 50,000 shares issued and outstanding at December 31,
2001 and 2000, respectively.  Dividends paid during 1995 amounted to $17,717 for
1993 and $14,800 for 1994. No dividends have been paid since 1995.

Preferred Stock - Class B
The  company is  authorized  to issue  300,000  shares of  non-voting  preferred
shares,  at a par value of $1.00 per share.  These shares  accrue a 10% dividend
payable annually on June 30 of each year. The cumulative  amount of dividend was
$4,000 at December 31, 2001. In December  2000, the Company issued 40,000 shares
of voting, Class B preferred stock in exchange for all the outstanding shares of
Verified Prescription  Safeguards,  Inc. (Note 1) These preferred shares are not
convertible into shares of common stock. 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. common stock. The acquisition was recorded at $0
value. The cumulative  amount of dividend was $1,750 at December 31, 2001. As of
December 31, 2001, there were 70,000 shares outstanding.

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 shares accrue a 10% dividend annually.
The cumulative  amount of dividend was $0 at December 31, 2001.  These preferred
shares are  convertible  into Class A common  stock at a  conversion  rate of 12
common  shares  for each  preferred  share.  There were $-0-  shares  issued and
outstanding at December 31, 2001. Management canceled all outstanding shares and
related dividends payable in 1997.

Common Stock - Class A
The Company is authorized to issue  99,900,000  Class A common shares,  at a par
value of $0.001 per share. These shares have full voting rights.

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.
Shares outstanding have retroactively been restated.

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.

                                      F-18
<PAGE>

                      EQUITY TECHNOLOGIES & RESOURCES, INC.
                          (A Development Stage Company)
                        NOTES TO THE FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000


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 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 306,700 shares issued and outstanding after the split. All
previously  issued shares have been  retroactively  restated in the accompanying
statement of stockholders' equity to reflect this stock split.

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  shares were  subsequently
canceled.

In August 2000, the Company issued 147,000  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.

In October 2000,  the Company  elected to cancel  220,000 shares of its Series A
common stock.

In November and December of 2000,  the Company issued 535,000 shares in exchange
for services  rendered.  The shares were valued at $0.25 - $0.38 per share based
upon the market value of the stock at the issuance dates.

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

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

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

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

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.

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 April 2, 2001, the Company canceled 200,000 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.

                                      F-19
<PAGE>

                      EQUITY TECHNOLOGIES & RESOURCES, INC.
                          (A Development Stage Company)
                        NOTES TO THE FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000


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 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. 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 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. The shares were valued at the fair market value
on the date of issuance.

On July 24, 2001, the Company issued  6,450,000  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 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 representing  post-split
shares from August 2000 that never got issued.

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.

                                      F-20
<PAGE>

                      EQUITY TECHNOLOGIES & RESOURCES, INC.
                          (A Development Stage Company)
                        NOTES TO THE FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000


On September 4, 2001, the Company issued 500,000 shares of common stock at $0.08
per share for service 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.

On September  29, 2001,  the Company  issued  250,000  shares of common stock at
$0.02 per share for cash.

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 and as collateral on a related party loan.
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 services rendered. 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
$.03 per share for services rendered, collateral on a related party loan, and an
insurance guarantee. 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.

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.

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 September 30, 2001.  All Class B shares of common
stock are held by a director at December 31, 2001.

                                      F-21
<PAGE>

                      EQUITY TECHNOLOGIES & RESOURCES, INC.
                          (A Development Stage Company)
                        NOTES TO THE FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000


NOTE 6 - 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 & 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 common A stock to James
Arch,  a former  President of the Company for  services  valued at $102,000.  An
agreement  has been 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 director and current  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.

                                      F-22
<PAGE>

                      EQUITY TECHNOLOGIES & RESOURCES, INC.
                          (A Development Stage Company)
                        NOTES TO THE FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000


NOTE 7 - 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.
<TABLE>
<CAPTION>
                                                                                                      From
                                                                                                  Inception of
                                                                                                 the Development
                                                                                                     stage on
                                                                                                  January 1,
                                                                                                       1994
                                                                       For the Years                 Through
                                                                  Ended December 31,               December 31,
                                                                2000                1999               2000
                                                       ------------------  ------------------  -------------------
<S>                                                    <C>                 <C>                 <C>
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)
                                                       ==================  ==================   ==================
</TABLE>

                                      F-23