U.S. SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-KSB

(Mark One)

  [X]  ANNUAL REPORT UNDER SECTION 13 OR 159D)OF THE SECURITIES EXCHANGE ACT OF
       1934(No Fee Required)

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004

  [ ]  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: 0-30101

                                   V-GPO, INC.

                 (Name of small business issuer in its charter)

                                     Florida

         (State or other jurisdiction of Incorporation or organization)

                                   59-1997186

                      (IRS Employer Identification Number)

             2150 Whitfield Industrial Way, Sarasota, Florida 34243

               (Address of principal executive offices) (Zip Code)

         Issuer's telephone number, including area code: (941) 727-1552

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

                         Common stock, $.0001 par value

                                (Title of Class)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  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-K 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,[X].

Issuer's revenues for its most recent fiscal year: $ 36,663
                                                   --------

The aggregate market value (closing sale price) on the OTC Bulletin Board of the
Registrant's  Common Stock held by  non-affiliates  at February  10,  2005,  was
approximately  $3,195,000.  For purposes of  computing  such market  value,  the
Registrant  has assumed that  affiliates  include only its  executive  officers,
directors and 5% stockholders.  This  determination of affiliate status has been
made solely for the purpose of this  Report,  and the  Registrant  reserves  the
right to disclaim that any such individual is an affiliate of the Registrant for
any other purposes.

NOTE:  If  determining  whether  a  person  is  an  affiliate  will  involve  an
unreasonable  effort and expense,  the issuer may calculate the aggregate market
value of the common  equity held by  non-affiliates  on the basis of  reasonable
assumptions, if the assumptions are stated.

                   (APPLICABLE ONLY TO CORPORATE REGISTRANTS)

As of March 1, 2005,  37,765,500  shares of the  Registrant's  common stock, par
value $.0001, were issued and outstanding.

Exhibit index appears on pages 21-22.


<PAGE>


                                TABLE OF CONTENTS

 PART I                                                                   PAGE

      Item 1    Business                                                     4

      Item 2    Property                                                     6

      Item 3    Legal Proceedings                                            6

      Item 4    Submission of Matters to a Vote of
                  Security Holders                                           7

 PART II

      Item 5    Market for Common Equity and Related
                  Stockholder Matters                                      7-8

      Item 6    Management's Discussion and Analysis of
                  Financial Condition and Results of
                  Operations                                              8-13

      Item 7    Financial Statements and Schedule                           13

      Item 8    Changes in and Disagreements with
                  Accountants on Accounting and Financial
                  Disclosure                                                13

      Item 8A   Controls and Procedures                                  13-14

 PART III

      Item 9    Directors and Executive Officers of the
                  Registrant                                             14-15

      Item 10   Executive Compensation                                   15-18

      Item 11   Security Ownership of Certain Beneficial
                  Owners and Management                                  18-19

      Item 12   Certain Relationships and Related
                  Transactions                                           19-20

      Item 13   Exhibits, Financial Statements and Schedules             20-22

      Item 14   Principal Account Fees and Services                      23-24

 SIGNATURES                                                                 29


<PAGE>


                                     PART I

ITEM 1.  BUSINESS

General

     The  Company  was  incorporated  in May,  1980 in the State of Florida  and
engaged in the hotel and  restaurant  industry  from 1980 until October 1, 1990,
when the Company sold its assets and ceased operations.

     Pursuant  to an  Agreement  and Plan of  Merger  ("Agreement")  dated as of
December  6, 2001 by and  between  the  Company  and  V-GPO,  Inc.,  a  Delaware
Corporation ("V-GPO  Delaware"),  on January 1, 2002, V-GPO Delaware merged with
and into the Company,  with the Company  emerging as the  surviving  corporation
("Merger").  In consideration of the Merger, all of V-GPO Delaware's outstanding
securities were converted into 36,500,000  shares of the Company's Common Stock,
100,000  shares  of the  Company's  Series A  Preferred  Stock and  options  and
warrants equal in kind and number to those of V-GPO Delaware  (collectively  the
"Merger Consideration").

     From  1990  to  the  effective  date  of the  Merger,  the  Company  had no
operations,  but  maintained  its legal  existence with a view to its subsequent
combination  with a private  corporation  actively  engaged in a  business.  The
Company  therefore had no revenues from  operations  nor conducted any operating
activities from October,  1990 until consummating the Merger.  Effective January
1, 2002, the Company, as the surviving  corporation in the Merger,  succeeded to
the business of V-GPO Delaware,  which was a supply chain management  consulting
and B-2-B commerce corporation servicing the healthcare industry. V-GPO Delaware
was  incorporated  in  May  2000  and  was  the  successor  as  a  result  of  a
reincorporation merger with IHI Associates,  Inc., a Florida corporation,  which
commenced operations in November 1997.

     In  April,   2002,  the  Company   organized  a  wholly-owned   subsidiary,
International  Healthcare Investments Ltd. ("IHI") to own, operate and/or manage
suburban and rural healthcare facilities. SEE BUSINESS - THE BUSINESS OF V-GPO -
INTERNATIONAL HEALTHCARE INVESTMENTS LTD.

     The Company ceased its supply chain management and B-2-B vending activities
in November  2002.  SEE  BUSINESS - THE  BUSINESS OF V-GPO - CESSATION OF SUPPLY
CHAIN MANAGEMENT AND B-2-B ACTIVITIES.

The Business of V-GPO

     Cessation of Supply Chain Management and B-2-B  Activities.  V-GPO Delaware
was a supply  chain  management  consulting  and  B-2-B  e-commerce  corporation
servicing the  healthcare  industry,  including  hospitals,  general  purchasing
organizations,  clinics, mail order pharmacies, etc., that marketed and licensed
software  products  developed  exclusively  for V-GPO  Delaware by its affiliate
Florida  Software  Systems,  Inc. and its  affiliates  which own the software ("
Software Owners" and collectively  with Florida  Software  Systems,  Inc. "FSS")
under a perpetual License Agreement ("License").  V-GPO Delaware purchased title
to the V-GPO  Software  in  December,  2001 and  terminated  payments  under the
License as of November 30, 2001 pursuant to a Software Sale  Agreement  with FSS
("Software Sale  Agreement").  On September 30, 2002, the Company entered into a
new agreement with FSS, whereby (i) the Company agreed to return to the Software
Owners all the  rights,  title and  interest  in the  software  that the Company
acquired in  December  2001 under the  Software  Sale  Agreement  subject to the
Company's  retention of a non-exclusive  license of the  software,  and (ii) the
Software  Owners  agreed to cancel and  return to the  Company  the  $30,000,000
promissory  note having an unpaid  principal of  $30,000,000.  The receivable of
$3,625,000  accrued under the License  remains on the books of the Company.  SEE
FINANCIAL STATEMENTS - FOOTNOTE I.

     In November 2002, the Company  determined that it was no longer feasible to
engage in the supply chain  management  and B-2-B  activities due to a number of
considerations   including   intensity  of  competition  and  persistently  slow
acceptance  of the  business  model for the supply  chain  management  and B-2-B
activities by customers and prospective investors.  The Company ceased it supply
chain management and B-2-B operations in order to focus all of its attention and
resources  toward  developing  and  expanding  the  business of its wholly owned
Delaware subsidiary,  International  Healthcare  Investments Ltd., Inc. ("IHI").
SEE BUSINESS - THE BUSINESS OF V-GPO - INTERNATIONAL HEALTHCARE INVESTMENTS LTD.

     International  Healthcare  Investments  Ltd.  The  Company  incorporated  a
wholly-owned  Delaware subsidiary,  International  Healthcare  Investments Ltd.,
Inc.  ("IHI"),  in April 2002, to own,  operate and/or manage suburban and rural
healthcare facilities in Texas and Oklahoma.  Generally, the Company anticipates
that these  facilities  would be the only facility in the suburban or rural area
in which they are  located.  Because  every  community  is  unique,  there is no
universal  approach  to  healthcare  management.  IHI is  committed  to creating
programs, services and facilities that actively respond to fulfill the needs and
required support of physicians who care for patients in the communities where an
IHI facility is located. The Company believes this is the best way to compete in
the markets it enters.  Subsidiaries  of IHI entered into  agreements to acquire
control of four (4)  healthcare  facilities  in  Oklahoma  City,  Oklahoma.  The
acquisitions  are subject to a variety of  conditions,  including  completion of
financing.  There can be no  assurance  that the parties will be able to satisfy
these conditions

     IHI has entered into an agreement to sell and has delivered an aggregate of
$275 million  principal amount of its 12% Bonds Due 2014 ("Bonds").  The Company
fully  and  unconditionally  guaranteed  the  Bonds.  IHI has not  received  any
proceeds  for the  issuance of the Bonds.  Despite  their  agreement to pay, the
persons holding  the Bonds  have  refused to pay for them and IHI has  initiated
steps to obtain return of the Bonds. There is no assurance that IHI will prevail
and obtain return of the Bonds.

Competition

     The market for healthcare facilities ownership, operation and management is
rapidly evolving and intensely competitive.

     Competition  is likely to intensify as the  Company's  market  matures.  As
competitive conditions intensify, competitors may:

     o    Enter into  strategic or commercial  relationships  with larger,  more
          established  healthcare companies;

     o    Secure services and products from suppliers on more favorable terms;

     o    Devote greater resources to marketing and promotional campaigns; and

     o    Devote  substantially  more  resources  to  acquisition  of  non-urban
          healthcare facilities.

ITEM 2.  PROPERTY

     The Company's  headquarters is located at 2150 Whitfield  Industrial Way in
Sarasota.  The Company  shares office space with an entity  controlled by one of
the Company's executive officers who is also a director.

Item 3.  LEGAL PROCEEDINGS

     1.   In  April,   2003,   the  Dallas,   Texas  County  Court   entered  an
          Interlocutory  Judgment  Order against the Company in the  approximate
          amount of $406,000 in favor of the Landlord of space  formerly  leased
          by the  Company in Dallas,  Texas for rent  allegedly  due and unpaid.
          Final  Judgment  was  entered,  the  Company  filed an  Appeal  and is
          awaiting for the decision.

     2.   In November,  2002,  the Company and a former  financial  advisor were
          named as  Defendants  in a Summons  and  Complaint  filed by a private
          lender in the United States District Court,  Southern  District of New
          York,  seeking  damages of  approximately  $260,000  plus interest and
          attorney's  fees, an accounting  and  rescission of certain  corporate
          actions in connection  with the alleged  failure by the Company to pay
          amounts  allegedly due under a Promissory Note in the principal amount
          of $200,000.  In July 2003, the Court approved the parties' stipulated
          agreement to dismiss the Complaint without prejudice to refiling.

     3.   In May 2003, the Texas Workforce  Commission awarded a former employee
          of the Company  approximately $16,000 in connection with a wage claim.
          The Company  believes it has  meritorious  defenses to the  employee's
          claims and  intends to  vigorously  defend  itself  against the claim.
          Management  believes the ultimate outcome of this matter will not have
          a material  adverse  effect on the  Company's  consolidated  financial
          position or results of operations.

     The Company has  recognized a liability  recorded at $4,134 payable under a
rescission  offer made to and  accepted  by certain  stockholders  in 1989 which
remains unpaid.  This liability has accrued interest at the rate of 6% per annum
which also remains unpaid as of the date of this Report on Form 10-KSB.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDER

     No matters  were  submitted  to a vote to the  Company's  security  holders
during the fourth quarter 2004.


                                    PART II

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

Market Information

     Although  the  Company's  Common  Stock  is  eligible  for  trading  in the
over-the-counter  market,  including  quotation  on  the  NASD  Over-The-Counter
Bulletin Board,  public trading in the market for the Company's Common Stock has
been sporadic  during the last two (2) years.  The Company cannot assure that an
active, liquid trading market will develop and be maintained in the future.

     The following table sets forth, for the fiscal quarters indicated, the high
and low closing sales prices for the  Company's  common stock as reported on the
OTC Bulletin Board. OTC Bulletin Board quotations reflect  inter-dealer  prices,
without  retail  mark-up,  markdown,  or  commission  and  may  not  necessarily
represent actual transactions.

<TABLE>
<CAPTION>

                                  COMMON STOCK
                                  ------------

                    2005                    2004                    2003
                    ----                    ----                    ----
                High    Low             High    Low             High    Low
                ----    ---             ----    ---             ----    ---
<S>             <C>     <C>             <C>     <C>             <C>     <C>
PERIOD
------
1st Quarter     $0.80   $0.50           $2.20   $1.75           $1.01   $0.85
2nd Quarter                              1.15    0.15            2.25    0.25
3rd Quarter                              0.26    0.15            0.35    0.21
4th Quarter                              0.10    0.05            0.50    0.50

</TABLE>

     On February  10,  2005,  the last  reported  sales price for the  Company's
common stock as reported on the OTC Bulletin Board was $0.50 per share.

     The Company has  registered  1,797,097  shares of common  stock in a public
offering  registered  on Form S-1 with the  Securities  and Exchange  Commission
which went effective on October 31, 1989. These shares consist of 380,430 shares
owned by certain shareholders and 1,416,667 treasury shares.

Holders

     As of March 1, 2005, there were approximately  1,001 shareholders of record
of the Company's common stock.

Dividends

     The holders of Common Stock are entitled to share ratably in dividends when
and as declared by the board of directors  out of funds legally  available.  The
Company  intends to retain any future  earnings  for use in its  operations  and
therefore  does not expect to pay any cash  dividends on its Common Stock in the
foreseeable future.

ITEM 6.  MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS

     This Form 10-KSB contains  forward-looking  statements made pursuant to the
safe harbor  provisions of the Securities  Litigation  Reform Act of 1995.  Such
statements  consist of any statement other than a recitation of historical facts
and  can  be  identified  by  words  such  as  "may,"  "except,"   "anticipate,"
"estimate," "hopes," "believes," "continue," "intends," "seeks," "contemplates,"
"suggests,"  "envisions," or the negative thereof or other variations thereon or
comparable  terminology.  These forward-looking  statements are based largely on
the  Company's   expectations   and  are  subject  to  a  number  of  risks  and
uncertainties,  including  but not  limited  to,  those  risks  associated  with
economic conditions  generally and economically in those areas where the Company
has or expects to have  assets and  operations;  competitive  and other  factors
affecting the Company's operations,  markets, products and services; those risks
associated  with the Company's  ability to  successfully  negotiate with certain
customers;  associated  costs  arising out of the Company's  activities  and the
matters  discussed  in this Form 10-KSB;  risks  relating to changes in interest
rates and in the availability, cost and terms of financing; risks related to the
performance  of financial  markets;  risks related to changes in domestic  laws,
regulations  and  taxes;  risks  related  to changes  in  business  strategy  or
development plans; risks associated with future profitability; and other factors
discussed  elsewhere in this Form 10-KSB and in  documents  filed by the Company
with the  Securities and Exchange  Commission.  Many of these factors are beyond
the  Company's  control.  Actual  results  could  differ  materially  from these
forward-looking statements. In light of these risks and uncertainties, there can
be no  assurance  that the  forward-looking  information  contained in this Form
10-KSB will, in fact,  occur.  The Company does not undertake any  obligation to
revise  these   forward-looking   statements   to  reflect   future   events  or
circumstances  and other  factors  discussed  elsewhere  in this  Report and the
documents  filed or to be filed by the Company with the  Securities and Exchange
Commission.

MANAGEMENT'S DISCUSSION AND ANALYSIS

     The  following is a discussion  of the  financial  condition and results of
operations of the Company for the years ended  December 31, 2004 and 2003.  This
discussion  and analysis  should be read in  conjunction  with the  accompanying
audited  Financial  Statements of the Company  including the Notes thereto which
are included elsewhere in this Form 10-KSB.

GENERAL

     Epicure  Investments,  Inc. (the  "Company") was  incorporated in May 1980,
under the laws of the State of Florida.  The Company was a hotel and  restaurant
operation from 1980 until October 1, 1990, when the Company's management decided
to sell its assets and cease  operations.  The Company has  maintained its legal
existence, but has not conducted operations since 1990.

     On  December 6, 2001 the Company  entered an  agreement  and plan of merger
with V-GPO, Inc. ("V-GPO  Delaware"),  a company  incorporated under the laws of
the state of Delaware.  Effective with the merger,  all  previously  outstanding
stock of V-GPO Delaware was exchanged for stock of the Company  resulting in the
previous  security  holders of V-GPO Delaware  owning  approximately  93% of the
Common Stock,  100% the Series A Preferred Stock of the Company,  in an exchange
ratio of 1 share of  V-GPO  common  stock  for 1 share of the  Company's  common
stock,  and 1 share of V-GPO  Series A  Preferred  Stock for 1 share of  Company
Series A Preferred Stock. As a result of the acquisition,  there was a change in
control of the Company, a public entity.

     Subsequent  to the merger,  Company was a business  solutions  organization
providing  software business  intelligence tools for supply chain management and
B-2-B online  supply  vending in healthcare  until  November  2002.  The Company
incorporated its Delaware subsidiary,  IHI, in April 2002 to own, operate and/or
manage  non-urban  healthcare  facilities  and  discontinued  its  supply  chain
management and B-2-B vending activities in November 2002.

     Subsidiaries  of IHI entered into agreements to acquire control of four (4)
healthcare  facilities in Oklahoma City, Oklahoma.  The acquisitions are subject
to a variety of conditions,  including completion of financing.  There can be no
assurance that the parties will be able to satisfy these conditions.

     The Company (including V-GPO Delaware's  operations) has experienced losses
in each year of its  operations,  and,  there can be no assurance,  that, in the
future, the Company will sustain revenue growth or achieve profitability.

Critical Accounting Policies and Estimates

     The  preparation of our financial  statements in conformity with accounting
principles generally accepted in the United States requires us to make estimates
and  judgments  that affect our  reported  assets,  liabilities,  revenues,  and
expenses,  and the disclosure of contingent assets and liabilities.  We base our
estimates  and  judgments  on  historical   experience   and  on  various  other
assumptions we believe to be reasonable under the circumstances.  Future events,
however,  may differ  markedly from our current  expectations  and  assumptions.
While  there are a number  of  significant  accounting  policies  affecting  our
consolidated financial statements;  we believe the following critical accounting
policies  involve the most  complex,  difficult  and  subjective  estimates  and
judgments:

     o Stock-based compensation.

     o Research and Development

Stock-based Compensation

     In December 2002, the FASB issued SFAS No. 148 - Accounting for Stock-based
Compensation - Transition and Disclosure.  This statement  amends SFAS No. 123 -
Accounting  for  Stock-Based  Compensation,  providing  alternative  methods  of
voluntarily  transitioning  to the fair market value based method of  accounting
for stock based employee  compensation.  FAS 148 also requires disclosure of the
method used to account for stock-based  employee  compensation and the effect of
the method in both the annual and interim financial  statements.  The provisions
of this statement  related to transition  methods are effective for fiscal years
ending  after  December  15,  2002,  while  provisions   related  to  disclosure
requirements  are effective in financial  reports for interim periods  beginning
after December 31, 2002.

     The Company  elected to continue  to account for  stock-based  compensation
plans using the intrinsic value-based method of accounting prescribed by APB No.
25,  "Accounting  for Stock Issued to Employees,"  and related  interpretations.
Under the  provisions  of APB No. 25,  compensation  expense is  measured at the
grant  date for the  difference  between  the fair  value of the  stock  and the
exercise price.

Research and Development

     The Company accounts for research and development  costs in accordance with
the Financial  Accounting  Standards Board's  Statement of Financial  Accounting
Standards No. 2 ("SFAS 2"),  "Accounting  for Research and  Development  Costs."
Under SFAS 2, all research and  development  costs must be charged to expense as
incurred.  Accordingly,  internal research and development costs are expensed as
incurred.  Third-party  research and  developments  costs are expensed  when the
contracted  work has been performed or as milestone  results have been achieved.
Company-sponsored  research and  development  costs  related to both present and
future products are expensed in the period incurred.

RESULTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 2004 AND 2003

Revenues

     The Company's total revenues were $36,663 for the twelve month period ended
December 31, 2004  compared to $590,229  for the same period ended  December 31,
2003, a decrease of $553,566 or 94%. The decrease is primarily attributed to the
company not recognizing $480,000 of consulting services rendered and billed to a
customer during the year ended December 31, 2004, because the collectibility can
not be reasonably assured.

Cost of Sales

     The Company did not  recognize  any direct cost of sales for the year ended
December 31, 2004 and 2003.

Operating Expenses

     The Company's operating expenses increased $750,811 from $2,034,353 for the
year ended  December 31, 2003 compared to  $2,785,164  for the same period ended
December 31, 2004, or 37%. Selling,  general and administrative expenses for the
twelve-month  period ended December 31, 2004 increased  $642,001 from $1,867,885
in 2003 to $2,509,886,  or 34%. The selling, general and administrative expenses
increase is primarily  attributed  to the  allowance for bad debt expense in the
amount of $850,520.  Depreciation  and  amortization  expense for the year ended
December  31, 2004  decreased  $7,964 from  $166,468  in 2003 to  $158,504.  The
decrease was because certain fixed assets were fully depreciated during the year
ended  December 31, 2003.  The Company  recorded  $116,774  impairment  of other
assets  during the year ended  December 31, 2004.  This was in  connection  with
IHI's Offering  Memorandum to issue an aggregate of $275 million bonds. As there
is no  assurance  the bonds will be issued and  funding  will be  received,  the
Company has charged to  operations  impairment  of the prepaid  costs.  Interest
expense for the twelve-month period ended December 31, 2004 was $379,638. As the
Company  continues  to  expand,  the  Company  will incur  additional  costs for
personnel. In order for the Company to attract and retain quality personnel, the
Company  anticipates  it will continue to offer  competitive  salaries and grant
Company stock options to current and future employees.

LIQUIDITY AND CAPITAL RESOURCES

December 31, 2004

     As of December  31,  2004,  the Company  had a working  capital  deficit of
$12,915,862  compared to a deficit of $11,310,173 at December 31, 2003 a deficit
increase of  $1,605,689.  The increase in working  capital  deficit is primarily
attributed to increase in accrued  management fees and increase in allowance for
doubtful account.

     As a result of our  operating  losses,  the  Company  generated a cash flow
deficit of $145,826 from operating  activities  during the  twelve-month  period
ended December 31, 2004. The cash flow deficit is primarily  attributable to the
Company's net loss from operations of $3,128,139  adjusted for  depreciation and
amortization  of  $158,504,   allowance  for  doubtful   accounts  of  $825,520,
impairment  of other  assets of $116,774  and  changes in  accounts  payable and
accrued expenses.

     There were no cash flows used in investing  activities for the twelve-month
period ended December 31, 2004.

     Cash flows  provided  by  financing  activities  were  $147,650  during the
twelve-month  period ended December 31, 2004. This is primarily  attributable to
$68,359 of cash the  Company  advanced to related  parties and  $216,009 of cash
advances received from related parties.

     IHI has entered into an agreement to sell and had delivered an aggregate of
$275 million  principal amount of its 12% Bonds Due 2014 ("Bonds").  The Company
fully  and  unconditionally  guaranteed  the  Bonds.  IHI has not  received  any
proceeds  for the  issuance of the Bonds.  Despite  their  agreement to pay, the
persons  holding  the Bonds have  refused to pay for them and IHI has  initiated
steps to obtain return of the Bonds. There is no assurance that IHI will prevail
and obtain return of the Bonds.

     Our independent  certified public  accountants have stated in their report,
which is included with our audited  financial  statements in the Form 10-KSB for
the period ended December 31, 2004,  that we have incurred  operating  losses in
the last two years and that we are  dependent on  management's  ability to raise
capital and develop  profitable  operations.  These factors,  among others,  may
raise substantial doubt about our ability to continue as a going concern.

RECENT ACCOUNTING PRONOUNCEMENTS

New Accounting Pronouncements

     In November 2004, the Financial  Accounting  Standards  Board (FASB) issued
SFAS  151,  INVENTORY  COSTS--  AN  AMENDMENT  OF ARB NO.  43,  CHAPTER  4. This
Statement amends the guidance in ARB No. 43, Chapter 4, "Inventory  Pricing," to
clarify the accounting for abnormal amounts of idle facility  expense,  freight,
handling costs, and wasted material  (spoilage).  Paragraph 5 of ARB 43, Chapter
4, previously  stated that ". . . under some  circumstances,  items such as idle
facility expense,  excessive spoilage,  double freight, and rehandling costs may
be so abnormal as to require  treatment as current period  charges.  . . ." This
Statement  requires  that those items be recognized  as  current-period  charges
regardless  of whether they meet the  criterion of "so  abnormal."  In addition,
this Statement  requires that  allocation of fixed  production  overheads to the
costs  of  conversion  be  based  on  the  normal  capacity  of  the  production
facilities.  This  Statement is effective for inventory  costs  incurred  during
fiscal  years  beginning  after June 15, 2005.  Management  does not believe the
adoption  of this  Statement  will  have any  immediate  material  impact on the
Company.

     In December 2004, the FASB issued SFAS No.152,  "Accounting for Real Estate
Time-Sharing Transactions--an amendment of FASB Statements No. 66 and 67" ("SFAS
152) The amendments  made by Statement 152 This Statement  amends FASB Statement
No.  66,  Accounting  for  Sales of Real  Estate,  to  reference  the  financial
accounting and reporting guidance for real estate time-sharing transactions that
is  provided in AICPA  Statement  of Position  (SOP) 04-2,  Accounting  for Real
Estate Time-Sharing Transactions.  This Statement also amends FASB Statement No.
67,  Accounting for Costs and Initial Rental Operations of Real Estate Projects,
to state that the guidance for (a) incidental  operations and (b) costs incurred
to sell  real  estate  projects  does  not  apply  to real  estate  time-sharing
transactions.  The accounting  for those  operations and costs is subject to the
guidance in SOP 04-2.  This Statement is effective for financial  statements for
fiscal years beginning after June 15, 2005. with earlier application encouraged.
The Company does not anticipate  that the  implementation  of this standard will
have a material impact on its financial position,  results of operations or cash
flows.

     On December 16, 2004,  the Financial  Accounting  Standards  Board ("FASB")
published  Statement of Financial  Accounting  Standards No. 123 (Revised 2004),
Share-Based  Payment ("SFAS 123R").  SFAS 123R requires that  compensation  cost
related to  share-based  payment  transactions  be  recognized  in the financial
statements.  Share-based  payment  transactions  within  the  scope of SFAS 123R
include stock options,  restricted stock plans,  performance-based awards, stock
appreciation  rights,  and employee share purchase plans. The provisions of SFAS
123R are  effective  as of the first  interim  period that begins after June 15,
2005. Accordingly,  the Company will implement the revised standard in the third
quarter of fiscal year 2005. Currently, the Company accounts for its share-based
payment  transactions under the provisions of APB 25, which does not necessarily
require  the  recognition  of  compensation  cost in the  financial  statements.
Management is assessing the  implications  of this revised  standard,  which may
materially  impact the  Company's  results of operations in the third quarter of
fiscal year 2005 and thereafter.

     On  December  16,  2004,  FASB issued  Statement  of  Financial  Accounting
Standards No. 153, EXCHANGES OF NONMONETARY  ASSETS, AN AMENDMENT OF APB OPINION
NO. 29,  ACCOUNTING FOR NONMONETARY  TRANSACTIONS (" SFAS 153").  This statement
amends APB Opinion 29 to eliminate the exception  for  nonmonetary  exchanges of
similar productive assets and replaces it with a general exception for exchanges
of nonmonetary assets that do not have commercial substance.  Under SFAS 153, if
a nonmonetary exchange of similar productive assets meets a commercial-substance
criterion and fair value is determinable,  the transaction must be accounted for
at fair  value  resulting  in  recognition  of any  gain or  loss.  SFAS  153 is
effective for  nonmonetary  transactions in fiscal periods that begin after June
15,  2005.  The Company  does not  anticipate  that the  implementation  of this
standard  will have a  material  impact on its  financial  position,  results of
operations or cash flows.

ITEM 7.  FINANCIAL STATEMENTS

     Financial  statements  as of and for the years ended  December 31, 2004 and
December  31, 2003 are  presented  in a separate  section of this Report on Form
10-KSB following the information in Part III.

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

     None

ITEM 8A.  CONTROLS AND PROCEDURES

     (a) Evaluation of Disclosure Controls and Procedures.

     We maintain  disclosure controls and procedures that are designed to ensure
that  information  required  to be  disclosed  in our  Exchange  Act  reports is
recorded,  processed,  summarized and reported within the time periods specified
in the SEC's  rules and forms,  and that such  information  is  accumulated  and
communicated  to our  management,  including  our Chairman  and Chief  Executive
Officer and President and Chief  Operating  Officer,  as  appropriate,  to allow
timely decisions regarding required disclosure.  Management  necessarily applied
its  judgment  in  assessing  the  costs  and  benefits  of  such  controls  and
procedures,  which,  by their  nature,  can provide  only  reasonable  assurance
regarding management's control objectives.

     We have  carried  out an  evaluation,  under the  supervision  and with the
participation  of our  management,  including  our Chairman and Chief  Executive
Officer and President and Chief Operating  Officer,  of the effectiveness of the
design and  operation of our  disclosure  controls and  procedures  as of a date
within 90 days prior to the filing date of this Annual  Report (the  "Evaluation
Date").

     Based upon that  evaluation,  the Chairman and Chief Executive  Officer and
President and Chief Operating Officer concluded that our disclosure controls and
procedures were effective as of the Evaluation Date.

     (b) Changes in Internal Controls.

     There were no  significant  changes in our  internal  controls  or in other
factors  that  could  significantly  affect  these  controls  subsequent  to the
Evaluation Date.

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

     The following table sets forth the names, ages and positions of the current
directors and executive officers of the Company:

<TABLE>
<CAPTION>

-------------------- ------- ---------------------------------------------------
        NAME           AGE                       POSITION
-------------------- ------- ---------------------------------------------------
-------------------- ------- ---------------------------------------------------
<S>                    <C>     <C>

Norman R. Dobiesz      57      Chairman, Chief Executive Officer and a Director
-------------------- ------- ---------------------------------------------------
-------------------- ------- ---------------------------------------------------

Samuel A. Greco        53      President, Chief Operating Officer and a Director
-------------------- ------- ---------------------------------------------------
-------------------- ------- ---------------------------------------------------

Edward E. Carty, Jr.   56      Vice President
-------------------- ------- ---------------------------------------------------

</TABLE>

     All directors hold office for one year or until the election or appointment
of their successors. Directors receive no compensation for serving on the board,
but may be reimbursed reasonable expenses for attending meetings upon submission
to the  Company of  appropriate  written  documentation.  Officers  are  elected
annually by the Company's  Board of Directors and serve at the discretion of the
board or until their successors are elected.

     Norman R. Dobiesz is the Chairman, Chief Executive Officer,  Director and a
principal  shareholder of the Company responsible for the headquarters  function
in Florida.  Since  1991,  Mr.  Dobiesz has served as a Director of  Teltronics,
Inc., a corporation  filing reports under the  Securities  Exchange Act of 1934.
Mr.  Dobiesz is President and owner of Florida  Software  Systems,  Inc. and its
affiliates  which  developed  the V-GPO  Software.  SEE ITEM 1.  BUSINESS  - THE
BUSINESS OF V-GPO - CESSATION OF SUPPLY CHAIN MANAGEMENT AND B-2-B ACTIVITIES.

     Samuel  A.  Greco  is a  founder  and was the  President,  Chief  Operating
Officer, Director and a principal shareholder of the Company responsible for the
operations and marketing  functions of V-GPO Delaware conducted at its office in
Dallas, Texas. Mr. Greco has held various management positions in the healthcare
industry during the last 25 years,  including several  executive  positions with
Columbia/HCA  Healthcare  Corporation now known as HCA - The Healthcare  Company
("Columbia")  from 1989 to August 1997.  He resigned his position as Senior Vice
President  of  Financial  Operations  of  Columbia  in  August  1997  to  pursue
consulting and other  opportunities  in the healthcare  industry by applying his
experience in the application of supply chain  strategies.  While with Columbia,
Mr. Greco elevated the area of Materials  Management to a core  competency  that
became a strategic  advantage to Columbia,  and launched Columbia's supply chain
initiative,  recognizing  how supply  cost and other costs  would  benefit  from
scale,  discipline  and process  improvement.  He has become one of the industry
leaders  in  successfully   applying  these  supply  chain  strategies,   vendor
partnering and logistics  management to improve results and provide  significant
savings.  Mr. Greco holds a Bachelor of Science degree in Accounting from Bryant
College and is a frequent speaker at various healthcare symposiums.

     Edward E. Carty,  Jr. is a Vice  President of the Company  responsible  for
national  account  representation,  GPO  relations,  minority  GPO  development,
customer relations,  supplier relations and subject matter expert communications
since approximately November 1997. Mr. Carty has over twenty years experience in
senior level materials management positions with large for profit and non-profit
healthcare  companies  including  Hospital  Affiliates  International,  Republic
Health Corporation, Lutheran Health Systems and seven years with Columbia.

     The Company is  presently  seeking to  identify  individuals  eligible  and
willing to serve as independent  directors on an audit committee of the Company.
However, the Company has not yet identified a willing individual. Therefore, the
board administers the audit functions directly. The Company's board of directors
has  determined  that the  Company  does not have an audit  committee  financial
expert because none of its directors possess the attributes specified to qualify
an  individual  as such.  The Company has not adopted a Code of Ethics as of the
date of this  Form  10-KSB  as  consideration  of the  matter  has not yet  been
completed.

Item 10.  EXECUTIVE COMPENSATION

     The following  tables set forth  information  regarding the annual and long
term compensation paid by the Company's predecessor,  V-GPO Delaware, during the
years indicated to the Chief Executive Officer,  the Chief Operating Officer and
its other most  highly paid  executive  officers  whose  total  salary and bonus
exceeded $100,000 for the year ended December 31, 2004 (collectively, the "Named
Officers").


<PAGE>


<TABLE>
<CAPTION>

                           SUMMARY COMPENSATION TABLE
---------------- ------- ----------- --------- ----------------- ----------- ---------------- --------- --------------
                                                                               Securities
   Name and                                                      Restricted    Underlying
   Principal                                     Other Annual      Stock        Options/       LTIP       All Other
   Position       Year     Salary     Bonus    Compensation(1)     Awards        SARs(#)      Payouts   Compensation
---------------- ------- ----------- --------- ----------------- ----------- ---------------- --------- --------------
---------------- ------- ----------- --------- ----------------- ----------- ---------------- --------- --------------
<S>               <C>       <C>         <C>           <C>            <C>            <C>          <C>          <C>
                  2004      (6)         -             -              -              -            -            -
Norman R.         2003      (6)         -             -              -              -            -            -
Dobiesz,          2002      (6)         -             -              -              -            -            -
Chairman          2001      (2)         -             -              -              -            -            -
and CEO           2000      (2)
                  1999      (2)
---------------- ------- ----------- --------- ----------------- ----------- ---------------- --------- --------------
---------------- ------- ----------- --------- ----------------- ----------- ---------------- --------- --------------
                  2004      (6)         -             -              -              -            -            -
Samuel A.         2003      (6)         -             -              -              -            -            -
Greco             2002      (6)         -             -              -              -            -            -
President         2001      (3)         -             -              -              -            -            -
and COO           2000      (3)
                  1999      (3)
---------------- ------- ----------- --------- ----------------- ----------- ---------------- --------- --------------
---------------- ------- ----------- --------- ----------------- ----------- ---------------- --------- --------------
                  2004      (7)         -             -              -              -            -            -
Edwin E.          2003      (7)         -             -              -              -            -            -
Carty, Jr.,       2002      (4)         -             -              -              -            -            -
Vice              2001    $120,000      -             -              -        50,000 shares      -            -
President         2000    $120,000
                  1999    $120,000
---------------- ------- ----------- --------- ----------------- ----------- ---------------- --------- --------------
---------------- ------- ----------- --------- ----------------- ----------- ---------------- --------- --------------
                 2004       (7)         -             -              -              -            -            -
Michael J.       2003       (7)         -             -              -              -            -            -
Kuhn,            2002       (5)         -             -              -              -            -            -
Vice             2001     $120,000      -             -              -        50,000 shares      -            -
President        2000     $120,000
                 1999     $120,000
---------------- ------- ----------- --------- ----------------- ----------- ---------------- --------- --------------

<FN>
<F1>
(1)  Certain  personal  benefits that  aggregate  less than ten percent of total
     cash  compensation  of any  executive  officer  or which  cannot be readily
     ascertained are not included.
</FN>

<FN>
<F2>
(2)  Mr.  Dobiesz  has waived  all unpaid  cash  compensation  payable  from the
     inception of V-GPO Delaware through December 31, 2001.
</FN>

<FN>
<F3>
(3)  Mr.  Greco  has  waived  all  unpaid  cash  compensation  payable  from the
     inception of V-GPO Delaware through December 31, 2001.
</FN>

<FN>
<F4>
(4)  Mr. Carty  received  only partial year  compensation  through  December 31,
     2002.
</FN>

<FN>
<F5>
(5)  Mr. Kuhn received only partial year compensation through December 31, 2002.
</FN>

<FN>
<F6>
(6)  Amounts  for 2002,  2003,  and 2004 have been  accrued but not paid for Mr.
     Dobiesz and Mr. Greco.
</FN>

<FN>
<F7>
(7)  Mr. Carty and Mr. Kuhn received no compensation for 2003 and 2004.
</FN>
</TABLE>


<PAGE>


<TABLE>
<CAPTION>

                      OPTION/SAR GRANTS IN LAST FISCAL YEAR
--------------------------- ------------------------- -------------------------- ------------------- -----------------
                              Number of Securities     % of Total Options/SARs
                            Underlying Options/SARs    Granted to Employees in    Exercise or Base
           Name                   Granted (#)                Fiscal Year           Price ($/Share)    Expiration Date
--------------------------- ------------------------- -------------------------- ------------------- -----------------
--------------------------- ------------------------- -------------------------- ------------------- -----------------
<S>                                    <C>                        <C>                    <C>                <C>

Norman R. Dobiesz(1)                   -                          -                      -                  -
--------------------------- ------------------------- -------------------------- ------------------- -----------------
--------------------------- ------------------------- -------------------------- ------------------- -----------------

Samuel A. Greco(1)                     -                          -                      -                  -
--------------------------- ------------------------- -------------------------- ------------------- -----------------
--------------------------- ------------------------- -------------------------- ------------------- -----------------

Edwin E. Carty, Jr.(2)                 -                          -                      -                  -
--------------------------- ------------------------- -------------------------- ------------------- -----------------
--------------------------- ------------------------- -------------------------- ------------------- -----------------

Michael J. Kuhn(3)                     -                          -                      -                  -
--------------------------- ------------------------- -------------------------- ------------------- -----------------

<FN>
<F1>
(1)  No options or SARs have been granted to Mr. Dobiesz or to Mr. Greco.
</FN>

<FN>
<F2>
(2)  No options or SARs were granted Mr. Carty in 2004.
</FN>

<FN>
<F3>
(3)  No options or SARs were granted to Mr. Kuhn in 2004.
</FN>
</TABLE>


<TABLE>

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
<CAPTION>

                                                                      Number of Securities     Value of Unexercised
                                                                     Underlying Unexercised        In-the-Money
                                                                        Options/SARs at           Options/SARs at
                                                                          FY-End(#)(1)              FY-End(#)(1)

--------------------------- -------------------- --------------------- ------------------------ ----------------------
           Name             Shares Acquired on    Value Realized (S)        Exercisable/            Exercisable/
                               Exercise (#)                                 Unexercisable           Unexercisable
--------------------------- -------------------- --------------------- ------------------------ ----------------------
--------------------------- -------------------- --------------------- ------------------------ ----------------------
<S>                                  <C>                  <C>                     <C>                     <C>

Norman R. Dobiesz(1)                 -                    -                       -                       -
--------------------------- -------------------- --------------------- ------------------------ ----------------------
--------------------------- -------------------- --------------------- ------------------------ ----------------------

Samuel A. Greco(1)                   -                    -                       -                       -
--------------------------- -------------------- --------------------- ------------------------ ----------------------
--------------------------- -------------------- --------------------- ------------------------ ----------------------

Edwin E. Carty, Jr.(2)               -                    -                 30,000/20,000               % (2)
--------------------------- -------------------- --------------------- ------------------------ ----------------------
--------------------------- -------------------- --------------------- ------------------------ ----------------------

Michael J. Kuhn(3)                   -                    -                 30,000/20,000               % (3)
--------------------------- -------------------- --------------------- ------------------------ ----------------------

<FN>
<F1>
(1)  No options have been granted to Mr. Dobiesz or to Mr. Greco.
</FN>

<FN>
<F2>
(2)  None of the options  granted to Mr. Carty were in the money on December 31,
     2004.
</FN>

<FN>
<F3>
(3)  None of the options  granted to Mr. Kuhn were in the money on December  31,
     2004.
</FN>
</TABLE>


<PAGE>


Executive Employment Agreements

     Effective  March 1, 2002,  Messrs.  Dobiesz and Greco entered into ten (10)
year  employment  agreements (the "Executive  Employment  Agreements")  with the
Company that replaced prior  employment  agreements  scheduled to expire May 31,
2004 which were renewable by the employee for up to two (2) additional  five (5)
year  periods  ("Prior  Employment   Agreements").   The  Executive   Employment
Agreements  are  terminable by the Company for certain "for cause"  events.  The
Executive  Employment  Agreements  provide  for  initial  base  compensation  of
$600,000 per year with $75,000 increases scheduled for the 1st day of January of
each year  commencing  January 1,  2003.  The  Company  has the right to include
Messrs.  Dobiesz and Greco in any  supplementary  bonus or other benefits in the
Company's  discretion.  Messrs.  Dobiesz  and Greco have  waived all unpaid cash
compensation  under the  Prior  Employment  Agreements  from  inception  through
December  31,  2001.  The  Company  has  agreed to  register  the  shares of the
Company's Common Stock Messrs.  Dobiesz and Greco own in any future registration
statement the Company may file.

1999 Incentive Stock Option Plan

     The Company adopted an Incentive Stock Option Plan, as amended  ("Plan") to
enhance  the  Company's  ability to retain the  services  of key  personnel  and
encourage  such employees to own stock in the Company.  The Plan  authorizes the
Board of Directors,  at its  discretion,  to grant incentive stock options under
the Internal  Revenue Code of 1986, as amended,  to key employees of the Company
or its  subsidiaries.  The Plan is  administered by the Board of Directors which
has full power and authority to designate  Participants,  to determine the terms
and provisions of respective option agreements (which need not be identical) and
to interpret the provisions of the Plan. The Plan became effective March 1, 1999
and will terminate  February 28, 2009 unless earlier  terminated by the Board of
Directors or extended by the Board with approval of the stockholders.

     An  aggregate  of  4,999,995  shares of the  Company's  Common Stock may be
issued or  transferred  to grantees  under the Plan.  If there is a stock split,
stock  dividend  or  other  relevant  change  affecting  the  Company's  shares,
appropriate  adjustments will be made in the number of shares that may be issued
or  transferred  in the  future  and in the  number of  shares  and price of all
outstanding  grants made before such event.  The option  price shall not be less
than the fair market value of the  Company's  Common Stock on the date of grant,
unless the  grantee  is the  holder of more than 10% of the voting  power of all
classes of stock of the  Company,  in which case the option  price  shall not be
less than 110% of the fair market value of the stock on the date of grant.

     Options  may be  exercised  solely by the  Participant  or his or her legal
representative during his or her employment with the Company, or any subsidiary,
or after his or her death by the person or persons entitled thereto under his or
her will or the laws of descent and distribution. In the event of termination of
employment for any reason other than death,  permanent  disability as determined
by the Board, or retirement with the consent of the Company,  Options may not be
exercised by the Participant or his or her legal  representative and shall lapse
effective  upon the earlier to occur of (i) notice of employment  termination or
(ii) last day of employment with the Company or any Subsidiary.

     During 2004, the Company did not issue any options under the Plan.

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

     The  following  table  sets  forth  information  regarding  the  beneficial
ownership of shares of the Company's  equity  securities as of March 15, 2005 by
(i) all shareholders  known to the Company to be beneficial  owners of more than
5% of the outstanding  Common Stock;  (ii) each director and executive  officer;
and (iii) all officers and directors of the Company as a group.

<TABLE>
<CAPTION>

--------------------------------------------------- ------------------------ ---------------------------- ---------------
   Name and Address(1)of                                                         Amount and Nature of        Percent of
   Beneficial Ownership                                  Title of Class          Beneficial Ownership        Class(2)(6)
--------------------------------------------------- ------------------------ ---------------------------- ---------------
--------------------------------------------------- ------------------------ ---------------------------- ---------------
<S>                                                   <C>                         <C>                          <C>

Norman R. Dobiesz(3)                                     Common Stock             19,562,500 shares            53.8%
Chairman, Chief Executive Officer                     Series A Preferred           100,000 shares               100%
and Director                                               Stock
--------------------------------------------------- ------------------------ ---------------------------- ---------------
--------------------------------------------------- ------------------------ ---------------------------- ---------------

Samuel A. Greco                                          Common Stock             11,812,500 shares            32.5%
President, Chief Operating Office
and Director
--------------------------------------------------- ------------------------ ---------------------------- ---------------
--------------------------------------------------- ------------------------ ---------------------------- ---------------

Edwin E. Carty, Jr.(4)                                         -                          -                     -
Vice President
--------------------------------------------------- ------------------------ ---------------------------- ---------------
--------------------------------------------------- ------------------------ ---------------------------- ---------------

Michael J. Kuhn(5)                                             -                          -                     -
Vice President
--------------------------------------------------- ------------------------ ---------------------------- ---------------
--------------------------------------------------- ------------------------ ---------------------------- ---------------

All  executive  officers and directors                   Common Stock             31,375,000 shares           86.3%
as a Group(4 persons)                                 Series A Preferred           100,000 shares              100%
                                                           Stock

--------------------------------------------------- ------------------------ ---------------------------- ---------------
<FN>
<F1>
(1)  The address of all directors and officers  identified  above is the address
     of the Company at 2150 Whitfield Industrial Way, Sarasota, Florida 34243.
</FN>

<FN>
<F2>
(2)  The percentages are calculated based upon 36,348,833 shares of Common Stock
     issued and outstanding  after exclusion of 1,416,667  issued shares held in
     treasury  and do not include an  aggregate  of  1,293,325  shares of Common
     Stock that may be issued  (a) upon  exercise  of  outstanding  warrants  to
     purchase  643,325  shares of Common  Stock,  warrants that may be issued to
     purchase  400,000  shares of Common  Stock and (b)  outstanding  options to
     purchase 250,000 shares of Common Stock. Unless otherwise indicated,  it is
     assumed that all shares are owned directly.
</FN>

<FN>
<F3>
(3)  Includes  19,187,500 shares owned by Kinsale,  L.P., a limited  partnership
     owned and  controlled by Mr.  Dobiesz and 375,000 of the aggregate  500,000
     shares owned by MedTel  Services,  Inc., a corporation of which Mr. Dobiesz
     owns 75% of the issued and outstanding shares of Common Stock.
</FN>

<FN>
<F4>
(4)  Excludes an aggregate of 50,000 shares issuable upon exercise of options.
</FN>

<FN>
<F5>
(5)  Excludes an aggregate of 50,000 shares issuable upon exercise of options.
</FN>
</TABLE>


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Effective  March 1, 2002, the Company entered into ten (10) year employment
agreements  with  Norman R.  Dobiesz,  Chairman  and CEO and  Samuel  A.  Greco,
President and COO. SEE EXECUTIVE COMPENSATION - EMPLOYMENT AGREEMENTS.

     Entities controlled by Norman R. Dobiesz,  the Company's Chairman,  CEO and
principal shareholder, advanced to the Company $1,980,599 in 2004 and $1,764,591
in 2003, all of which was unpaid at December 31, 2004.

     The Company has advanced funds to entities  controlled by Company  officers
and principal  shareholders  for the year ended  December 31, 2004 and 2003. The
amounts  due to the Company at December  31, 2004 and 2003 were  $1,432,305  and
$1,363,946, respectively.

     The  Company  shares  office  space in  Sarasota,  Florida  with an  entity
controlled by the Company's officer and director.

Item 13.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

     (a)  The following documents are filed as part of this report:

          (1)  Financial Statements:

               The financial  statements filed on part of this report are listed
               on the Index to Consolidated Financial Statements.

          (2)  Financial Statement Schedules:

               Schedule II - Valuation and Qualifying Accounts.

               All other consolidated  financial  statement  schedules have been
               omitted  because  the  required   information  is  shown  in  the
               consolidated  financial  statements  or notes thereto or they are
               not applicable.


<PAGE>


     (b)  Exhibits:

Exhibit                                     Description

   2.1          Agreement  and Plan of  Merger by and  between  V-GPO,  Inc. and
                Epicure Investments,  Inc.  dated  December  6, 2001.  Filed  as
                Exhibit 2.1 to V-GPO's Form 8-K filed January 15, 2002.

   3.1          Restated  Articles of  Incorporation of V-GPO, Inc., as amended.
                Filed as Exhibit 3.1 to V-GPO's Form 8-K filed January 15, 2002.

   3.2          Articles of Amendment  to Articles  of  Incorporation  of V-GPO,
                Inc., as amended. Filed as Exhibit 3.2 to V-GPO's Form 8-K filed
                January 15, 2002.

  10.1          Software Sale Agreement dated  December 12, 2001, by and between
                V-GPO, Inc. and Florida Software Systems, Inc.  Filed as Exhibit
                10.1 to V-GPO's Form 8-K/A filed January 30, 2002.

  10.2          Promissory  Note in  the principal  amount of  $30,000,000 dated
                December  12, 2001  executed by V-GPO, Inc. payable  to  Florida
                Software Systems  Corporation,  Home Healthcare  Alliance,  Inc.
                and Home Health Plan, Inc. Filed as Exhibit 10.2 to V-GPO's Form
                8-K/A filed January 30, 2002.

  10.3          Specimen of Bridge Note.  Filed as Exhibit 10.3 to V-GPO's  Form
                8-K/A filed January 30, 2002.

  10.4          Line of Credit Note. Filed as Exhibit 10.4 to V-GPO's Form 8-K/A
                filed January 30, 2002.

  10.5          Employment  Agreement  effective  as of  March  1, 2002  by  and
                between V-GPO, Inc. and Norman R. Dobiesz. Filed as Exhibit 10.5
                to V-GPO's Form 8-K/A filed January 30, 2002.

  10.6          Employment  Agreement  effective  as of  March  1, 2002  by  and
                between V-GPO, Inc.  and Samuel A. Greco.  Filed as Exhibit 10.6
                to V-GPO's Form 8-K/A filed January 30, 2002.

  10.7          Agreement between V-GPO, Inc. and Florida Software Systems, Inc.
                Filed as Exhibit 10.1 to V-GPO's Form 10-QSB filed May 15, 2002.

  16.1          Letter from Gary  Kriner, CPA  dated  January 30, 2002. Filed as
                Exhibit  16.1 to V-GPO's Form 8-K/A filed January 30, 2002.

  21            List of Subsidiaries.*

  99.1          Certification of  Norman R. Dobiesz  Pursuant to  Section 906 of
                the  Sarbanes-Oxley Act of 2003.*

  99.2          Certification of  Samuel A. Greco Pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2003.*

  (*)           Filed as an Exhibit to this Annual Report on Form 10-KSB for the
                fiscal year ended December 31, 2004.


<PAGE>


ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

     The  following  table sets forth fees billed to the Company by our auditors
during the fiscal  years  ended  December  31, 2004 and 2003 for:  (i)  services
rendered for the audit of our annual financial  statements and the review of our
quarterly financial statements, (ii) services by our auditor that are reasonably
related to the  performance  of the audit or review of our financial  statements
and that are not reported as Audit Fees,  (iii) services  rendered in connection
with tax  compliance,  tax advice and tax planning,  and (iv) all other fees for
services rendered.

                                     DECEMBER 31, 2004        DECEMBER 31, 2003
                                     -----------------        -----------------

         1.  Audit Fees                  $  34,550                $  32,305

         2.  Audit Related Fees                 --                       --

         3.  Tax Fees                           --                       --

         4.  All Other Fees                     --                       --

             Total Fees                  $  34,550                $  32,305

     Audit fees consist of fees billed for  professional  services  rendered for
the audit of the Company's  consolidated  financial statements and review of the
interim  consolidated  financial  statements  included in quarterly  reports and
services that are normally provided by Russell Bedford Stefanou  Mirchandani LLP
in connection with statutory and regulatory filings or engagements.

     Audit-related  fees  consists  of fees  billed for  assurance  and  related
services that are reasonably  related to the  performance of the audit or review
of the Company's consolidated financial statements, which are not reported under
"Audit Fees." There were no  Audit-Related  services  provided in fiscal 2004 or
2003.

     Tax  fees  consists  of  fees  billed  for  professional  services  for tax
compliance, tax advice and tax planning.

     All other fees consist of fees for  products  and  services  other than the
services reported above. There were no management  consulting  services provided
in fiscal 2004 or 2003.

     The Company is  presently  seeking to  identify  individuals  eligible  and
willing to serve as independent  directors on an audit committee of the Company.
However, the Company has not yet identified a willing individual. Therefore, the
board  administers  the  audit  functions  directly.   Prior  to  the  Company's
engagement  of its  independent  auditor,  such  engagement  is  approved by the
Company's  board of directors.  The services  provided under this engagement may
include audit services, audit-related services, tax services and other services.
Pre-approval  is generally  provided for up to one year and any  pre-approval is
detailed as to the  particular  service or category of services and is generally
subject to a specific  budget.  The  independent  auditors  and  management  are
required  to report  to the  Company's  board of  directors  at least  quarterly
regarding  the  extent of  services  provided  by the  independent  auditors  in
accordance with this  pre-approval,  and the fees for the services  performed to
date.  The board of  directors  may also  pre-approve  particular  services on a
case-by-case  basis. All audit-related fees, tax fees and other fees incurred by
the Company for the year ended December 31, 2004, were approved by the Company's
board of directors.


<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.

                                        V-GPO, INC.

 Dated:  March 30, 2005                 By: /s/ NORMAN R. DOBIESZ
                                            Norman R. Dobiesz
                                            Chairman and Chief Executive Officer


     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
Report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant in the capacities on the dates indicated.


     SIGNATURES                      TITLE                           DATE
     ----------                      -----                           ----

/s/ NORMAN R. DOBIESZ           Director, Chairman and          March 30, 2005
                                Chief Executive Officer

    Norman R. Dobiesz


/s/ SAMUEL A. GRECO             Director, President and         March 30, 2005
                                Chief Operating Officer

    Samuel A. Greco


<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549



                       FINANCIAL STATEMENTS AND SCHEDULES

                           DECEMBER 31, 2004 AND 2003



                         FORMING A PART OF ANNUAL REPORT

                 PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934

                                   V-GPO, INC.


<PAGE>


                                   V-GPO, INC.
                          Index to Financial Statements


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


                                                                      Page No.
                                                                      --------

Report of Independent Registered Certified
 Public Accountants                                                     F-3

Consolidated Balance Sheet at December 31, 2004                         F-4

Consolidated Statements of Losses for the Years
 Ended December 31, 2004 and 2003                                       F-5

Consolidated Statements of Deficiency in
 Stockholders' Equity for the Years Ended
 December 31, 2004 and 2003                                             F-6

Consolidated Statements of Cash Flows for the
 Years Ended December 31, 2004 and 2003                                 F-7

Notes to Consolidated Financial Statements                           F-8 to F-21


<PAGE>


                    RUSSELL BEDFORD STEFANOU MIRCHANDANI LLP
                          CERTIFIED PUBLIC ACCOUNTANTS


         REPORT OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTANTS
         -------------------------------------------------------------


Board of Directors
V-GPO, Inc.
Sarasota, FL


     We have audited the accompanying  consolidated balance sheet of V-GPO, Inc.
and its wholly-owned  subsidiary (the "Company") as of December 31, 2004 and the
related consolidated  statements of losses,  deficiency in stockholders' equity,
and cash flows for the two years 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 upon our audits.

     We conducted our audit in accordance  with  standards of the Public Company
Accounting  Oversight Board (United States of America).  Those standards require
that we plan and perform the audit to obtain reasonable  assurance about whether
the financial statements are free of material  misstatements.  An audit includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial  statements.  An audit also  includes  assessing  the  accounting
principles  used  and  significant  estimates  made  by  management,  as well as
evaluating the overall financial  statement  presentation.  We believe 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 financial position of the Company
as of December 31, 2004,  and the results of its  operations  and its cash flows
for  the two  years  then  ended,  in  conformance  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
O, the Company is experiencing  difficulty in generating sufficient cash flow to
meet it obligations and sustain its operations,  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 O.  The  consolidated  financial
statements do not include any adjustments  that might result from the outcome of
this uncertainty.

                                    /s/ RUSSELL BEDFORD STEFANOU MIRCHANDANI LLP
                                        ----------------------------------------
                                        Russell Bedford Stefanou Mirchandani LLP
                                        Certified Public Accountants

McLean, Virginia
March 1, 2005

                                       F-3


<PAGE>


                                   V-GPO, INC.
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 2004

ASSETS

Current assets:
Cash and cash Equivalents                                           $     7,262
Accounts receivable, net of allowance for
 doubtful account of $850,520                                             6,666
                                                                    -----------
Total current assets                                                     13,928

Property, plant and equipment: (Note B)
Property, plant and equipment, at cost                                   57,821
Less: accumulated  depreciation                                          52,922
                                                                    -----------
                                                                          4,899

Other assets:

Software development, less accumulated
 amortization of $502,322 (Note C)                                      270,482

Total assets                                                        $   289,309
                                                                    ===========
LIABILITIES AND DEFICIENCY IN STOCKHOLDERS'
 EQUITY

Current liabilities:
Accounts payable and accrued liabilities
 (Note D)                                                           $ 6,614,763
Advances from related parties, net (Note E)                             548,294
Other advances                                                          130,500
Notes payable (Note F)                                                1,779,983
Line of credit (Note G)                                                 231,250
Software license fees due (Note H)                                    3,625,000
                                                                     ----------
Total current liabilities                                            12,929,790


Commitments and contingencies (Note M)                                        -

Deficiency in stockholders' equity: Preferred
 stock, par value $ 0.001 per share; 20,000,000
 shares  authorized:

Series A preferred stock, par value $ 0.001 per
 share; 100,000 shares authorized; 100,000 issued
 at December 31, 2004 (Note I)                                              100
Common stock, par value $ 0.0001 per share;
100,000,000 shares authorized; 37,765,500 shares
issued and outstanding at December 31, 2004
 (Note I)                                                                 3,777
Treasury stock                                                         (242,500)
Additional paid-in capital                                            1,987,362
Accumulated deficit                                                 (14,389,220)
                                                                    -----------
Total deficiency in stockholders' equity                            (12,640,481)

Total liabilities and deficiency in stockholders'
equity                                                              $   289,309
                                                                    ===========


           See accompanying notes to consolidated financial statements

                                       F-4


<PAGE>


                                   V-GPO, INC.
                        CONSOLIDATED STATEMENTS OF LOSSES
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

                                              2004                  2003
                                              ----                  ----
Revenue:

Consulting Income, net                        $    36,663           $   590,229

Operating Expenses:

  Selling, General and Administrative           2,509,886             1,867,885
  Impairment of Other Assets (Note M)             116,774                     -

  Depreciation and Amortization
   Expenses (Note B and C)                        158,504               166,468
                                              -----------           -----------
  Total Operating Expenses                      2,785,164             2,034,353


Net Loss from Operations                       (2,748,501)           (1,444,124)


Interest (Expense), net                          (379,638)             (431,614)

Provision for Income Taxes                              -                     -
                                              -----------           -----------

Net Loss                                      $(3,128,139)          $(1,875,738)
                                              ===========           ===========

Loss per common share (basic and
 assuming dilution)(Note L)                   $     (0.08)          $    (0.05)
                                              ===========           ==========
Weighted average shares outstanding

Basic and diluted                              37,765,500            37,765,500
                                              ===========           ===========


           See accompanying notes to consolidated financial statements

                                       F-5


<PAGE>


<TABLE>

                                   V-GPO, INC.
          CONSOLIDATED STATEMENTS OF DEFICIENCY IN STOCKHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

<CAPTION>

                   Preferred    Preferred               Common                Treasury    Additional
                    Series A     Series A     Common     Share      Stock      Paid in    Common Stock   Accumulated
                     Shares       Amount      Shares     Amount     Amount     Capital    Subscription     Deficit        Total
<S>                 <C>          <C>        <C>         <C>        <C>        <C>         <C>          <C>             <C>


Balance At
 January 1, 2003     100,000     $    100   37,765,500  $  3,777   (242,500)  1,987,362   $        -   $ (9,385,343)   $ (7,636,604)
                    ========     ========   ==========  ========   ========   =========   ==========   =============    ============

Net loss                   -            -            -         -          -           -            -     (1,875,738)     (1,875,738)
                   ---------     --------   ----------  --------   --------   ---------   ----------   ------------    ------------

Balance At
 December 31, 2003   100,000     $    100   37,765,500  $  3,777   (242,500)  1,987,362   $        -    (11,261,081)   $ (9,512,342)
                   =========     ========   ==========  ========   ========   =========   ==========   ============    ============
Net loss                   -            -            -         -          -           -            -     (3,128,139)     (3,128,139)
                   ---------     --------   ----------  --------   --------   ---------   ----------   ------------    ------------
Balance At
 December 31, 2004   100,000     $    100   37,765,500  $  3,777   (242,500)  1,987,362   $        -   $(14,389,220)   $(12,640,481)
                   =========     ========   ==========  ========   ========   =========   ==========   ============    ============

</TABLE>


           See accompanying notes to consolidated financial statements

                                       F-6


<PAGE>


                                   V-GPO, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

                                              2004                 2003
                                              ----                 ----
Cash flows from operating activities:
Net loss from operating activities            $ (3,128,139)        $ (1,875,738)
Adjustments to reconcile net loss to
 net cash (used in) operating activities:
Depreciation and amortization                      158,504              166,468
Reserve for allowance for doubtful
 account and employee advances                     825,520               53,197
Impairment of other assets (Note M)                116,774                    -
(Increase) decrease in:
Accounts receivable                                      -             (473,483)
Prepaid expenses and other assets                        -             (100,000)
Increase (decrease) in:
Accounts payable and accrued liabilities         1,881,515            1,967,752
                                              ------------         ------------
Net cash (used in) operating activities           (145,826)            (261,804)


Cash flows from investing activities:
Capital expenditures                                     -               (2,500)
                                              ------------         ------------
Net cash (used in) investing activities                  -               (2,500)


Cash flows from financing activities:
Advances to related parties, net of
 repayments                                        (68,359)             (69,081)
Advances from related parties, net
 of repayments                                     216,009              204,723
Other advances                                           -              130,500
                                              ------------        -------------
Net cash provided by financing activities          147,650              266,142


Net increase in cash and cash equivalents            1,824                1,838
Cash and cash equivalents at beginning of
 the year                                            5,438                3,600
                                              ------------        -------------
Cash and cash equivalents at end of the year  $      7,262        $       5,438
                                              ============        =============


Supplemental Information:
Cash paid during the year for interest        $          -        $           -
                                              ============        =============
Cash paid during the year for income taxes               -                    -
                                              ============        =============


           See accompanying notes to consolidated financial statements

                                       F-7


<PAGE>


                                   V-GPO, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant  accounting  policies applied in the preparation of
the accompanying financial statements follows.

Business and Basis of Presentation

V-GPO,  Inc.  (the  "Company"  or "VGPO") is engaged in the  business of owning,
operating,  and/or managing non-urban healthcare  facilities in the Southwestern
United States. The Company was formed on May 4, 2000 under the laws of the State
of Delaware.

In April 2002, the Company incorporated  International  Healthcare  Investments,
LTD., Inc. ("IHI").  The consolidated  financial statements include the accounts
of  the  Company  and  its  wholly-owned  subsidiary,  International  Healthcare
Investments,   Ltd.,  Inc.  Significant  intercompany   transactions  have  been
eliminated in consolidation.

Cash and Cash Equivalents

For purposes of the Statements of Cash Flows,  the Company  considers all highly
liquid debt  instruments  purchased with a maturity date of three months or less
to be cash equivalents.

Property and Equipment

Property and  equipment is stated at cost.  When retired or otherwise  disposed,
the related  carrying value and  accumulated  depreciation  are removed from the
respective  accounts  and the net  difference  less  any  amount  realized  from
disposition,  is  reflected  in  earnings.  For  financial  statement  purposes,
property and equipment are depreciated using the straight-line method over their
estimated useful lives of the assets (Note B).

Long-lived Assets

The Company has adopted  Statement of  Financial  Accounting  Standards  No. 144
("SFAS  144").  The  Statement  requires  that  long-lived  assets  and  certain
identifiable intangibles held and used by the Company be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable.  Events relating to recoverability  may include
significant  unfavorable changes in business conditions,  recurring losses, or a
forecasted  inability to achieve  break-even  operating results over an extended
period. The Company evaluates the recoverability of long-lived assets based upon
forecasted  undiscounted cash flows. Should an impairment in value be indicated,
the carrying value of intangible assets will be adjusted,  based on estimates of
future discounted cash flows resulting from the use and ultimate  disposition of
the asset.  SFAS No. 144 also  requires  assets to be disposed of be reported at
the lower of the carrying amount or the fair value less costs to sell.

Fair Value of Financial Instruments

Statement of Financial  Accounting  Standards No. 107,  "Disclosures  About Fair
Value of  Financial  Instruments,"  requires  disclosure  of the  fair  value of
certain financial instruments.  The carrying value of cash and cash equivalents,
accounts receivable, accounts payable and short-term borrowings, as reflected in
the balance sheets, approximate fair value because of the short-term maturity of
these instruments.

                                       F-8


<PAGE>


                                   V-GPO, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Income Taxes

The Company has implemented the provisions on Statement of Financial  Accounting
Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"). SFAS 109 requires
that income tax accounts be computed using the liability method.  Deferred taxes
are  determined  based  upon the  estimated  future tax  effects of  differences
between  the  financial   reporting  and  tax  reporting  bases  of  assets  and
liabilities given the provisions of currently enacted tax laws.

Net Earnings (Losses) Per Common Share

The Company computes earnings per share under Statement of Financial  Accounting
Standards No. 128,  "Earnings Per Share" ("SFAS 128"). Net earnings (losses) per
common share is computed by dividing net income  (loss) by the weighted  average
number  of  shares  of  common  stock  and  dilutive  common  stock  equivalents
outstanding during the year. Dilutive common stock equivalents consist of shares
issuable upon conversion of convertible preferred shares and the exercise of the
Company's  stock  options and  warrants  (calculated  using the  treasury  stock
method).

Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect certain  reported amounts and  disclosures.  Accordingly,  actual results
could differ from those estimates.

Revenue Recognition

Revenues are  recognized in the period that  services are provided.  For revenue
from product  sales,  the Company  recognizes  revenue in accordance  with Staff
Accounting  Bulletin No. 104, REVENUE RECOGNITION  ("SAB104"),  which superseded
Staff Accounting Bulletin No. 101, REVENUE  RECOGNITION IN FINANCIAL  STATEMENTS
("SAB101"). SAB 101 requires that four basic criteria must be met before revenue
can be  recognized:  (1)  persuasive  evidence  of an  arrangement  exists;  (2)
delivery has occurred; (3) the selling price is fixed and determinable;  and (4)
collectibility is reasonably assured.  Determination of criteria (3) and (4) are
based on management's judgments regarding the fixed nature of the selling prices
of the products  delivered and the  collectibility of those amounts.  Provisions
for discounts and rebates to customers,  estimated  returns and allowances,  and
other  adjustments  are  provided  for in the same period the related  sales are
recorded.  The  Company  defers any  revenue  for which the product has not been
delivered  or is subject  to refund  until  such time that the  Company  and the
customer jointly determine that the product has been delivered or no refund will
be required.  Payments  received in advance are  deferred  until the trusses are
built and shipped to customers.

SAB  104   incorporates   Emerging  Issues  Task  Force  00-21  ("EITF  00-21"),
MULTIPLE-DELIVERABLE  REVENUE ARRANGEMENTS.  EITF 00-21 addresses accounting for
arrangements that may involve the delivery or performance of multiple  products,
services and/or rights to use assets.  The effect of implementing  EITF 00-21 on
the Company's  consolidated financial position and results of operations was not
significant.

                                       F-9


<PAGE>


                                   V-GPO, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Advertising

The Company  follows the policy of charging the costs of advertising to expenses
incurred. The Company incurred no advertising costs for the years ended December
31, 2004 and 2003.

Research and Development

The Company  accounts for research and development  costs in accordance with the
Financial   Accounting  Standards  Board's  Statement  of  Financial  Accounting
Standards No. 2 ("SFAS 2"),  "Accounting  for Research and  Development  Costs."
Under SFAS 2, all research and  development  costs must be charged to expense as
incurred.  Accordingly,  internal research and development costs are expensed as
incurred.  Third-party  research and  developments  costs are expensed  when the
contracted  work has been performed or as milestone  results have been achieved.
Company-sponsored  research and  development  costs  related to both present and
future  products are expensed in the period  incurred.  The Company  incurred no
expenditures on research and product development for the year ended December 31,
2004 and 2003.

Liquidity

As shown in the accompanying consolidated financial statements,  the Company has
incurred a net loss of $3,128,139 and $1,875,738 during the years ended December
31, 2004 and 2003, respectively.  The Company's current liabilities exceeded its
current  assets by  $12,915,862  as of  December  31,  2004.  Consequently,  its
operations  are  subject to all risks  inherent  in the  establishment  of a new
business enterprise.

Concentrations of Credit Risk

Financial  instruments and related items, which potentially  subject the Company
to  concentrations  of credit risk,  consist primarily of cash, cash equivalents
and related party  receivables.  The Company  places its cash and temporary cash
investments with credit quality institutions.  At times, such investments may be
in excess of the FDIC  insurance  limit.  The Company  periodically  reviews its
trade  receivables  in  determining  its  allowance for doubtful  accounts.  The
allowance for doubtful accounts was $850,520 at December 31, 2004.

Comprehensive Income

The  Company  adopted  Statement  of  Financial  Accounting  Standards  No. 130,
"Reporting  Comprehensive  Income".  SFAS No. 130 establishes  standards for the
reporting  and   displaying  of   comprehensive   income  and  its   components.
Comprehensive  income is defined as the change in equity of a business  during a
period from  transactions  and other  events and  circumstances  from  non-owner
sources.  It  includes  all  changes  in  equity  during a period  except  those
resulting from investments by owners and  distributions to owners.  SFAS No. 130
requires  other   comprehensive   income  (loss)  to  include  foreign  currency
translation  adjustments and unrealized  gains and losses on  available-for-sale
securities.

                                      F-10


<PAGE>


                                   V-GPO, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Stock Based Compensation

In December 2002, the FASB issued  Statement of Financial  Accounting  Standards
No. 148 ("SFAS No. 148"),  "Accounting for  Stock-Based  Compensation-Transition
and  Disclosure-an  amendment of SFAS 123." This statement  amends SFAS No. 123,
"Accounting for Stock-Based  Compensation,"  to provide  alternative  methods of
transition  for a voluntary  change to the fair value based method of accounting
for stock-based employee  compensation.  In addition,  this statement amends the
disclosure requirements of SFAS No. 123 to require prominent disclosures in both
annual and  interim  financial  statements  about the method of  accounting  for
stock-based employee  compensation and the effect of the method used on reported
results.  The  Company  has  chosen  to  continue  to  account  for  stock-based
compensation  using the intrinsic value method  prescribed in APB Opinion No. 25
and related interpretations. Accordingly, compensation expense for stock options
is  measured as the excess,  if any, of the fair market  value of the  Company's
stock at the date of the grant over the  exercise  price of the related  option.
The Company has adopted the annual disclosure  provisions of SFAS No. 148 in its
financial  reports for the year ended  December 31, 2004 and 2003 and will adopt
the interim  disclosure  provisions for its financial reports for the subsequent
periods.

Had compensation  costs for the Company's stock options been determined based on
the fair value at the grant dates for the  awards,  the  Company's  net loss and
losses  per share  would  have been as  follows  (transactions  involving  stock
options issued to employees and Black-Scholes model assumptions are presented in
Note J):

                                               2004                2003
                                               ----                ----
Net loss - as reported                         $ (3,128,139)       $ (1,875,738)
Add:  Total  stock  based  employee
 compensation   expense  as reported
 under intrinsic value method (APB.
 No. 25)                                                  -                   -
Deduct:  Total  stock  based  employee
 compensation  expense as reported under
 fair value based method (SFAS No. 123)                   -              (7,515)
Net loss - Pro Forma                           $ (3,128,139)       $ (1,883,253)
Net loss attributable to common
 stockholders - Pro forma                      $ (3,128,139)       $ (1,883,253)
Basic (and assuming dilution)loss per
 share - as reported                           $      (0.08)       $      (0.05)
Basic (and assuming dilution) loss per
 share - Pro forma                             $      (0.08)       $      (0.05)

Segment Information

Statement of Financial Accounting Standards No. 131, "Disclosures about Segments
of an Enterprise and Related Information" ("SFAS 131") establishes standards for
reporting   information   regarding   operating  segments  in  annual  financial
statements and requires selected  information for those segments to be presented
in interim financial  reports issued to stockholders.  SFAS 131 also establishes
standards for related  disclosures  about  products and services and  geographic
areas.  Operating  segments are identified as components of an enterprise  about
which separate discrete financial information is available for evaluation by the
chief operating  decision maker, or  decision-making  group, in making decisions
how to allocate  resources and assess  performance.  The  information  disclosed
herein  materially  represents all of the financial  information  related to the
Company's principal operating segment.

                                      F-11


<PAGE>


                                   V-GPO, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

New Accounting Pronouncements

In November 2004, the Financial  Accounting  Standards  Board (FASB) issued SFAS
151,  INVENTORY  COSTS-- AN AMENDMENT OF ARB NO. 43,  CHAPTER 4. This  Statement
amends the guidance in ARB No. 43,  Chapter 4,  "Inventory  Pricing," to clarify
the accounting for abnormal amounts of idle facility expense,  freight, handling
costs,  and  wasted  material  (spoilage).  Paragraph  5 of ARB 43,  Chapter  4,
previously  stated  that ". . . under  some  circumstances,  items  such as idle
facility expense,  excessive spoilage,  double freight, and rehandling costs may
be so abnormal as to require  treatment as current period  charges.  . . ." This
Statement  requires  that those items be recognized  as  current-period  charges
regardless  of whether they meet the  criterion of "so  abnormal."  In addition,
this Statement  requires that  allocation of fixed  production  overheads to the
costs  of  conversion  be  based  on  the  normal  capacity  of  the  production
facilities.  This  Statement is effective for inventory  costs  incurred  during
fiscal  years  beginning  after June 15, 2005.  Management  does not believe the
adoption  of this  Statement  will  have any  immediate  material  impact on the
Company.

In  December  2004,  the FASB issued SFAS  No.152,  "Accounting  for Real Estate
Time-Sharing Transactions--an amendment of FASB Statements No. 66 and 67" ("SFAS
152) The amendments  made by Statement 152 This Statement  amends FASB Statement
No.  66,  Accounting  for  Sales of Real  Estate,  to  reference  the  financial
accounting and reporting guidance for real estate time-sharing transactions that
is  provided in AICPA  Statement  of Position  (SOP) 04-2,  Accounting  for Real
Estate Time-Sharing Transactions.  This Statement also amends FASB Statement No.
67,  Accounting for Costs and Initial Rental Operations of Real Estate Projects,
to state that the guidance for (a) incidental  operations and (b) costs incurred
to sell  real  estate  projects  does  not  apply  to real  estate  time-sharing
transactions.  The accounting  for those  operations and costs is subject to the
guidance in SOP 04-2.  This Statement is effective for financial  statements for
fiscal years beginning after June 15, 2005. with earlier application encouraged.
The Company does not anticipate  that the  implementation  of this standard will
have a material impact on its financial position,  results of operations or cash
flows.

On  December  16,  2004,  the  Financial  Accounting  Standards  Board  ("FASB")
published  Statement of Financial  Accounting  Standards No. 123 (Revised 2004),
SHARE-BASED  PAYMENT ("SFAS 123R").  SFAS 123R requires that  compensation  cost
related to  share-based  payment  transactions  be  recognized  in the financial
statements.  Share-based  payment  transactions  within  the  scope of SFAS 123R
include stock options,  restricted stock plans,  performance-based awards, stock
appreciation  rights,  and employee share purchase plans. The provisions of SFAS
123R are  effective  as of the first  interim  period that begins after June 15,
2005. Accordingly,  the Company will implement the revised standard in the third
quarter of fiscal year 2005. Currently, the Company accounts for its share-based
payment  transactions under the provisions of APB 25, which does not necessarily
require  the  recognition  of  compensation  cost in the  financial  statements.
Management is assessing the  implications  of this revised  standard,  which may
materially  impact the  Company's  results of operations in the third quarter of
fiscal year 2005 and thereafter.

                                      F-12


<PAGE>


                                   V-GPO, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

New Accounting Pronouncements (Continued)

On December 16, 2004, FASB issued  Statement of Financial  Accounting  Standards
No. 153,  EXCHANGES OF NONMONETARY  ASSETS,  AN AMENDMENT OF APB OPINION NO. 29,
ACCOUNTING FOR NONMONETARY TRANSACTIONS (" SFAS 153"). This statement amends APB
Opinion 29 to  eliminate  the  exception  for  nonmonetary  exchanges of similar
productive  assets and  replaces it with a general  exception  for  exchanges of
nonmonetary assets that do not have commercial  substance.  Under SFAS 153, if a
nonmonetary  exchange of similar productive assets meets a  commercial-substance
criterion and fair value is determinable,  the transaction must be accounted for
at fair  value  resulting  in  recognition  of any  gain or  loss.  SFAS  153 is
effective for  nonmonetary  transactions in fiscal periods that begin after June
15,  2005.  The Company  does not  anticipate  that the  implementation  of this
standard  will have a  material  impact on its  financial  position,  results of
operations or cash flows.

Reclassifications

Certain reclassifications have been made in prior year's financial statements to
conform to classifications used in the current year.

NOTE B - PROPERTY AND EQUIPMENT

The  Company's  property  and  equipment  at December  31, 2004  consists of the
following:

                                                   2004
                                                   ----

  Computer Equipment                         $   44,623
  Office Furniture                               13,198
                                             ----------
   Total                                         57,821
  Accumulated Depreciation                      (52,922)
                                             ----------
                                             $    4,899
                                             ==========

Depreciation  expense  included  as a charge to income  amounted  to $3,944  and
$11,912 for the years ended December 31, 2004 and 2003, respectively.

NOTE C - SOFTWARE DEVELOPMENT COSTS

During the period March 1999 through December 2001,  entities  controlled by the
Company's Chief Executive Officer and principal shareholder,  contributed to the
Company  certain  capitalized  software  development  costs  for the  exclusive,
worldwide  distribution  and use by the  Company.  An  aggregate  of $772,804 of
software  development costs, net of liabilities  assumed,  was capitalized as of
December 31, 2004.

                                      F-13


<PAGE>


                                   V-GPO, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003

NOTE C - SOFTWARE DEVELOPMENT COSTS (CONTINUED)

In accordance with Staff  Accounting  Bulletin Topic 5-G, the Company  accounted
for the contribution of the capitalized software development costs as assets and
assumption  of  liabilities,  and  a  corresponding  capital  contribution.  The
transaction  is  accounted  for using the  purchase  method of  accounting.  The
Company  recorded  the  carryover   historical  basis  of  net  tangible  assets
contributed, which did not differ materially from their fair value.

Software  development  costs are  amortized  over a useful  life of five  years.
Amortization  expense  included as a charge to income  amounted to $154,560  and
$154,556  for the  years  ended  December  31,  2004 and  2003.  The  costs  and
accumulated  amortization of software development costs at December 31, 2004 are
summarized as follows:

                                                       2004
                                                       ----

  Software development costs                     $  772,804
  Less: accumulated amortization                   (502,322)
                                                 ----------
  Software development costs, net                $  270,482
                                                 ==========

NOTE D - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities
 at December 31, 2004 are as follows:

                                                       2004
                                                       ----

  Accrued interest                              $ 1,624,213
  Accrued payroll and payroll taxes               4,278,653
  Other accrued liabilities                         711,897
                                                -----------
  Total                                         $ 6,614,763
                                                ===========

NOTE E - RELATED PARTY TRANSACTIONS

Advances from related parties at December
 31, 2004 are as follows:

                                                       2004
                                                       ----

  10% note payable, unsecured and payable
   on demand to Company officer                  $   75,000
  10% note payable, unsecured and payable
   on demand to Company officer                     325,000
  Series of advances unsecured and payable
   on demand to entities controlled by
   Company officers, accrues interest at
   10% per annum                                     60,800
  Series of advances unsecured and payable
   on demand to Company officers, accrues
   interest at 10% per annum                        610,000
  Series of advances unsecured and payable
   on demand to an entity controlled by
   Company officers, accrues interest at
   10% per annum                                     47,650

                                      F-14


<PAGE>


                                   V-GPO, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003

NOTE E - RELATED PARTY TRANSACTIONS (CONTINUED)

  (Continued)
  Series of advances unsecured and payable
   on demand to an entity controlled by
   Company officers, accrues interest at
   10% per annum                                    215,800
  Series of advances unsecured and payable
   on demand to an entity controlled by
   Company officers, accrues interest at
   10% per annum                                    151,300
  Series of advances unsecured and payable
   on demand to an entity controlled by
   Company officers, accrues interest at
   10% per annum                                     60,000
  Series of advances unsecured and payable
   on demand to an entity controlled by
   Company officers, non-interest bearing           108,830
  Series of advances unsecured and payable
   on demand to an entity controlled by
   Company officers, non-interest bearing           326,218
                                                 ----------
                                                 $1,980,598
                                                 ==========

The Company also has advanced funds to entities  controlled by Company  officers
and principal  shareholders  during the year ended December 31, 2004. The amount
due to the  Company at  December  31,  2004 was  $1,432,304.  The  advances  are
non-interest  bearing,  unsecured and no formal  repayment terms or arrangements
exist. Net advances from related parties amounted $548,294 at December 31, 2004.

NOTE F - NOTES PAYABLE

Notes payable at December 31, 2004 are
 as follows:

                                                      2004
                                                      ----

  10% senior convertible notes payable,
   unsecured and due six months from
   the date of the note with the latest
   maturity June 2001; Noteholder has
   the option convert unpaid note principal
   together with accrued and unpaid interest
   to the Company's common stock at a rate of
   $1.50 per share. In the event the unpaid
   principal amount of the notes, together
   with any accrued and unpaid interest, are
   not converted or paid in full by maturity,
   then interest accrues at 12.5% per annum
   until paid in full. The Company is in
   default under the terms of the Note
   Agreement(see Note M).                      $ 1,779,983
                                               -----------
                                                 1,779,983
   Less: current portion                       (1,779,983)
                                               -----------
                                               $         -
                                               ===========

                                      F-15


<PAGE>


                                   V-GPO, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003

NOTE G - LINE OF CREDIT

                                                      2004
                                                      ----

  Line of  Credit,  secured by  certain
   receivables  and  related  contracts
   and proceeds thereof up to an aggregate
   of $740,000 under a Security Agreement,
   line cannot exceed $370,000, to be repaid
   upon earlier of receipt by Company of
   accounts  receivable  owed by certain
   account debtors or December 15, 2001. The
   Company is in default under the terms of
   this agreement.                               $ 231,250
  Less Current Portion                             (231,250)
                                                 ----------
                                                 $        -
                                                 ==========

NOTE H - ACCRUED SOFTWARE LICENSE FEES

The Company entered into a Software  License  Agreement  ("Agreement")  in March
1999 with an entity  controlled by the  Company's  Chief  Executive  Officer and
principal  shareholder  ("Licensor").  The  Agreement  provided  for a  limited,
restricted,  non-exclusive,  revocable  worldwide license to use,  reproduce and
sublicense  certain  software owned by the Licensor and two additional  entities
controlled by the Company's Chief Executive  Officer and principal  shareholder.
License fees under the Agreement  were based upon a percentage of revenues to be
subject  to a  $200,000  per month fee and  further  subject  to the  successful
completion of a securities  offering generating at least $7,000,000 of proceeds.
The  Agreement  was  amended  on April  21,  2000 to  provide  for an  exclusive
worldwide  license in return for a minimum  license fee of $150,000 per month to
be  increased  to a  minimum  of  $200,000  per month if a  securities  offering
generated at least  $4,500,000  in  proceeds.  In April 2001 there was a further
amendment to provide that  effective  January 1, 2001, the minimum was increased
to $250,000 per month with increases of 10% on each January  thereafter.  During
the year ended December 31, 2001, the Company  defaulted  under the terms of the
Agreement.  In  September  2002,  the Licensor  and the Company  terminated  the
Agreement.  As of  December  31,  2004,  the  Company  has  accrued  in  current
liabilities previously incurred license fees aggregating $3,625,000.

NOTE I - CAPITAL STOCK

The Company has  authorized  20,000,000  shares of preferred  stock,  with a par
value of $.001 per share. The Company has designated 100,000 shares of preferred
stock as Series A  Preferred  Stock with a par value of $.001.  With  respect to
every matter upon which the stockholders shall be entitled to vote, every holder
of Series A Preferred  Stock shall be entitled to four hundred (400) votes.  The
holders of the shares of Series A  Preferred  Stock are not  entitled to receive
dividends.  As of December 31, 2004,  the Company has 100,000 shares of Series A
Preferred Stock issued and outstanding.

The company has authorized  100,000,000 shares of common stock, with a par value
of $.0001 per share. As of December 31, 2004, the Company has 37,765,500  shares
of common stock issued and outstanding.

                                      F-16


<PAGE>


                                   V-GPO, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003

NOTE J - STOCK OPTIONS AND WARRANTS

Employee Stock Options

Transactions  involving  stock  options  issued to employees  are  summarized as
follows:

                                       Number of Shares        Weighted Average
                                       ----------------         Price Per Share
                                                               ----------------

  Outstanding at January 1, 2003                250,000              $     0.25
   Granted                                            -                       -
   Exercised                                          -                       -
   Canceled or expired                                -                       -
                                             ----------              ----------
  Outstanding at December 31, 2003              250,000                    0.25
   Granted                                            -                       -
   Exercised                                          -                       -
   Canceled or expired                         (250,000)                   0.25
                                             ----------              ----------
   Outstanding at December 31, 2004                   -              $        -
                                             ==========              ==========

The Company did not grant any stock  options to employees  during the year ended
December 31,  2004.  The  weighted-average  fair value of stock  options  vested
during the year ended  December  31, 2003 and the  weighted-average  significant
assumptions  used to determine those fair values,  using a Black-Scholes  option
pricing model are as follows:

                                                   2003
                                                   ----

  Significant assumptions (weighted-average):
   Risk-free interest rate at grant date          1.13%
   Expected stock price volatility                 143%
   Expected dividend payout                           -
   Expected option life-years(a)                      5
   (a)The expected option life is based on
      contractual expiration dates.

If the Company  recognized  compensation cost for the employee stock option plan
in  accordance  with SFAS No. 123, the Company's pro forma net loss and net loss
per share  would have been  $(3,128,139)  and  $(0.08)  at  December  31,  2004,
respectively,   and   $(1,883,253)   and  $(0.05)  and  at  December  31,  2003,
respectively.

Warrants

The  following  table  summarizes  the changes in warrants  outstanding  and the
related  prices  for  the  shares  of  the  Company's  common  stock  issued  to
non-employees  of the  Company.  These  warrants  were  granted  in lieu of cash
compensation for services performed or financing expenses.

     Warrants Outstanding                              Warrants Exercisable
     --------------------                              --------------------
                        Weighted Average   Weighted                   Weighted
                            Remaining       Average                    Average
Exercise    Number         Contractual     Exercise       Number       Exercise
 Prices   Outstanding      Life (Years)      Price      Exercisable      Price
--------  -----------   ----------------   --------     -----------   ----------
 $1.00      643,324           3.00          $1.00         643,324       $1.00
            -------                                       -------
            643,324                                       643,324
            =======                                       =======

                                      F-17


<PAGE>


                                   V-GPO, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003

NOTE J - STOCK OPTIONS AND WARRANTS

Warrants (Continued)

Transactions involving warrants are summarized as follows:

                                                               Weighted Average
                                       Number of Shares         Price Per Share
                                       ----------------        ----------------

  Outstanding at January 1, 2003                643,324              $     1.00
   Granted                                            -                       -
   Exercised                                          -                       -
   Canceled or expired                                -                       -
                                             ----------              ----------
  Outstanding at December 31, 2003              643,324              $     1.00
   Granted                                            -                       -
   Exercised                                          -                       -
   Canceled or expired                                -                       -
                                             ----------              ----------
  Outstanding at December 31, 2004              643,324              $     1.00
                                             ==========              ==========

The Company did not grant any  warrants to  non-employees  during the year ended
December  31, 2004 and 2003,  accordingly  no expense was charged to  operations
during the two years then ended.

NOTE K - INCOME TAXES

The Company has adopted Financial Accounting Standard No. 109 which requires the
recognition of deferred tax  liabilities  and assets for the expected future tax
consequences of events that have been included in the financial statement or tax
returns.  Under this method,  deferred tax liabilities and assets are determined
based on the difference between financial statements and tax bases of assets and
liabilities  using  enacted  tax  rates in  effect  for the  year in  which  the
differences  are  expected to reverse.  Temporary  differences  between  taxable
income  reported for  financial  reporting  purposes and income tax purposes are
insignificant.

For income tax reporting purposes,  the Company's aggregate unused net operating
losses approximate $14,300,000 which expire through 2024, subject to limitations
of Section 382 of the Internal Revenue Code, as amended.  The deferred tax asset
related  to the  carryforward  is  approximately  $4,900,000.  The  Company  has
provided a valuation  reserve  against the full amount of the net operating loss
benefit,  because in the opinion of management based upon the earning history of
the Company, it is more likely than not that the benefits will not be realized.

Components of deferred tax assets as of December 31, 2004 are as follows:

  Non Current:
   Net operating loss carryforward                            $ 4,900,000
   Valuation allowance                                         (4,900,000)
                                                              -----------
   Net deferred tax asset                                     $         -
                                                              ===========

                                      F-18


<PAGE>


                                   V-GPO, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003

NOTE L - LOSSES PER SHARE

The following  table  presents the  computations  of basic and dilutive loss per
share:

                                             2004                 2003
                                             ----                 ----
Loss Available to Common Shareholders        $ (3,128,139)        $ (1,875,738)
                                             ============         ============
Basic and Fully Diluted Loss Per Share       $      (0.08)        $      (0.05)
                                             ============         ============
Weighted Average Common Shares Outstanding     37,765,500           37,765,500
                                             ============         ============

NOTE M - COMMITMENTS AND CONTINGENCIES

Lease Commitments

The Company  shared  office  spaces with an entity  controlled  by the Company's
officer and director.  No rent expenses incurred during the years ended December
31, 2004 and 2003.

Employment Agreements

The Company  has  employment  agreements  with the Chief  Executive  Officer and
President.  The  Agreements  are  generally  for a term of 36 to 48 months  from
inception  and  renewable  automatically  from year to year  unless  either  the
Company or the individual terminates such agreement by written notice.

Litigation

As described in Note F, the Company is in default  under the terms of its Senior
Convertible  Note  Agreements.  In November  2002, a holder of Company's  Senior
Convertible  Notes  filed a complaint  against the Company in the U.S.  District
Court,  Southern  District of New York, New York. The complaint seeks payment of
the unpaid  principal,  accrued interest and costs aggregating  $260,000.  As of
December  31,  2004,  the Company has  included in its accrued  liabilities  all
unpaid principal amount of the Senior  Convertible  Notes along with accrued and
unpaid interest.

In April,  2003, a former landlord filed a complaint  against V-GPO, Inc. in the
County Court of Dallas for Dallas  County,  Texas.  The complaint  seeks payment
under  remaining  term of an  agreement to lease  certain  real  property in the
amount  of $  406,000  allegedly  due and  unpaid,  plus  interests,  costs  and
attorney's  fees.  The  Company  acknowledges  that it leased  the  property  in
question,  however  disputes that this amount is owed.  Management  believes the
ultimate  outcome of this matter will not have a material  adverse effect on the
Company's consolidated financial position or results of operations.

In May 2003, the Texas Work Force  Commission  awarded a former  employee of the
Company  approximately  $16,000 in  connection  with a wage  claim.  The Company
believes it has  meritorious  defenses to the  employee's  claims and intends to
vigorously  defend itself  against the claim.  Management  believes the ultimate
outcome of this matter will not have a material  adverse effect on the Company's
consolidated financial position or results of operations.

                                      F-19


<PAGE>


                                   V-GPO, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003

NOTE M - COMMITMENTS AND CONTINGENCIES (CONTINUED)

Litigation (Continued)

The Company is subject to other legal proceedings and claims, which arise in the
ordinary  course of its  business.  Although  occasional  adverse  decisions  or
settlements may occur, the Company  believes that the final  disposition of such
matters  should not have a material  adverse  effect on its financial  position,
results of operations or liquidity.

Financing Commitment and Acquisitions

In  January  2004,  IHI  entered  into  a  definitive   agreement  to  sell  and
subsequently  delivered  $275  million of Bonds.  IHI did not  receive  the Bond
proceeds.  As a result of the  default  under the  terms of the  agreement,  the
Company has initiated  steps to have the Bonds returned and cancelled.  There is
no assurance  IHI will prevail and have the Bonds  returned and  cancelled.  The
Company  believes that the final  disposition  of such matters should not have a
material  adverse  effect on its  financial  position,  results of operations or
liquidity.

During the year ended  December 31, 2004,  the Company has charged to operations
impairment  of prepaid  costs in the amount of $116,774 in  connection  with the
Offering.

NOTE N - MAJOR CUSTOMERS

Revenue from the Company's one major customers  approximated  $36,663 or 100% of
sales for the year ended  December 31, 2004.  Revenue from the  Company's  three
major  customers  approximated  $540,000  or 91% of sales  for the  years  ended
December 31, 2003.

NOTE O - GOING CONCERN MATTERS

The accompanying consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the satisfaction
of  liabilities  in the normal  course of  business.  As shown in the  financial
statements the Company incurred accumulated losses of $14,389,220. The Company's
current  liabilities  exceeded its current  assets by $12,915,862 as of December
31, 2004.  These  factors  among  others may  indicate  that the Company will be
unable to continue as a going concern for a reasonable period of time.

The  Company's  existence  is  dependent  upon  management's  ability to develop
profitable operations and resolve its liquidity problems. Management anticipates
the Company will attain  profitable  status and improve it liquidity through the
continued  developing of its products,  establishing a profitable market for the
Company's  products  and  additional  equity  investment  in  the  Company.  The
accompanying  financial  statements  do not include any  adjustments  that might
result should the Company be unable to continue as a going concern.

                                      F-20


<PAGE>


                                   V-GPO, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003

NOTE O - GOING CONCERN MATTERS (CONTINUED)

In order to improve the  Company's  liquidity,  the Company is actively  pursing
additional  equity financing  through  discussions  with investment  bankers and
private  investors.  There can be no assurance the Company will be successful in
its effort to secure additional equity financing.

If  operations  and cash  flows  continue  to  improve  through  these  efforts,
management  believes  that the Company can  continue  to  operate.  However,  no
assurance  can be given that  management's  actions  will  result in  profitable
operations or the resolution of its liquidity problems.

                                      F-21