##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-KSB

[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. 000-31505

Global Energy Group,
Inc.(Name of small business issuer in its charter)

|                                                                             |  |                                                   
|---------------------------------------------------------------------------- |  | --------------------------------------------------
|Delaware
(State or other jurisdiction of
incorporation or organization)      |  | 23-3020677
(I.R.S. Employer
Identification Number)
|                                                                             |  |                                                   
|2346 Success Drive, Odessa, Florida
(Address of principal executive offices) |  | 33556
(Zip Code)                                  

(727) 372-3939
(Issuers telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

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

Common Stock, $.001 par value per share

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
[X] Yes [  ] 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. [  ]

State issuers revenues for its most recent fiscal year. $164,422

State the aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the price at which the common
equity was sold, or the average bid and asked price of such common equity, as
of a specified date within the past 60 days. (See definition of affiliate in
Rule 12b-2 of the Exchange Act.)



| |                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | As of March 20, 2003, the aggregate market value (based on the last sale
price on such date) of Common Stock held by non-affiliates of the registrant
was $3,851,955. For purposes of this disclosure, we have considered each
officer and director, and each person who owns 5% or more of the outstanding
Common Stock, to be an affiliate. This determination of affiliate status is
not necessarily applicable for other purposes.

State the number of shares outstanding of each of the issuers classes of
common equity, as of the latest practicable date: 13,589,851 shares of Common
Stock, par value $.001 per share, as of March 20, 2003.

DOCUMENTS INCORPORATED BY REFERENCE:None.

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





---

TABLE OF CONTENTS



|                                               |                                                                                                                          |  |  |  |  |  |  | 
|---------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------ |  |  |  |  |  |  | 
|PART I                                        
|                                               | Cautionary Statement Regarding Forward-Looking Information                                                              
|                                               | Item 1. Description of Business.                                                                                        
|                                               | Item 2. Description of Property.                                                                                        
|                                               | Item 3. Legal Proceedings.                                                                                              
|                                               | Item 4. Submission of Matters to a Vote of Security Holders.                                                            
|PART II                                       
|                                               | Item 5. Market for Common Equity and Related Stockholder Matters.                                                       
|                                               | Item 6. Managements Discussion and Analysis or Plan of Operation                                                       
|                                               | Item 7. Financial Statements.                                                                                           
|                                               | Item 8. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.                           
|PART III                                      
|                                               | Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance With Section 16(a) of the Exchange Act.
|                                               | Item 10. Executive Compensation.                                                                                        
|                                               | Item 11. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.                
|                                               | Item 12. Certain Relationships and Related Transactions.                                                                
|                                               | Item 13. Exhibits and Reports on Form 8-K.                                                                              
|                                               | Item 14. Controls and Procedures                                                                                        
|Ex-3.1 12/31/02 Amended Cert of Incorporation 
|Ex-3.2 12/10/02 Amended By-Laws               
|Ex-4.1 Amended 2001 Incentive Plan            
|Ex-10.19 Thomas Hebert Patent Assignment Agmnt
|Ex-23.1 Accountants' Consent                  
|Ex-99.1 Certification by Management           



---



##### Table of Contents



GLOBAL ENERGY GROUP, INC.
Annual Report on Form 10-KSB
For the Fiscal Year Ended
December 31, 2002

|                                                           |  |                                                                                                                         |  |        
|---------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------- |  | -------
|Item                                                       |  |                                                                                                                         |  | Page   
|                                                           |  |                                                                                                                         |  |        
|PART I                                                     |  |                                                                                                                         |  |        
|Cautionary Statement Regarding Forward-Looking Information |  | 1                                                                                                                      
|Item 1.                                                    |  | Description of Business                                                                                                 |  | 1      
|Item 2.                                                    |  | Description of Property                                                                                                 |  | 5      
|Item 3.                                                    |  | Legal Proceedings                                                                                                       |  | 5      
|Item 4.                                                    |  | Submission of Matters to a
Vote of Security Holders                                                                     |  | 5      
|                                                           |  |                                                                                                                         |  |        
|PART II                                                    |  |                                                                                                                         |  |        
|Item 5.                                                    |  | Market for Common Equity and
Related Stockholder Matters                                                                |  | 6      
|Item 6.                                                    |  | Managements Discussion and Analysis
or Plan of Operation                                                               |  | 8      
|Item 7.                                                    |  | Financial Statements                                                                                                    |  | 16     
|Item 8.                                                    |  | Changes In and Disagreements With Accountants
on Accounting and Financial Disclosure                                    |  | 16     
|                                                           |  |                                                                                                                         |  |        
|PART III                                                   |  |                                                                                                                         |  |        
|Item 9.                                                    |  | Directors, Executive Officers, Promoters and Control
Persons; Compliance With Section 16(a) of the
Exchange Act         |  | 16     
|Item 10.                                                   |  | Executive Compensation                                                                                                  |  | 18     
|Item 11.                                                   |  | Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters                          |  | 20     
|Item 12.                                                   |  | Certain Relationships and Related Transactions                                                                          |  | 23     
|Item 13.                                                   |  | Exhibits and Reports on Form 8-K                                                                                        |  | 24     
|Item 14.                                                   |  | Controls and Procedures                                                                                                 |  | 25     
|                                                          
|Index to Financial Statements                              |  | F-1                                                                                                                    
|                                                           |  | Independent Auditors Report
(Baumann, Raymondo & Company, PA)                                                          |  | F-2    
|                                                           |  | Consolidated Balance Sheets
at December 31, 2002 and December 31, 2001                                                  |  | F-3 & 4
|                                                           |  | Consolidated Statements of Operations
for the Years ended December 31, 2002
and December 31, 2001                       |  | F-5    
|                                                           |  | Consolidated Statements of Cash Flows
for the Years ended December 31, 2002
and December 31, 2001                       |  | F-6    
|                                                           |  | Consolidated Statements of Changes in Stockholders Capital
for the Years ended December 31, 2002
and December 31, 2001 |  | F-7    
|                                                           |  | Notes to Financial Statements                                                                                           |  | F-8    





---



##### Table of Contents






PART I




Cautionary Statement Regarding Forward-Looking Information

This report and other reports, as well as other written and oral
statements made or released by us, may contain forward looking statements.
Forward looking statements are statements that describe, or that are based on,
our current expectations, estimates, projections and beliefs. Forward looking
statements are based on assumptions made by us, and on information currently
available to us. Forward-looking statements describe our expectations today of
what we believe is most likely to occur or may be reasonably achievable in the
future, but such statements do not predict or assure any future occurrence and
may turn out to be wrong. You can identify forward-looking statements by the
fact that they do not relate strictly to historical or current facts. The words
believe, anticipate, intend, expect, estimate, project, predict,
hope, should, may, and will, other words and expressions that have
similar meanings, and variations of such words and expressions, among others,
usually are intended to help identify forward-looking statements.

Forward-looking statements are subject to both known and unknown risks and
uncertainties and can be affected by inaccurate assumptions we might make.
Risks, uncertainties and inaccurate assumptions could cause actual results to
differ materially from historical results or those currently anticipated.
Consequently, no forward-looking statement can be guaranteed. As discussed in
other sections of this document, we will be unable to continue as a going
concern if we are unable to raise additional capital through debt or equity
financings, or if we are unable to earn sufficient revenues from our operations
to cover our expenses. Other potential risks and uncertainties that could
affect forward looking statements include, but are not limited to: increased
competition, extent of the market demand for and supply of goods and services
of the types provided by the Company, governmental regulation, performance of
information systems, and the ability of the Company to hire, train and retain
qualified employees. You also should consider the specific risk factors
described more fully in this report beginning on page 11. In addition, other
risks, uncertainties, assumptions, and factors that could affect the Companys
results and prospects have been and may further be described in the Companys
prior and future filings with the Securities and Exchange Commission and other
written and oral statements made or released by the Company.

We caution you not to place undue reliance on any forward-looking
statements, which speak only as of the date of this document. The information
contained in this report is current only as of its date, and we assume no
obligation to update any forward-looking statements.




Item 1. Description of Business.

Overview

Global Energy Group, Inc. (the Company or Global) invents, develops
and commercializes new technologies that improve the energy efficiency of
existing products and processes. Our particular focus is on thermodynamics,
heat transfer and heat exchange, which are important to the heating,
ventilation, air conditioning, and refrigeration (HVACR) industries. We
currently hold the rights to nine U.S. patents, and eight U.S. patent-pending
applications. Using these patents we have been able to develop products that we
believe are significantly more energy efficient than those typically available.
Our initial product strategy is to market a line of retrofit and new equipment
products to the commercial rooftop air conditioning market in the U.S. Over the
past several years we have sold our equipment for installation in a number of
locations in Florida, California, and Texas. Some of these installations were
retrofits to existing air conditioning equipment, while others were entirely
new systems. Through these installations, we refined our equipment design and
provided field verification that our technologies would effectively increase
capacity while reducing energy consumption. Each of these initial installations
resulted in energy efficiency improvements of 25% or greater (meaning that the
installation of our equipment increased the cooling level achieved by 25%,
without increasing energy consumption). In almost all instances an energy
service company (ESCO) installed our products for the customer, with the
customer paying the ESCO directly for the installation and, as part of such
installation process, the ESCO tested the equipment which included the
measurement of the efficiency increase; in the few cases where we installed our
products ourselves, we conducted the testing and measured the increase in
efficiency. As new technologies are developed, we will evaluate how to
maximize the value of each one. This will include choosing between
commercializing the products ourselves, licensing the technology to others, or
joint venturing.

1



---



##### Table of Contents



Technology

Global currently holds the exclusive rights to nine U.S. patents and eight
patent-pending applications pursuant to a series of agreements with the
inventors of the underlying technologies. Under the terms of these agreements,
the Company has the exclusive right to pursue commercial development of the
patented technologies. For all but one of the patents, these agreements are
with Mr. Thomas Hebert, an officer of the Company and the beneficial owner of
1,456,205 shares (or about 11%) of the Companys Common Stock. The other
inventor is Mr. Noel Davis, an individual not otherwise associated with the
Company. Mr. Hebert and Mr. Davis are entitled to royalty payments from any
sales of the products produced by the Company with the patented technologies.
These payments began in 2002 and are tied to the dollar amount of sales by the
Company of products incorporating the patented technologies. The agreements
also establish minimum royalty amounts, regardless of the level of sales, if
any, required to be paid beginning in 2002. Minimum royalties under the
Companys patent agreements as in effect on the date of this report would
amount to $10,000 in 2003, increasing each year until reaching $710,000 in 2010
and following years. No royalty payments are required after the underlying
patents expire. In addition to making royalty payments, the Company must use
reasonable efforts to generate income on each patent. Failure to comply with a
patent assignment or license agreement could result in the loss of the
Companys right to manufacture and sell products incorporating the patented
technology. Many of these patents are essential to the Companys business plan,
and loss of the rights to exploit these patents would seriously jeopardize the
Companys existence. One patent not important to the Companys business expires
in 2003, and the other patents expire at various times in 2016 through 2019. A
brief summary of each patent follows:



| |  |  | USP# 4,599,870                                                                                                                                                                                                                                                                                                                                                                                          
| |  |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | A refrigeration heat recovery system for producing usable hot water from a
refrigeration systems waste heat, using a natural force to provide water flow
through the heat exchanger (thermosyphon effect) rather than using a pump.                                                                                                                                                                    
|
| |  |  | USP# 5,970,728                                                                                                                                                                                                                                                                                                                                                                                          
| |  |  | Utilization of multiple staged common circuit compressors to provide for higher
heat output from a heat pump at low outside ambient conditions. Heat output is
maintained, or even increased, as outside temperatures fall.                                                                                                                                                                             
|
| |  |  | USP# 6,070,423                                                                                                                                                                                                                                                                                                                                                                                          
| |  |  | A system to provide first, liquid refrigerant subcooling by means of
evaporative cooling utilizing the condensate water, and second, a system for
providing hot gas discharge refrigerant precooling by means of evaporative
cooling. Both combining to give greater capacity without requiring an increase
in input power, and even possibly decreasing the required input power.                      
|
| |  |  | USP# 6,116,048                                                                                                                                                                                                                                                                                                                                                                                          
| |  |  | An evaporator design that provides counterflow temperature conditions to the
direction of air flow by sectionalizing the various temperature gradients found
in evaporators and arranging the sections to provide a temperature gradient
that places the warmest section in front of colder and subsequently colder
sections. Provides for optimized heat exchange as well as improved
dehumidification.
|
| |  |  | USP# 6,167,715 B1                                                                                                                                                                                                                                                                                                                                                                                       
| |  |  | A direct refrigerant to ground (geothermal) heat exchange system for subcooling
and desuperheating (or postheating in the heat mode of a heat pump) the
refrigerant of an air-cooled air conditioner, refrigeration system or heat
pump. No secondary fluid or pumping system required. Provides near full
geothermal system efficiency.                                                                
|
| |  |  | USP# 6,237,359 B1                                                                                                                                                                                                                                                                                                                                                                                       
| |  |  | Provides liquid refrigerant subcooling by utilizing the cold harvest water
and/or meltwater discharging from the ice machine to increase ice production
capacity of the ice machine.                                                                                                                                                                                                                    
|
| |  |  | USP# 6,000,170                                                                                                                                                                                                                                                                                                                                                                                          
| |  |  | A system consisting of multiple parallel reflectively coated tubes whose
inflation is controlled by a controller that provides for controlled shading in
a greenhouse system during times of high solar loading of the greenhouse, and
provides for minimized heat loss at night, especially in cold climates.                                                                                          
|
| |  |  | USP# 6,442,903 B1                                                                                                                                                                                                                                                                                                                                                                                       
| |  |  | The structural construction methodology for a greenhouse inflatable insulative
covering to be used to reduce heat losses and overheating of greenhouses.                                                                                                                                                                                                                                                

2



---



##### Table of Contents





| |  |  | USP# 6,460,358 B1                                                                                                                                                                                                                                                                
| |  |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |  | A heat exchanger that reduces an evaporators flash gas loss region and reduces
the superheat region, allowing for improved heat exchange by the evaporator
itself, thereby allowing for increased refrigeration mass flow and therefore
increased system refrigeration capacity.

The patents described above apply only in the United States.
The Company has applied for patent protection on select technologies in a few foreign
countries. However, because of its limited financial resources, the Company is generally
unable to apply for or enforce patents outside the United States.

Products

To date, the Company has completed development of four products.
Currently, our principal products are our EER(+)Plus and Inventor Series 1400
units, which we expect to be the primary sources of our sales revenues during
the coming year. The EER(+)Plus is a retrofit unit, designed to be added to
existing air conditioning units to boost their performance very cost
effectively. The Inventor Series 1400 is a complete unitary packaged air
conditioning unit, with our patented technologies incorporated into it. Both of
these products utilize generally wasted condensate water and exhaust air,
produced by all standard air conditioning systems, to provide increased
capacity and to reduce power consumption. We believe this produces improvements
in energy efficiency of at least 25%, compared to typical other new equipment.
If our products are replacing a customers older, worn equipment, the
efficiency gains would likely be much higher than 25%. This efficiency
improvement reduces energy consumption for air conditioning while maintaining
the same cooling level. A sample Inventor Series 1400 unit was certified by the
Air Conditioning and Refrigeration Institute (ARI), the independent industry
group which certifies the energy efficiency ratings of air conditioning units,
in May, 2002. The Companys 7.5-ton unit was rated 13.5 EER. Current plans call
for the Company to offer both the EER+ product and the Inventor Series 1400
units in several cooling sizes ranging from 6 to 30 tons. Typically, a
commercial building installation requires a ton of air conditioning for every
300-400 square feet. Large buildings would utilize multiple units.

We are currently developing additional products that target the
residential market, and in the future we plan to expand our product line to
include more energy-efficient heat pumps, ice machines and water heaters.
However, there is no assurance that we will complete the development or
introduction of any new products, and the timing of the introduction of any
additional products is not certain.

Competition and Markets

This discussion of competition and markets is based on the first two
products Global is selling. This discussion will be expanded as Global develops
products which are sold in different markets.

The Company competes in the marketplace for unitary air conditioning and
heat pump equipment, in both the new construction and replacement markets.
While Globals products will work in many countries around the world, the
United States market will be the main focus of the company over the next year.
According to ARI, in the United States in 2002 and 2001, 6.75 million and 6.28
million unitary air conditioning units and heat pumps were sold, respectively.
Approximately one-half of this market is for replacement units, and one-half is
for new installations. There are numerous manufacturers of such equipment, and
the Company competes with all other manufacturers of HVACR equipment. All of
these companies are more established and many are substantially larger than
Global and have greater resources. Economies of scale are important in reducing
unit production costs, and the company currently is at a disadvantage in this
area due to its lack of sales volume.

While actual pricing will vary based on market conditions and other
factors, the Company anticipates that its units generally will be priced higher
than competitors products. For Global to be successful our products must have
a higher value to our customers; that is, the higher price of the product
initially must be more than offset by the lower operating expenses of the
customer while the equipment is in use. The HVACR industry and the U.S.
Department of Energy both use the term life-cycle costs to describe the total
costs to the customer of both buying and then using the equipment over its
useful life. In order for Global to succeed, our products have to provide the
lowest life-cycle costs for our targeted customers.

We provide a competitive warranty on our products covering parts only for
a period of one year from the date of operation; compressors are warranted for
an additional four years.

3



---



##### Table of Contents



Production

To date, Global has internally produced all of the EER+ units that it has
sold. The Company purchases the required components and sheet metal and then
assembles and tests the finished product. In the last two years, Global
has produced over 100 of the EER+ units of various sizes. Global has the
ability itself to make the projected number of EER+ units needed for the
immediate future.

The Inventor Series 1400 units are considerably more complex and more
expensive to build than the EER+ units, and Global has arranged to have
Matthews Industries of Decatur, AL manufacture these units. An agreement with
Matthews was reached in November 2002, and the production of the first batch of
units has been completed. Matthews has production capacity available to meet
the planned needs of the Company for the foreseeable future.

In the future, the Company may continue to produce its products itself, or
the Company may seek further arrangements with others for manufacturing
services. All materials and components for the Companys products are readily
available from vendors who sell to the air conditioning industry generally.
The Company believes that it will be able to secure an adequate supply of
material to produce its products, and that suitable manufacturing services will
be readily available.

Distribution

The Company has a small in-house sales staff located in Florida and
California. Global uses this sales force to sell its products to some key
end-use customers, but primarily promotes the sale of its products through a
variety of sales channels, including: energy service companies (ESCOs),
independent sales representatives, specifying engineers and HVACR distributors
and/or contractors. ESCOs market bundled energy savings products and services
to end-use customers, and are familiar with marketing products to customers on
the basis of future energy savings. At the time of this report, Global
currently has working relationships established with ten ESCOs, nine
independent sales representatives, five engineering firms and seven HVACR
distributors and/or contractors. These firms are presently actively specifying
Global Energy products to be included as a part of their own sales to their
customers.

In 2000, Global Energy entered
into discussions with two individuals, Mr. Roger Rendall and
Mr. Rudolph Hiensch, regarding the sale and distribution of its products
in Europe. The concept was to establish two new companies, one based in the United
Kingdom and the other in Holland. The company to be formed in the UK was to distribute
Global Energy products within the countries of the British Commonwealth, and the
Dutch company was to perform the same function in the rest of Europe. In the UK company,
Rendall was to be the majority stockholder, with Global Energy and Hiensch being minority
stockholders. In the Dutch company, Hiensch was to be the majority stockholder, and Global
Energy and Rendall were to be minority stockholders.

As a result of these discussions, the UK
transaction was completed in 2000, except that Hiensch did not become a minority
stockholder. Consistent with the discussions among the three parties, a new company,
GEER Ltd., was formed and entered into a formal Distribution Agreement with Global
Energy for the sale and distribution of its products. To date only nominal sales have
occurred. The Distribution Agreement expires in March 2004.

Global Energy, Hiensch and Rendall did
not complete the other transaction. While Hiensch did form a new company, GEER B.V., he
refused to enter into a Distribution Agreement with Global Energy for the sale of its
products. Instead, he has relied upon a two-page document signed by the parties very
early in the discussion period to claim that he and the new Dutch company have the right
to sell Global Energy technology within Europe. This document is now the source
of a disagreement between Hiensch and Global Energy. The company maintains that the document
is only a letter of intent and is not binding upon the parties; Hiensch maintains that it is
a binding agreement. Hiensch is selling products, which it manufactures, that contain
Global Energys proprietary technology. The company has notified Hiensch that this is
a violation of the companys patents. Global Energy has sought to negotiate a settlement
to this dispute, but has been unsuccessful thus far. Global Energy does not have the financial
resources to pursue this matter by litigation in Europe and may not be able to prevent
Hiensch from marketing and selling products with Global Energy technology. Moreover, if Hiensch
were to prevail in its position, the company might be precluded from making sales
in Europe.

Customers

Over the last several years, our major customers have been a single ESCO,
a large direct customer, and a few independent sales representatives. The
products that have been sold and installed over the past few years have
primarily been sold either directly by us or through ESCOs that had customers
seeking to reduce their overall energy consumption. To combat our lack of
resources and brand identity, our marketing and sales strategy focuses on using
ESCOs, existing distributors and/or HVACR contractors that have established
customer bases.

Environmental Matters

Our operations are subject to evolving and often increasingly stringent
federal, state, local and international laws and regulations concerning the
environment. Environmental laws that affect or could affect the Companys
domestic operations include, among others: the Clean Air Act, the Clean Water
Act, the Resource Conservation and Recovery Act, the Comprehensive
Environmental Response, Compensation and Liability Act, the Occupational Safety
and Health Act, the National Environmental Policy Act, the Toxic Substances
Control Act, and any regulations promulgated under these acts and various other
federal, state and local laws and regulations governing environmental matters.
The Company believes it is in compliance in all material respects with all
existing environmental laws and regulations.

In the past decade, there has been increasing regulatory and political
pressure to phase out the use of certain ozone depleting substances, including
halons, chlorofluorocarbons (CFCs), and hydrochlorofluorocarbons (HCFCs),
some of which are utilized in air conditioning and refrigeration equipment.
Like most of its competitors, the Companys products utilize HCFCs as
refrigerants. Federal and international law currently caps production of HCFCs
at 1996 levels and contemplates a complete phase-out of HCFC production by
2030. The Company does not believe the current phase out schedule for HCFCs
will have any adverse effect on its financial position or results of
operations. The Company believes that there will likely be continued pressure
by the international environmental community for the United States and other
countries to accelerate the HCFC phase out schedule. However, the Companys
products are being designed to utilize the next generation of refrigerants
without substantial modification, and the Company believes it is well
positioned to react to any changes in the regulatory landscape for HCFCs.

4



---



##### Table of Contents



Employees

The Company currently employs 13 full-time and five part-time people. It
is anticipated that additional personnel will be required if the Company
expands its operations.

Corporate History

Global Energy & Environmental Research, Inc. (GEER), a Florida
corporation and the original operator of our business, was organized in
December 1998. Mr. Wiles, Mr. Cornett, Mr. Hebert, and Dr. Stubbs were founders
of GEER. In October 1999, an individual not related to GEER formed
1stopsale.com Holdings, Inc., a Delaware corporation, which conducted an
initial public offering in 2000. Although 1stopsale.com Holdings, Inc.
originally was intended to operate an Internet-oriented retail business, it
never began that operation.

In October 2001, GEER and 1stopsale.com entered into a Securities Exchange
Agreement. Pursuant to that agreement, (1) shares of 1stopsale.com Holdings,
Inc. were issued in exchange for all outstanding shares of GEER, making GEER a
wholly owned subsidiary of 1stopsale.com Holdings, Inc., (2) 1stopsale.com
Holdings, Inc. assumed the business operations of GEER, keeping GEER as a
subsidiary, and (3) 1stopsale.com Holdings, Inc. changed its name to Global
Energy Group, Inc., its current name, thereby becoming the Company. This
transaction (the 2001 Restructuring) resulted in the previous owners of GEER
giving up their ownership of GEER, which then became a subsidiary of
1stopsale.com Holdings, Inc. In exchange, those individuals gained control of
1stopsale.com Holdings, Inc., which then became the Company.

From a corporate law standpoint, 1stopsale.com Holdings, Inc. (now known
as Global Energy Group, Inc.) acquired all the outstanding Common Stock of
GEER. However, from an accounting perspective, the 2001 Restructuring is
treated as a reverse merger, or as if GEER acquired 1stopsale.com Holdings,
Inc. Also as part of the 2001 Restructuring, the Company effectuated a 1-for-20
reverse stock split which changed the par value of its Common Stock and the
number of authorized shares to 50,000,000 shares of $.001 par value per share
Common Stock. In the 2001 Restructuring, 9,375,000 shares of Common Stock were
issued to the former GEER stockholders in exchange for their GEER common stock.
Although GEER is now a subsidiary of the Company, prior to October 2001 there
was no affiliation between GEER and the Company.

The Companys principal office is at 2346 Success Drive, Odessa, Florida
33556 and its telephone number is 727.372.3939.




Item 2. Description of Property.

The Company occupies and leases approximately 20,540 square feet of
office/manufacturing space in Odessa, Florida, which is in good condition and
is adequate for the Companys needs at this time.

It is not our policy to acquire assets primarily for possible capital gain
or primarily for income. We do not have, and do not expect to have in the
foreseeable future, any material investments in real estate, interests in real
estate, real estate mortgages, or securities of or interests in persons
primarily engaged in real estate activities. However, we do not have any
policies regarding such investments, there are no limitations on the amount
that the Company is permitted to invest in any one investment or type of
investment, and no vote of our security holders is required to adopt or change
any policy regarding the foregoing.




Item 3. Legal Proceedings.

We are not a party to any material legal proceedings, and no material
legal proceedings have been threatened by or, to the best of our knowledge,
against us.




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

The Companys 2002 Annual Meeting of Stockholders (Annual Meeting) was
held on December 10, 2002. At the Annual Meeting, the stockholders approved:
(1) an amendment to the Companys Certificate of Incorporation to provide for a
classified Board of Directors, (2) the ratification and adoption of the
Companys 2001 Equity

5



---



##### Table of Contents



Incentive Plan, as amended, and (3) the ratification of
the Companys independent accounting firm. In addition, the Companys
stockholders elected four directors, each with a term expiring in 2003, 2004 or
2005.

The votes for, against and abstaining in connection with the approval of
the amendment to the Companys Certificate of Incorporation to provide for a
classified Board of Directors were as follows:

|           |  |  |           | 
|---------- |  |  | --------- | 
|For        |  |  | 8,347,119 | 
|Against    |  |  | 0         | 
|Abstaining |  |  | 60,000    | 

The votes for, against and abstaining in connection with the approval of
the ratification and adoption of the Companys 2001 Equity Incentive Plan, as
amended were as follows:

|           |  |  |           | 
|---------- |  |  | --------- | 
|For        |  |  | 8,347,119 | 
|Against    |  |  | 0         | 
|Abstaining |  |  | 60,000    | 

The votes for, against and abstaining in connection with the approval of
the ratification of the Companys independent accounting firm were as follows:

|           |  |  |           | 
|---------- |  |  | --------- | 
|For        |  |  | 8,347,119 | 
|Against    |  |  | 0         | 
|Abstaining |  |  | 60,000    | 

The voting for the election of Directors was as follows:

|                   |  |     |           |          |  |              |         |  |  |  |      | 
|------------------ |  | --- | --------- | -------- |  | ------------ | ------- |  |  |  | ---- | 
|Director           |  | For |           | Withheld |  | Term expires
|                   |  |     |           |          |  |             
|Richardson, Joseph |  |     | 8,407,119 |          |  |              | 0       |  |  |  | 2005 | 
|Wiles, Richard     |  |     | 8,271,907 |          |  |              | 135,212 |  |  |  | 2005 | 
|Toomey, Peter      |  |     | 8,407,119 |          |  |              | 0       |  |  |  | 2004 | 
|Fox-Penner, Peter  |  |     | 8,407,119 |          |  |              | 0       |  |  |  | 2003 | 

On February 21, 2003, Dr. Peter Fox-Penner notified the company that it
was necessary for him to resign as a member of the Board of Directors. The
resignation was not the result of any disagreement between Dr. Fox-Penner and
the company or its management on any matter relating to the companys
operations, policies or practices. Dr. Fox-Penner currently serves as Chairman
of The Brattle Group, a Washington D.C. based economic consulting firm. His
primary work responsibilities have continued to expand and have, therefore,
made it difficult for him to devote the amount of time that he felt appropriate
for a director. Dr. Fox-Penners resignation was effective on February 21,
2003. At this time the company has no immediate plans to fill this seat on its
Board. This resignation was reported on a Form 8-K filed by the Company on
February 27, 2003.




PART II




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

(a)(i) Market for Common Equity

We are authorized to issue 50,000,000 shares of Common Stock, of which
13,589,851 shares were issued and outstanding as of March 20, 2003. Holders of
shares of Common Stock are entitled to receive such dividends as may be
declared by the board of directors from assets legally available for that
purpose and are entitled at all meetings of shareholders to one vote for each
share held by them. However, we have never paid dividends on our Common Stock
and we do not anticipate paying dividends in the foreseeable future. We intend
to reinvest any funds that might otherwise be available for the payment of
dividends in further development of our business. The shares of Common Stock
are not redeemable and do not have any preemptive or conversion rights. All of
the outstanding

6



---



##### Table of Contents



shares of Common Stock are fully paid and non-assessable. In
the event of a voluntary or involuntary winding up or dissolution, liquidation,
or partial liquidation of Global Energy, holders of Common Stock shall
participate, pro rata, in any distribution of our assets remaining after
payment of liabilities.

Our Common Stock is traded on the over-the-counter bulletin board (OTCBB)
under the symbol GENG. Our Common Stock was first publicly traded on July 2,
2001. From that date until October 12, 2001 our Common Stock traded under the
symbol OSSI. The shares historically have not been eligible for listing on
any securities exchange or under the Nasdaq system.

The following table sets forth the range of high and low bid information
for the periods indicated, based on information obtained from the OTCBB
Historical Data Service:

|                   |  |      |      |     |  |   |      | 
|------------------ |  | ---- | ---- | --- |  | - | ---- | 
|Quarter Ended      |  | High |      | Low
|                   |  |      |      |    
|September 30, 2001 |  | $    | 5.00 |     |  | $ | 1.60 | 
|December 31, 2001  |  | $    | 5.75 |     |  | $ | 0.60 | 
|                  
|March 31, 2002     |  | $    | 5.00 |     |  | $ | 1.97 | 
|June 30, 2002      |  | $    | 4.95 |     |  | $ | 2.00 | 
|September 30, 2002 |  | $    | 2.30 |     |  | $ | 2.00 | 
|December 31, 2002  |  | $    | 3.00 |     |  | $ | 0.95 | 

These quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commission, and may not represent actual transactions.

As of March 20, 2003, 13,589,851 shares of Common Stock were issued and
outstanding, of which 2,350,029 were unrestricted and freely tradable. On that
date there were 69 shareholders of record as reported to us by our transfer
agent.

On March 18, 2002, the Company entered into a Registration Rights
Agreement with certain of its stockholders. Under the terms of this Agreement,
the Company agreed to file a Registration Statement on Form SB-2 at its own
expense to register a portion of the stockholders restricted stock shares, and
the stockholders agreed to cancel a portion of their shares in exchange. The
Company filed the SB-2 on April 12, 2002, and amended it on June 21, 2002. In
October 2002, the stockholders informally agreed to postpone the pursuit of the
SB-2 indefinitely. The Registration Statement was never declared effective, and
has not yet been withdrawn. The Company is now in the process of seeking to
formally terminate the Registration Rights Agreement to remove any requirement
that it proceed with the SB-2. If the Agreement were terminated, then the
shares that were to be canceled under the Registration Rights Agreement would
continue to remain outstanding.

We are authorized to issue up to 10,000,000 shares of Preferred Stock,
$.001 par value, with such designation, rights and preferences as may be
determined from time to time by the board of directors. Accordingly, the board
of directors is empowered, without stockholder approval, to issue Preferred
Stock with dividend, liquidation, conversion, voting or other rights that could
adversely affect the voting power or other rights of the holders of our Common
Stock. In the event of issuance, the preferred stock could be used, under
certain circumstances, as a method of discouraging, delaying or preventing a
change in control in Global Energy. Global has no present intention to issue
any shares of its preferred stock.

(a)(ii) Recent Sales of Unregistered Securities

On April 26, 2002, Global issued 17,667 shares of its $. 001 par value
common shares to four individuals for services. The value of the services
rendered was the basis used to determine the value of the shares issued.

On November 30, 2002, Global issued 15,000 shares of its $. 001 par value
common shares to one individual for services. The value of the stock was
determined based on a fair market analysis of the underlying shares.

All of these transactions were completed without general solicitation and
involved only a limited number of offerees, most of whom were persons with whom
the Company and/or its controlling persons had prior business and/or personal
relationships, and all of whom the Company believes to have been accredited
investors at the times of the transactions. At all relevant times the Company
was a reporting company under the Securities Exchange Act

7



---



##### Table of Contents



of 1934 and there was
readily available adequate current public information with respect to the
Company. Moreover all such transactions were completed without the involvement
of any underwriter, placement agent or similar person, and without the payment
of any commission or other compensation. The Company believes that each of
these transactions was exempt from registration under Section 4(2) of the
Securities Act of 1933 and may also have qualified for exemption from
registration under Rule 505 of Regulation D adopted pursuant to Section 3(b) of
the Securities Act of 1933.

(c) Securities Authorized for Issuance under Equity Compensation Plans.

Information regarding securities authorized for issuance under equity
compensation plans is set forth in Item 11 of this report, which information is
incorporated by reference into this Item 5.




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

The financial information set forth in the following discussion should be
read in conjunction with the Financial Statements included in this report.

Critical Accounting Policies and Estimates

Globals significant accounting policies are more fully described in Note
A to the financial statements. However, certain accounting policies are
particularly important to the portrayal of the Companys financial position and
results of operations and require the application of significant judgment by
our management; as a result they are subject to an inherent degree of
uncertainty. In applying these policies, Globals management uses their
judgment to determine the appropriate assumptions to be used in the
determination of certain estimates. Those estimates are based on our historical
operations, terms of existing contracts, our observance of trends in the
industry, information provided by our customers and information available from
other outside sources, as appropriate. Our significant accounting policies
include:



| |  |  |  Revenue Recognition.Global Energy recognizes revenue principally from
sales of equipment and to a lesser degree, from contracts involving the
combined sale and installation of equipment. For equipment sales, the
Company records revenue on the accrual basis of accounting when title to the
product is transferred pursuant to shipping terms. The accrual basis of
accounting provides for matching of revenues with expenses. For contracts
involving the combined sale and installation of products, revenue is
recognized on the percentage-of-completion method. Contract revenues are
accrued based generally on the percentage that costs incurred to date bear
to total estimated costs for each contract. This method is used because
management considers costs expended to be the best available measure of
progress on these contracts. The asset Costs and estimated earnings in
excess of billings on uncompleted contracts represents revenue recognized
in excess of amounts billed.
| |  |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  |  Warranty reserve.A liability for the estimated cost of product warranty
is established by a charge against operations at the time that products are
sold. Effective January 1, 2002, management is recording a warranty reserve
of 1% of sales. This percentage is based on an analysis of the historical
warranty cost experience of other HVAC manufacturers that use the same or
similar components in their products, and it is supported by the limited
experience of the Company to date. The Companys estimated future warranty
cost is subject to adjustment from time to time depending on actual
experience.                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  |  |  Allowance for Uncollectible Accounts Receivable. We estimate and provide
an allowance for uncollectible accounts based on analysis and age of our
open accounts, our experience with the particular customer, our own
historical experience with bad debts, as well as other information obtained
from outside sources.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  |  |  Long-lived assets. We depreciate property and equipment and amortize
patents over the respective assets estimated useful life. We determine the
useful lives of each asset based of how long we determine the asset will
generate revenue or has a useful economic life. We review the remaining
useful life of our assets annually to ascertain that our estimate is still
valid. If we determine the useful lives have materially changed, we either
change the useful life of the assets or we may write the asset off
completely if we determine the asset has exhausted its useful life.                                                                                                                                                                                                                                                                                                                                                                                                             

8



---



##### Table of Contents





| |  |  |  Income Taxes. As part of the process of preparing our financial
statements, we are required to estimate our income taxes. This process
involves estimating our actual current tax exposure together with assessing
temporary differences resulting from differing treatment of specific items,
such as depreciation, allowance for uncollectible accounts receivable and
others. These differences result in deferred tax assets and liabilities. We
then assess the likelihood that our deferred tax assets will be recovered
from future taxable income, and to the extent we believe that recovery is
not likely, we must establish a valuation allowance. To the extent we
establish a valuation allowance or increase the allowance in a period, we
must include an expense within the tax provision in the statement of
operations. To date, we have recorded a valuation allowance of $1,128,274
for the entire amount of our deferred tax assets due to the uncertainty of
our ability to utilize them. In the event that actual results differ from
these estimates or we adjust these estimates in future periods, we may need
to establish or adjust an additional valuation allowance that could
materially impact our financial position and results of operations.
| |  |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Income Statement  Results Of Operations

2002 compared to 2001

Revenues increased from $108,238 to $164,622. The increase was due to
greater sales of EER+ units during 2002. One major project with the
Jacksonville, FL Naval Air Station was in process over the year-end of 2001;
this job contributed almost evenly to revenues and cost of goods sold in each
fiscal year. Cost of sales increased by $73,651 from $84,458 to $158,109. The
higher cost of sales was due to the sale of more EER+ units in 2002, combined
with increased costs of production during 2002 compared to 2001. These
increased production costs were related both to the beginning of production of
the Inventor Series units in late 2002, and some costs associated with
production of the EER+ units.

The gross profit in 2002 was $6,313, compared to a gross profit of $23,780
in 2001. This decline was attributable to the fact that the increase in cost of
goods sold exceeded the revenue increase, as described above. The gross profit
margin percentage thus decreased from 22% for 2001 to 4% for 2002. This
decrease in the margin percentage was caused by the increased production costs
during 2002, as described above, which was spread over a very small base of
units sold and cost of goods sold expense. Due to the low volume of units sold
during both 2002 and 2001, our costs per unit were greater than we would expect
them to be if we were operating at a higher volume of production.

Operating expenses increased from $1,291,827 in 2001 to $2,423,841 in
2002. This increase of $1,132,014 was due to: (1) an increase in salaries and
benefits of $890,321, (2) an increase in general and administrative expenses of
$304,069, (3) an increase in legal and accounting expenses of $188,660, (4) an
increase in research and development expenses of $53,000, which combined more
than offset the decrease in consulting expenses of $304,857. The increase in
salaries and benefits was due to greater staffing levels during 2002. This
staff increase was due to the company transitioning from the R&D stage to the
commercialization stage, and was caused by added management, sales and
production employees. The increase in general and administrative expenses was
due to increased insurance expenses, as the Company maintained more insurance
during 2002 than it had during 2001; and increased rent expenses from a full
year of occupancy in the Odessa facility. The increase in legal and accounting
expenses was due to the fact that the company was publicly-traded throughout
all of 2002 and therefore had more ongoing reporting requirements, and during
2002 there were material legal and accounting expenses associated with the
filing of a registration statement on Form SB-2 and several amendments. The
2002 increase in research and development costs was due to a greater effort
placed on this area during 2002, mainly with the effort to commercialize the
new Inventor Series 1400 product. The decrease in consulting expenses was due
to fewer consulting work efforts during 2002.

Net interest expense during 2002 increased by $17,429 to $49,996, due to
greater levels of debt outstanding during 2002, and to the absence in 2002 of
any offsetting interest income. The primary cause for the increase in debt
levels in 2002 was the issuance of $1.425 million of notes payable throughout
the period from April to December. The amortization of discount on notes
payable during 2002 was due to the discounts on the notes payable being
amortized over the lives of the notes that were originally scheduled to mature
on April 1, 2003. This amortization of discount totaled $506,974 in 2002,
while there was none during 2001.

9



---



##### Table of Contents



Net loss for the year
increased from a loss of ($1,299,651) in 2001 to a
loss of ($2,977,693) in 2002. The average number of shares outstanding during
2002 increased by 3,335,845, or by about 30% over the 2001 average
shares. This increase was due to the fact that the shares issued in
October 2001 were outstanding for the full year during 2002, and to a lesser
extent, by the issuance of 963,516 new shares during 2002. Finally, the loss
per share for 2002 was ($0.22) per share, compared to a loss per share of
($0.13) for 2001.

Commitments

In connection with the funding arrangement from the Technical Research and
Development Authority of the State of Florida (TRDA), the Company is
obligated to TRDA for royalty payments equal to three times the amount funded
by TRDA. The total obligation to TRDA at December 31, 2002 is $614,184, which
consisted of the unpaid funded liability of $204,728 and related royalty
expense of $409,456. The estimated future maturities of this payable are shown
in the table below.

In connection with the Companys rights to use the patents as described in
Technology, there are associated minimum royalties due for each patent. If
the Company decided not to continue to pursue any individual patent, it would
be relieved of the minimum royalty payments associated with that patent. The
table below presents the minimum royalties due based on the patents the Company
has the rights to pursue as of the end of 2002.

The Company has a current material commitment with its landlord. Global
Energy leases a 20,540 square foot facility in an industrial park in Odessa,
Florida. The lease is for a period of five years with an automatic renewal
clause for each additional year. The current lease amount is $4.87 per square
foot annually ($8,329 monthly, including rent, insurance, taxes and other pass
through items), increasing each year on the anniversary of the lease. The
company has a small lease for computer equipment. The payment amounts are
included in the table below, under the heading operating leases.

Under the terms of contracts executed on March 30, 2002, the Company is
obligated to two individuals to pay consulting expenses totaling $10,000 per
month for the following twelve months. The table below shows the amount
remaining of three months, as of the end of the 2002.

The following table presents a summary of the Companys contractual
obligations and other commercial commitments as of December 31, 2002.

|                                               |  |       |            |        |  |                        |         |        |  |         |           |       |  |   |         |  |  |   |           | 
|---------------------------------------------- |  | ----- | ---------- | ------ |  | ---------------------- | ------- | ------ |  | ------- | --------- | ----- |  | - | ------- |  |  | - | --------- | 
|                                               |  |       |            |        |  | Payments due by Period
|                                               |  |       |            |        |  |                       
|                                               |  |       |            |        |  | Less than              |         | 1 to 3 |  | 4 to 5  |           | After
|                                               |  | Total |            | 1 year |  | Years                  |         | Years  |  | 5 Years
|                                               |  |       |            |        |  |                        |         |        |  |        
|Royalties payable  TRDA                       |  | $     | 614,184    |        |  | $                      | 153,000 |        |  | $       | 461,184   |       |  | $ | 0       |  |  | $ | 0         | 
|Minimum royalties
due under patent
assignments |  |       | 8,555,000  |        |  |                        | 10,000  |        |  |         | 340,000   |       |  |   | 795,000 |  |  |   | 7,410,000 | 
|Notes payable                                  |  |       | 1,425,007  |        |  |                        | 0       |        |  |         | 1,425,007 |       |  |   | 0       |  |  |   | 0         | 
|Operating leases                               |  |       | 425,286    |        |  |                        | 102,773 |        |  |         | 213,850   |       |  |   | 108,663 |  |  |   | 0         | 
|Other contractual
obligations                  |  |       | 30,000     |        |  |                        | 30,000  |        |  |         | 0         |       |  |   | 0       |  |  |   | 0         | 
|                                               |  |       |            |        |  |                        |         |        |  |         |           |       |  |   |         |  |  |   |           | 
|Total contractual
cash obligations             |  | $     | 11,049,477 |        |  | $                      | 295,773 |        |  | $       | 2,440,041 |       |  | $ | 903,663 |  |  | $ | 7,410,000 | 

Liquidity And Capital Resources

2002

The Company incurred
a net loss for 2002 of ($2,977,693) for the reasons
described above. Of this loss, $506,974 represented the amortization
of a discount on the notes payable, and another $426,269 represented the
expensing of the value of certain shares of common stock and stock options that
were issued in consideration for services provided and other expenses. The
expense amount for the stock and options issued was determined based upon a
valuation of the underlying shares or options, or in those cases where it was
specified, the value of the services provided. The value attributable to the
options and warrants was based upon the fair market value of the securities
using the Black-Scholes option pricing methodology. All of these expenses did
not represent a use of cash. Decreases in cost and estimated earnings in excess
of billings and prepaid items totaled $87,724, and increases in
inventory of $150,862 and accounts payable of $353,611, brought the net
cash loss from operations to approximately $1.74 million.

10



---



##### Table of Contents



Net cash invested during 2002 included technical and office equipment
purchases of approximately $23,942 and investments in patents of $28,553.

Net cash from financing during 2002 included the issuance of the
$1,425,007 in notes payable and the collection of a stock subscription of
$40,000, which had been outstanding over the year-end on December 31, 2001.
The notes payable were issued to two stockholders and two officers of the
Company in a series of transactions from April through December. Investment
Agreements governing the notes were entered into on March 31, 2002, October 2,
2002, and on January 30, 2003. Some of the terms of the notes, including the
maturity date, and some of the interest rates, were adjusted during the year.
As of December 31, 2002 the details and the amounts owed under the notes were
as follows:

|                               |  |           |           |               |  |   |        | 
|------------------------------ |  | --------- | --------- | ------------- |  | - | ------ | 
|                               |  | Principal |           | Accrued      
|Lender                         |  | Owed      |           | Interest Owed
|                               |  |           |           |              
|Robert Smith                   |  | $         | 760,000   |               |  | $ | 28,943 | 
|Quest Capital Alliance, L.L.C. |  |           | 320,000   |               |  |   | 7,579  | 
|Joseph Richardson              |  |           | 204,004   |               |  |   | 4,872  | 
|Peter Toomey                   |  |           | 141,003   |               |  |   | 3,738  | 
|Total                          |  | $         | 1,425,007 |               |  | $ | 45,132 | 

The notes each bear interest at 8%, and all are due on February 1, 2004.
All interest accrues until the maturity date, so there are no ongoing debt
service obligations. All of the notes are secured by a lien on substantially
all of the assets of the Company.

2003 and prospectively

Global Energy does not expect any significant purchases or sales of
furniture or equipment, and does not plan to materially change the number of
its employees, until it is able to raise the capital required to further expand
its operations. The Company has no bank lines of credit.

The liquidity needs of the Company in 2003 are expected to continue to
arise mostly from the companys operating activities and in part from capital
expenditures for patents and for some additional lab equipment. As of March
20, 2003, Global had approximately $11,569 in cash with which to satisfy its
future liquidity requirements. At its currently planned level of operations,
the Company would require a minimum of approximately $1.5 million for the
entire year 2003 to fund its base spending for operating expenses, consisting
mainly of salaries and occupancy expenses.

From January 1, 2003 to the date of this report, the Company has raised an
additional $375,000 by issuing additional notes payable with detachable
warrants. Of this amount, $100,000 was the remaining amount that was committed
to be funded under the October 2, 2002 Investment Agreement, while the other
$275,000 was funded under a new Investment Agreement. On January 30, 2003,
Global entered into a new Investment Agreement with two of its existing
investors, Mr. Robert Smith and Quest Capital Alliance, L.L.C. Under the terms
of this Agreement, Mr. Smith and Quest agreed to fund an additional $575,000 in
a series of advances through June 1, 2003, under substantially the same terms
as the notes issued during 2002. The maturity dates of all of the existing
notes, including those of Mr. Richardson and Mr. Toomey, were extended until
February 1, 2004. As a part of this agreement, Mr. Richardson and Mr. Toomey
agreed to defer their salaries through the end of April 2003. Any amounts
deferred will bear interest at 8%, but are not secured by any liens on the
Companys assets.

The actual amount of financing that will be needed for the remainder of
2003 will depend upon the amount of cash needed for operations, which will be
impacted by cash generated from product sales. Although the Company is hopeful
that product sales will increase significantly in 2003, there can be no
assurance that the Company will achieve its product sales goals or that, even
if such product sales goals are achieved, that gross margins and/or operating
expenses will be within targeted levels. The expected liquidity needs are
based in part upon a targeted increase in gross profit margin percentage to
29%, compared to the Companys historical gross profit margins of 12% in 2000,
22% in 2001 and 4% during 2002. The gross profit margin percentage is expected
to increase beyond

11



---



##### Table of Contents



historical levels as the number of sales and the total
revenues increase, allowing the Company to take advantage of selected economies
of scale in the purchasing of components and in production costs.

In addition to the funds from the Investment Agreement, the Company plans
to satisfy its liquidity requirements for the balance of 2003 through
additional equity and debt financing. As of the date of this report, Global
has begun exploring opportunities for securing up to $4.0 million of additional
equity or debt financing. To the extent that Global is unable to obtain
further debt or equity financing or to the extent that sales are slower to
develop than management is now expecting and the combined debt and equity
financing is insufficient to cover the shortfall, Global would not be able to
continue operations as currently conducted.

Risks And Uncertainties

An investment in our Common Stock is speculative and involves a
substantial degree of risk. Investors should carefully consider, along with
other information in this report, the following considerations and risks in
evaluating an investment in our Common Stock. You should not purchase any
Common Stock unless you can afford to lose your entire investment.

We have accumulated a deficit and anticipate future losses, and we may be
unable to continue as a going concern.

From inception through December 31, 2002, our revenues have been sporadic
and we have an accumulated deficit of ($6,045,622). Many of our products are in
the early stages of commercialization, while others are still under
development. The products scheduled for manufacturing and distribution will
require significant production, sales and marketing expenditures that, together
with projected general and administrative expenses along with continuing
expenses to develop and patent additional technologies, will cause anticipated
additional operating losses for the near future. We cannot predict when we will
become profitable. If we cannot achieve profitability, we will be unable to
continue as a going concern and investors in our Common Stock will likely lose
their entire investment.

We need to raise additional capital which, if not obtained, could require us to
cease operations.

As of December 31, 2002 we had approximately $7,600 in cash, and as of
March 20, 2003 we had approximately $11,569 in cash. However, we would need
approximately $1.5 million in net cash available to pay our operating expenses
for the full 2003 year, which will require us to obtain additional financing
beyond the Investment Agreement we now have. We may not be able to obtain such
additional financing, or, if available, the terms of the financing may not be
favorable to us or to our shareholders. An inability to raise additional
financing would have a material adverse effect on our business, prospects,
operating results and financial condition and could require us to cease
operations.

Our substantial leverage, the pledge of our assets to secure the debt and the
restrictions imposed by our existing debt instruments will limit our ability to
finance future operations or capital needs, may place us at a competitive
disadvantage in our industry and may otherwise have a material adverse effect
on the Company.

We are leveraged with a substantial amount of indebtedness. Our debt
outstanding as of December 31, 2002 is secured by a pledge of substantially all
of our assets and matures on February 1, 2004. Our existing debt instruments
and the terms of any future debt may impose operating and other restrictions on
us. Thus, our significant debt could adversely affect our ability to operate
our business and may limit our ability to take advantage of potential business.
If we are unable to repay or refinance our existing debt when it becomes due,
or if we were to violate any of the operating or other restrictions imposed by
our debt instruments, a default may occur. If such a default occurs, the
lenders who have a security interest in our assets may elect to declare their
obligations due and payable and, ultimately, to proceed against the collateral
granted to them to secure the debt. Because the collateral comprises
substantially all of our assets, any successful effort to realize on such
collateral would have a material adverse effect on the Company, its ability to
conduct its business and the ability of the Companys stockholders to realize
anything on their investment.

We are a small company with limited resources compared to some of our current
and potential competitors.

The markets in which we compete are intensely competitive. Many of our
current and potential competitors have longer operating histories,
significantly greater resources, broader name recognition and a larger customer
base

12



---



##### Table of Contents



than we have. As a result, these competitors may have greater credibility
with our existing and potential customers. They also may be able to adopt more
aggressive pricing policies and devote greater resources to the
development, promotion and sale of their products than we can to ours, which would
allow them to respond more quickly than us to new or emerging technologies or
changes in customer requirements. In addition, some of our current and
potential competitors have established supplier relationships with our current
or potential customers. These competitors may be able to leverage their
existing relationships to discourage these customers from purchasing products
from us or to persuade them to replace our products with their products.
Increased competition could decrease our prices, reduce our sales, lower our
margins, or decrease our market share. These and other competitive pressures
could prevent us from competing successfully against current or future
competitors and could materially harm our business.

We have limited experience in marketing and selling our products and our
marketing strategy is untested.

We are now marketing our two primary products to the commercial unitary air
conditioning market. To sell our products effectively, we have to develop a
small internal marketing and sales organization, and utilize existing
distribution channels in the ESCO and/or HVAC industries. Our initial sales
strategy will be to rely heavily on selling our products through ESCOs,
independent sales representatives, and existing HVAC distributors and/or
contractors. We hope the Federal government and various state and local
governments buy our products, as these customers have historically been
willing to pay more upfront for products that will save energy. These
government entities priorities may change, their funding may be insufficient
to allow them to purchase our products, they may defer their plans to purchase
products, or they may discontinue buying appliances that reduce their energy
consumption. Our planned marketing strategy is untested and we do not know
whether it will be successful. If we are unable to market and sell our products
in commercial quantities we may not be able to generate sufficient revenue to
survive.

We may be unable to sell our products at the prices we establish.

While actual pricing will vary based on market conditions and other
factors, we anticipate that our products generally will be priced higher than
competitors products. We will be unable to sell our products at higher prices
than our competitors unless our customers consider our higher prices to be more
than offset by the increased operational efficiency and lower operating
expenses of our equipment when compared to the products available from other
manufacturers. Customers may be unwilling to pay the established prices for our
products if our equipment does not achieve such operational efficiencies or
lower operating expenses, if we do not effectively communicate such factors to
customers, or for other reasons. If we are unable to market and sell our
products in commercial quantities we may not be able to generate sufficient
revenue to survive.

We have limited experience in manufacturing our products in commercial
quantities and our current manufacturing facilities have limited capacity.

We have manufactured our products in limited quantities only. To be
financially successful, however, we (or third parties on our behalf) will have
to manufacture our products in commercial quantities at acceptable costs while
also maintaining the quality control we have achieved in manufacturing these
products in limited quantities. This presents a number of challenges for the
Company and we cannot be sure that we will be successful in developing
manufacturing processes or in locating third party manufacturers that permit us
to accomplish these tasks. Although our facilities are adequate to manufacture
limited quantities of our products, we do not have the capacity to manufacture
certain of our products in commercial quantities. For the manufacture of those
products, we plan to contract with third party manufacturers if suitable terms
can be arranged. If we are unable to obtain such arrangements, we may be forced
to manufacture our products with our own limited resources. If we are unable to
manufacture or obtain quality products in commercial quantities at acceptable
costs, then we may not be able to maintain product inventories at levels
necessary to generate and support product sales and we may not be able to
generate sufficient revenue to survive.

We may be unable to raise additional capital to complete our product
development and commercialization plans.

Our product development and commercialization schedule could be delayed if
we are unable to fund our research and development activities or the continuing
development of our manufacturing plans. Technological advances in competitors
products could force us to invest more heavily in our product development, or
our products technological advantage could become limited. Our current
expectations are that we will need to seek

13



---



##### Table of Contents



additional capital through public or
private sales of our securities in order to fund our activities on a long-term
basis. We do not know whether we will be able to secure such additional funding
on terms acceptable to us. We face substantial uncertainties with our business operations and may not be able
to achieve the cash flows that we currently predict. Our current cash
resources, together with revenues from operations and the proceeds, if any, we
may receive from any future financing transactions may not be sufficient to
enable us to reach our cash break-even point. If we are not able to secure
additional funds, investors in our Common Stock will likely lose their entire
investment. If we are successful in raising additional capital, investors and
shareholders could face substantial dilution of their investments.

If we are unable to protect our intellectual property, we may be unable to
compete.

Our products rely on our proprietary technology, and we expect that future
technological advancements made by us will be critical to sustain market
acceptance of our products. Therefore, we believe that the protection of our
intellectual property rights is, and will continue to be, important to the
success of our business. Patent and trade secret laws and other restrictions on
disclosure and use of our intellectual property rights may not prevent
unauthorized parties from copying or otherwise obtaining and using our products
or technology. Monitoring unauthorized use of our products is difficult, and we
cannot be certain that the steps we have taken will prevent unauthorized use of
our technology, particularly in foreign countries where applicable laws may not
protect our proprietary rights as fully as in the United States. In addition,
the measures we undertake may not be sufficient to adequately protect our
proprietary technology and may not preclude competitors from independently
developing products with functionality or features similar to those of our
products.

Our patent rights are subject to royalty fees and to the risk of loss.

Our products incorporate the proprietary technology covered by the
Companys patents, which were assigned and/or licensed to the Company by the
inventors of the underlying technology. Information regarding those
arrangements is set forth under Our Business  Technology. The Company will
be required to make royalty payments to the inventors with respect to sales of
products incorporating the patented technology, and also to actively
commercialize the technology. If the Company fails to pay the required
royalties or fails to use reasonable efforts to generate income on products
covered by a patent, the inventors have the right to terminate the related
agreement. Minimum royalties under the Companys patent agreements as in effect
on the date of this report would amount to $10,000 in 2003, increasing each
year until reaching $710,000 in 2010 and following years. The company also has
a note payable to TRDA under which the company repays TRDA based on the level
of sales of certain products, and TRDA has a priority claim to proceeds from
the sale of certain of the companys products. Loss of the rights to use these
patents would render the Company unable to manufacture, market and sell some or
all of its products and thereby seriously jeopardize the Companys ability to
survive.

Our efforts to protect our intellectual property may involve us in costly and
lengthy litigation than could seriously harm our business.

In recent years, there has been significant litigation in the United
States involving patents, trademarks and other intellectual property rights.
Although we have not been involved in intellectual property litigation, we may
become involved in litigation in the future to protect our intellectual
property or defend allegations of infringement asserted by others. Legal
proceedings could subject us to significant liability for damages or invalidate
our intellectual property rights. Any litigation, regardless of its outcome,
would likely be time consuming and expensive to resolve and would divert
managements time and attention. Any potential intellectual property litigation
also could force us to take specific actions, including:



| |  |  | cease selling our products that use the challenged
intellectual property;                                                                                                                              
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | obtain from the owner of the infringed intellectual property
right a license to sell or use the relevant technology or trademark,
which license may not be available on reasonable terms, or at all;
or
|
| |  |  | redesign those products that use infringing intellectual
property or cease to use an infringing patent.                                                                                                

Any of these actions would likely preclude us from selling our most
valuable products, and therefore might force us to cease operations.

14



---



##### Table of Contents



Certain legal risks and uncertainties relating to our products could subject us
to claims for damages.

In the course of our business, we are exposed to legal risks and
uncertainties, including the possibility of product liability or warranty
claims by our customers or others. Any such claim could be time-consuming and
costly, could exceed the amounts covered by our insurance or involve a matter
not covered by insurance, and could harm our business and financial condition.

Our common stock may experience extreme market price and volume fluctuations.

The market price of our common stock has little trading history, and has
historically experienced significant volatility and may continue to experience
such volatility in the future. We have few publicly traded shares and a limited
number of stockholders, and our stock is currently thinly-traded. Factors such
as technological achievements by us and our competitors, the establishment or
development of strategic relationships with other companies, our introduction
of commercial products, and our financial performance may have a significant
effect on the market price of our common stock. In addition, the stock market
in general, and the stock of technology companies in particular, have in recent
years experienced extreme price and volume fluctuations, which are often
unrelated to the performance or condition of particular companies. Such broad
market fluctuations could adversely affect the market price of our common
stock. Following periods of volatility in the market price of a particular
companys securities, securities class action litigation has often been brought
against a company. If we become subject to this kind of litigation in the
future, it could result in substantial litigation costs, a damages award
against us and the diversion of our managements attention.

Our common stock is thinly traded, and therefore it may be difficult to sell
your securities at a given time, and at any price, which could result in a loss
on your investment.

As of the date of this report, there are few trades in the public market
for our Common Stock. There is no market maker for of our securities and there
may not be a market maker for our securities in the future. As a result of the
foregoing, investors may be unable to sell their shares to liquidate their
investment, which could cause a loss of their investment.

The penny stock rules apply to broker-dealer sales of our common stock and
could have a negative effect on the liquidity and market price of our common
stock.

Our common stock is listed on the OTC Bulletin Board. It is not quoted on
any exchange or on Nasdaq, and no other exemptions currently apply. Therefore,
the SEC penny stock rules govern the trading in our common stock. These rules
require, among other things, that any broker engaging in a transaction in our
securities provide its customers with the following:



| |  |  | a risk disclosure document,                                                                            
| | - |  | -------------------------------------------------------------------------------------------------------
|
| |  |  | disclosure of market quotations, if any,                                                               
|
| |  |  | disclosure of the compensation of the broker and its salespersons in the transaction, and              
|
| |  |  | monthly account statements showing the market values of our
securities held in the customers accounts.

The broker must provide the bid and offer quotations and compensation
information before effecting the transaction. This information must be
contained on the customers confirmation. Generally, brokers subject to the
penny stock rules when effecting transactions in our securities may be less
willing to do so. This may make it more difficult for investors to dispose of
our common stock. In addition, the broker prepares the information provided to
the brokers customer. Because we do not prepare the information, we cannot
assure you that such information is accurate, complete or current.

We do not anticipate paying dividends on our common stock.

We have never paid dividends on our common stock and we do not anticipate
paying dividends in the foreseeable future. We intend to reinvest any funds
that might otherwise be available for the payment of dividends in further
development of our business.

15



---



##### Table of Contents



Four of our stockholders have substantial control over our company and could
delay or prevent a change in corporate control.

A small group of our principal stockholders own, in the aggregate,
approximately 62% of our outstanding common stock. As a result, these
stockholders will be able to exert significant control over all matters
requiring stockholder approval, including the election of directors and
approval of significant corporate transactions. This concentration of voting
power could delay or prevent an acquisition of our company on terms which other
stockholders may desire.




Item 7. Financial Statements.

Reference is made to the financial statements included in this report
immediately following the signature page of this report, which financial
statements are incorporated by reference into this Item 7.




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

Not applicable.




PART III




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

(a) Directors and Executive Officers

Directors and Officers

The table below identifies the directors and executive officers of the Company.

|                     |  |     |    |                           |  |                                                                  |  | 
|-------------------- |  | --- | -- | ------------------------- |  | ---------------------------------------------------------------- |  | 
|Name                 |  | Age |    | Position(s) and Office(s)
|                     |  |     |    |                          
|Joseph H. Richardson |  |     | 53 |                           |  | Chairman, President, Chief Executive Officer, Director          
|Peter E. Toomey      |  |     | 45 |                           |  | Executive Vice President  CFO, Secretary, Treasurer, Director  
|Todd Van Hyfte       |  |     | 37 |                           |  | Executive Vice President  Marketing and New Product Development
|Thomas H. Hebert     |  |     | 62 |                           |  | Vice President  Research and Development                       
|Guy Frankenfield     |  |     | 44 |                           |  | Vice President  Sales                                          
|Keith Glaze          |  |     | 41 |                           |  | Vice President  Operations                                     
|Richard E. Wiles     |  |     | 59 |                           |  | Director                                                        

Joseph H. Richardson.Mr. Richardson was elected as President and Chief
Executive Officer and Chairman of the Board of Directors on March 30, 2002.
Prior to his association with Global, Mr. Richardson was employed by Florida
Progress Corporation for close to twenty-five years. Florida Progress
Corporation was a NYSE-listed, Fortune-500 company. Throughout that period, Mr.
Richardson served in a variety of positions at both Florida Progress and its
principal subsidiary, Florida Power Corporation. Mr. Richardson served as
President of Florida Power Corporation from April 1996 through November 2000,
at which time both companies were acquired by Carolina Power & Light Company.
Mr. Richardson earned a BA degree in Economics from Cornell University, and a
JD degree from Florida State University.

16



---



##### Table of Contents



Peter E. Toomey.Mr. Toomey was elected as Executive Vice President, Chief
Financial Officer and Director on March 30, 2002. He was also named Secretary
and Treasurer of Global on April 5, 2002. Prior to his association with Global,
Mr. Toomey was employed by Florida Progress Corporation for over sixteen years.
Mr. Toomey served in a variety of financial positions at both Florida Progress
and its subsidiaries. Mr. Toomey served as Vice President of Corporate
Development at Florida Progress Corporation from April 1997 through November
2000, at which time that company was acquired by Carolina Power & Light
Company. Mr. Toomey earned a BS degree in Economics from Florida State
University and an MBA from the University of South Florida.

Todd Van Hyfte.Mr. Van Hyfte was elected and appointed as Executive Vice
President and Director on October 12, 2001. He resigned from the Board on March
30, 2002. From June 1998 to September 2001, Mr. Van Hyfte served as Manager of
Product Strategies of Lennox International, a subsidiary of Lennox Industries.
From April 1997 to June 1998, he served as Product Manager of Alco Controls
Division of Emerson Electric Company. From May 1992 to April 1997, Mr. Van
Hyfte served as Senior Marketing Engineer (International Group) for The Trane
Company, a subsidiary of American Standard. Mr. Van Hyfte earned a BS degree in
Electrical Engineering Technology from Southern Illinois University, and an MBA
from University of Dallas.

Thomas H. Hebert.Mr. Hebert has served as Vice President  Research and
Development since October 12, 2001 and served its predecessor GEER in this
capacity since February 1998. With over 32 years in the construction, HVACR and
refrigeration industries, Mr. Hebert has invented and been the principal design
engineer for numerous technologies, including several patented products. From
June 1995 to September 1997, he served as Vice President of Engineering with
Energy Technologies, Inc. Mr. Hebert has focused on product development,
applications and manufacturing/production development, and has spent over
twenty years in the development and research of his proprietary inventions. Mr.
Hebert earned a BS in Physics and an M.SCI in Physical Chemistry from the
University of South Florida, and is a Masters Candidate in Engineering.

Guy Frankenfield.Mr. Frankenfield was appointed Vice President  Sales on
July 22, 2002. From July 1994 through July 2002, Mr. Frankenfield served in a
variety of lead technical sales positions for Honeywell in their Performance
Contracting and Energy Conservation divisions, working primarily in the
southeast United States. From December 1983 through July 1994, Mr.
Frankenfield served as a lead facilities design engineer for IBM in Endicott,
NY earning several awards for energy conservation. From July 1980 through
December 1983, Mr. Frankenfield worked as a manufacturing engineer for the
Trane Company in Dunmore, PA. Mr. Frankenfield earned a BS degree in
Mechanical Engineering from Lehigh University, and has a professional
engineering license in both New York and Florida.

Keith Glaze.Mr. Glaze was appointed Vice President  Operations on
October 12, 2001. From 1998 to October 2001, Mr. Glaze served its predecessor
company, GEER, in this same capacity and in others. From 1997 to 1998, Mr.
Glaze was an Executive Business Analyst with George S. May International, a
consulting firm specializing in quality programs and process improvement. From
1989 to 1997, Mr. Glaze worked for York International in a variety of
positions. From 1994 on, he was the Regional Sales Manager with responsibility
for inventory control and distribution for the Jacksonville, Florida region.
Mr. Glaze has a BS degree in business administration from Trinity College.

Richard E. Wiles.Mr. Wiles served as President and Chief Executive
Officer from October 12, 2001 until March 30, 2002. Mr. Wiles was elected
Chairman of GEER in June 2001. Mr. Wiles served GEER in these capacities and as
a Director from its inception in February 1998. Prior to his association with
GEER, Mr. Wiles served from May 1975 to June 1995 as President of Richard E.
Wiles Corp., a company specializing in land development. From June 1995 to
January 1998, Mr. Wiles served as President of Sun South Corp. Mr. Wiles earned
a BA degree in Business Administration from Coe College, Cedar Rapids, Iowa.

On February 21, 2003, Dr. Peter Fox-Penner notified the company that it
was necessary for him to resign as a member of the Board of Directors. The
resignation was not the result of any disagreement between Dr. Fox-Penner and
the company or its management on any matter relating to the companys
operations, policies or practices. Dr. Fox-Penner currently serves as Chairman
of The Brattle Group, a Washington D.C. based economic consulting firm. His
primary work responsibilities have continued to expand and have, therefore,
made it difficult for him to devote the amount of time that he felt appropriate
for a director. Dr. Fox-Penners resignation was effective on February 21,
2003. At this time the company has no immediate plans to fill this seat on its
Board. This resignation was reported on a Form 8-K filed by the Company on
February 27, 2003.

17



---



##### Table of Contents



(b) Section 16(a) Beneficial Ownership Reporting Compliance

Mr. Richardson did not timely file three Forms 4 required to be filed by
him, Mr. Toomey did not timely file four Forms 4 required to be filed by him,
Mr. Hebert did not timely file one Form 4 required to be filed by him, and Mr.
Frankenfield did not timely file a Form 3 required to be filed by him; all
related to transactions completed during the Companys fiscal year ended
December 31, 2002.




Item 10. Executive Compensation.

Summary

The following table sets forth information concerning the compensation
paid or accrued by Global during the three fiscal years ended December 31, 2002
to its executive officers. No other executive officer received annual
compensation in excess of $100,000 in any such fiscal year.

Summary Compensation Table

|                         |  |                     |      |                        |  |       |        |              |  |              |   |              |  |              |         |              |  |            |        |     |  |   |   |           |  |   |   |  |  |   |   | 
|------------------------ |  | ------------------- | ---- | ---------------------- |  | ----- | ------ | ------------ |  | ------------ | - | ------------ |  | ------------ | ------- | ------------ |  | ---------- | ------ | --- |  | - | - | --------- |  | - | - |  |  | - | - | 
|                         |  | Annual Compensation |      | Long-Term Compensation
|                         |  |                     |      |                       
|Name and Principal       |  | Fiscal              |      |                        |  |       |        |              |  |              |   | Other Annual |  |              |         |              |  | Restricted |        |     |  |   |   | All Other
|Position                 |  | Year                |      | Salary                 |  | Bonus |        | Compensation |  | Options/SARS |   | Stock Awards |  | LTIP Payouts |         | Compensation
|                         |  |                     |      |                        |  |       |        |              |  |              |   |              |  |              |         |             
|Joseph H. Richardson,    |  |                     | 2002 |                        |  | $     | 95,673 |              |  | $            | 0 |              |  | $            | 0       |              |  | $          | 99,193 | (1) |  | $ | 0 |           |  | $ | 0 |  |  | $ | 0 | 
|President and CEO        |  |                     | 2001 |                        |  | $     | 0      |              |  | $            | 0 |              |  | $            | 0       |              |  | $          | 0      |     |  | $ | 0 |           |  | $ | 0 |  |  | $ | 0 | 
|                         |  |                     | 2000 |                        |  | $     | 0      |              |  | $            | 0 |              |  | $            | 0       |              |  | $          | 0      |     |  | $ | 0 |           |  | $ | 0 |  |  | $ | 0 | 
|                         |  |                     |      |                        |  |       |        |              |  |              |   |              |  |              |         |              |  |            |        |     |  |   |   |           |  |   |   |  |  |   |   | 
|Peter E. Toomey,         |  |                     | 2002 |                        |  | $     | 77,115 |              |  | $            | 0 |              |  | $            | 0       |              |  | $          | 73,371 | (1) |  | $ | 0 |           |  | $ | 0 |  |  | $ | 0 | 
|EVP, CFO, Secretary,     |  |                     | 2001 |                        |  | $     | 0      |              |  | $            | 0 |              |  | $            | 0       |              |  | $          | 0      |     |  | $ | 0 |           |  | $ | 0 |  |  | $ | 0 | 
|Treasurer                |  |                     | 2000 |                        |  | $     | 0      |              |  | $            | 0 |              |  | $            | 0       |              |  | $          | 0      |     |  | $ | 0 |           |  | $ | 0 |  |  | $ | 0 | 
|                         |  |                     |      |                        |  |       |        |              |  |              |   |              |  |              |         |              |  |            |        |     |  |   |   |           |  |   |   |  |  |   |   | 
|Richard E. Wiles         |  |                     | 2002 |                        |  | $     | 0      |              |  | $            | 0 |              |  | $            | 0       |              |  | $          | 0      |     |  | $ | 0 |           |  | $ | 0 |  |  | $ | 0 | 
|Former President and CEO |  |                     | 2001 |                        |  | $     | 86,400 |              |  | $            | 0 |              |  | $            | 101,500 | (2)          |  | $          | 0      |     |  | $ | 0 |           |  | $ | 0 |  |  | $ | 0 | 
|                         |  |                     | 2000 |                        |  | $     | 31,600 |              |  | $            | 0 |              |  | $            | 0       |              |  | $          | 0      |     |  | $ | 0 |           |  | $ | 0 |  |  | $ | 0 | 



---

|(1) |  | Reflects a grant of options on March 30, 2002. The valuation of
the stock options shown is based upon the fair market value of the
underlying common shares less the required exercise price for the
options. These amounts reflect those options which were exercisable at
the time of issue. The fair market value of the stock was calculated
using the stock trading price on the date of the grant, adjusted
downward for, among other things, the inability to sell such a block of
stock in light of the thin trading activity in Globals stock.                                                                                                                                                                                              
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Reflects a grant of 250,000 shares on November 26, 2001. Such
shares fully vested three months after the date of grant, on February
26, 2002. As of December 31, 2001, Mr. Wiles held all such shares of
restricted stock. The valuation of the stock shown is based upon the
market value of stock trading on the date of the grant, adjusted
downward for, among other things, the inability to sell such a block of
stock in light of the thin trading activity in Globals stock. If
valued solely on the basis of the closing market price of the Companys
Common Stock on the date of grant, such shares would be valued at
$1,125,000. Restricted shares are entitled to receive dividends, if
any, declared with respect to the Common Stock.

Option/SAR Grants; LTIP Awards

During its most recent fiscal year, the Company granted the following
stock options:



| |  |  | On March 30, 2002, Global Energy granted an option to its
President, Joseph H. Richardson, and its Chief Financial Officer,
Peter E. Toomey, to purchase 555,318 and 277,659 shares of its
common stock respectively at $0.01 per share expiring March 30,
2012. The options are exercisable one-third March 30, 2002,
one-third on March 30, 2003, and one-third on March 30, 2004.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

18



---



##### Table of Contents





| |  |  | On April 6, 2002 Global Energy granted options to two
employees to purchase a total of 70,000 shares of its common stock.
The exercise prices were $0.01 per share for 35,000 shares, and
$2.00 per share for 35,000 shares. The options vest one year from
the grant date.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | On July 22, 2002 Global Energy granted options to an employee
to purchase a total of 50,000 shares of its common stock. The
exercise prices were $0.01 per share for 25,000 shares, and $2.00
per share for 25,000 shares. The options vest one year from the
grant date.  
|
| |  |  | On November 4, 2002 Global Energy granted options to an
employee to purchase a total of 7,500 shares of its common stock.
The exercise price was $0.75 per share, and the options vest one
year from the grant date.                                                       

The Company has not adopted or made any awards under any long-term
incentive plan.

Compensation of Directors

The Company pays its non-employee directors an annual retainer of $10,000,
currently payable in cash. The Company also pays non-employee directors a
meeting fee of $1,000 per meeting, payable in cash, and reimburses its
directors for any expenses associated with attending the meetings. At this
time, the Company has not determined to pay any additional amounts for
committee participation or special assignments. The Companys policy provides
that employee directors receive no compensation for their services on the Board
of Directors.

During the year ended December 31, 2002, the following amounts were earned
by, and paid to, the outside Directors under this plan:

|                     |  |               |       |                 |  |   |       | 
|-------------------- |  | ------------- | ----- | --------------- |  | - | ----- | 
|Director             |  | Earned amount |       | Amount received
|                     |  |               |       |                
|Richard E. Wiles     |  | $             | 9,356 |                 |  | $ | 1,000 | 
|Dr. Peter Fox-Penner |  | $             | 7,082 |                 |  | $ | 1,000 | 

Executive Employment and Change-in-Control Arrangements

On March 30, 2002, the Company entered into employment agreements with Mr.
Richardson and Mr. Toomey. Under these agreements, each individual is employed
for a period of three years, with automatic annual renewals. Key provisions of
the agreements include:



| |  |  |  Mr. Richardsons base salary will be $125,000, $150,000 and $175,000 for
the first, second and third years, respectively;                                                                                                                                                                                                                                                                   
| |  |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  |  Mr. Toomeys base salary will be $100,000, $125,000 and $150,000 for the
first, second and third years, respectively;                                                                                                                                                                                                                                                                       
|
| |  |  |  The agreements may be terminated by the Company, either with good cause
(as defined in the agreements) or without good cause (as defined in the
agreements). Terminations without good cause would require payment of
accrued compensation and benefits plus a lump-sum severance payment
amounting to compensation that otherwise would be earned through the end of
the then current term;
|
| |  |  |  Generally, a change in the positions, roles or responsibilities of Mr.
Richardson or Mr. Toomey in a manner adverse to the employee would be deemed
a termination without cause under the employment agreements;                                                                                                                                                                            
|
| |  |  |  Termination of employment within three years of a change in control of the
Company would require payment of accrued compensation and benefits plus a
lump-sum severance payment amounting to three years base salary plus bonus
compensation;                                                                                                                                              
|
| |  |  |  Both employees are subject to certain non-competition and non-solicitation
provisions.                                                                                                                                                                                                                                                                                                      

19



---



##### Table of Contents






Item 11. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters.

(a) Security Ownership of Certain Beneficial Owners and Management

The following table sets forth information regarding the beneficial
ownership of our Common Stock as of March 20, 2003 by:



| |  |  | each person, or group of affiliated persons, who is known by us to
| | - |  | ------------------------------------------------------------------
|
| |  |  | beneficially own more than 5% of our Common Stock;                
|
| |  |  | each of our directors;                                            
|
| |  |  | each of our named executive officers; and                         
|
| |  |  | all of our directors and executive officers as a group.           

The column entitled Percentage of Ownership is based on there being
13,589,851 shares of Common Stock outstanding as of March 20, 2003. All shares
of Common Stock subject to any option or warrant currently exercisable (or
exercisable within 60 days of March 20, 2003) are deemed to be outstanding for
the purpose of computing the percentage of ownership of the person holding such
option or warrant, but are not deemed to be outstanding for computing the
percentage of ownership of any other person. Unless otherwise indicated below,
each shareholder named in the table has sole voting and investment power with
respect to all shares beneficially owned, subject to applicable community
property laws. Unless otherwise indicated in the table, a mailing address of
each individual listed in the table is c/o Global Energy Group, Inc., 2346
Success Drive, Odessa, Florida 33556.

20



---



##### Table of Contents



|                                                  |  |                            |           |               |  |  |       |  
|------------------------------------------------- |  | -------------------------- | --------- | ------------- |  |  | ----- | -
|Name and Address                                  |  | Number of Shares of Common |           | Percentage of
|of Beneficial Owner                               |  | Stock Beneficially Owned   |           | Ownership    
|                                                  |  |                            |           |              
|Joseph H. Richardson                              |  |                            | 1,048,887 | (1)           |  |  | 7.17  | %
|                                                  |  |                            |           |               |  |  |       |  
|Peter E. Toomey                                   |  |                            | 689,779   | (2)           |  |  | 4.83  | %
|                                                  |  |                            |           |               |  |  |       |  
|Todd Van Hyfte                                    |  |                            | 50,000    | (3)           |  |  | *     |  
|                                                  |  |                            |           |               |  |  |       |  
|Guy S. Frankenfield                               |  |                            | - 0-      |               |  |  | *     |  
|                                                  |  |                            |           |               |  |  |       |  
|W. Keith Glaze                                    |  |                            | 65,071    | (4)           |  |  | *     |  
|                                                  |  |                            |           |               |  |  |       |  
|Thomas H. Hebert                                  |  |                            | 1,456,205 |               |  |  | 10.72 | %
|                                                  |  |                            |           |               |  |  |       |  
|Richard E. Wiles                                  |  |                            | 1,784,798 |               |  |  | 12.90 | %
|                                                  |  |                            |           |               |  |  |       |  
|Eugene Cornett                                    |  |                            |           |               |  |  |       |  
|27110 Coral Springs Drive                         |  |                            |           |               |  |  |       |  
|Wesley Chapel, FL 33543                           |  |                            | 1,786,464 |               |  |  | 12.91 | %
|                                                  |  |                            |           |               |  |  |       |  
|Quest Capital Alliance, L.L.C                     |  |                            |           |               |  |  |       |  
|3140 E. Division St                               |  |                            |           |               |  |  |       |  
|Springfield, MO 65802                             |  |                            | 2,250,000 | (5)           |  |  | 14.36 | %
|                                                  |  |                            |           |               |  |  |       |  
|Dr. Neal S. Stubbs                                |  |                            |           |               |  |  |       |  
|928 Oakfield Drive                                |  |                            |           |               |  |  |       |  
|Brandon, FL 33551                                 |  |                            | 3,381,373 |               |  |  | 24.88 | %
|                                                  |  |                            |           |               |  |  |       |  
|Robert J. Smith                                   |  |                            |           |               |  |  |       |  
|3865 Turtle Hatch Road                            |  |                            |           |               |  |  |       |  
|Springfield, MO 65809                             |  |                            | 2,323,333 | (6)           |  |  | 15.12 | %
|                                                  |  |                            |           |               |  |  |       |  
|All officers and directors
as a group (7 persons) |  |                            | 4,844,740 |               |  |  | 31.46 | %
|                                                  |  |                            |           |               |  |  |       |  
|*less than 1%                                     |  |                            |           |               |  |  |       |  



---

|(1) |  | Includes options to purchase 370,212 shares of Common Stock of the Company,
and warrants to purchase 678,675 shares of common stock issued in conjunction
with loans made to the Company. Such shares, though not yet issued, are deemed
to be beneficially owned because the stock options and warrants either are
currently exercisable or will become exercisable within 60 days to the extent
of the numbers of shares shown.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Includes options to purchase 185,106 shares of Common Stock of the Company,
and warrants to purchase 504,673 shares of common stock issued in conjunction
with loans made to the Company. Such shares, though not yet issued, are deemed
to be beneficially owned because the stock options and warrants either are
currently exercisable or will become exercisable within 60 days to the extent
of the numbers of shares shown.
|   
|(3) |  | Reflects shares covered by stock options. Such shares, though not yet
issued, are deemed to be beneficially owned because the stock options will
become exercisable within 60 days to the extent of the numbers of shares shown.                                                                                                                                                                                                 
|   
|(4) |  | Includes options to purchase 20,000 shares of common stock of the Company.
Such shares, though not yet issued, are deemed to be beneficially owned because
the stock options will become exercisable within 60 days to the extent of the
numbers of shares shown.                                                                                                                                                                
|   
|(5) |  | Includes warrants to purchase 2,080,000 shares of common stock issued under
Investment Agreements, in conjunction with loans made to the Company. Such
shares, though not yet issued, are deemed to be beneficially owned because the
warrants are currently exercisable to the extent of the numbers of shares
shown.                                                                                                           

21



---



##### Table of Contents



|(6) |  | Includes warrants to purchase 1,773,333 shares of common stock issued under
an Investment Agreement, in conjunction with loans made to the Company. Such
shares, though not yet issued, are deemed to be beneficially owned because the
warrants are currently exercisable to the extent of the numbers of shares
shown.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(b) Securities Authorized for Issuance under Equity Compensation Plans

The Global Energy Group, Inc. 2001 Equity Incentive Plan, adopted by our
Board of Directors effective as of September 1, 2001 and ratified by our
stockholders in October 2001, and as amended and ratified by our stockholders
in December 2002, covers up to 3,000,000 shares of our Common Stock which are
issuable upon the exercise of stock options or as outright stock awards. The
purpose of the Plan is to enable us to encourage eligible plan participants to
contribute to our success by granting such individuals stock options or stock
rewards. Options granted under the Plan may qualify as incentive stock
options as defined in Section 422A of the Internal Revenue Code of 1986. The
Board presently administers the Plan. Subject to the express provisions of the
Plan, the Board has the complete discretion and power to determine from among
eligible persons those to whom options or stock awards may be granted, the
option price, the number of shares of Common Stock to be granted and the
recipients. Securities may be granted under the Plan from time to time until
September 1, 2011, or such earlier date as may be determined by the Board.

On March 18, 2002 Global issued 420,000 shares of its common stock to two
consultants in exchange for providing certain management and marketing
consulting services. The shares were issued pursuant to the Plan, were
registered on Form S-8 and were valued at $202,398, based on the market value
of the shares granted.

On March 30, 2002 Global issued options to purchase 555,318 shares of its
common stock to Mr. Richardson, and options to purchase 277,659 shares to Mr.
Toomey. On April 5, 2002, Global issued options to purchase 50,000 shares of
its common stock to Mr. VanHyfte and options to purchase 20,000 shares to Mr.
Glaze. On July 22, 2002, Global issued options to purchase 50,000 shares of
its common stock to Mr. Guy Frankenfield. On November 7, 2002, Global issued
options to purchase 7,500 shares of its common stock to an employee. No
determinations have been made regarding the persons to whom securities will be
granted in the future. The following table sets forth certain information
regarding the plan as of March 20, 2003.

|                                                           |  |                   |         |                   |  |                     |       |  |  |  |           | 
|---------------------------------------------------------- |  | ----------------- | ------- | ----------------- |  | ------------------- | ----- |  |  |  | --------- | 
|                                                           |  | Number of         |         |                   |  |                     |       |  |  | 
|                                                           |  | securities to be  |         |                   |  |                     |       |  |  | 
|                                                           |  | issued upon       |         | Weighted average  |  |                     |       | 
|                                                           |  | exercise of       |         | exercise price of |  | Number of          
|                                                           |  | outstanding       |         | outstanding       |  | securities         
|                                                           |  | options, warrants |         | options, warrants |  | remaining available
|Plan Category                                              |  | and rights        |         | and rights        |  | for future issuance
|                                                           |  |                   |         |                   |  |                    
|Equity compensation
plans approved by
security holders     |  |                   | 967,977 |                   |  | $                   | 0.14  |  |  |  | 1,007,023 | 
|                                                           |  |                   |         |                   |  |                     |       |  |  |  |           | 
|Equity compensation
plans not approved
by security holders |  |                   | - 0 -   |                   |  |                     | - 0 - |  |  |  | - 0 -     | 
|                                                           |  |                   |         |                   |  |                     |       |  |  |  |           | 
|Total                                                      |  |                   | 967,977 |                   |  | $                   | 0.14  |  |  |  | 1,007,023 | 

Warrants and options to purchase the Companys stock may also be issued
outside the Plan. During 2002, as more fully described in both Item 6.
Liquidity and Capital Resources, and also under Item 11. Related Party
Transactions, the Company issued a series of warrants to purchase shares of its
common stock to Mr. Richardson and to Mr. Toomey. These warrants were issued
together with notes payable from the Company as part of its financing.

22



---



##### Table of Contents






Item 12. Certain Relationships and Related Transactions.

Related Party Transactions

On March 30, 2002, the Company and one of its principal stockholders, Mr.
Robert Smith, entered into an Investment Agreement. This agreement called for
Mr. Smith to lend up to $761,000 to Global on preset dates through July of
2002. Pursuant to that Investment Agreement, the Company borrowed $590,000 from
Mr. Smith and issued to Mr. Smith, as additional consideration for lending such
amounts to the Company, warrants to purchase up to 393,333 shares of our Common
Stock at an exercise price of $1.50 per share, exercisable for three years from
the date of the loan. The Company issued its promissory notes with respect to
the borrowed amounts, each bearing interest at 8% per annum, due six months
after the date of the note or, if earlier, upon the Companys obtaining
permanent equity financing and secured by a pledge of substantially all of the
assets of the Company. As more fully described under Item 11, on March 18,
2002 the Company entered into a consulting agreement with Mr. Smith, and agreed
to issue 252,000 shares of its common stock to him as payment for his services.

On March 30, 2002, approximately simultaneously with the appointment of a
majority of the Companys board of directors and also the Companys new CEO and
CFO, the Company entered into consulting agreements with Messrs. Wiles and
Cornett calling for monthly payments of $5,000 each for a period of one year.
They are to provide services to assist in the management transition and
generally perform whatever duties the Company requires. Thus far, the Company
has paid $5,000 to each of Messrs. Wiles and Cornett pursuant to such
Agreements and additional payments are being deferred.

On March 30, 2002, as more fully described under Item 11., the Company
issued options to purchase its common stock to Messrs. Richardson and Toomey as
part of the agreement under which they joined the Company.

During June, July and August, 2002, Mr. Richardson lent the Company
$85,000 and Mr. Toomey lent the Company $85,000 pursuant to an Investment
Agreement. The Company issued its promissory notes with respect to the borrowed
amounts, each bearing interest at 4-3/4% per annum and due on demand.

During September 2002, as an inducement to Quest Capital Alliance, L.L.C.
(Quest Capital), a third party not affiliated with the Company or any
director or officer of the Company, to provide financing to the Company, the
Company requested and received the commitment of Mr. Toomey and Mr. Richardson
to provide additional financing on an equal priority with the financing from
Mr. Smith and from Quest Capital. The commitment was reflected in an Investment
Agreement. As an inducement to Mr. Toomey and Mr. Richardson to make such
commitment, the Company issued warrants to Mr. Richardson to purchase 56,667
shares of Common Stock, and to Mr. Toomey to purchase 56,667 shares of Common
Stock, at an exercise price of $1.50 per share, exercisable for three years
from the dates of the loans. The terms of the Companys previously issued
promissory notes payable to Messrs. Richardson and Toomey also were amended to
provide that (1) the notes would be due six months after the date of the note
or, if earlier, upon the Companys obtaining permanent equity financing, and
not on demand, (2) the notes would bear interest at 8% per annum, and (3) the
notes would be secured by a pledge of substantially all of the assets of the
Company of equal priority with the security interests in favor of Mr. Smith and
Quest Capital. In connection with such transactions, Mr. Richardson lent the
Company an additional $45,000 in September 2002 under a promissory note bearing
interest at 8% per annum, due six months after the date of the note or, if
earlier, upon the Companys obtaining permanent equity financing and secured by
an equal priority pledge of substantially all of the assets of the Company. As
additional consideration for lending such amount to the Company, the Company
issued to Mr. Richardson a warrant to purchase up to 30,000 shares of our
Common Stock at an exercise price of $1.50 per share, exercisable for three
years from the date of the loan.

On October 2, 2002, the Company, Quest Capital, Mr. Smith, and Messrs.
Richardson and Toomey entered into an Investment Agreement that superseded and
replaced (including as to any remaining unfunded commitments) the financing
arrangements reflected in the above described Investment Agreements with Quest
Capital, Mr. Smith, and Messrs. Richardson and Toomey. Pursuant to the new
Investment Agreement, Quest Capital agreed to lend the Company $200,000, in
addition to its prior 2002 loans of $120,000 (which remain outstanding), Mr.
Richardson agreed to lend the Company $74,004, in addition to his prior 2002
loans of $130,000 (which remain outstanding), Mr. Toomey agreed to lend the
Company $56,003, in addition to his prior 2002 loans of $85,000 (which remain
outstanding), and Mr. Smith agreed to lend the Company $270,000, in addition to
his prior 2002 loans of $590,000 (which remain outstanding). The new
Investment Agreement provides that, with respect to each new loan, the

23



---



##### Table of Contents



Company will issue its promissory note bearing interest at 8% per annum,
due April 1, 2003 or, if earlier, the date the Company has raised at least
$2,700,000 in cash proceeds from equity financing and secured by an equal
priority pledge of substantially all of the assets of the Company. The
maturity dates of all then outstanding loans from these persons to the Company
were also simultaneously amended to match these revised maturity date terms.
With respect to each loan, the Company is required to issue to the respective
lender a warrant to purchase a specified number of shares at an exercise price
of $1.00 per share, exercisable for three years from the date of the loan.
Pursuant to this agreement, as of December 31, 2002, Quest Capital had lent the
Company $200,000 and had received warrants to purchase 1,600,000 shares, Mr.
Richardson had lent the Company $74,004 and had received warrants to purchase
592,004 shares, Mr. Toomey had lent the Company $56,003 and has received
warrants to purchase 448,003 shares, and Mr. Smith had lent the Company
$170,000 and had received warrants to purchase 680,000 shares, in each case on
the terms called for by the new Investment Agreement.

Global currently holds the exclusive rights to nine U.S. patents and eight
patent-pending applications pursuant to a series of agreements with the
inventors of the underlying technologies. Under the terms of these agreements,
the Company has the exclusive right to pursue commercial development of the
patented technologies. For all but one of the patents, these agreements are
with Mr. Thomas Hebert, an officer of the Company and the beneficial owner of
1,456,205 shares (or about 11%) of the Companys Common Stock. Mr. Hebert is
entitled to royalty payments from any sales of the products produced by the
Company with the patented technologies. These payments will begin in 2004 and
will be tied to the dollar amount of sales by the Company of products
incorporating the patented technologies. The agreements also establish minimum
royalty amounts, regardless of the level of sales, if any, required to be paid
to Mr. Hebert beginning in 2004. Minimum royalties under the Companys patent
agreements with Mr. Hebert, as in effect on the date of this report, would
amount to $110,000 in 2004, increasing each year until reaching $700,000 in
2010 and following years. No royalty payments are required after the underlying
patents expire. In addition to making royalty payments, the Company must use
reasonable efforts to generate income on each patent. Failure to comply with a
patent assignment or license agreement could result in the loss of the
Companys right to manufacture and sell products incorporating the patented
technology. Most of these patents are essential to the Companys business plan,
and loss of the rights to exploit these patents would seriously jeopardize the
Companys existence.




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

(a) Exhibits

The following exhibits are filed as part of this report (exhibits marked have
been previously filed with the Commission as indicated and are incorporated
herein by this reference):

|            |  |                                                                                                                                                      
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit no. |  | Description                                                                                                                                          
|            |  |                                                                                                                                                      
|3.1(5)      |  | Amended Certificate of Incorporation dated December 31, 2002,
as filed in the office of the Secretary of State, State of Delaware on
January 6, 2003.
|            |  |                                                                                                                                                      
|3.2(5)      |  | Bylaws (As amended by the Companys Board of Directors on
December 10, 2002).                                                                        
|            |  |                                                                                                                                                      
|4.1 (5)     |  | Global Energy Group, Inc. 2001 Equity Incentive Plan (as
amended and ratified by the Companys stockholders on December 10,
2002)                    
|            |  |                                                                                                                                                      
|10.1**      |  | Employment agreement  Richardson                                                                                                                    
|            |  |                                                                                                                                                      
|10.2**      |  | Employment agreement -Toomey                                                                                                                         
|            |  |                                                                                                                                                      
|10.3**      |  | Consulting agreement  Wiles                                                                                                                         
|            |  |                                                                                                                                                      
|10.4**      |  | Consulting agreement  Cornett                                                                                                                       
|            |  |                                                                                                                                                      
|10.5**      |  | Proxy and Voting Agreement                                                                                                                           
|            |  |                                                                                                                                                      
|10.6+       |  | Investment Agreement dated March 30, 2002                                                                                                            

24



---



##### Table of Contents



|            |  |                                                                             
|----------- |  | ----------------------------------------------------------------------------
|Exhibit no. |  | Description                                                                 
|            |  |                                                                             
|10.7+       |  | Registration Rights Agreement                                               
|            |  |                                                                             
|10.8+       |  | Agreement with the Technical Research and Development Authority             
|            |  |                                                                             
|10.9++      |  | Patent Assignment Agreement with Mr. Thomas Hebert  Patent No. 4,599,870   
|            |  |                                                                             
|10.10++     |  | Patent Assignment Agreement with Mr. Thomas Hebert  Patent No. 5,970,728   
|            |  |                                                                             
|10.11++     |  | Patent Assignment Agreement with Mr. Thomas Hebert  Patent No. 6,070,423   
|            |  |                                                                             
|10.12++     |  | Patent Assignment Agreement with Mr. Thomas Hebert  Patent No. 6,116,048   
|            |  |                                                                             
|10.13++     |  | Patent Assignment Agreement with Mr. Thomas Hebert  Patent No. 6,167,715   
|            |  |                                                                             
|10.14++     |  | Patent Assignment Agreement with Mr. Thomas Hebert  Patent No. 6,237,359   
|            |  |                                                                             
|10.15++     |  | Patent Licensing Agreement with Mr. Noel Davis  Patent No. 6,000,170       
|            |  |                                                                             
|10.16++     |  | Patent Assignment Agreement with Mr. Thomas Hebert  Patent No. 6,442,903   
|            |  |                                                                             
|10.17++     |  | Investment Agreement dated October 2, 2002                                  
|            |  |                                                                             
|10.18 (6)   |  | Investment Agreement dated January 30, 2003                                 
|            |  |                                                                             
|10.19 (5)   |  | Patent Assignment Agreement with Mr. Thomas Hebert  Patent No. 6,460,358 B1
|            |  |                                                                             
|21.1**      |  | Subsidiaries of the Company                                                 
|            |  |                                                                             
|23.1 (5)    |  | Consent to use of Report of Independent Certified Public Accountants        
|            |  |                                                                             
|99.1(5)     |  | Certification by Management                                                 



---

|*   |  | Previously filed; incorporated by reference as indicated.                                                                                                                                                              
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|**  |  | Previously filed; incorporated by reference to the same-numbered exhibit
to the Companys Annual Report on Form 10-KSB for the year ended December
31, 2001, as originally filed on April 11, 2002.                    
|   
|+   |  | Previously filed; incorporated by reference to the same-numbered
exhibit to the Companys Registration Statement on Form SB-2,
Registration No. 333-86208, originally filed on April 12, 2002, as
subsequently amended.
|   
|++  |  | Previously filed; incorporated by reference to the same-numbered
exhibit to the Companys Annual Report on Form 10-KSB/A for the year
ended December 31, 2001, as originally filed on November 26, 2002.               
|   
|(5) |  | Filed herewith                                                                                                                                                                                                         
|   
|(6) |  | Previously filed; incorporated by reference to the same-numbered exhibit
to the Companys Amended Quarterly Report on Form 10-QSB/A for the quarter
ended March 31, 2002, as originally filed on February 14, 2003.    

(b) Reports on Form 8-K

The following reports on Form 8-K were filed during the fourth quarter of the
year ended December 31, 2002, the period covered by this report:

None.




Item 14. Controls and Procedures

Within the 90 days prior to the date of this Form 10-K, the Company carried out
an evaluation, under the supervision and with the participation of the
Companys management, including the Companys President/Chief

25



---



##### Table of Contents



Executive Officer along with the Companys Executive Vice President/Chief
Financial Officer, of the effectiveness of the design and operation of the
Companys disclosure controls and procedures pursuant to Exchange Act Rule
13a-14. Based upon that evaluation, the Companys President/Chief Executive
Officer along with the Companys Executive Vice President/Chief Financial
Officer concluded that the Companys disclosure controls and procedures are
effective in timely alerting them to material information relating to the
Company (including its consolidated subsidiaries) required to be included in
the Companys periodic SEC filings. There have been no significant changes in
the Companys internal controls or in other factors that could significantly
affect internal controls subsequent to the date the Company carried out its
evaluation.

SIGNATURES

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

| |  |                                                                      |  |                         
| |  | -------------------------------------------------------------------- |  | ------------------------
| |  | GLOBAL ENERGY GROUP, INC                                            
| |  |                                                                      |  |                         
| |  | By:                                                                  |  | /s/ Joseph H. Richardson
| |  |                                                                      |  |                         
| |  | Joseph H.
Richardson
President, Chief Executive Officer
and Chairman
| |  |                                                                      |  |                         
| |  | Date:
April 14, 2003                                                

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

|                                                   |  |                   
|-------------------------------------------------- |  | ------------------
|/s/      Joseph H. RichardsonJoseph H. Richardson  |  | April 14, 2003Date
|President, Chief Executive Officer, Chairman       |  |                   
|(principal executive officer, director)            |  |                   
|                                                  
|                                                   |  |                   
|                                                  
|/s/     Peter E. ToomeyPeter E. Toomey             |  | April 14, 2003Date
|Executive Vice President  Chief Financial Officer |  |                   
|(principal financial officer, principal accounting |  |                   
|officer, director)                                 |  |                   
|                                                  
|                                                   |  |                   
|                                                  
|/s/     Richard E. WilesRichard E. Wiles           |  | April 14, 2003Date
|(director)                                         |  |                   

26



---



##### Table of Contents



CERTIFICATIONS

I, Joseph H. Richardson, certify that:



| | 1. |  | I have reviewed this annual report on Form 10-KSB of Global Energy
Group, Inc.;                                                                                                                                                                                                                                         
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 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.
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

April 14, 2003

|                                                     |  | 
|---------------------------------------------------- |  | 
|/s/ Joseph H. Richardson

Name: Joseph H. Richardson |  | 
|Title: Chief Executive Officer                       |  | 

27



---



##### Table of Contents



I, Peter E. Toomey, certify that:



| | 1. |  | I have reviewed this annual report on Form 10-KSB of Global Energy
Group, Inc.;                                                                                                                                                                                                                                         
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 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 quarterly 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 quarterly 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.
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

April 14, 2003

|                                           |  | 
|------------------------------------------ |  | 
|/s/ Peter E. Toomey

Name: Peter E. Toomey |  | 
|Title: Chief Financial Officer             |  | 

28



---



##### Table of Contents



INDEX TO FINANCIAL STATEMENTS

TABLE OF CONTENTS

|                                                                                                                                                    |  |          
|--------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------
|                                                                                                                                                    |  | PAGE     
|                                                                                                                                                    |  |          
|Independent Auditors Report                                                                                                                         |  | F-2      
|Balance sheets as of December 31, 2002 (consolidated) and
December 31, 2001 (consolidated and restated)                                             |  | F-3 & 4  
|Statements of operations for the years ended December 31, 2002
(consolidated) and December 31, 2001 (consolidated and restated)                     |  | F-5      
|Statements of cash flows for the years ended December 31, 2002
(consolidated) and December 31, 2001 (consolidated and restated)                     |  | F-6      
|Statements of stockholders equity (deficit) for the years ended
December 31, 2002 (consolidated) and December 31, 2001
(consolidated and restated) |  | F-7      
|Notes to Consolidated Financial Statements                                                                                                          |  | F-8 to 19

F-1





---



##### Table of Contents



INDEPENDENT AUDITORS REPORT

To the Board of Directors and Stockholders
Global Energy Group, Inc.
Odessa, Florida

We have audited the accompanying balance sheets of Global Energy Group, Inc.,
as of December 31, 2002 (consolidated) and December 31, 2001 (consolidated and
restated) and the related statements of operations, cash flows and
stockholders equity (deficit) for the years ended December 31, 2002
(consolidated) and December 31, 2001 (consolidated and restated). These
financial statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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 audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly in
all material respects, the financial position of Global Energy Group, Inc. at
December 31, 2002 (consolidated) and December 31, 2001 (consolidated and
restated) and the results of its operations, and its cash flows for the years
ended December 31, 2002 (consolidated) and December 31, 2001 (consolidated and
restated) in conformity with accounting principles generally accepted in the
United States of America.

As more fully discussed in Note Q to the financial statements, Global Energy
Group, Inc. changed its method of accounting for long-term contracts and
royalties payable as of December 31, 2001. Accordingly, the 2001 financial
statements have been restated to correct the error.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the financial statements,
the Company incurred a net loss of $2,977,693 during the year ended December
31, 2002, and must find alternative sources for capital. These conditions raise
substantial doubt about the Companys ability to continue as a going concern.
Managements plans regarding these matters are described more fully in Note R
to the financial statements. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

|                                                                                                         |  | 
|-------------------------------------------------------------------------------------------------------- |  | 
|/s/ Baumann, Raymondo & Company, P.A.

BAUMANN, RAYMONDO & COMPANY, P.A.
Tampa, Florida
January 30, 2003 |  | 

F-2





---



##### Table of Contents



GLOBAL ENERGY GROUP, INC.
BALANCE SHEETS
DECEMBER 31, 2002 AND 2001

|                         |                                                                                |                      |         |              |         |          |         |                  |         | 
|------------------------ | ------------------------------------------------------------------------------ | -------------------- | ------- | ------------ | ------- | -------- | ------- | ---------------- | ------- | 
|                         |                                                                                |                      |         |              |         |          |         | Consolidated and
|                         |                                                                                |                      |         | Consolidated |         | Restated
|ASSETS                   |                                                                                | 2002                 |         | 2001        
|                         |                                                                                |                      |         |             
|CURRENT ASSETS           |                                                                                |                      |         |              |         |          |         |                 
|                         | Cash                                                                           |                      | $       | 7,613        |         |          | $       | 334,308          |        
|                         | Accounts receivable                                                            |                      |         | 6,680        |         |          |         |                 |        
|                         | Cost and estimated earnings in excess of
billings                              |                      |         |             |         |          |         | 63,524           |        
|                         | Inventory                                                                      |                      |         | 219,880      |         |          |         | 69,018           |        
|                         | Prepaid expenses                                                               |                      |         | 7,170        |         |          |         | 24,200           |        
|                         |                                                                                |                      |         |              |         |          |         |                 
|                         |                                                                                | Total current assets |         |              | 241,343 |          |         |                  | 491,050 | 
|                         |                                                                                |                      |         |              |         |          |         |                 
|FURNITURE AND EQUIPMENT, |                                                                                |                      |         |              |         |          |         |                 
|                         | net of accumulated depreciation of $23,852
in 2002 and $8,009 in 2001          |                      |         | 63,396       |         |          |         | 61,509           |        
|                         |                                                                                |                      |         |              |         |          |         |                 
|OTHER ASSETS             |                                                                                |                      |         |              |         |          |         |                 
|                         | Investment in Investee                                                         |                      |         |             |         |          |         |                 |        
|                         | Deposits                                                                       |                      |         | 7,205        |         |          |         | 7,205            |        
|                         | Patents, net of accumulated amortization
of $14,710 in 2002 and $7,227 in 2001 |                      |         | 122,447      |         |          |         | 101,377          |        
|                         |                                                                                |                      |         |              |         |          |         |                 
|                         |                                                                                | Total other assets   |         |              | 129,652 |          |         |                  | 108,582 | 
|                         |                                                                                |                      |         |              |         |          |         |                 
|TOTAL ASSETS             |                                                                                | $                    | 434,391 |              |         | $        | 661,141 |                 
|                         |                                                                                |                      |         |              |         |          |         |                 

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

F-3






---



##### Table of Contents



GLOBAL ENERGY GROUP, INC.
BALANCE SHEETS (Continued)
AT DECEMBER 31, 2002 AND 2001

|                                                     |                                                                                                                                                      |                                                       |                                      |                                      |           |              |            |          |         |                  |         |  
|---------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------- | ------------------------------------ | ------------------------------------ | --------- | ------------ | ---------- | -------- | ------- | ---------------- | ------- | -
|                                                     |                                                                                                                                                      |                                                       |                                      |                                      |           |              |            |          |         | Consolidated and
|                                                     |                                                                                                                                                      |                                                       |                                      |                                      |           | Consolidated |            | Restated
|                                                     |                                                                                                                                                      |                                                       |                                      |                                      |           | 2002         |            | 2001    
|                                                     |                                                                                                                                                      |                                                       |                                      |                                      |           |              |            |         
|CURRENT LIABILITIES                                  |                                                                                                                                                      |                                                       |                                      |                                      |           |              |            |         
|                                                     |                                                                                                                                                      | Accounts payable and accrued expenses                 |                                      | $                                    | 398,049   |              |            | $        | 44,438  |                 
|                                                     |                                                                                                                                                      | Convertible debenture payable                         |                                      |                                      |          |              |            |          | 500,000 |                 
|                                                     |                                                                                                                                                      | Royalty payable, current portion                      |                                      |                                      | 51,000    |              |            |          | 196     |                 
|                                                     |                                                                                                                                                      |                                                       |                                      |                                      |           |              |            |         
|                                                     |                                                                                                                                                      |                                                       |                                      | Total current liabilities            |           |              | 449,049    |          |         |                  | 544,634 |  
|                                                     |                                                                                                                                                      |                                                       |                                      |                                      |           |              |            |         
|LONG TERM LIABILITIES                                |                                                                                                                                                      |                                                       |                                      |                                      |           |              |            |         
|                                                     |                                                                                                                                                      | Royalty payable, net of current portion               |                                      |                                      | 153,728   |              |            |          | 205,450 |                 
|                                                     |                                                                                                                                                      | Promissory
notes payable, net of unamortized discount |                                      |                                      | 1,043,521 |              |            |          |        |                 
|                                                     |                                                                                                                                                      |                                                       |                                      |                                      |           |              |            |         
|                                                     |                                                                                                                                                      |                                                       |                                      | Total long term liabilities          |           |              | 1,197,249  |          |         |                  | 205,450 |  
|                                                     |                                                                                                                                                      |                                                       |                                      |                                      |           |              |            |         
|TOTAL LIABILITIES                                    |                                                                                                                                                      |                                                       | 1,646,298                            |                                      |           |              | 750,084    |         
|                                                     |                                                                                                                                                      |                                                       |                                      |                                      |           |              |            |         
|STOCKHOLDERS EQUITY (DEFICIT)                       |                                                                                                                                                      |                                                       |                                      |                                      |           |              |            |         
|                                                     | Common stock, $0.001 par value,
50,000,000 shares authorized,
13,589,851 and 12,626,335 shares issued
and outstanding in 2002 and 2001,
respectively |                                                       |                                      | 13,590                               |           |              |            | 12,626   |        
|                                                     | Preferred stock, $0.001 par value,
10,000,000 shares authorized, 0 shares
issued and outstanding                                                     |                                                       |                                      |                                     |           |              |            |         |        
|                                                     |                                                                                                                                                      |                                                       | Additional paid-in capital           |                                      |           | 4,820,125    |            |          |         | 3,006,360        |        
|                                                     |                                                                                                                                                      |                                                       | Common stock subscription receivable |                                      |           |             |            |          |         | (40,000          | )      
|                                                     |                                                                                                                                                      |                                                       | Retained (deficit)                   |                                      |           | (6,045,622   | )          |          |         | (3,067,929       | )      
|                                                     |                                                                                                                                                      |                                                       |                                      |                                      |           |              |            |         
|                                                     |                                                                                                                                                      |                                                       |                                      | Total stockholders equity (deficit) |           |              | (1,211,907 | )        |         |                  | (88,943 | )
|                                                     |                                                                                                                                                      |                                                       |                                      |                                      |           |              |            |         
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
(DEFICIT) |                                                                                                                                                      | $                                                     | 434,391                              |                                      |           | $            | 661,141    |         
|                                                     |                                                                                                                                                      |                                                       |                                      |                                      |           |              |            |         

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

F-4






---



##### Table of Contents



GLOBAL ENERGY GROUP, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001

|                                                     |                                           |               |            |              |            |          |            |                  |            |  
|---------------------------------------------------- | ----------------------------------------- | ------------- | ---------- | ------------ | ---------- | -------- | ---------- | ---------------- | ---------- | -
|                                                     |                                           |               |            |              |            |          |            | Consolidated and
|                                                     |                                           |               |            | Consolidated |            | Restated
|                                                     |                                           |               |            | 2002         |            | 2001    
|                                                     |                                           |               |            |              |            |         
|REVENUES                                             |                                           | $             | 164,422    |              |            | $        | 108,238    |                 
|COST OF GOODS SOLD                                   |                                           |               | 158,109    |              |            |          | 84,458     |                 
|                                                     |                                           |               |            |              |            |          |            |                 
|GROSS PROFIT                                         |                                           |               | 6,313      |              |            |          | 23,780     |                 
|                                                     |                                           |               |            |              |            |          |            |                 
|OPERATING EXPENSES                                   |                                           |               |            |              |            |          |            |                 
|                                                     | Consulting                                |               |            | 420,042      |            |          |            | 724,899          |           
|                                                     | Salaries and benefits                     |               |            | 1,121,525    |            |          |            | 231,204          |           
|                                                     | Legal and accounting                      |               |            | 266,378      |            |          |            | 77,718           |           
|                                                     | Research and development                  |               |            | 125,963      |            |          |            | 72,963           |           
|                                                     | Sales and marketing                       |               |            | 63,381       |            |          |            | 62,560           |           
|                                                     | General and administrative                |               |            | 426,552      |            |          |            | 122,483          |           
|                                                     |                                           |               |            |              |            |          |            |                 
|TOTAL OPERATING EXPENSES                             |                                           |               | 2,423,841  |              |            |          | 1,291,827  |                 
|                                                     |                                           |               |            |              |            |          |            |                 
|LOSS BEFORE OTHER INCOME (EXPENSES)                  |                                           |               | (2,417,528 | )            |            |          | (1,268,047 | )               
|                                                     |                                           |               |            |              |            |          |            |                 
|OTHER INCOME (EXPENSE)                               |                                           |               |            |              |            |          |            |                 
|                                                     | (Loss) on sale of assets                  |               |            | (3,195       | )          |          |            |                 |           
|                                                     | Interest income                           |               |            |             |            |          |            | 963              |           
|                                                     | Amortization of discount on notes payable |               |            | (506,974     | )          |          |            |                 |           
|                                                     | Interest (expense)                        |               |            | (49,996      | )          |          |            | (32,567          | )         
|                                                     |                                           |               |            |              |            |          |            |                 
|TOTAL OTHER (EXPENSE)                                |                                           |               | (560,165   | )            |            |          | (31,604    | )               
|                                                     |                                           |               |            |              |            |          |            |                 
|LOSS BEFORE INCOME TAXES                             |                                           |               | (2,977,693 | )            |            |          | (1,299,651 | )               
|INCOME TAXES                                         |                                           |               |           |              |            |          |           |                 
|                                                     |                                           |               |            |              |            |          |            |                 
|NET LOSS                                             |                                           | $             | (2,977,693 | )            |            | $        | (1,299,651 | )               
|                                                     |                                           |               |            |              |            |          |            |                 
|LOSS PER COMMON SHARE                                |                                           |               |            |              |            |          |            |                 
|                                                     |                                           | Basic         |            | $            | (0.22      | )        |            | $                | (0.13      | )
|                                                     |                                           |               |            |              |            |          |            |                 
|                                                     |                                           | Fully diluted |            | $            | (0.22      | )        |            | $                | (0.13      | )
|                                                     |                                           |               |            |              |            |          |            |                 
|WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING |                                           |               |            |              |            |          |            |                 
|                                                     |                                           | Basic         |            |              | 13,427,499 |          |            |                  | 10,091,654 |  
|                                                     |                                           |               |            |              |            |          |            |                 
|                                                     |                                           | Fully diluted |            |              | 13,427,499 |          |            |                  | 10,091,654 |  
|                                                     |                                           |               |            |              |            |          |            |                 

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

F-5




---



##### Table of Contents



GLOBAL ENERGY GROUP, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001

|                                     |                                          |                                                                           |                                         |                                                    |            |              |           |          |            |                  |          |  
|------------------------------------ | ---------------------------------------- | ------------------------------------------------------------------------- | --------------------------------------- | -------------------------------------------------- | ---------- | ------------ | --------- | -------- | ---------- | ---------------- | -------- | -
|                                     |                                          |                                                                           |                                         |                                                    |            |              |           |          |            | Consolidated and
|                                     |                                          |                                                                           |                                         |                                                    |            | Consolidated |           | Restated
|                                     |                                          |                                                                           |                                         |                                                    |            | 2002         |           | 2001    
|                                     |                                          |                                                                           |                                         |                                                    |            |              |           |         
|CASH FLOWS FROM OPERATING ACTIVITIES |                                          |                                                                           |                                         |                                                    |            |              |           |         
|                                     |                                          | Net loss                                                                  |                                         | $                                                  | (2,977,693 | )            |           | $        | (1,299,651 | )               
|                                     |                                          |                                                                           |                                         |                                                    |            |              |           |         
|                                     |                                          | Adjustments to reconcile net loss to cash
(used) in operating activities: |                                         |                                                    |            |              |           |          |            |                 
|                                     |                                          |                                                                           |                                         | Common stock issued for services                   |            |              | 242,856   |          |            |                  | 630,842  |  
|                                     |                                          |                                                                           |                                         | Stock options issued to employees                  |            |              | 172,564   |          |            |                  |          |  
|                                     |                                          |                                                                           |                                         | Interest on notes converted to
common stock        |            |              | 10,849    |          |            |                  | 18,094   |  
|                                     |                                          |                                                                           |                                         | Loss on the sale of assets                         |            |              | 3,195     |          |            |                  |         |  
|                                     |                                          |                                                                           |                                         | Amortization                                       |            |              | 514,457   |          |            |                  | 4,406    |  
|                                     |                                          |                                                                           |                                         | Depreciation                                       |            |              | 16,360    |          |            |                  | 4,302    |  
|                                     |                                          | (Increase) decrease in assets:                                            |                                         |                                                    |            |              |           |          |            |                 
|                                     |                                          |                                                                           |                                         | Accounts receivable                                |            |              | (6,680    | )        |            |                  | 35,611   |  
|                                     |                                          |                                                                           |                                         | Costs and estimated earnings in
excess of billings |            |              | 63,524    |          |            |                  | (63,524  | )
|                                     |                                          |                                                                           |                                         | Inventory                                          |            |              | (150,862  | )        |            |                  | (48,356  | )
|                                     |                                          |                                                                           |                                         | Prepaid expenses                                   |            |              | 17,030    |          |            |                  | (24,200  | )
|                                     |                                          |                                                                           |                                         | Increase in security deposits                      |            |              |          |          |            |                  | (6,355   | )
|                                     |                                          | Increase (decrease) in liabilities:                                       |                                         |                                                    |            |              |           |          |            |                 
|                                     |                                          |                                                                           |                                         | Accounts payable and accrued expenses              |            |              | 353,611   |          |            |                  | (116,128 | )
|                                     |                                          |                                                                           |                                         |                                                    |            |              |           |         
|                                     |                                          |                                                                           |                                         | Total adjustments                                  |            |              | 1,236,904 |          |            |                  | 434,692  |  
|                                     |                                          |                                                                           |                                         |                                                    |            |              |           |         
|                                     |                                          |                                                                           | Net cash (used) in operating activities |                                                    |            | (1,740,789   | )         |          |            | (864,959         | )       
|                                     |                                          |                                                                           |                                         |                                                    |            |              |           |         
|CASH FLOWS FROM INVESTING ACTIVITIES |                                          |                                                                           |                                         |                                                    |            |              |           |         
|                                     | Redemption of certificate of deposit     |                                                                           |                                         |                                                   |            |              |           | 30,000   |           
|                                     | Acquisition of patents and related costs |                                                                           |                                         | (28,553                                            | )          |              |           | (51,466  | )         
|                                     | Proceeds from the sale of assets         |                                                                           |                                         | 2,500                                              |            |              |           |         |           
|                                     | Acquisition of furniture and equipment   |                                                                           |                                         | (23,942                                            | )          |              |           | (60,903  | )         
|                                     |                                          |                                                                           |                                         |                                                    |            |              |           |         
|                                     |                                          |                                                                           | Net cash (used) in investing activities |                                                    |            | (49,995      | )         |          |            | (82,369          | )       
|                                     |                                          |                                                                           |                                         |                                                    |            |              |           |         
|CASH FLOWS FROM FINANCING ACTIVITIES |                                          |                                                                           |                                         |                                                    |            |              |           |         
|                                     | Proceeds from stock subscription         |                                                                           |                                         | 40,000                                             |            |              |           |         |           
|                                     | Proceeds from royalty payable            |                                                                           |                                         |                                                   |            |              |           | 30,000   |           
|                                     | Proceeds from convertible debenture      |                                                                           |                                         |                                                   |            |              |           | 500,000  |           
|                                     | Proceeds from promissory notes           |                                                                           |                                         | 1,425,007                                          |            |              |           | 30,000   |           
|                                     | Repayment of promissory notes            |                                                                           |                                         |                                                   |            |              |           | (30,000  | )         
|                                     | Repayment of royalty payable             |                                                                           |                                         | (918                                               | )          |              |           |         |           
|                                     | Proceeds from issuance of common stock   |                                                                           |                                         |                                                   |            |              |           | 750,000  |           
|                                     |                                          |                                                                           |                                         |                                                    |            |              |           |         
|                                     |                                          | Net cash provided by financing activities                                 |                                         |                                                    | 1,464,089  |              |           |          | 1,280,000  |                 
|                                     |                                          |                                                                           |                                         |                                                    |            |              |           |         
|NET (DECREASE) INCREASE IN CASH      |                                          |                                                                           | (326,695                                | )                                                  |            |              | 332,672   |         
|CASH, BEGINNING OF THE PERIOD        |                                          |                                                                           | 334,308                                 |                                                    |            |              | 1,636     |         
|                                     |                                          |                                                                           |                                         |                                                    |            |              |           |         
|CASH, END OF THE PERIOD              |                                          | $                                                                         | 7,613                                   |                                                    |            | $            | 334,308   |         
|                                     |                                          |                                                                           |                                         |                                                    |            |              |           |         

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

F-6






---



##### Table of Contents



GLOBAL ENERGY GROUP, INC.
STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001

|                                                                                         |  |        |            |         |  |          |        |         |  |            |           |   |  |   |            |   |  |   |            |  
|---------------------------------------------------------------------------------------- |  | ------ | ---------- | ------- |  | -------- | ------ | ------- |  | ---------- | --------- | - |  | - | ---------- | - |  | - | ---------- | -
|                                                                                         |  |        |            |         |  |          |        |         |  | ADDITIONAL |           |   |  |   |            |   |  |  
|                                                                                         |  | COMMON |            | PAIDIN |  | RETAINED |        |         |  |           
|                                                                                         |  | SHARES |            | AMOUNT  |  | CAPITAL  |        | DEFICIT |  | TOTAL     
|                                                                                         |  |        |            |         |  |          |        |         |  |           
|BALANCE DECEMBER 31,
2000 (Restated)                                                     |  |        | 8,793,592  |         |  | $        | 8,794  |         |  | $          | 1,378,206 |   |  | $ | (1,768,278 | ) |  | $ | (381,278   | )
|Common stock issued for
Services($1.22 per share)                                        |  |        | 310,984    |         |  |          | 311    |         |  |            | 378,956   |   |  |   |           |   |  |   | 379,267    |  
|Common stock issued for
Cash($.92 per share)                                             |  |        | 270,424    |         |  |          | 270    |         |  |            | 249,730   |   |  |   |           |   |  |   | 250,000    |  
|Issuance of common shares
pursuant to exchange of
Preacquisition shares                  |  |        | 603,938    |         |  |          | 604    |         |  |            | (604      | ) |  |   |           |   |  |   |           |  
|Common stock issued for
Services($.52 per share)                                         |  |        | 55,000     |         |  |          | 55     |         |  |            | 28,495    |   |  |   |           |   |  |   | 28,550     |  
|Common stock issued for
Cash($.25 per share)                                             |  |        | 1,966,062  |         |  |          | 1,966  |         |  |            | 498,034   |   |  |   |           |   |  |   | 500,000    |  
|Common stock issued to
employees for consulting
Services($.41 per share)                 |  |        | 550,000    |         |  |          | 550    |         |  |            | 222,475   |   |  |   |           |   |  |   | 223,025    |  
|Common stock issued in
exchange for cancellation
of stockholders notes
($3.29 per share) |  |        | 76,335     |         |  |          | 76     |         |  |            | 251,068   |   |  |   |           |   |  |   | 251,144    |  
|Subscription receivable                                                                  |  |        |           |         |  |          |       |         |  |            |          |   |  |   |           |   |  |   | (40,000    | )
|Net loss for the year                                                                    |  |        |           |         |  |          |       |         |  |            |          |   |  |   | (1,299,651 | ) |  |   | (1,299,651 | )
|                                                                                         |  |        |            |         |  |          |        |         |  |            |           |   |  |   |            |   |  |   |            |  
|BALANCE DECEMBER 31,
2001 (Consolidated and
Restated)                                    |  |        | 12,626,335 |         |  |          | 12,626 |         |  |            | 3,006,360 |   |  |   | (3,067,929 | ) |  |   | (88,943    | )
|                                                                                         |  |        |            |         |  |          |        |         |  |            |           |   |  |   |            |   |  |   |            |  
|Stock subscription received                                                              |  |        |           |         |  |          |       |         |  |            |          |   |  |   |           |   |  |   | 40,000     |  
|Common stock issued to convert
debenture($1.00 per share)                                |  |        | 510,849    |         |  |          | 511    |         |  |            | 510,338   |   |  |   |           |   |  |   | 510,849    |  
|Common stock issued for
Services($0.48 per share)                                        |  |        | 420,000    |         |  |          | 420    |         |  |            | 201,978   |   |  |   |           |   |  |   | 202,398    |  
|Issue stock options to employees                                                         |  |        |           |         |  |          |       |         |  |            | 172,564   |   |  |   |           |   |  |   | 172,564    |  
|Common stock issued for
royalties owed($3.21 per share)                                  |  |        | 4,667      |         |  |          | 5      |         |  |            | 14,995    |   |  |   |            |   |  |   | 15,000     |  
|Common stock issued for
Services($0.77 per share)                                        |  |        | 25,000     |         |  |          | 25     |         |  |            | 19,169    |   |  |   |           |   |  |   | 19,194     |  
|Common stock issued in lieu of
cash for board members fees($2.09 per share)              |  |        | 3,000      |         |  |          | 3      |         |  |            | 6,261     |   |  |   |           |   |  |   | 6,264      |  
|Issue debt with detachable
Warrants for cash                                             |  |        |           |         |  |          |       |         |  |            | 888,460   |   |  |   |           |   |  |   | 888,460    |  
|Net loss for the year                                                                    |  |        |           |         |  |          |       |         |  |            |          |   |  |   | (2,977,693 | ) |  |   | (2,977,693 | )
|                                                                                         |  |        |            |         |  |          |        |         |  |            |           |   |  |   |            |   |  |   |            |  
|BALANCE DECEMBER 31,
2002 Consolidated                                                   |  |        | 13,589,851 |         |  | $        | 13,590 |         |  | $          | 4,820,125 |   |  | $ | (6,045,622 | ) |  | $ | (1,211,907 | )
|                                                                                         |  |        |            |         |  |          |        |         |  |            |           |   |  |   |            |   |  |   |            |  

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

F-7






---



##### Table of Contents



GLOBAL ENERGY GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001

NOTE A  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of significant accounting policies of Global Energy Group, Inc.,
(Global Energy) is presented to assist in understanding Global Energys
financial statements. The financial statements and notes are the representation
of Global Energys management who is responsible for their integrity and
objectivity. These accounting policies conform to accounting principles
generally accepted in the United States of America consistently applied in the
preparation of the financial statements.

Nature of Operations

Global Energy Group, Inc. was organized under the laws of the State of Delaware
on October 5, 1999. Global Energy & Environmental Research, Inc., was organized
under the laws of the State of Florida on February 16, 1998 (collectively
referred to as Global Energy).

Global Energy & Environmental Research, Inc. (GEER) has developed patented and
patent pending technology relating to the heating, air conditioning,
refrigeration and ice machine market. GEER is currently producing and
developing products that will utilize this advanced technology to allow for
reduced energy consumption, as well as other associated benefits. GEER markets
its products to energy service companies who provide technologies, services and
products to federal, state and municipal governments as well as many private
corporations. GEER will also provide its products and services to the
traditional residential and commercial heating, air conditioning, refrigeration
and ice machine markets.

Reverse Merger Method of Accounting

In 2001 following the acquisition, the former management of GEER became the
management of Global Energy and the former stockholders of GEER were issued
approximately 94% of the outstanding shares of Global Energys $0.001 par value
common stock. In accordance with accounting principles generally accepted in
the United States of America, Global Energys acquisition of GEER has been
accounted for as a reverse merger. As a result, GEER has been treated as the
acquiring entity and Global Energy has been treated as the acquired entity for
accounting purposes.

The historical financial statements of GEER have become the historical
financial statements of Global Energy in connection with the acquisition.
Similarly, the historical equity and retained deficit of GEER prior to the
acquisition have been retroactively restated for the equivalent number of
shares issued in connection with the acquisition. The balance sheet reflects
the financial position of Global Energy at December 31, 2001. The related
statements of operations, cash flow and stockholders (deficit) reflect the
operations of Global Energy for the year ended December 31, 2001.

F-8





---



##### Table of Contents



GLOBAL ENERGY GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001

NOTE A  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Principles of Consolidation

The consolidated financial statements include the accounts of Global Energy
Group, Inc. and its wholly owned subsidiary Global Energy & Environmental
Research, Inc. All significant inter-company accounts and transactions have
been eliminated.

Basis of Accounting

Global Energy maintains its financial records and financial statements on the
accrual basis of accounting. The accrual basis of accounting provides for
matching of revenues and expenses.

Revenue and Cost Recognition

Global Energy recognizes revenue principally from sales of equipment and to a
lesser degree, from contracts for both the sale and installation of equipment,
respectively as follows:

Equipment sales

The Companys transactions that are equipment sales alone are documented by
either a purchase order or a distribution agreement, in each case signed by the
Companys customer. Both of these documents include the Companys customary
terms and conditions of sale. Under these customary terms, title to the
product passes when the Company delivers the equipment to the shipper  the
Companys customer is responsible for the product from this point on. The
Company provides no separate return rights (other than the limited return
rights under the Companys warranty). The Company will typically offer payment
terms of 2/10, net 30 to qualified buyers. New customers must complete a
credit application, and the Company performs a credit review of the customer
prior to any significant grant of credit. The Company records revenue when
title to the product is transferred pursuant to shipping terms.

Equipment sales and installation

For contracts for both the sale and installation of products, revenue is
recognized on the percentage-of-completion method. Contract revenues are
accrued based generally on the percentage that costs incurred to date bear to
total estimated costs for each contract. This method is used because management
considers cost expended to be the best available measure of progress on these
contracts. The asset Costs and estimated earnings in excess of billings on
uncompleted contracts represents revenue recognized in excess of amounts
billed.

Accounts Receivable

Global Energys trade accounts receivable result from the sale of its products
and services with its projects, and consist primarily of amounts due from both
private companies and governmental entities. Global Energy uses the allowance
method to account for uncollectible accounts receivable.

F-9





---



##### Table of Contents



GLOBAL ENERGY GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001

NOTE A  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Concentration of Credit Risk

Financial instruments, which potentially expose Global Energy to concentrations
of credit risk, as defined by FASB Statement No. 105, Disclosure of Information
about Financial Instruments with Off-Balance Sheet Risk and Financial
Instruments with Concentration of Credit Risk,consist principally of trade
receivables.

The potential for a loss on receivables with a government entity is usually
minimal; while credit limits, ongoing credit evaluation, and account monitoring
procedures are utilized to minimize the risk of loss on contractor private
companies. Collateral is not generally required.

Financial Instruments

Global Energy estimates that the fair value of all financial instruments at
December 31, 2002 and 2001 do not differ materially from the aggregate carrying
value of its financial instruments recorded in the accompanying balance sheets.

Inventories

Inventories consist primarily of parts and materials used to develop Global
Energys products. Inventories are stated at the lower of cost (first-in,
first-out method) or market.

Furniture and Equipment

Furniture and equipment are recorded at historical cost and include
expenditures, which substantially increase the useful lives of existing
property, plant and equipment. Maintenance and repairs are charged to
operations when incurred. Depreciation of property and equipment is computed
primarily using the straight-line method based on estimated useful lives
(furniture and office equipment, 5 to 10 years; equipment and tools, 5 to 10
years).

Patents

The costs associated with the internal development of Global Energys patents
relating to the technologies associated with the reduction of energy
consumption, consisting mainly of legal and filing fees, are amortized over a
17 year period, consistent with current patent lives. Amortization expense for
the years ended 2002 and 2001 were $7,483 and $4,406, respectively.

Use of Estimates

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

Research and Development

Global Energy has expended significant amounts of funds in the development of
its products and technology. In accordance with accounting principles generally
accepted in the United States of America, these amounts are shown as current
period expenses in the accompanying financial statements.

F-10





---



##### Table of Contents



GLOBAL ENERGY GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001

NOTE A  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Advertising Costs

Global expenses the production costs of advertising the first time the
advertising takes place. Advertising expense for the years ended December 31,
2002 and 2001 was $3,621 and $0, respectively.

Income Taxes

Global Energy records its federal and state income tax liability in accordance
with Financial Accounting Standards Board Statement No. 109 Accounting for
Income Taxes. Deferred taxes payable are provided for differences between the
basis of assets and liabilities for financial statements and income tax
purposes, using current tax rates. Deferred tax asset is the expected benefit
of a net operating loss carryover and general business credits that are
available to offset future income taxes.

Loss Per Share

Global Energy records basic and fully diluted loss per share in accordance with
Financial Accounting Standards Board Statement No. 128, Earnings per Share.
Basic earnings (loss) per share includes no dilution and is computed by
dividing income (loss) available to common stockholders by the weighted average
number of shares outstanding for the period.

Dividend Policy

Global Energy has not yet adopted a policy regarding payment of dividends.

Fiscal Year

Global Energy has elected December 31 as its fiscal year end.

Product Warranties

Fiscal 2001

At December 31, 2001 no warranty reserve was established because a reasonable
estimate of the anticipated warranty experience was considered insignificant
given the insignificant amount of the Companys product sales and the absence
of any warranty claims in fiscal 2001 or in any prior fiscal years.

Fiscal 2002

The Company records an estimated cost of product warranty at the time the
revenue is recognized. Effective January 1, 2002, management is recording a
warranty reserve of 1% of sales based on their analysis of other HVAC
manufacturers that use the same or similar components in their products. The
Companys estimated future warranty cost is subject to adjustment from time to
time depending on actual experience.

F-11





---



##### Table of Contents



GLOBAL ENERGY GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001

NOTE A  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Reclassifications

Certain prior year amounts have been reclassified to conform to the current
year presentation.

NOTE B  CERTIFICATE OF DEPOSIT

Global Energy invested $30,000 in a certificate of deposit on June 16, 2000
with an original maturity of August 16, 2001 earning interest at the rate of
6.05% per annum. The certificate was redeemed on March 26, 2001.

NOTE C  PATENTS

Global Energy has the rights to patents and patent-pending applications
pursuant to a series of assignments and royalty agreements. For all but one of
the patents, the assignment agreements are with Mr. Thomas Hebert, an officer
and shareholder of Global Energy. The remaining assignment agreement is with an
unrelated third party.

Under the terms of these agreements, Global Energy has the right and the
obligation to pursue commercial development of these technologies. If Global
Energy fails to commercialize the patents within a specified period of time,
Mr. Hebert and the other assignor have the right to terminate the assignments
to Global Energy. Management believes that it is in the process or will be in
a position to commercialize each of these patents.

Mr. Hebert and the other assignor are entitled to royalty payments from the
sale of products produced by Global Energy with the patented technology. The
royalty to Mr. Hebert are to be paid at the rate of 3 percent of the portions
of net revenues received by Global Energy beginning April 1, 2004. Prior to
April 1, 2004 there are no amounts due on any of the patents associated with
Mr. Hebert. Payment for royalties to the other assignor are at the rate of 8
percent of the portions of net revenues received by Global Energy beginning in
2002. There were no royalties payable prior to 2002 to this individual.

The future minimum royalty payments under these agreements are as follows:

|                         |      |        |         |         | 
|------------------------ | ---- | ------ | ------- | ------- | 
|Year Ended December 31,  |      | Amount
|                         |      |       
|                         | 2003 |        | $       | 10,000  | 
|                         | 2004 |        |         | 120,000 | 
|                         | 2005 |        |         | 220,000 | 
|                         | 2006 |        |         | 335,000 | 
|                         | 2007 |        |         | 460,000 | 
|                         | 2008 |        |         | 580,000 | 
|                         | 2009 |        |         | 660,000 | 
|Annually      Thereafter |      |        | 710,000 |        

F-12





---



##### Table of Contents



GLOBAL ENERGY GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001

NOTE D  FURNITURE AND EQUIPMENT

Furniture and equipment as of December 31, 2002 and 2001 is summarized as
follows:

|                              |                             |  |         |        |      |   |        |        | 
|----------------------------- | --------------------------- |  | ------- | ------ | ---- | - | ------ | ------ | 
|                              |                             |  | 2002    |        | 2001
|                              |                             |  |         |        |     
|Machinery and equipment       |                             |  | 43,421  |        |      | $ | 30,735 |       
|Office equipment              |                             |  | 43,827  |        |      |   | 38,783 |       
|                              |                             |  |         |        |      |   |        |       
|                              |                             |  | 87,248  |        |      |   | 69,518 |       
|Less accumulated depreciation |                             |  | (23,852 | )      |      |   | (8,009 | )     
|                              |                             |  |         |        |      |   |        |       
|                              | Net furniture and equipment |  | $       | 63,396 |      |   | $      | 61,509 | 
|                              |                             |  |         |        |      |   |        |       

Depreciation expense for the years ended December 31, 2002 and 2001 was $17,730
and $4,302, respectively.

NOTE E  INVESTMENT IN INVESTEE

Global Energy acquired a 25% interest in the common stock of Global Energy &
Environmental Research Limited (LTD), an entity formed in the United Kingdom.
Global Energy acquired its common stock interest in LTD in exchange for the
future distribution rights of its technological equipment to potential
customers in the United Kingdom. Hence, there is no cost basis in the
investment. Global Energy accounts for its investment in the investee using
the equity method which is cost, as adjusted for Global Energys proportionate
share of earnings or losses. Condensed financial information of the investee
for the year ended May 31, 2002 is as follows:

|                                             |  |   |         |  
|-------------------------------------------- |  | - | ------- | -
|Sales                                        |  | $ | 0       |  
|Gross Profit                                 |  | $ | (2,182  | )
|Net income (loss) from continuing operations |  | $ | (43,740 | )
|Net income (loss)                            |  | $ | (43,740 | )

The other beneficial owner of LTD is also a shareholder of Global Energy.

NOTE F  PROMISSORY NOTES

During the year ended December 31, 2002 two shareholders and two officers of
Global Energy made loans to the company totaling $1,425,007. These loans bear
interest at 8% which accrues until the maturity date, and they are secured by a
lien on substantially all of the companys assets. The maturity date of all of
the notes was extended to February 1, 2004. At December 31, 2002 the amount of
the promissory notes and the accrued interest associated with them were
$1,425,007 and $45,132, respectively. These loans were issued with detachable
warrants which resulted in a discount on the notes payable of $888,460. At
December 31, 2002, the amount of the unamortized discount on the notes was
$381,486.

During the year ended December 31, 2001 shareholders made advances to Global
Energy totaling $30,000. The $30,000 loan was not evidenced by promissory notes
and was repaid during the same year.

On December 27, 2001, Global Energy issued 35,001 shares of its $0.001 par
value common stock in exchange for the cancellation of these promissory notes
and accrued interest of $10,165.

At December 31, 2000, Global Energy was obligated to a trust, which was wholly
owned by the largest shareholder of Global Energy. The note bears interest at
an original rate of 12% and a past due rate of 18%. The note was to mature on
August 5, 2000. Certain officers of Global Energy personally guaranteed the
note. At December 31, 2000, the amount of the promissory note and the accrued
interest associated with this note amounted to $103,050 and $28,391,
respectively.On December 27, 2001, Global Energy issued 41,334 shares of its
$0.001 par value common stock in exchange for the cancellation of this
promissory note and accrued interest of $47,929.

F-13





---



##### Table of Contents



GLOBAL ENERGY GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001

NOTE G  CONVERTIBLE DEBENTURE PAYABLE

On September 27, 2001, Global Energy borrowed $500,000 from an unrelated third
party secured by a 6% convertible debenture originally due November 30, 2001.
The debenture is convertible into Global Energys $0.001 par value common stock
at $1 per share through the debentures maturity date. The maturity date of the
debenture was subsequently extended to February 28, 2002. On February 7, 2002,
the holders of the debenture converted the principal and accrued interest into
510,849 shares of Global Energys $0.001 par value common stock.

NOTE H  AMENDMENT OF ARTICLES OF INCORPORATION

During the year ended December 31, 2002, Global Energy approved an amendment to
its articles of incorporation to create a classified Board of Directors. Under
the new structure, there are three classes for the Board, each serving three
year terms.

During the year ended December 31, 2001, Global Energy approved an amendment to
its articles of incorporation to (a) change the name of the company from
1Stopsale.com Holdings, Inc. to Global Energy Group, Inc.; (b) reverse split
the outstanding shares of its common stock one-for-twenty; (c) reduce the par
value of its common stock resulting from the reverse split from $0.02 to
$0.001; (d) increase the number of common shares Global Energy is authorized to
issue from 5,000,000 to 50,000,000; and (e) increase the number of preferred
shares Global Energy is authorized to issue from 500,000 to 10,000,000 shares.

All common share issuances and per share amounts have been adjusted to reflect
the effects of the reverse split.

NOTE I  INCOME TAXES

For income tax purposes Global Energy has a net operating loss carryover of
$5,641,370, which can be used to offset future federal and state taxable income
through 2016 as indicated below. In addition, Global Energy has available
general business credits that arose from research activities which can be used
to offset future federal income tax through 2016 as follows:

|                        |  |        |           |         |  |   |        | 
|----------------------- |  | ------ | --------- | ------- |  | - | ------ | 
|Year ended December 31, |  | Losses |           | Credits
|                        |  |        |           |        
|2013                    |  | $      | 1,033,297 |         |  | $ | 6,699  | 
|2014                    |  |        | 251,039   |         |  |   | 6,259  | 
|2015                    |  |        | 515,927   |         |  |   | 4,957  | 
|2021                    |  |        | 1,355,345 |         |  |   | 5,000  | 
|2022                    |  |        | 2,485,762 |         |  |   | 188    | 
|                        |  |        |           |         |  |   |        | 
|Total                   |  | $      | 5,641,370 |         |  | $ | 23,103 | 
|                        |  |        |           |         |  |   |        | 

The potential tax benefit of these losses and credits is estimated as follows:

|                    |  |   |            |  
|------------------- |  | - | ---------- | -
|Future tax benefit  |  | $ | 1,128,274  |  
|Valuation allowance |  |   | (1,128,274 | )
|                    |  |   |            |  
|Future tax benefit  |  | $ |           |  
|                    |  |   |            |  

At December 31, 2002 and 2001, no deferred tax assets or liabilities were
recorded in the accompanying financial statements.

F-14





---



##### Table of Contents



GLOBAL ENERGY GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001

NOTE J  LOSS PER SHARE

Global Energy has reported basic loss per share based on the weighted average
number of shares outstanding for the period. Global Energy cannot report fully
diluted loss per share including the shares reserved for the options,
warrants, or the conversion of the 6% convertible debenture even though they
are common stock equivalents, as the effect of this would be anti-dilutive.
Global will include the effect of this dilution in the calculation of fully
diluted earnings per share only upon actual conversion, or to the extent they
are not anti-dilutive.

In connection with and prior to the merger with Global Energy & Environmental
Research, Inc., Global Energy approved a reverse split of the outstanding
shares of its common stock one-for-twenty and reduced the par value of its
common stock resulting from the reverse split from $0.02 to $0.001. For
purposes of computation of loss per share, the common stock outstanding has
been retroactively adjusted for all periods presented to reflect the reverse
split.

NOTE K  EQUITY INCENTIVE PLAN

During the year ended December 31, 2001, Global Energy adopted a 2001 Equity
Incentive Plan (Incentive Plan) for the benefit of key employees (including
officers and employee directors) and consultants of Global Energy and its
affiliates. The Incentive Plan is intended to provide those persons who have
substantial responsibility for the management and growth of Global Energy with
additional incentives and an opportunity to obtain or increase their
proprietary interest in Global Energy, encouraging them to continue in the
employ of Global Energy.

Global Energy filed a registration statement on Form S-8 with the Securities
and Exchange Commission to register the 3,000,000 shares of its $0.001 par
value common stock underlying its 2001 Equity Incentive Plan. The registration
statement became effective October 31, 2001.

On November 1, 2001, Global Energy issued 55,000 shares of its $0.001 par value
common stock from the Incentive Plan in exchange for consulting services
provided by an unrelated company. The value of the consulting services of
$28,550 was determined based on a fair market analysis of the underlying
shares.

On March 18, 2002, Global Energy issued 420,000 shares of its $0.001 par value
common stock from the Incentive Plan in exchange for consulting services to
certain shareholders of Global Energy.

On March 30, 2002, Global Energy granted an option to its President, Joseph H.
Richardson, and its Chief Financial Officer, Peter E. Toomey, to purchase
555,318 and 277,659 shares of its common stock respectively at $0.01 per share
expiring March 30, 2012. The options are exercisable one-third March 30, 2002,
one-third on March 30, 2003, and one-third on March 31, 2004.

On April 6, 2002 Global Energy granted options to two employees to purchase a
total of 70,000 shares of its common stock. The exercise prices were $0.01 per
share for 35,000 shares, and $2.00 per share for 35,000 shares. The options
vest one year from the grant date.

On July 22, 2002 Global Energy granted options to an employee to purchase a
total of 50,000 shares of its common stock. The exercise prices were $0.01 per
share for 25,000 shares, and $2.00 per share for 25,000 shares. The options
vest one year from the grant date.



F-15



---



##### Table of Contents



GLOBAL ENERGY GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001

NOTE K  EQUITY INCENTIVE PLAN (Continued)

On November 4, 2002 Global Energy granted options to an employee to purchase a
total of 7,500 shares of its common stock. The exercise price was $0.75 per
share, and the options vest one year from the grant date.

NOTE L  STOCK ISSUANCES

During the year ended December 31, 2001, and prior to the effective date of the
merger, GEER issued 310,984 ($1.22 per share) and 270,424($.92 per share) shares
(as adjusted for the reverse-merger) of its common stock for $379,267 in
services and $250,000 in cash, respectively. The effect of these issuances is
reflected in the cash flows statements as cash and non-cash transactions
respectively.

On November 1, 2001 and November 16, 2001, Global Energy issued 802,000 shares
and 1,164,062 shares (collectively 1,966,062 shares at $.25 per share) of its
$0.001 par value restricted common stock to an unrelated group of investors as
part of a financing arrangement.

The understanding was that the previously issued and outstanding common stock
of 1Stopsale.com of 603,938, along with the issuance of 1,164,062 and 802,000
shares issued in connection with the private placement, the 55,000 ($.52 per
share) shares issued on November 1, 2001 for consulting services from the
Incentive Plan (Note K) plus the future issuance of 500,000 ($.41 per share)
shares reflecting the conversion of the debenture due February 28, 2002, as
extended, would add up to 3,125,000 or 25% of the outstanding common stock of
Global Energy.

On November 26, 2001 the Board of Directors issued 550,000 shares of its $0.001
par value common stock as a stock bonus. Of these, 250,000 shares were issued
to Richard E. Wiles, Global Energys President at that time; 50,000 shares were
issued to Thomas H. Hebert, Global Energys Vice-President of Research and
Development, and 250,000 shares were issued to Eugene L. Cornett, an
independent consultant and former Vice-President of Global Energy &
Environmental Research, Inc. The value of the stock bonus of $223,025 was
determined based on a fair market analysis of the underlying shares.

On April 26, 2002, Global issued 17,667 shares of its $. 001 par value common
shares for services. The value of the services rendered was the basis used to
determine the value of the shares issued.

On November 30, 2002, Global issued 15,000 shares of its $. 001 par value
common shares for services. The value of the stock was determined based on a
fair market analysis of the underlying shares.

NOTE M  COMMITMENTS AND CONTINGENCIES

Royalties

In connection with the funding arrangement from the Technical Research and
Development Authority of the State of Florida (TRDA) on December 6,1999,
Global Energy is obligated to TRDA for royalty payments equal to three times
the amount funded by TRDA. In addition, the royalty payments have priority
over all existing and future obligations obtained from all other sources. The
amount funded by TRDA was $207,113,as of December 31, 2002 and 2001.

F-16





---



##### Table of Contents



GLOBAL ENERGY GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001

NOTE M  COMMITMENTS AND CONTINGENCIES (Continued)

In accordance with the agreement, royalty payments to TRDA are based on 5% of
the gross sales of certain of its products in any calendar year. Royalty
payments are due quarterly, beginning with the calendar quarter after the
quarter in which products are sold. The payments continue for a period of five
years with annual renewals until such time as the repayment to TRDA is
complete. At the time payments are made to TRDA, royalty expense equal to
2/3rds of each payment is recorded. Royalty expense to TRDA for the years
ended December 31, 2002 and 2001 amounted to $1,836 and $4,406, respectively.
In the event the agreement terminates for cause, Global Energy has the option
to repay the obligation immediately, or convert the obligation into an interest
bearing promissory note.

The total obligation to TRDA at December 31, 2002 is $614,184, which consists
of the unpaid funded liability of $204,728 and related royalty expense of
$409,456. The estimated future maturities of this payable are as follows:

|                        |       |        |   |         |         | 
|----------------------- | ----- | ------ | - | ------- | ------- | 
|Year Ended December 31, |       | Amount
|                        |       |       
|                        |       | 2003   |   | $       | 153,000 | 
|                        |       | 2004   |   |         | 382,500 | 
|                        |       | 2005   |   |         | 78,684  | 
|                        |       | 2006   |   |         | 0       | 
|Thereafter              |       |        | 0 |        
|                        |       |        |   |        
|                        | Total |        | $ | 614,184 |        
|                        |       |        |   |        

Operating Leases

On October 4, 2001, Global Energy entered into an agreement to lease its
executive offices and warehouse space in Odessa, Florida under a 5-year
non-cancelable lease commencing January 1, 2002 at the rate of $7,170 per month
plus applicable Florida sales tax. The lease is automatically renewable for an
additional one-year period. Global Energy shall be liable, as additional rent,
for real estate taxes exceeding $11,840 per year, solid waste disposal
assessment exceeding $2,200 per year and any insurance costs exceeding $2,000
per year. The lease contains an escalation clause whereby rent shall increase
by the greater of 3% or the increase in the consumer price index.

Global Energy leases certain computer equipment under a three-year lease which
commenced on October 24, 2002 at the rate of $220 per month plus applicable
Florida sales tax.

The future maturities of minimum lease payments under these leases are as
follows:

|                        |       |        |         |         |         | 
|----------------------- | ----- | ------ | ------- | ------- | ------- | 
|Year ended December 31, |       | Amount
|                        |       |       
|                        |       | 2003   |         | $       | 102,773 | 
|                        |       | 2004   |         |         | 105,591 | 
|                        |       | 2005   |         |         | 108,259 | 
|Thereafter              |       |        | 108,663 |        
|                        |       |        |         |        
|                        | Total |        | $       | 425,286 |        
|                        |       |        |         |        



F-17



---



##### Table of Contents



GLOBAL ENERGY GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001

NOTE M  COMMITMENTS AND CONTINGENCIES (Continued)

Employment Agreements

On March 30, 2002, the Company entered into employment agreements with Mr.
Richardson and Mr. Toomey. Under these agreements, each individual is employed
for a period of three years, with automatic annual renewals. Key provisions of
the agreements include:

Mr. Richardsons base salary will be $125,000, $150,000 and $175,000 for the
first, second and third years, respectively;

Mr. Toomeys base salary will be $100,000, $125,000 and $150,000 for the first,
second and third years, respectively;

The agreements may be terminated by the Company either with good cause or
without good cause, respectively (as defined in the agreements). Terminations
without good cause would require payment of accrued compensation and benefits
plus a lump-sum severance payment amounting to compensation that otherwise
would be earned through the end of the then current term.

The future salary payments under these agreements are as follows:

|                        |  |        |         | 
|----------------------- |  | ------ | ------- | 
|Year ended December 31, |  | Amount
|                        |  |       
|2003                    |  | $      | 262,500 | 
|2004                    |  |        | 312,500 | 
|2005                    |  |        | 81,250  | 
|                        |  |        |         | 
|Total                   |  | $      | 656,250 | 
|                        |  |        |         | 

NOTE N  MERGER AND CHANGE OF MANAGEMENT

On September 17, 2001, the shareholders of Global Energy entered into a
Securities Exchange Agreement, as amended, to exchange 100% of the issued and
outstanding common stock of Global Energy & Environmental Research, Inc.,
(GEER) for an aggregate of 9,375,000 shares (post reverse split) of Global
Energys $0.001 par value common stock.

On the effective date of the transaction, Donald R. Mastropietro, the former
President, Treasurer, Secretary and sole Director of Global Energy resigned,
and Richard E. Wiles, President, CEO, Treasurer and Director of GEER became
President, CEO and Chairman of Global Energy. Also, Mr. Thomas H. Hebert and
Keith Glaze former Vice-President of Research and Development, and
Vice-President of Operations respectively of GEER, assumed similar positions
with Global Energy.

NOTE O  SUPPLEMENTAL DISCLOSURE OF NON-CASH INFORMATION

In fiscal 2002 the Company issued promissory notes with detachable common stock
warrants. When debt with detachable stock purchase warrants is issued, a
portion of the proceeds should be allocated to the warrants and recorded as
paid in capital. The amount allocated should be based upon the relative fair
market value of the two securities at the time they are issued. The Company
recorded a non-cash discount and additional paid in capital in the amount of
$888,460 respectively. The unamortized discount of the promissory notes was
$381,486 at December 31, 2002.



F-18



---



##### Table of Contents



GLOBAL ENERGY GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001

NOTE O  SUPPLEMENTAL DISCLOSURE OF NON-CASH INFORMATION (Continued)

For the years ended December 31, 2002 and 2001, cash interest expense of $46
and $0 was paid. Additionally, no income taxes were paid during these periods.

In connection with the acquisition of Global Energy & Environmental Research,
Inc., Global Energy issued 9,375,000 shares of its $0.001 par value common
stock in exchange for 100% of the outstanding common stock of that company.

NOTE P  ECONOMIC DEPENDENCY  MAJOR CUSTOMER

Global Energy sold a substantial portion of its products to one customer during
2002 and 2001, respectively. Sales to this customer aggregated $83,207 and
$64,938, in 2002 and 2001 respectively. At December 31, 2002 and 2001, amounts
due from this customer included in accounts receivable were $821 and $64,938,
respectively.

NOTE Q  CORRECTION OF AN ERROR

In 2002, Global Energy changed its method in accounting for royalties payable.
Global Energy believes that the change in accounting results in a better
accounting of assets and liabilities. The effect of the change had no effect on
net income for 2002. The change in accounting principle had no effect in basic
and fully diluted earnings per share for 2002. The change had no effect on the
prior years net income or earnings per share as the change was a balance sheet
correction only.

In 2001, Global Energy changed its method in accounting for long-term contracts
from the completed contract method to the percentage of completion method.
Global Energy believes that the percentage of completion method results in a
closer matching of revenues and expenses. The effect in the change was to
increase net income for 2001 by $ 13,612. The change in accounting principle
had no effect in basic and fully diluted earnings per share for 2001. The
change had no effect on the prior years quarterly financial reporting as there
were no open long-term contracts which extended beyond the prior quarter ends.

NOTE R  GOING CONCERN

The Companys financial statements are prepared using generally accepted
accounting principles applicable to a going concern, which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. The Company has incurred losses from its inception on February 16,
1998 through December 31, 2002. The Company does not have an established source
of revenues sufficient to cover its operating costs and, accordingly, there is
substantial doubt about its ability to continue as a going concern.

In order to develop an established source of revenues, and achieve a profitable
level of operations, the Company will need, among other things, additional
capital resources. Management is currently seeking outside funding through
various sources, including through debt and/or the sale of equity in the
Company. However, there is no guarantee that management will be successful in
procuring any outside funding, or if such funding does become available, that
such funding will be on terms acceptable to the Company.

F-19