<PAGE>
     As filed with the Securities and Exchange Commission on March 27, 2003.
================================================================================

                      SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

                                   -----------

(Mark One)

      [X]   Annual Report under Section 13 or 15(d) of the Securities Exchange
            Act of 1934

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002

      [ ]   Transition Report under Section 13 or 15(d) of the Securities
            Exchange Act of 1934

              For the transition period from           to
                                             ---------    ---------

                           COMMISSION FILE NO. 0-33353

                               HARP & EAGLE, LTD.
                 (Name of small business issuer in its charter)

                       WISCONSIN                     39-1980178

             (State or other jurisdiction of    (I.R.S. Employer
             incorporation or organization)     Identification Number)

                1234 NORTH ASTOR STREET
                 MILWAUKEE, WISCONSIN                  53202

         (Address of principal executive offices)    (Zip Code)

                                 (414) 272-5273
                (Issuer's telephone number, including area code)

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

Securities registered under Section 12(g) of the Exchange Act: COMMON STOCK, PAR
                            VALUE $0.0001 PER SHARE

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

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B 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 consolidated revenues for its most recent fiscal year: $1,357,165

      Aggregate market value of voting and non-voting common equity held by
                     non-affiliates as of December 31, 2002:
 $2,026,584 (calculated at $6.00 per share, the initial public offering price)

Number of shares outstanding of each of the issuer's classes of common equity as
                              of December 31, 2002:
          717,766 SHARES OF COMMON STOCK, PAR VALUE $0.0001 PER SHARE

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      NONE

================================================================================
<PAGE>
                                     PART I

      IN THIS REPORT, "HARP & EAGLE," "WE," "US" AND "OUR" REFER TO THE
REGISTRANT, HARP & EAGLE, LTD., A WISCONSIN CORPORATION, AND ITS SUBSIDIARIES.

ITEM 1. DESCRIPTION OF BUSINESS.

      Harp & Eagle is engaged in the business of forming, acquiring, operating
and managing Irish-theme inns and restaurants. We own all of the outstanding
common stock of Castledaly Acquisition Corporation, a Wisconsin corporation
which wholly owns Castledaly Manor, Ltd., an Irish limited company which owns a
23-room inn and related facilities in a refurbished country manor known as
Castledaly Manor, located approximately five miles from Athlone, County
Westmeath, in the center of Ireland.

      During 2001, we acquired, principally through the exchange of shares, all
of the outstanding common stock of Castledaly Acquisition Corporation. Our
business operations include (1) the operation of Castledaly Manor and (2) the
review and evaluation of other potential sites for development of additional
Irish-theme inns and restaurants. We are currently developing an inn in Green
Bay, Wisconsin and considering a potential site in County Antrim, Ireland. In
the future, we will seek to build, acquire and/or develop other Irish-theme
hotels in the United States and Ireland.

CASTLEDALY MANOR

      GENERAL. Castledaly Manor is a 37-acre facility with a manor house and
stable blocks, originally built as a working estate in the early 18th Century.
During 1997, a group of Wisconsin investors organized Castledaly Acquisition
Corporation which purchased one-half of the outstanding "ordinary shares" of
Castledaly Manor, Ltd., an Irish limited company; an Irish entrepreneur owned
the balance. Castledaly Manor, Ltd. owns 100% of the equity in Castledaly Manor.
An Irish limited company, which is comparable to a typical business corporation
in the United States, provides limited liability of its shareholders; its equity
shares, which are comparable to common stock, are referred to as "ordinary
shares." In 1997, Castledaly Manor significantly renovated its buildings and
improved its grounds. During 1999, Castledaly Acquisition Corporation acquired
the remaining outstanding ordinary shares of Castledaly Manor, Ltd. and now owns
100% of its outstanding shares. During 2000 and 2001, Harp & Eagle acquired all
of the outstanding common stock of Castledaly Acquisition Corporation, thereby
becoming the sole owner of Castledaly Manor.

      Castledaly Manor offers a travel package for American tourists which
includes round-trip air travel between Chicago to Dublin and one week's
accommodations at Castledaly Manor, for a package price per couple of less than
$1,350 in the winter to $2,000 in the summer. This program has resulted in an
occupancy rate of more than 80% for the period from late 1999 to date. Any rooms
not occupied by travel-package guests are available to others at the rate of
$100 per night.

      Originally, Castledaly Manor had 11 rooms available for rent. Early in
2001, it expanded by renovation of the stable blocks behind the manor house,
thereby adding an additional 12 guest rooms; with these additional rooms, the
inn now has 23 guest rooms available for rent. Commencing in the second half of
1999 and continuing to date, Castledaly Manor has achieved positive cash flow.

      DESCRIPTION OF THE CASTLEDALY PROPERTY. Castledaly Manor is located midway
between Athlone and Moate, in the center of Ireland. It was built over 250 years
ago and is surrounded by 37 acres of pasture and woodland. Five golf courses,
riding and angling are available in the immediate vicinity. The manor's main
building includes an entrance hall and reception hall; a dining room, lounge and
function room (for corporate and business meetings); a conservatory; 11 guest
rooms including one double-family suite; a manager's living suite; a bar; and
miscellaneous other rooms. The grounds are also occupied by walled gardens, a
pond and stream, and stone stables which have been converted into an additional
12 guest rooms. We intend to further expand Castledaly Manor by adding a pub in
a section of the stables for an estimated approximate cost of $250,000.


                                       2
<PAGE>
      MARKETING AND PROMOTION. We promote Castledaly Manor primarily by word of
mouth referrals and through advertising at County Clare in Milwaukee, Wisconsin
and 52 Stafford in Plymouth, Wisconsin.

      FINANCING; INSURANCE. Castledaly Manor is subject to a first mortgage held
by Ulster Bank, payable in monthly installments of $7,862, due February 1, 2013,
bearing interest at the Irish prime rate less 0.2%. $701,051 was outstanding as
of December 31, 2002, and the interest rate was 5.625% per annum. The property
is fully insured.

COMPETITION

      To date, we have not conducted domestic operations. However, utilizing
proceeds of our ongoing initial public offering, we propose to expand our
business to include both Irish and U.S. operations, principally through
development of inns in Green Bay, Wisconsin and County Antrim, Ireland. With
respect to our Irish operations, as well as our proposed domestic operations,
the primary method of competition in the hotel business involves the effort to
attract lodging guests and related dining and other business, such as meetings.
The competition is intense in both countries, and we will compete with numerous
hotels and inns which offer excellent facilities and service, many of which have
substantially greater financial and other resources than our company,
particularly with respect to suitable properties and locations for expansion. In
the United States, we believe that our Irish-theme concept will distinguish our
inns from the vast majority of competing facilities, providing a significant
marketing advantage.

      Provided that the net proceeds of our currently ongoing initial public
offering are sufficient to adequately fund one or more new inns, we expect to
compete for additional properties principally with respect to properties and
locations. We intend to provide for the growth of our company largely through
the acquisition or development of additional hotel properties, and our inability
to successfully compete for such properties could impede our efforts to grow and
expand as quickly as planned.

BUSINESS EXPANSION

      We intend to concentrate substantial efforts, including the allocation of
management time and other resources, on the expansion of our business in the
United States and Ireland. We expect to do so by (1) constructing and developing
new inns in the United States and Ireland, (2) acquiring ownership positions in
firms that own and operate hotels, predominantly, we expect, in the United
States and Ireland, and (3) increasing our interest in properties which we
already partially own.

      OWNERSHIP OF EQUITY INTERESTS. We wholly own Castledaly Acquisition
Corporation, which owns and operates Castledaly Manor in Ireland, as discussed
above, and a minority equity interest in County Clare, Ltd., which operates a
30-room Irish-theme inn and restaurant named County Clare in Milwaukee,
Wisconsin. County Clare and Castledaly Manor share marketing materials and
advertising. Personnel are occasionally rotated between Milwaukee and Ireland,
and share common training.

      In the future, we may increase our interest in County Clare and/or acquire
an ownership interest in one or more other facilities, including an additional
hotel currently operated by our President, Cary James O'Dwanny: 52 Stafford, a
19-room hotel with restaurant located in Plymouth, Wisconsin. Our general
purpose in acquiring such interests is to gain participation in the management
of the firms in which we invest, and to develop operating synergies that benefit
our company, such as achieving economies of scale in purchasing supplies,
training of personnel and sharing of marketing expenses.

      DEVELOPMENT OF NEW FACILITIES. We have explored a second location in
Ireland, in the town of Ballycastle, County Antrim. Our President has conducted
discussions with numerous governmental authorities and potential sources of
development capital and operating services. As a result, a number of extremely
attractive proposals have been presented to us for consideration, including an
offer by local investors to build the facility and lease it to us with an option
to purchase, both at very favorable cost. For the time being, however, we have
elected not to commit to any development plan, while continuing to explore all
available alternatives, until the political situation in Northern Ireland
becomes more clear. We are aware of a number of sites in the South of Ireland
which would serve our purposes extremely well, and which we believe we could
acquire on terms comparable with those available in Ballycastle.


                                       3
<PAGE>
      In the United States, we may seek in the future to enter new markets by
developing, building and operating additional Irish-theme hotels. In selecting
sites, we intend to locate in or near cities with large populations of persons
of Irish heritage, particularly in areas which exhibit pride in their ethnic
origin. In our experience, the sponsorship of local Irish-heritage
organizations, fairs, parades and similar groups and functions indicates an
interest in Irish heritage and provides an effective means of identifying and
communicating with persons who are likely to appreciate and support our
Irish-theme inns and restaurants.

      Our first objective has been and remains the development of an Irish-theme
hotel in the Green Bay, Wisconsin metropolitan area. A large segment of the
Green Bay population is of Irish descent. We reviewed various potential
locations to build an Irish-theme hotel in the Green Bay area and identified one
that we consider desirable for this purpose, located on the Fox River in the
downtown area of the city. Prior to December 31, 2002, we reached agreement with
the City of Green Bay and its Redevelopment Authority, including our securing of
related financing commitments and all governmental approvals required to date,
with respect to our purchase of that site and construction of an Irish-theme
inn, with restaurant and related facilities, on the property, pending only the
execution of a definitive development agreement which provides, among other
things, for approval of our final site development plan by the City and
participating lenders. As of the filing date of this report, we confirm that the
final development agreement was signed on January 11, 2003, and ground breaking
took place on March 20, 2003. We have also considered potential locations in
other U.S. cities, including Cudahy, Wisconsin, St. Paul, Minnesota and Chicago,
Illinois. We will generally seek to expand in a manner consistent with our
format, as described below.

THE FORMAT OF OUR HOTELS

      As a general rule, we expect to follow a common pattern in our newly
constructed Irish theme hotels. Typically, we will build smaller facilities,
with approximately 30 to 50 guest rooms. Each will generally be constructed in
the Georgian-style of architecture, which is a pattern common to Irish guest
houses. Each of our inns will typically be a three-story building with colored
stucco exterior. Each will feature an entrance designed to emulate the imposing
pub entrances found throughout Ireland. Each inn will typically offer food
service and include a pub.

PERSONNEL

      Harp & Eagle and its subsidiaries, Castledaly Acquisition Corporation and
Castledaly Manor, Ltd., currently have six full-time and six part-time
employees, all of whom are employed directly by Castledaly Manor, Ltd. and work
at Castledaly Manor. No employee is subject to a collective bargaining
agreement. Castledaly Manor, Ltd. generally considers its relations with its
employees to be excellent. Neither Harp & Eagle nor Castledaly Acquisition
Corporation directly employs any full-time or part-time workers at this time.
Officers of the foregoing corporations will work part-time on an as-needed basis
until our level of operations is sufficient to justify a greater commitment of
time and financial resources. No such employee is subject to a collective
bargaining agreement.

ITEM 2. DESCRIPTION OF PROPERTY.

      Our executive offices are located at County Clare, 1234 North Astor
Street, Milwaukee, Wisconsin 53202; County Clare, Ltd., the corporation which
owns County Clare, is our affiliate, and we pay no rent for the space occupied
by us. A description of our Castledaly Manor property is included in Item 1,
above, under the caption "CASTLEDALY MANOR"; Castledaly Manor is owned by us
(through our wholly-owned subsidiary, Castledaly Manor, Ltd.), subject to the
mortgage described above in Item 1 under the caption "CASTLEDALY MANOR."

ITEM 3. LEGAL PROCEEDINGS.

      There are no material pending legal proceedings involving Harp & Eagle or
any of our properties.

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

      No matter was submitted to a vote of our security holders during the
fourth quarter of the fiscal year ended December 31, 2002


                                       4
<PAGE>
                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

      (a)   There is no public trading market for our Common Stock. Our initial
public offering remains ongoing as of December 31, 2002, and we anticipate that,
upon the termination of such offering, our Common Stock will be quoted on the
NASD's OTC Bulletin Board.

      As of December 31, 2002, the approximate number of holders of record of
our Common Stock was 100.

      We have never declared or paid any cash dividends on our capital stock. We
currently intend to retain any future earnings to finance the growth and
development of our business and therefore do not anticipate paying any cash
dividends in the foreseeable future. Our right to declare a dividend is not
limited by any restrictive covenant, contract or agreement.

      (b)   Pursuant to Securities Act Rule 463, the information required by
Item 701(f) of Regulation S-B is included on Schedule A to this report.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.

      You should read the following commentary in conjunction with the financial
statements and related notes contained elsewhere in this report.

      During 2001, we completed our acquisition of all of the outstanding
capital stock of Castledaly Acquisition Corporation, a Wisconsin corporation,
which certain of our officers helped to organize and which owns all outstanding
ordinary shares of Castledaly Manor, Ltd., an Irish corporation. Ordinary Shares
are comparable to common stock in a U. S. corporation. When discussing our
financial condition and performance, we refer to the financial condition and
results of operations of Castledaly Manor during the periods described.

      During 1999, Castledaly Manor had been operated under the control of an
Irish partner for the first five months. At the end of May, 1999, Castledaly
Acquisition Corporation purchased the interest of its partner and instituted new
marketing and operating policies. Operations improved within 30 days, and since
then the facility has generally achieved positive cash flow. During fiscal 2000,
Castledaly Manor enjoyed significant sales and profit improvement over 1999. It
improved further in our fiscal year ended December 31, 2001. During the fall of
2000, we began a major expansion program at our Castledaly Manor facility. This
involved remodeling unused stable blocks and improving the court yard area
between the stable blocks and our main hotel facility. We opened the new rooms
for occupancy in April 2001 and experienced a substantially greater volume of
sales. A backlog of reservations developed through 2001, but, immediately
following the September 11, 2001 attack on the World Trade Center and other
targets in the United States by international terrorists, we experienced a
reduction in sales volume due to cancellations of customer reservations.
However, 80% or more of those who cancelled their reservations have requested an
opportunity to reschedule to a later date.

      While forward reservations for 2002 were down from the prior year, we took
steps to improve sales by increased marketing to local Irish residents and by
offering a reduced price trip from the United States, with price reductions
somewhat offset by extending the duration of the trip from six nights to seven
nights. Additional revenue is being generated on the additional tour day. We
also explored marketing to Great Britain and the European continent. Overall, we
are satisfied that the steps we have taken have maintained our operations on a
profitable and cash-flow-positive basis. We believe that tourism has been down
in Ireland, as it is throughout the world, due to general economic conditions
and persistent fears of terrorism, so we have been satisfied that our overall
results of operations, when compared to those of our competitors, have been more
than satisfactory for our industry. The impact of the situation in Iraq is
currently impossible to predict.


                                       5
<PAGE>
RESULTS OF OPERATIONS

      Gross Revenue

      Sales decreased $54,715, or 3.9%, from $1,411,880 in 2001 to $1,357,165 in
2002, while our cost of sales increased from $285,209 in 2001 to $379,211 in
2002, an increase of $94,002, or 33.0% . We believe that our decreased sales
were principally due to the worldwide general decline in tourism and
travel-related activities in the wake of the September 11 terrorist attacks. The
growth in our cost of sales was the result of generally anticipated increases in
our overhead and maintenance expenses at Castledaly Manor, including amounts
expended for wages and payroll taxes, food and beverages, linen and laundry,
utilities, grounds maintenance and other supplies. These expense increases were
exacerbated by the decline in value of the dollar against the euro during 2002.
The expenses which comprise our cost of sales are paid in euros, but translated
to and recorded in dollars for financial statement purposes. With respect to our
Irish operations during 2002, approximately 60% of our expense increases result
from our being required to expend considerably more dollars to purchase the
euros necessary to pay such expenses. While we believe that our post-September
11 operating results surpassed those of most of our competitors, we nonetheless
reported decreased sales as a result of the industry downturn, with resultant
reductions in our operating and net income levels.

      We receive approximately 56% of our revenue from sales of airline tickets;
33% from room rentals; and 11% from food and beverage sales. We expect this
pattern of sales to continue in 2003.

      Operating Expenses

      Our increased efforts to develop and introduce more stringent and
effective cost controls and efficiencies into our operations resulted in a
decrease in operating expenses of $46,458, or 4.9%, from $952,772 in 2001 to
$906,314 in 2002. This somewhat offset the $94,002 increase in cost of sales for
2002 as compared to 2001. However, due to decreased sales coupled with increased
cost of sales, our income from operations decreased from $173,899 in 2001 to
$71,640 in 2002, down $102,259, or 58.8%.

      In general, 62% of our operating expenses are incurred to purchase airline
tickets; 27% are incurred in connection with room rentals; 9% are incurred to
support food and beverage sales; and 2% are incurred for other miscellaneous
general purposes. Our revenue from airline tickets usually approximates our cost
for those tickets.

      Net Income

      In 2002, we increased our debt, as discussed below; however, our interest
expense decreased, down from $79,390 in 2001 to $54,815 for 2002, a reduction of
$24,575, or 31.0%. Nonetheless, due principally to our reduced sales, coupled
with our increased cost of sales, as discussed above, our pre-tax income
decreased by $79,923, or 71.0%, from 2001 to 2002. Although somewhat offset by a
decrease in our provision for income taxes of $18,808, or 61.9%, from $30,374 in
2001 to $11,566 in 2002, our net income nevertheless decreased by $61,115, or
74.4%, from 2001 to 2002. We expect our operations to continue on a generally
profitable and cash-flow-positive basis for 2003.

FINANCIAL CONDITION

      Liquidity; Commitments for Capital Resources; and Sources of Funds

      Our principal source of liquidity from operations has been cash earnings
from rental of hotel rooms, and food and liquor sales. Our Castledaly Manor
facility has earned revenues primarily from U.S. residents who purchase our
weekly round-trip travel package. Under this program, two persons fly from
Chicago to Dublin, where they are met by our bus and taken to Castledaly Manor.
They stay at Castledaly Manor for a week, from Wednesday to Wednesday, and fly
back to Chicago.

      Beginning as of January 1, 2002, the trip has been extended to run from
Wednesday through Thursday of the following week, which is producing increased
food and liquor sales. Reservations are usually made months in advance, and we
generally have experienced a backlog. A few room nights are sold to walk-in
local customers in Ireland. We also receive revenues from food and beverage
sales to local residents who are welcome to patronize


                                       6
<PAGE>
our facilities, including rentals for private parties. We anticipate that
revenues generated by room rentals and food and drink sales will continue to
satisfy our operating cash requirements in the future, as they do currently and
have since 1999. For 2002, we placed somewhat greater emphasis on marketing to
Irish, British and other European residents, and for a time we ran reduced-rate
trips from the United States until international air travel began to return to
more normal levels following the September 2001 terrorist events. We have raised
our rates as occupancy appeared to be returning to desired levels. However, the
impact of the current situation in Iraq on our operating results is currently
impossible to predict, and further pricing adjustments may be necessary to
promote sales.

      We experienced working capital deficits during 2001 and 2002, due
principally to our initial startup costs and subsequent renovation and
improvement of Castledaly Manor. However, our working capital deficit decreased
by $379,471, or 52.8%, from $718,614 at the end of 2001 to $339,143 at the end
of 2002. We anticipate repayment of approximately $486,000 of current
obligations with proceeds of our ongoing initial public offering, which would
further reduce our working capital deficit. We achieved positive earnings in
2001 and 2002, and, in the estimation of management, we will in 2003 and
subsequently continue to be able to generate sufficient cash from operations to
meet our obligations as they become due.

      To provide additional liquidity, we have obtained a revolving term loan
credit facility from a U.S. commercial bank, under which we may borrow up to a
maximum principal amount of $350,000, with interest at the rate of 5.9% per
annum. Pursuant to the current agreement, the lending commitment terminates
December 1, 2005, and any loan balance outstanding shall be paid on that date;
however, we have not experienced difficulty in renewing and extending previous
credit agreements and anticipate that the current agreement will be extended on
acceptable terms. Amounts outstanding under such credit facility are guaranteed
by County Clare, Ltd., a related party, and by a stockholder of Harp & Eagle. As
of December 31, 2002, approximately $338,000 was outstanding under this credit
facility. We also borrowed $235,165 from Ulster Bank, Ireland, as described
below, to finance our purchase of 16,260 additional shares of County Clare, Ltd,
We intend to reduce such indebtedness with proceeds of our ongoing initial
public offering.

      While we have no specific source of or provision for long-term liquidity,
management is confident that we will be able to extend the credit facility
described above beyond its scheduled termination as of December 1, 2005.

      A major use of proceeds will be to repay bank debt that we incurred in
connection with the acquisition and improvement of Castledaly Manor. Repayment
of these loans will reduce our future interest expenses. However, we also intend
to purchase, construct, and operate one or more other hotels in the United
States, as well as one in Northern Ireland, to the extent that investment
capital and new loans permit. Any new borrowings will increase our future
interest charges.

      As of June 30, 2001, we acquired the balance of the shares of outstanding
common stock of Castledaly Acquisition Corporation not already owned by us in a
share exchange.

      Changes in Assets and Liabilities

      From 2001 to 2002, we increased our assets, reduced debts relative to
assets and improved our liquidity. Increases in assets were largely represented
by increases in our cash accounts, our prepaid expenses, our fixed assets and
our investment in County Clare. During 2002, cash on hand increased from
$105,383 on December 31, 2001 to $198,697 on December 31, 2002, an increase of
$93,314, or 88.5%. In addition, prepaid expenses, principally represented by
airline tickets purchased for patrons of our weekly Irish tour, increased during
2002, from $25,106 on December 31, 2001 to $61,147 on December 31, 2002, an
increase of $36,041, or 143.6%. As a result of these increases, current assets
grew by $154,182, or 94.6%, from $162,936 on December 31, 2001 to $317,118 on
December 31, 2002. As described below, we substantially increased our fixed
assets, principally through improvements to Castledaly Manor and the furniture,
fixtures and improvements located there. Our total assets grew by $579,275, or
26.6%, increasing from $2,174,464 at the end of 2001 to $2,753,739 at the end of
2002.

      In December 2002, we borrowed $235,165 from Ulster Bank, Ireland, payable
in monthly installments of $10,483 and due December 23, 2003, at the Irish prime
rate less 0.2% (5.625% at December 31, 2002), to finance our purchase of an
additional 16,260 shares of common stock of County Clare, Ltd. As a result of
this purchase,


                                       7
<PAGE>
we increased our ownership of County Clare, Ltd. to 19%. We also hold options to
purchase an additional 16,500 shares of County Clare common stock at the price
of $1.00 per share. Exercise of these options would increase to approximately
30% our ownership interest in County Clare. We expect during 2003 to attempt
further acquisitions of County Clare common stock. Increased debt, principally
representing the additional monies borrowed to finance our above-described
purchase of additional County Clare common stock, and customer deposits,
collected in connection with our Irish tours, represented a significant portion
of our increased total liabilities, which grew $305,811, or 22.0%, from
$1,389,652 on December 31, 2001 to $1,695,463 on December 31, 2002.

      For 2002 as compared with 2001, our land costs increased by $47,445, or
21.7%; buildings and improvements increased by $329,116, or 32.7%; and
furniture, fixtures and equipment increased by $81,490, or 23.2%. Costs in
connection with converting the stable blocks in the rear of our hotel into guest
rooms available for rent was the primary cause of increased building improvement
costs during 2001 and 2002. We also added to our furniture, fixtures and
equipment at Castledaly Manor in connection with the addition of these rooms.
These additional rooms became available for rent during April 2001.

INFLATION AND OTHER FACTORS THAT MAY AFFECT FUTURE RESULTS.

      We have not been affected by inflation in the past, and do not expect
inflation to have a significant effect on operations in the foreseeable future.

ITEM 7. FINANCIAL STATEMENTS.

      Our consolidated financial statements and related notes, and the report of
Cherry, Bekaert & Holland, L.L.P., independent auditors, with respect thereto,
as described in the Index to Financial Statements, appear elsewhere in this
report at pages F-1 through F-17.

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

      On November 1, 2001, we engaged Cherry, Bekaert & Holland, L.L.P. as our
principal independent public accountants and auditors upon the resignation of
Schenck & Associates, S.C. No report issued at any time by Schenck & Associates,
S.C. on the financial statements of Harp & Eagle or its subsidiaries has
contained an adverse opinion or disclaimer of opinion, or was modified as to
uncertainty, audit scope or accounting principles. Further, there were no
disagreements with Schenck & Associates, S.C., whether or not resolved, on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure, which, if not resolved to the satisfaction of
Schenck & Associates, S.C., would have caused them to make reference to the
subject matter of the disagreement(s) in connection with their report.

      The change in accountants described above was approved by our board of
directors.


                                       8
<PAGE>
                                    PART III

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

DIRECTORS AND OFFICERS

      Listed below are the names and ages of our directors and officers and the
positions they hold with our company.

<TABLE>
<CAPTION>
         Name             Age                Position
         ----             ---                --------
<S>                       <C>       <C>
Cary James O'Dwanny        62       President, Treasurer and Director
Gerard Dunne               46       Vice President and Director
Dennis J. Radtke           31       Vice President and Director
Sean D. O'Dwanny           36       Vice President and Director
Richard A. Kranitz         58       Secretary and Director
Michael S. Joyce           60       Director
Thomas J. Sheehan          63       Director
</TABLE>

      CARY JAMES "RIP" O'DWANNY has been the President, Treasurer and a director
of Harp & Eagle since our inception in 1999. From 1993 to the present, he has
also been the President, Treasurer and a director of County Clare, Ltd., which
owns and operates County Clare, an Irish-theme inn and restaurant located in
Milwaukee, Wisconsin. Since 1989, Mr. O'Dwanny has also been the President and a
director of Classic Inns of Wisconsin, Inc., which owns and operates 52
Stafford, another Irish-theme inn and restaurant located in Plymouth, Wisconsin.

      GERARD DUNNE has been a Vice President and a director of Harp & Eagle
since our inception in 1999. He has been the manager of Castledaly Manor since
June 1999. From 1998 to 1999, Mr. Dunne was a manager with The Bridge House, a
popular pub in Fidelma Kiernan, Ireland, and from 1997 to 1998, he was a manager
with The Three Jolly Pigeons in Athlone, Ireland. Mr. Dunne was employed by the
accounting firm of Milne & Dwyer & Co., of Tullamore, from 1974 to 1981; from
1981 to 1982, he was employed by the accounting firm of Walsh Kealey & Co., also
of Tullamore; and from 1982 to 1998, he maintained his own private accounting
practice.

      DENNIS J. RADTKE has been a Vice President and director of Harp & Eagle
since our inception in 1999. From 1996 to the present, he has been the general
manager of County Clare, an Irish-theme inn and restaurant located in Milwaukee,
Wisconsin. From 1990 to 1996, he was employed at 52 Stafford, another
Irish-theme inn and restaurant located in Plymouth, Wisconsin.

      SEAN D. O'DWANNY has been a Vice President of Harp & Eagle since our
inception in 1999 and a director since 2001. From 1986 to the present, Mr.
O'Dwanny has been the general manager of 52 Stafford, an Irish-theme inn and
restaurant located in Plymouth, Wisconsin. Since 1994, he has also owned and
operated the Rochester Inn, a historic bed-and-breakfast hotel located in
Sheboygan Falls, Wisconsin.

      RICHARD A. KRANITZ has been the Secretary and a director (except for
approximately nine months during 2000 and 2001) of Harp & Eagle since our
inception in 1999. He has been an attorney in private practice since 1970,
concentrating in securities, banking and business law. Prior to establishing
Kranitz & Philipp (formerly the Law Offices of Richard A. Kranitz) in 1984, he
was with the Milwaukee law firms of Fretty & Kranitz (1982 to 1983), Habush,
Gillick, Habush, Davis, Murphy, Kraemer & Kranitz (1977 to 1978), McKay, Martin
& Kranitz (1973-1976) and Reinhart, Boerner, Van Deuren, Norris & Rieselbach,
S.C. (1970 to 1973). Mr. Kranitz is a director of the Grafton State Bank.

      MICHAEL S. JOYCE has been a director of Harp & Eagle since December 2000.
Mr. Joyce is (since July, 2001) President and Chief Executive Officer of
Americans for Community and Faith-Centered Enterprise and the Foundation for
Community and Faith-Centered Enterprise, located in Washington, D.C. and
Phoenix, Arizona, respectively. From 1985 to 2001, he was President and Chief
Executive Officer of The Lynde and Harry Bradley Foundation, Milwaukee,
Wisconsin. From 1977 to 1985, Mr. Joyce was the President of the John M. Olin
Foundation, New York, New York; from 1974 to 1977, he was the President of the
Goldseker Foundation, Baltimore, Maryland. Mr. Joyce is a director of Blue Cross
& Blue Shield United of Wisconsin, the Pinkerton Foundation, the Philanthropy
Roundtable and a member of the Selection Committee of the Clare Booth Luce Fund.


                                       9
<PAGE>
      THOMAS J. SHEEHAN has been a director of Harp & Eagle since December 2000.
From 1990 to the present, he has been the Chairman of the Board, President and
Chief Executive Officer of Grafton State Bank, a $125 million full-service
commercial bank with an active mortgage banking operation. Mr. Sheehan is the
current President of the Independent Community Bankers of America, an
organization which represents over 5,000 community banks throughout the United
States. He is also a Director of TYME Corporation, the primary provider of ATM
and POS interchange services in Wisconsin, and a member of its Executive
Committee. Mr. Sheehan is the current Chairman of the Grafton Community
Development Authority; Treasurer of the Ozaukee County Development Corporation;
a Director of the St. Mary's Hospital Foundation; and a member of the Grafton
Police and Fire Commission.

      Cary James O'Dwanny is the father of Sean D. O'Dwanny.

      All of our directors hold office until the next annual meeting of
stockholders and the election and qualification of their successors. Our
directors are not compensated for acting as directors, nor are they reimbursed
for expenses related to their service as directors. Officers are elected
annually by our board of directors and serve at the discretion of the board.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

      Section 16(a) of the Securities Exchange Act of 1934 requires our
directors, executive officers and persons who own more than ten percent of a
registered class of our equity securities to file with the Securities and
Exchange Commission ("SEC") initial reports of ownership and reports of changes
in ownership of our Common Stock and other IMS equity securities. Officers,
directors and beneficial owners of more than ten percent of such equity
securities are required by SEC regulations to furnish us with copies of all
Section 16(a) reports filed by them.

      Based solely upon review of the copies of such reports furnished to us and
written representations that no other reports were required, we believe that
there was compliance for the fiscal year ended December 31, 2002 with all
Section 16(a) filing requirements applicable to our officers, directors and
greater-than-10% beneficial owners.


                                       10
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION.

      SUMMARY COMPENSATION TABLE. The following table provides information
concerning the compensation earned by our Chief Executive Officer for his
services rendered to us in all capacities during the fiscal years ended December
31, 2002, 2001 and 2000. We are required to disclose in the table the
compensation we paid to our Chief Executive Officer and to any other executive
officer of our company who was paid in excess of $100,000. These persons are
referred to in this prospectus as "named executive officers." Because no
executive officer of our company was paid more than $100,000 for any fiscal
year, only the compensation paid by us to our Chief Executive Officer is
included in the table.

<TABLE>
<CAPTION>
                                              Annual Compensation
                                         -----------------------------        All Other
        Name and Principal Positions     Year    Salary($)    Bonus($)     Compensation($)
        ----------------------------     ----    ---------    --------     ---------------
<S>                                      <C>     <C>          <C>          <C>
Cary James O'Dwanny                      2002     6,000          --             --
   President, Treasurer and Director     2001     6,000          --             --
                                         2000     1,200          --             --
</TABLE>

----------

      No executive officer received annual compensation in excess of $100,000
for fiscal 2002.

      OPTION GRANTS IN THE LAST FISCAL YEAR. No options were granted to our
Chief Executive Officer, our only named executive officer, for our fiscal year
ended December 31, 2002.

      OPTION EXERCISES IN FISCAL 2002 AND AGGREGATE OPTION VALUES AT DECEMBER
31, 2002. No options were exercised by our Chief Executive Officer, our only
named executive officer, during fiscal 2002, and, as of December 31, 2002, no
unexercised options were held by our Chief Executive Officer.

LIMITATION OF LIABILITY AND INDEMNIFICATION

      Our bylaws provide for the elimination, to the fullest extent permissible
under Wisconsin law, of the liability of our directors to us for monetary
damages. This limitation of liability does not affect the availability of
equitable remedies such as injunctive relief. Our bylaws also provide that we
shall indemnify our directors and officers against certain liabilities that may
arise by reason of their status or service as directors or officers, other than
liabilities arising from certain specified misconduct. We are required to
advance their expenses incurred as a result of any proceeding against them for
which they could be indemnified, including in circumstances in which
indemnification is otherwise discretionary under Wisconsin law. At the present
time, there is no pending litigation or proceeding involving a director,
officer, employee or other agent of our company in which indemnification would
be required or permitted. We are not aware of any threatened litigation or
proceeding which may result in a claim for such indemnification.


                                       11
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

      The following table sets forth certain information with respect to the
beneficial ownership of our common stock as of December 31, 2002 by:

      o     each person known by us to beneficially own more than 5% of our
            common stock;

      o     each of our directors;

      o     our sole named executive officer; and

      o     all of our directors and executive officers as a group.

      We believe that, subject to applicable community and marital property
laws, the beneficial owners of our common stock listed below have sole voting
and dispositive power with respect to such shares.

<TABLE>
<CAPTION>
                                                    Shares beneficially owned as
                                                        of December 31, 2002
                                                    ----------------------------
Name and Address of Beneficial Owner                  Number           Percent
------------------------------------                ----------       -----------
<S>                                                 <C>              <C>
Cary James O'Dwanny .........................        333,334             46.4%
1234 North Astor Street
Milwaukee, WI 53202

Gerard Dunne ................................             --               --
Castledaly, Moate
County Westmeath, Ireland

Dennis J. Radtke ............................             --               --
1234 North Astor Street
Milwaukee, WI 53202

Sean D. O'Dwanny ............................             --               --
52 Stafford Street
Plymouth, WI 53073

Richard A. Kranitz ..........................          8,334              1.1%
1238 Twelfth Avenue
Grafton, WI 53024

Michael S. Joyce ............................         30,000              4.2%
1201 Pennsylvania Avenue, N.W
Washington, D.C. 20004

Thomas J. Sheehan ...........................          8,334              1.1%
101 Falls Road
Grafton, WI 53024

All directors and executive officers
   as a group (7 persons) ...................        380,002             52.9%
</TABLE>


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

CERTAIN TRANSACTIONS

      Use of Proceeds to Repay Indebtedness

      We have applied or intend to apply net proceeds of our ongoing initial
public offering, up to the approximate aggregate amount and in the order of
priority shown below, to repay outstanding indebtedness:

      o     First, $33,000 owed to Grafton State Bank, an unrelated party,
            bearing interest at the rate of 6% per annum, due on demand, which
            amount has been paid;

      o     Second, approximately $13,000 owed to Cary James O'Dwanny, our
            President and a director, bearing no interest, due on demand, which
            amount has been paid;

      o     Third, $100,000 owed to Richard Peterson, one of our non-affiliate
            shareholders, bearing interest at the rate of 9% per annum, due on
            demand, which amount has been paid; and

      o     Fourth, approximately $340,000 owed to Johnson Bank, an unrelated
            party, bearing interest at the rate of 5.9% per annum, due December
            1, 2005.


                                       12
<PAGE>
      Proceeds of the above loans were provided to Castledaly Acquisition
Corporation to finance the improvement and operation of the Castledaly Manor inn
and restaurant. We assumed some of this indebtedness in connection with our
acquisition of Castledaly Acquisition Corporation, as described in the following
paragraph.

      Acquisition of Castledaly Acquisition Corporation

      In a series of transactions during 2000 and the first six months of 2001,
we acquired all of the outstanding shares of common stock of Castledaly
Acquisition Corporation in exchange for (1) the issuance of Harp & Eagle common
stock with an aggregate value of $466,682 and (2) our assumption of outstanding
indebtedness of Castledaly Acquisition Corporation in the aggregate amount of
$241,000, including indebtedness to, or guaranteed by, certain of our directors,
officers, shareholders and affiliates, as follows:

      o     Johnson Bank - $168,000 guaranteed by County Clare, Ltd.;

      o     County Clare, Ltd. - $40,000; and

      o     Grafton State Bank - $33,000 guaranteed by Cary James O'Dwanny, F.
            Fuller McBride and Richard A. Kranitz.

      Acquisition of Additional County Clare Common Stock

      In December 2002, we borrowed $235,165 from Ulster Bank, Ireland, payable
in monthly installments of $10,483 and due December 23, 2003, at the Irish prime
rate less 0.2% (5.625% at December 31, 2002), to finance our purchase of an
additional 16,260 shares of common stock of County Clare, Ltd. As a result of
this purchase, we increased our ownership of County Clare, Ltd. to approximately
19%. We also hold options to purchase an additional 16,500 shares of County
Clare common stock at the price of $1.00 per share. Exercise of these options
would increase to approximately 30% our ownership interest in County Clare.

CONFLICTS OF INTEREST

      Certain potential conflicts of interest are inherent in the relationships
between our affiliates and us. From time to time, one or more of our affiliates
may form or hold an ownership interest in and/or manage other businesses both
related and unrelated to the type of business that we own and operate. These
persons expect to continue to form, hold an ownership interest in and/or manage
additional other businesses which may compete with ours with respect to
operations, including financing and marketing, management time and services and
potential customers. These activities may give rise to conflicts between or
among the interests of Harp & Eagle and other businesses with which our
affiliates are associated. Our affiliates are in no way prohibited from
undertaking such activities, and neither we or our shareholders will have any
right to require participation in such other activities.

      Further, because we intend to transact business with some of our officers,
directors and affiliates, as well as with firms in which some of our officers,
directors or affiliates have a material interest, potential conflicts may arise
between the respective interests of Harp & Eagle and these related persons or
entities. For example, we may buy additional shares of common stock of County
Clare, Ltd., the corporation which owns and operates County Clare, an
Irish-theme inn and restaurant located in Milwaukee, Wisconsin. As of December
31, 2002, we already held a 19% minority interest in County Clare, Ltd. and
options to purchase an additional 16,500 shares (approximately 11%) at the price
of $1.00 per share. Cary James O'Dwanny, who is the President, treasurer, a
director and significant shareholder of Harp & Eagle, is also an officer,
director and shareholder of County Clare, Ltd.

      We believe that such transactions will be effected on terms at least as
favorable to us as those available from unrelated third parties, and, with
respect to transactions involving real or apparent conflicts of interest, we
have adopted policies and procedures which require that (1) the fact of the
relationship or interest giving rise to the potential conflict be disclosed or
known to the directors who authorize or approve the transaction prior to such
authorization or approval, (2) the transaction be approved by a majority of our
disinterested outside directors and (3) the transaction be fair and reasonable
to Harp & Eagle at the time it is authorized or approved by our directors.


                                       13
<PAGE>
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.

      (a) Exhibits

<TABLE>
<CAPTION>
  Exhibit
  Number                        Description
  ------                        -----------
<S>          <C>
    3.1      Articles of Incorporation of the Registrant *
    3.2      Articles of Amendment of the Registrant *
    3.3      Bylaws of the Registrant *
    3.4      Articles and Plan of Share Exchange between the Registrant and
             Castledaly Acquisition Corporation *
   16.1      Letter of Schenck & Associates, S.C., as to change in accountants *
   16.2      Letter of Cherry, Bekaert & Holland, L.L.P., as to change in
             accountants *
   99.1      Certification of Chief Executive Officer and Chief Financial
             Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
             Section 906 of the Sarbanes-Oxley Act of 2002.
</TABLE>

----------

      *     Incorporated by reference to the registration statement of Harp &
            Eagle, Ltd. on Form SB-2 (File No. 333-55088).

      There are no management contracts or compensatory plans required to be
filed as an exhibit to this report.

      (b) Reports on Form 8-K

            No reports on Form 8-K were filed during the fourth quarter of the
      fiscal year ended December 31, 2002.

ITEM 14. CONTROLS AND PROCEDURES.

      (a) Evaluation of disclosure controls and procedures. Based on his
evaluation as of a date within 90 days of the filing date of this report
("Evaluation Date"), our principal executive officer and principal financial
officer has concluded that our disclosure controls and procedures (as defined in
Sections 240.13a-14(c) and 240.15d-14(c) of the Securities Exchange Act of
1934) are effective to ensure that information required to be disclosed by Harp
& Eagle in reports that it files or submits under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in
Securities and Exchange Commission rules and forms.

      (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, nor were there any significant
deficiencies or material weaknesses noted in our internal controls. As a result,
no corrective action with regard to significant deficiencies and material
weaknesses was taken.


                                       14
<PAGE>
                                   SIGNATURES

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

                                             HARP & EAGLE, LTD.


   Dated:  March 26, 2003     By:          /s/ CARY JAMES O'DWANNY
                                  --------------------------------------------
                                  Cary James O'Dwanny, President and Treasurer
                                  (Principal Executive and Financial Officer)


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

<TABLE>
<CAPTION>
          SIGNATURE                                     TITLE                               DATE
          ---------                                     -----                               ----
<S>                                        <C>                                         <C>

    /s/ CARY JAMES O'DWANNY                President and Treasurer (Principal          March 26, 2003
---------------------------------           Executive and Financial Officer)
      Cary James O'Dwanny                            and Director

       /s/ GERARD DUNNE                             Vice President                     March 26, 2003
---------------------------------                    and Director
         Gerard Dunne

     /s/ DENNIS J. RADTKE                           Vice President                     March 26, 2003
---------------------------------                    and Director
       Dennis J. Radtke

     /s/ SEAN D. O'DWANNY                           Vice President                     March 26, 2003
---------------------------------                    and Director
       Sean D. O'Dwanny

    /s/ RICHARD A. KRANITZ                            Secretary                        March 26, 2003
---------------------------------                    and Director
      Richard A. Kranitz

     /s/ MICHAEL S. JOYCE                             Director                         March 26, 2003
---------------------------------
       Michael S. Joyce

    /s/ THOMAS J. SHEEHAN                             Director                         March 26, 2003
---------------------------------
      Thomas J. Sheehan
</TABLE>


                                       15
<PAGE>
                                 CERTIFICATIONS

      I, Cary James O'Dwanny, certify that:

      1. I have reviewed this annual report on Form 10-KSB of Harp & Eagle,
Ltd.;

      2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

      3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

      4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

            a)    designed such disclosure controls and procedures to ensure
            that material information relating to the registrant, including its
            consolidated subsidiaries, is made known to us by others within
            those entities, particularly during the period in which this annual
            report is being prepared;

            b)    evaluated the effectiveness of the registrant's disclosure
            controls and procedures as of a date within 90 days prior to the
            filing date of this annual report (the "Evaluation Date"); and

            c)    presented in this annual report our conclusions about the
            effectiveness of the disclosure controls and procedures based on our
            evaluation as of the Evaluation Date;

      5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):

            a)    all significant deficiencies in the design or operation of
            internal controls which could adversely affect the registrant's
            ability to record, process, summarize and report financial data and
            have identified for the registrant's auditors any material
            weaknesses in internal controls; and

            b)    any fraud, whether or not material, that involves management
            or other employees who have a significant role in the registrant's
            internal controls; and

      6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: March 26, 2003


                                            /S/ CARY JAMES O'DWANNY
                                  ------------------------------------------
                                             Cary James O'Dwanny,
                                      President (Chief Executive Officer)
                                    and Treasurer (Chief Financial Officer)


                                       16
<PAGE>
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                           Page
                                                                           ----
<S>                                                                        <C>
Independent Auditors' Report ...........................................   F-1

Financial Statements:

Consolidated Balance Sheets at December 31, 2002 and 2001 ..............   F-2

Consolidated Statements of Income for the years ended
         December 31, 2002 and 2001 ....................................   F-4

Consolidated Statements of Changes in Stockholders' Equity
         for the years ended December 31, 2002 and 2001 ................   F-5

Consolidated Statements of Cash Flows for the years ended
         December 31, 2002 and 2001 ....................................   F-7

Notes to Consolidated Financial Statements .............................   F-9
</TABLE>


                                       17
<PAGE>
[CHERRY BEKAERT & HOLLAND LOGO]



                          Independent Auditors' Report

Board of Directors
Harp & Eagle, Ltd.
Milwaukee, Wisconsin

We have audited the accompanying consolidated balance sheets of Harp & Eagle,
Ltd. and Subsidiaries as of December 31, 2002 and 2001 and the related
consolidated statements of income, changes in stockholders' equity, and cash
flows for the years then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Harp & Eagle, Ltd.
and Subsidiaries as of December 31, 2002 and 2001 and the results of their
operations and their cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of America.

As discussed in Note 1, during 2002 the Company adopted the provisions of
Statements of Financial Accounting Standards No. 142, Goodwill and Other
Intangible Assets, and No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets.


/S/ CHERRY, BEKAERT & HOLLAND, L.L.P.


Charlotte, North Carolina
February 14, 2003


                                      F-1
<PAGE>
                       HARP & EAGLE, LTD. AND SUBSIDIARIES

                           Consolidated Balance Sheets

                           December 31, 2002 and 2001

<TABLE>
<CAPTION>
                                                      2002               2001
                                                   ----------         ----------
<S>                                                <C>                <C>
      ASSETS
Current assets
  Cash and cash equivalents                        $  198,697         $  105,383
  Accounts receivable                                   6,376              3,639
  Due from related party                               38,671             16,883
  Inventory                                            12,227             11,925
  Prepaid expense                                      61,147             25,106
                                                   ----------         ----------

Total current assets                                  317,118            162,936
                                                   ----------         ----------

Property and equipment
  Land                                                266,195            218,750
  Buildings and improvements                        1,335,825          1,006,709
  Furniture, fixtures and equipment                   432,938            351,448
  Construction in progress                             30,000                 --
                                                   ----------         ----------

                                                    2,064,958          1,576,907
  Less accumulated depreciation                       254,946            160,255
                                                   ----------         ----------

Net property and equipment                          1,810,012          1,416,652
                                                   ----------         ----------

Other assets
  Goodwill                                             14,337             14,337
  Amounts receivable from shareholder                  19,411             19,411
  Costs of issuing stock                                   --            201,396
  Deferred tax asset                                   17,750             25,000
  Investment in affiliate                             575,111            334,732
                                                   ----------         ----------

Total other assets                                    626,609            594,876
                                                   ----------         ----------


                                                   $2,753,739         $2,174,464
                                                   ==========         ==========
</TABLE>


See notes to consolidated financial statements.


                                      F-2
<PAGE>
<TABLE>
<CAPTION>
                                                        2002               2001
                                                 -----------        -----------
<S>                                              <C>                <C>
       LIABILITIES AND
         STOCKHOLDERS' EQUITY
Current liabilities
   Notes payable - related parties               $     5,534        $   118,234
   Notes payable - other                                  --             33,000
   Current maturities of long-term debt              235,131            371,252
   Accounts payable                                   58,212            147,375
   Accrued liabilities:
     Interest                                         19,400             17,135
      Other                                           97,182             71,420
   Customer deposits                                 240,802            123,134
                                                 -----------        -----------

Total current liabilities                            656,261            881,550

Long-term debt, less current maturities            1,039,202            508,102
                                                 -----------        -----------

Total liabilities                                  1,695,463          1,389,652
                                                 -----------        -----------

Commitments and contingencies

Stockholders' equity
   Preferred stock                                        --                 --
   Common stock                                           72                 65
   Additional paid-in capital                      1,252,549          1,185,305
   Accumulated deficit                              (183,045)          (204,123)
   Foreign currency translation adjustment           (11,300)          (196,435)
                                                 -----------        -----------

Total stockholders' equity                         1,058,276            784,812
                                                 -----------        -----------



                                                 $ 2,753,739        $ 2,174,464
                                                 ===========        ===========
</TABLE>


See notes to consolidated financial statements.


                                      F-3
<PAGE>
                       HARP & EAGLE, LTD. AND SUBSIDIARIES

                        Consolidated Statements of Income

                 For the years ended December 31, 2002 and 2001

<TABLE>
<CAPTION>
                                                        2002              2001
                                                 -----------       -----------
<S>                                              <C>               <C>
Sales                                            $ 1,357,165       $ 1,411,880

Cost of sales                                        379,211           285,209

Operating expenses                                   906,314           952,772
                                                 -----------       -----------

Income from operations                                71,640           173,899
                                                 -----------       -----------

Other income (expense)
      Earnings from investment in affiliate           13,005            12,069
      Interest income                                  2,814             5,989
      Interest expense                               (54,815)          (79,390)
                                                 -----------       -----------

Other expense, net                                   (38,996)          (61,332)
                                                 -----------       -----------

Income before provision
  for income taxes                                    32,644           112,567

Provision for income taxes                            11,566            30,374
                                                 -----------       -----------

Net income                                       $    21,078       $    82,193
                                                 ===========       ===========



Net income per common share                      $      0.03       $      0.14
                                                 ===========       ===========
</TABLE>


See notes to consolidated financial statements.


                                      F-4
<PAGE>
                       HARP & EAGLE, LTD. AND SUBSIDIARIES

           Consolidated Statements of Changes in Stockholders' Equity

                 For the years ended December 31, 2002 and 2001

<TABLE>
<CAPTION>
                                                                                       Common
                                                                      Preferred        Shares         Common
                                                                        Stock        Outstanding       Stock
                                                                      ---------      -----------      -------
<S>                                                                   <C>            <C>              <C>
                         2001


Balance January 1, 2001                                               $      --        504,339        $    21

   Comprehensive income:
      Net income                                                             --             --             --
      Foreign currency translation adjustment                                --             --             --
   Total comprehensive income:

   Non-cash compensation of officer                                          --             --             --

   Issuance of common stock to acquire the remaining ownership
      interest in Castledaly Acquisition Corporation                         --        145,322             44
                                                                      ---------        -------        -------

Balance December 31, 2001                                                    --        649,661             65


                         2002


   Comprehensive income:
      Net income                                                             --             --             --
      Foreign currency translation adjustment                                --             --             --
   Total comprehensive income

   Issuance of stock offering                                                --         68,105              7
                                                                      ---------        -------        -------

Balance December 31, 2002                                             $      --        717,766        $    72
                                                                      =========        =======        =======
</TABLE>

Common stock - par value of $.0001 at December 31, 2002 and 2001
  due to a one-for-three reverse stock split on April 4, 2001; 10,000,000 shares
  authorized, 717,766 and 649,661 shares issued at December 31, 2002 and 2001,
  respectively. All shares have been restated to reflect the effect of the
  one-for-three reverse stock split on April 4, 2001.

Preferred stock - 2,000,000 shares authorized, no shares have been issued.


See notes to consolidated financial statements.


                                      F-5
<PAGE>
<TABLE>
<CAPTION>
                                               Accumulated
    Additional                                    Other
     Paid-In              Accumulated         Comprehensive
     Capital                Deficit                Loss                Total
-----------------         -----------         -------------         -----------
<S>                       <C>                  <C>                  <C>
$       1,184,405         $  (286,316)         $  (140,946)         $   757,164



               --              82,193                   --               82,193
               --                  --              (55,489)             (55,489)
                                                                    -----------
                                                                         26,704

              900                  --                   --                  900



               --                  --                   --                   44
-----------------         -----------          -----------          -----------


        1,185,305            (204,123)            (196,435)             784,812
                                                                    -----------





               --              21,078                   --               21,078

               --                  --              185,135              185,135
                                                                    -----------

                                                                        206,213


           67,244                  --                   --               67,251
-----------------         -----------          -----------          -----------

$       1,252,549         $  (183,045)         $   (11,300)         $ 1,058,276
=================         ===========          ===========          ===========
</TABLE>


                                      F-6
<PAGE>
                       HARP & EAGLE, LTD. AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows

                 For the years ended December 31, 2002 and 2001

<TABLE>
<CAPTION>
                                                       2002              2001
                                                    ---------         ---------
<S>                                                 <C>               <C>
Operating activities
 Net income                                         $  21,078         $  82,193
 Adjustments to reconcile net income to net
   cash provided by operating activities:
   Amortization of goodwill                                --             1,163
   Depreciation                                        94,691            72,619
   Deferred tax expense                                 7,250            13,361
   Non-cash compensation of
     officer                                               --               900
   Decrease (increase) in:
    Accounts receivable                                (2,737)           (2,084)
    Inventory                                            (302)           (5,945)
    Prepaid expense                                   (36,041)           60,672
   Increase (decrease) in:
    Accounts payable                                  (89,163)          115,832
    Accrued liabilities                                28,027           (28,950)
    Customer deposits                                 117,668          (131,838)
                                                    ---------         ---------
Net cash provided by
  operating activities                                140,471           177,923
                                                    ---------         ---------

Investing activities
 Investment in affiliate                             (231,690)               --
 Purchases of property and
   equipment                                         (237,704)         (364,547)
 Earnings from interest in affiliate                   (8,689)           (8,433)
 Increase in due from related
   party                                              (21,788)           (5,001)
                                                    ---------         ---------
 Net cash used in investing
   activities                                        (499,871)         (377,981)
                                                    ---------         ---------
</TABLE>


See notes to consolidated financial statements.


                                      F-7
<PAGE>
                       HARP & EAGLE, LTD. AND SUBSIDIARIES

                Consolidated Statements of Cash Flows, Continued

                 For the years ended December 31, 2002 and 2001

<TABLE>
<CAPTION>
                                                    2002                2001
                                                  ---------           ---------
<S>                                               <C>                 <C>
Financing activities
      Proceeds from long-term debt                $ 306,988           $ 273,538
      Repayment of:
                Notes payable                      (112,700)            (34,466)
                Long-term debt                      (44,154)                 --
      Costs of issuing stock                        (75,795)           (138,671)
      Issuance of common stock                      344,442                  44
                                                  ---------           ---------

Net cash provided by financing
      activities                                    418,781             100,445
                                                  ---------           ---------

Effect of exchange rate changes
      on cash                                        33,933             (55,489)
                                                  ---------           ---------

Cash and cash equivalents

      Net increase (decrease)                        93,314            (155,102)
      Beginning of period                           105,383             260,485
                                                  ---------           ---------

      End of period                               $ 198,697           $ 105,383
                                                  =========           =========

Supplemental cash flow information

      Cash paid for interest                      $  52,550           $  42,718

      Cash paid for income taxes                  $      --           $      --
</TABLE>


                                      F-8
<PAGE>
                       HARP & EAGLE, LTD. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                           December 31, 2002 and 2001

NOTE 1 - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

NATURE OF BUSINESS

Harp & Eagle, Ltd. (Company) was formed in September 1999 under the laws of the
state of Wisconsin for the purpose of acquiring all of the issued and
outstanding common stock of Castledaly Acquisition Corporation (Castledaly). In
2000, the Company acquired approximately 63% of the outstanding common stock of
Castledaly in a series of transactions. The acquisition of Castledaly has been
accounted for in a manner similar to a pooling of interest since it was acquired
from a company under joint control and common management. In 2001, the Company
acquired the remaining 37% ownership interest of Castledaly. Castledaly owns
100% of its subsidiary, Castledaly Manor Limited (Manor), which owns and
operates an Irish manor house inn located in the village of Castledaly, Ireland.
The ten-room inn opened in May 1998 and serves food and beverages on the
premises. In March 2001, the Manor expanded the capacity of the inn to
twenty-three rooms.

A significant portion of the revenues related to the Company are dependent on
travelers from the United States going to the Manor in Ireland. Any disruption
or slow down of this travel could have an impact on the Company's operations.

PRINCIPLES OF CONSOLIDATION

As noted above, through a series of transactions, the Company principally
through the exchange of its shares for shares in Castledaly acquired 100% of the
outstanding shares of Castledaly. Both the Company and Castledaly had a
significant number of shareholders in common, were under common management, and
had a majority of board members in common. As a result, both entities are deemed
to be under common control of the above described control group and accordingly,
the acquisition of the Castledaly shares has been accounted for in a manner
similar to pooling-of-interests accounting.

The Company issued 147,086 shares of common stock plus cash in exchange for the
63% interest in Castledaly. Subsequent to that, the Company acquired the
remaining 37% ownership interest of Castledaly exchanging 145,322 shares of the
Company for the remaining shares of Castledaly.

As noted above, Castledaly owns 100% of the Manor which has been consolidated
into Castledaly. All significant intercompany transactions and accounts have
been eliminated.

The financial statements for all periods presented contain the activity of both
Castledaly and the Company as if the business combination described above
occurred on January 1, 1999.

USE OF ESTIMATES

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

FOREIGN CURRENCY TRANSLATION

The assets and liabilities of the Manor, which are denominated in a foreign
currency, are translated using rates of exchange as of the end of the period.
Revenues and expenses and cash flows are translated at weighted average rates of
exchange in effect during the year. The cumulative effect resulting from such
translation is included in accumulated other comprehensive income in the
consolidated financial statements.


                                      F-9
<PAGE>
                       HARP & EAGLE, LTD. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                           December 31, 2002 and 2001

NOTE 1 - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

CASH AND CASH EQUIVALENTS

Cash and cash equivalents include liquid investments having a maturity date of
less than three months when originally acquired.

INVENTORIES

Inventories consist principally of food and beverage and, are stated at the
lower of cost, determined on the first-in, first-out (FIFO) method, or market.

PROPERTY, EQUIPMENT, AND DEPRECIATION

Property and equipment are stated at cost. Expenditures for additions and
improvements are capitalized while replacements, maintenance and repairs which
do not improve or extend the lives of the respective assets are expensed
currently as incurred. Properties sold, or otherwise disposed of, are removed
from the property accounts, with gains or losses on disposal credited or charged
to the results of operations.

Depreciation is provided over the estimated useful lives of the respective
assets, using the straight-line method for financial reporting purposes, and, in
general, accelerated methods for income tax purposes.

OTHER ASSETS AND AMORTIZATION

Goodwill and other intangible assets - The Company adopted the provisions of
Statement of Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible
Assets, effective January 1, 2002. Under SFAS No. 142, goodwill and intangible
assets that have indefinite useful lives are not amortized but rather are tested
at least annually for impairment. Intangible assets that have finite useful
lives are amortized over their estimated useful lives, but without the
constraint of the 40-year maximum life required by APB Opinion No. 17.
Intangible assets with finite useful lives are reviewed for impairment in
accordance with SFAS No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets. SFAS No. 144, the provisions of which were also adopted
during 2002, requires the Company to evaluate the recoverability of long-lived
assets whenever events or changes in circumstances indicate that its carrying
amount may not be recoverable. The adoption of the provisions of SFAS No. 142
and SFAS No. 144 did not have a significant impact on the Company's financial
position or results of operations.

AMOUNTS RECEIVABLE FROM SHAREHOLDER

Amounts receivable from shareholder represent monies advanced by the Company on
behalf of a shareholder which are non-interest bearing and have no stated
maturity date.

COSTS OF ISSUING STOCK

Costs incurred directly related to the stock offering are reflected as an asset
on the December 31, 2001 balance sheet. These costs offset the equity proceeds
in 2002.


                                      F-10
<PAGE>
                       HARP & EAGLE, LTD. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                           December 31, 2002 and 2001


NOTE 1 - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

FUNDS HELD IN ESCROW

During December 2001, the Company filed a registration statement on Form SB-2
with the Securities and Exchange Commission in connection with a "best efforts"
public stock offering. The offering minimum was 60,000 shares to be sold within
120 days from the effective date of the Form SB-2. Any monies received for
shares prior to the minimum being met were held in escrow at a local bank. These
amounts would have been returned in full had the minimum not been met in the
specified time period. As of December 31, 2001, the minimum was not met and
$20,000 was being held in escrow. The minimum was met on April 10, 2002. As a
result of reaching the minimum offering, the Company recorded the effects of the
public stock offering during the second quarter of fiscal 2002.

CUSTOMER DEPOSITS

Customer deposits consist of monies received from customers in advance for trips
to the Manor.

INCOME TAXES

Income taxes are provided for the tax effects of transactions reported in the
financial statements and consist of taxes currently due plus deferred taxes
related primarily to differences between the financial and tax basis of property
and equipment, accrued liabilities and net operating loss carryforwards. The
deferred tax assets and liabilities represent the future tax return consequences
of those differences, which will either be taxable or deductible when the assets
and liabilities are recovered or settled. Deferred taxes are also recognized for
tax credits that are available to offset future income taxes. Valuation
allowances are established, if necessary, to reduce any deferred tax assets to
the amount that will more likely than not be realized.

FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value approximates book value for the following financial instruments due
to their short-term nature: cash and cash equivalents, accounts receivable, and
accounts payable. Fair values of notes payable and long-term debt are based on
estimates using present value techniques.

At December 31, 2002 and 2001, the carrying values of the Company's notes
payable and long-term debt approximated their fair values as the interest rates
on such financial instruments are comparable to market rates and/or remaining
principal is due in a relatively short period of time. Fair value of unused line
of credit arrangements approximate carrying value as the terms are at current
market for similar agreements.

REVENUE RECOGNITION

The Company records room revenues after guests have completed their stay at the
Manor and also records revenues for food and beverage and other services as they
are delivered to the guests. The Company includes as part of their package
prices, the cost of airfare to Ireland and recognizes this as revenue when
guests complete their stay. The Company bears the risk of loss on the tickets
when purchased until the guest has utilized the ticket.

ADVERTISING COSTS

Advertising costs are expensed as incurred. Advertising costs amounted to $2,874
in 2002 and $8,540 in 2001.


                                      F-11
<PAGE>
                       HARP & EAGLE, LTD. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                           December 31, 2002 and 2001

NOTE 1 - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

COMPREHENSIVE INCOME

Statement of Financial Accounting Standards No. 130 (SFAS No. 130), Reporting
Comprehensive Income, requires that total comprehensive income be reported in
the financial statements. Total comprehensive income is presented in the
consolidated statement of changes in stockholders' equity.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In June 2002, the FASB issued the Statement of Financial Accounting Standards,
No. 146, Accounting for Costs Associated with Exit or Disposal Activities (SFAS
No. 146). The Statement nullifies Emerging Issues Task Force (EITF) Issue no.
94-3, "Liability Recognition for Certain Employee Termination Benefits and Other
Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)". SFAS No. 146 requires that a liability for a cost associated
with an exit or disposal activity be recognized when incurred, as opposed to
EITF 94-3 which required that such a liability was recognized at the date of the
entity's commitment to the exit plan. The provisions of this Statement are
effective for exit or disposal activities initiated after December 31, 2002. The
Company expects that adopting the provisions of this statement will not have a
material impact on the consolidated financial statements of the Company.

In December 2002, the FASB issued Statement of Financial Accounting Standards,
No. 148, Accounting for Stock-Based Compensation (SFAS No. 148). 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. SFAS No. 148 requires new disclosures about the
effect of stock-based employee compensation on reported results. The Company
expects that adopting the provisions of this statement will not have a material
impact on the consolidated financial statements of the Company.

REVERSE 1 FOR 3 STOCK SPLIT

Effective April 4, 2001 the Company effected a 1 for 3 reverse stock split. All
share amounts and per share amounts have been presented giving retroactive
effect for this reverse split.

RECLASSIFICATIONS

Certain reclassifications have been made to the 2001 consolidated financial
statements to conform to the current year presentation.

NOTE 2 - CONCENTRATION OF CREDIT RISK

The Company maintains its cash balances in various financial institutions
located in the United States and Ireland. Balances maintained in financial
institutions located in the United States are insured by the Federal Deposit
Insurance Corporation up to $100,000 per institution. At times, the Company's
bank balances exceed this amount.


                                      F-12
<PAGE>
                       HARP & EAGLE, LTD. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                           December 31, 2002 and 2001

NOTE 3 - ACQUIRED INTANGIBLE ASSETS

The Company purchased additional shares of County Clare, Ltd. during 2002, which
brought its ownership to a point where the Company exercises significant
influence over the operating and financial activities of County Clare, Ltd.
Therefore, the transition was made from recording this investment from the cost
to the equity method. Since this goodwill was created after the adoption of SFAS
No. 142, the financial statements record this investment as if SFAS No. 142 was
adopted on January 1, 2001.

In the Manor acquisition, the Company recognized the excess of the purchase
price over the fair values of assets acquired and liabilities assumed as
goodwill. Prior to the adoption of the provisions of SFAS No. 142 effective
January 1, 2002, goodwill was being amortized over 15 years. Effective January
1, 2002, the Company ceased amortization of goodwill and began testing goodwill
for impairment, which was done effective January 1, 2002, and will be performed
at least annually. The results of the Company's impairment testing indicated no
impairment of goodwill as of January 1, 2002. The following is a summary of the
effect of the adoption of SFAS No. 142.

<TABLE>
<CAPTION>
                                                       2002            2001
                                                    -------         -------
<S>                                                 <C>             <C>
      Net income                                    $21,078         $82,193
      Add back:  Goodwill amortization                   --           1,163
                                                    -------         -------
      Adjusted net income                           $21,078         $83,356
                                                    =======         =======
</TABLE>

Carrying amounts and amortization of goodwill and other intangibles as of
December 31, 2002 are summarized below.

<TABLE>
<CAPTION>
                                                  Gross carrying
                                                      value
                                                  --------------
<S>                                               <C>
     NON-AMORTIZED INTANGIBLE ASSET
          Goodwill                                  $ 14,337
                                                    ========
</TABLE>

NOTE 4 - INVESTMENT IN AFFILIATED COMPANY

At December 31, 2001, the Company owned approximately 6% of the outstanding
common stock of County Clare, Ltd. (Clare) which is affiliated with the Company
through common ownership. The investment had been accounted for at cost because
the Company did not have the ability to exercise significant influence over this
affiliate. In 2002, the Company purchased an additional 13% of Clare, which gave
the Company significant influence over Clare's operating and financial
activities. Therefore, the Company is required under accounting principles
generally accepted in the United States of America governing a "step
acquisition" of an investee company to retroactively adopt the equity method of
accounting for its original interest in Clare for the periods prior to the
additional investment and restate its historical financial results. The effect
of the restatement is as follows:

<TABLE>
<CAPTION>
                                          Net income       Accumulated deficit
                                          ----------       -------------------
<S>                                       <C>              <C>
Originally reported in 2001                $  73,760            $(212,556)
Effect of restatement                          8,433                8,433
                                           ---------            ---------
Restated amount                            $  82,193            $(204,123)
                                           =========            =========
</TABLE>


                                      F-13
<PAGE>
                       HARP & EAGLE, LTD. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                           December 31, 2002 and 2001


NOTE 4 - INVESTMENT IN AFFILIATED COMPANY, CONTINUED

The following is a summary of County Clare's financial information:

<TABLE>
<CAPTION>
                                                     2002                2001
                                                  ----------          ----------
<S>                                               <C>                 <C>
Total assets                                      $2,842,327          $2,769,489
Total liabilities                                  1,289,585           1,296,232
                                                  ----------          ----------
    Total equity                                  $1,552,742          $1,473,257
                                                  ==========          ==========

Total revenue                                     $2,231,031          $2,170,957
Total direct operating expenses                    1,420,323           1,424,126
                                                  ----------          ----------
Gross profit                                         810,708             746,831
Other expenses                                       620,623             569,273
                                                  ----------          ----------
Net income before tax                                190,085             177,558
Provision for income taxes                            68,700              53,500
                                                  ----------          ----------
    Net income                                    $  121,385          $  124,058
                                                  ==========          ==========
</TABLE>

The Company's investment in Clare exceeded its share of underlying equity in
Clare by $270,330 and $234,593 at December 31, 2002 and 2001, respectively.

In addition, at December 31, 2002 the Company holds an option to acquire 16,500
additional shares of County Clare, Ltd. for $1 per share which would increase
its ownership percentage to 30%.

NOTE 5 - NOTES PAYABLE

Related party notes payable consist of the following:

<TABLE>
<CAPTION>
                                                                                 2002            2001
                                                                               --------        --------
<S>                                                                            <C>             <C>
      Stockholder
      Non-interest bearing note, unsecured, due on demand, paid in 2002        $     --        $ 12,700

      County Clare - affiliate
      Non-interest bearing note, unsecured, due on demand                         5,534           5,534

      Stockholder
      9% note, unsecured, due on demand, paid in 2002                                --         100,000
                                                                               --------        --------
                                                                               $  5,534        $118,234
                                                                               ========        ========
</TABLE>

Other notes payable consists of the following:

<TABLE>
<CAPTION>
                                                                                 2002            2001
                                                                               --------        --------
<S>                                                                            <C>             <C>
Grafton State Bank
  10% note, interest payable quarterly, due on demand,
    personally guaranteed by three stockholders of the Company,
    paid in 2002                                                               $     --        $ 33,000
                                                                               ========        ========
</TABLE>


                                      F-14
<PAGE>
                       HARP & EAGLE, LTD. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                           December 31, 2002 and 2001

NOTE 6 - LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
                                                                              2002              2001
                                                                           ----------        ----------
<S>                                                                        <C>               <C>
Ulster Bank, Ireland
  Mortgage note, due in monthly installments of $7,862 due February
    1, 2013, interest at Irish prime less .2% (5.625% at December
    31, 2002), secured by substantially all real estate owned by
    the Manor                                                              $  701,051        $  541,237

  Bank note, due in monthly installments of $10,483 due December
    23, 2003, interest at Irish prime less .2% (5.625% at December
    31, 2002), secured by substantially all real estate owned by
    the Manor                                                                 235,165                --

Johnson Bank
  Line of credit in the amount of $350,000, interest at 5.900%,
    guaranteed by County Clare, Ltd., as well as a stockholder
    of the Company, payable in monthly installments of $6,456,
    final payment of all principal and interest December 1, 2005              338,117           338,117
                                                                           ----------        ----------

Total long-term debt                                                        1,274,333           879,354
Less current maturities                                                       235,131           371,252
                                                                           ----------        ----------

Long-term debt, less current maturities                                    $1,039,202        $  508,102
                                                                           ==========        ==========
</TABLE>

Maturities of long-term debt for each of the five years succeeding December 31,
2002 are as follows:

<TABLE>
<S>                                                              <C>
                              2003                               $     235,131
                              2004                                     242,669
                              2005                                     277,589
                              2006                                      66,863
                              2007                                      70,721
                              Thereafter                               381,360
                                                                 -------------
                                   Total                         $   1,274,333
                                                                 =============
</TABLE>

NOTE 7 - INCOME TAXES

Deferred taxes are as follows:

<TABLE>
<CAPTION>
                                                     2002             2001
                                                   --------         --------
<S>                                                <C>              <C>
      Deferred income tax assets:
        Total                                      $ 91,500         $ 68,000
        Valuation allowances                        (30,250)         (43,000)
                                                   --------         --------
                                                     61,250           25,000
      Total deferred income tax liabilities         (43,500)              --
                                                   --------         --------
      Net deferred income tax asset                $ 17,750         $ 25,000
                                                   ========         ========
</TABLE>


                                      F-15
<PAGE>
                       HARP & EAGLE, LTD. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                           December 31, 2002 and 2001


NOTE 7 - INCOME TAXES, CONTINUED

There was approximately a $13,000 decrease and a $5,000 increase in the
valuation allowance during the years ended December 31, 2002 and 2001,
respectively.

The provision for income taxes consists of:

<TABLE>
<CAPTION>
                                                 2002              2001
                                               --------          --------
<S>                                            <C>               <C>
       Current provision:
         Federal                               $     --          $ 10,855
         State                                       --             2,522
                                               --------          --------

                                               $     --          $ 13,377
                                               ========          ========
</TABLE>

<TABLE>
<CAPTION>
                                                 2002              2001
                                               --------          --------
<S>                                            <C>               <C>
       Deferred provision:
         Federal                               $ (2,748)         $  8,140
         State                                      814             1,892
         Foreign                                 13,500             6,965
                                               --------          --------
       Deferred provision                      $ 11,566          $ 16,997
                                               ========          ========
</TABLE>

Effective rate reconciliation:

<TABLE>
<CAPTION>
                                                 2002              2001
                                               --------          --------
<S>                                            <C>               <C>

         U. S. Statutory Rate                        34%               34%
                                               --------          --------

         U. S. Statutory Rate                  $ 11,099          $ 38,273
         State income taxes, net                    814             6,936
         Effect of valuation allowances          (2,767)              963
         International rate differences           2,420           (15,798)
                                               --------          --------

                                               $ 11,566          $ 30,374
                                               ========          ========
</TABLE>

The net operating losses of approximately $330,000 which principally arose from
the Company's Irish operations may be carried forward indefinitely under Irish
law to be used to offset future business income of the Irish operations.


                                      F-16
<PAGE>
                       HARP & EAGLE, LTD. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                           December 31, 2002 and 2001


NOTE 8 - EARNINGS PER SHARE

Earnings per share has been computed based on the weighted average shares
outstanding for the periods below:

<TABLE>
<CAPTION>
                                                           Harp & Eagle, Ltd.
                                               ----------------------------------------
                                                  Income         Shares       Per-Share
                                               (Numerator)    (Denominator)     Amount
                                               -----------    -------------   ---------
<S>                                            <C>            <C>             <C>
Basic income per common share:
  Income available to common stockholders:
         December 31, 2002                        $21,078        698,117         $.03
                                                  -------        -------         ----
         December 31, 2001                        $82,193        577,597         $.14
                                                  -------        -------         ----
</TABLE>

During December, 2000 the Company granted options to purchase approximately
33,332 shares of common stock to four individuals, all of whom are officers,
directors and/or employees of the Company. These options were granted pursuant
to a plan adopted by the board of directors. All of these options were
exercisable for a period of ten years, at the price of $3.00 per share; however,
such options would not become fully vested and exercisable until July 1, 2007.
The exercise price of these options was determined by the Company to reflect the
fair value of the common stock as of December 31, 2000. The Company canceled
these options during 2002.

NOTE 9 - COMMITMENTS AND CONTINGENCIES

The Company accepts reservations for trips to the Manor in advance of customers'
travel. As a result, the Company is obligated to provide air travel and other
amenities associated with the trips. The Company prices its trips at a level
expected to cover these costs and provide a profit, accordingly, no provision
for these future costs has been made in these financial statements.

NOTE 10 - SALES BY REGION

<TABLE>
<CAPTION>
                                             2002                  2001
                                          ----------            ----------
<S>                                       <C>                   <C>
      Domestic/USA                        $  709,984            $  820,152
      Europe                                 647,181               591,728
                                          ----------            ----------
         Total                            $1,357,165            $1,411,880
                                          ==========            ==========
</TABLE>

NOTE 11 - SUBSEQUENT EVENT

In 2003, the Company entered into an agreement to construct an Irish-themed inn
and restaurant in Green Bay, Wisconsin. The construction costs are estimated at
$2 million, to be paid out of additional debt and equity offerings. At December
31, 2002, approximately $30,000 had been expended for this project.


                                      F-17
<PAGE>
                                                                      SCHEDULE A

                               HARP & EAGLE, LTD.

                                   FORM 10-KSB
                      FOR THE YEAR ENDED DECEMBER 31, 2002

      Pursuant to Securities Act Rule 463, the following information (as
identified in paragraphs (f)(2) through (f)(4) of Regulation S-B Item 701) is
provided concerning the initial public offering ("Offering") of its common
stock, par value $0.0001 per share ("Common Stock"), conducted by Harp & Eagle,
Ltd. ("Company"), pursuant to a registration statement on Form SB-2 under the
Securities Act of 1933 (File No. 333-55088), which initially became effective as
of December 11, 2001:

            (f)(2) through (f)(4)(i): The Offering commenced as of December 11,
            2001, and remained ongoing as of December 31, 2002.

            (f)(4)(ii): As of December 31, 2002, the offering is being
            self-underwritten by the Company.

            (f)(4)(iii) through (f)(4)(iv): 1,000,000 shares of Common Stock
            were registered on Form SB-2, all of which are included in the
            Offering; all such shares were registered for the account of the
            Company; the aggregate price of the Common Stock registered
            (calculated at $6.00 per share, the initial public offering price)
            was $6,000,000; during the period from December 11, 2001 through
            December 31, 2002, 68,105 shares were sold in the Offering.

            (f)(4)(v): From December 11, 2001 through December 31, 2002, the
            Company incurred the following expenses in connection with the
            Offering:

<TABLE>
<S>                                                         <C>
                  Underwriting commissions                  $ 35,350
                  Underwriters' expense allowances             8,838
                  Other expenses                             124,554*
                                                            --------
                          Total expenses                    $168,742*
                                                            ========
</TABLE>

            * Estimate

            Approximately $44,500 of the above expenses consisted of fees and
            expense reimbursements paid to Kranitz & Philipp, counsel to the
            Company. Richard A. Kranitz, a partner in Kranitz & Philipp, is the
            Secretary and a director of the Company. Apart from the foregoing,
            none of the above expenses were paid, directly or indirectly, to
            directors or officers of the Company, or to their affiliates, or to
            persons owning ten percent or more of any class of equity securities
            of the Company, or to affiliates of the Company.

            (f)(4)(vi) through (f)(4)(vii): After deducting the total expenses
            reported above, net proceeds of the Offering received by the Company
            from December 11, 2001 through December 31, 2002 were $239,888. Of
            such net proceeds, $145,700 was applied to debt reduction (including
            $45,700 to affiliates of the Company), $80,000 was applied to the
            purchase of real estate and related preliminary architectural and
            construction expenses, and the balance was held in Company accounts
            pending application. Apart from the $45,700 applied to repay
            indebtedness to affiliates, no net proceeds were paid, directly or
            indirectly, to directors or officers of the Company, or to their
            affiliates, or to persons owning ten percent or more of any class of
            equity securities of the Company, or to affiliates of the Company.
<PAGE>
                               HARP & EAGLE, LTD.

                                   FORM 10-KSB

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002


                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>
    Exhibit
    Number                         Description
    -------                        -----------
<S>            <C>
      3.1      Articles of Incorporation of the Registrant *
      3.2      Articles of Amendment of the Registrant *
      3.3      Bylaws of the Registrant *
      3.4      Articles and Plan of Share Exchange between the Registrant and
               Castledaly Acquisition Corporation *
     16.1      Letter of Schenck & Associates, S.C., as to change in
               accountants *
     16.2      Letter of Cherry, Bekaert & Holland, L.L.P., as to change in
               accountants *
     99.1      Certification of Chief Executive Officer and Chief Financial
               Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant
               to Section 906 of the Sarbanes-Oxley Act of 2002.
</TABLE>

----------

      *     Incorporated by reference to the registration statement of Harp &
            Eagle, Ltd. on Form SB-2 (File No. 333-55088).