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                    U. S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  FORM 10-KSB

(MARK ONE)
 [X]     ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
         OF 1934
         For the fiscal year ended December 31, 2002

 [ ]     TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934
         For the transition period from __________ to __________

                         Commission File Number 0-32863

                               STARMED GROUP, INC.
                 (Name of small business issuer in its charter)

           NEVADA                                                52-2220728
-------------------------------                              -------------------
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                               Identification No.)

   2029 CENTURY PARK EAST, SUITE 1112
        Los Angeles, California                                      90067
----------------------------------------                          ----------
(Address of principal executive offices)                          (Zip Code)

        Issuer's telephone number (including area code): (310) 226-2555

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

                                      None

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

                     Common Stock, $0.01 par value per share
                     ---------------------------------------
                                (Title of Class)

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

         Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

         The registrant's revenues for its most recent fiscal year were
$9,270.

         The aggregate market value of the voting stock held by non-affiliates
of the registrant as of December 31, 2002 was ($97,140) based upon the book
value of the registrant's Common Stock of ($0.08) as of December 31, 2002.

         The number of shares outstanding of the registrant's Common Stock,
$0.01 par value per share, was 7,056,424 as of June 1, 2004.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None

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ALL FORWARD-LOOKING STATEMENTS CONTAINED HEREIN ARE DEEMED BY THE COMPANY TO BE
COVERED BY AND TO QUALIFY FOR THE SAFE HARBOR PROTECTION PROVIDED BY THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995. SHAREHOLDERS AND PROSPECTIVE
SHAREHOLDERS SHOULD UNDERSTAND THAT SEVERAL FACTORS GOVERN WHETHER ANY
FORWARD-LOOKING STATEMENT CONTAINED HEREIN WILL BE OR CAN BE ACHIEVED. ANY ONE
OF THOSE FACTORS COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE
PROJECTED HEREIN. THESE FORWARD-LOOKING STATEMENTS INCLUDE PLANS AND OBJECTIVES
OF MANAGEMENT FOR FUTURE OPERATIONS, INCLUDING PLANS AND OBJECTIVES RELATING TO
THE PRODUCTS AND THE FUTURE ECONOMIC PERFORMANCE OF THE COMPANY. ASSUMPTIONS
RELATING TO THE FOREGOING INVOLVE JUDGMENTS WITH RESPECT TO, AMONG OTHER THINGS,
FUTURE ECONOMIC, COMPETITIVE AND MARKET CONDITIONS, FUTURE BUSINESS DECISIONS,
AND THE TIME AND MONEY REQUIRED TO SUCCESSFULLY COMPLETE DEVELOPMENT PROJECTS,
ALL OF WHICH ARE DIFFICULT OR IMPOSSIBLE TO PREDICT ACCURATELY AND MANY OF WHICH
ARE BEYOND THE CONTROL OF THE COMPANY. ALTHOUGH THE COMPANY BELIEVES THAT THE
ASSUMPTIONS UNDERLYING THE FORWARD-LOOKING STATEMENTS CONTAINED HEREIN ARE
REASONABLE, ANY OF THOSE ASSUMPTIONS COULD PROVE INACCURATE AND, THEREFORE,
THERE CAN BE NO ASSURANCE THAT THE RESULTS CONTEMPLATED IN ANY OF THE
FORWARD-LOOKING STATEMENTS CONTAINED HEREIN WILL BE REALIZED. BASED ON ACTUAL
EXPERIENCE AND BUSINESS DEVELOPMENT, THE COMPANY MAY ALTER ITS MARKETING,
CAPITAL EXPENDITURE PLANS OR OTHER BUDGETS, WHICH MAY IN TURN AFFECT THE
COMPANY'S RESULTS OF OPERATIONS. IN LIGHT OF THE SIGNIFICANT UNCERTAINTIES
INHERENT IN THE FORWARD LOOKING STATEMENTS INCLUDED THEREIN, THE INCLUSION OF
ANY SUCH STATEMENT SHOULD NOT BE REGARDED AS A REPRESENTATION BY THE COMPANY OR
ANY OTHER PERSON THAT THE OBJECTIVES OR PLANS OF THE COMPANY WILL BE ACHIEVED.

PART I

ITEM 1. DESCRIPTION OF BUSINESS

Business Development

         StarMed Group, Inc., a Nevada corporation, referred herein to as "we",
"StarMed Group" or the "Company", is a holding company of Sierra Medicinals,
Inc., an Arizona corporation, and our wholly-owned subsidiary ("Sierra
Medicinals"). StarMed Group, through Sierra Medicinals is engaged in the
development and marketing of natural alternative medicinals. The Company was
first incorporated on November 3, 1961 under the name of Riverside Homes, Inc.
in North Carolina. On December 18, 1969 the Company's Articles of Incorporation
were amended to change the name of the Company to Port Star Industries, Inc. In
February, 1972, the Company had to sell all of its assets to pay existing debts.
The Company became inactive until August 3, 1981 when its domicile was changed
to Nevada from North Carolina.

         On March 20, 1984 the Company's shareholders voted to acquire a company
called Energy Dynamics, Inc. and to change its name to Energy Dynamics, Inc. On
March 20, 1985 this proposed acquisition was rescinded because of
non-performance and the Company changed its name to Heathercliff Group Inc. The
Company became inactive for several years. Heathercliff Group, Inc. was in real
estate development, and Herman Rappaport, either directly or through his family
trust, was a majority shareholder of that company.

         On January 10, 2000, the Company was revived and received its
Certificate of Revival from the State of Nevada on January 24, 2001 with its
name changed to StarMed Group, Inc. At the time of its revival, the Company had
no assets and no liabilities. Mr. Rappaport was a majority shareholder of
StarMed Group, Inc. (either directly or through his family trust).

         On July 27, 2001, the Company acquired Sierra Medicinals, Inc., an
Arizona corporation incorporated in March, 2000, in an share exchange of a total
of 469,792 shares, on a one for one basis. The number of shares outstanding of
StarMed Group, Inc. is 4,945,384 as of December 31, 2001. Following the merger,
the Company has a wholly-owned subsidiary of Sierra Medicinals, Inc., an Arizona
corporation. Mr. Rappaport, either directly or through his family trust, was a
majority shareholder of Sierra Medicinals, Inc.

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         There are no contracts or agreements between StarMed Group, Inc. and
its wholly owned subsidiary Sierra Medicinals, Inc. Sierra Medicinals, Inc. is
responsible for the development of specific nutraceuticals that address the
problems of aging sight, arthritis, and colon. It has no further rights or
responsibilities, nor are there any commitments as to future funding, financial
terms, or termination provisions.

         We continue our operations through Sierra Medicinals, Inc. because of
the market recognition of the Sierra Medicinal label and the SierraMed website,
as well as the marketing of its existing nutraceuticals e.g. Sight D, Sight W,
Colon IB, JT Penetrating Cream, and Sierra Slim.

         The Company organized a new, wholly-owned Nevada subsidiary on August
22, 2003 named Vet Medicinals, Inc. The business purpose of this subsidiary is
to focus on canine weight loss. Clinical trials were begun to test the efficacy
of Phase 2(tm) starch blocker product for canine weight loss. Results of the
clinical tests have been positive and The Company intends to produce and market
its own brand of weight loss for dogs.

         The Company has also commissioned the writing of a book on canine
weight loss which is to be used as a marketing tool for its products.

         All former Sierra Medicinals, Inc. stockholders (including minority
stockholders) have exchanged their stock for an equal number of shares in
StarMed Group, Inc.

         On August 23, 2001, the venture capital company, Citadel Capital
Management Company, agreed to provide funding in the amount of $600,000 as a
two-year loan to StarMed Group's subsidiary, Sierra Medicinals, convertible to
10% of the common stock of the Company and guaranteed by the Company.

         In 2002, the Company had a $400,000 convertible note payable with an
interest rate at 10% per annum which matured on August 31, 2003.

         On July 23, 2003, the Company entered into an agreement for the
cancellation of the note payable in the amount of $467,255 including accrued
interest through July 23, 2003, in exchange for the issuance 82,300 restricted
shares of common stock. See Financial Statements.

         The Company has never been involved in any bankruptcy, receivership, or
similar proceedings.

Business of Issuer

General

         We have three major targeted markets for Sierra Medicinals' products.
First, the domestic market (the United States), targets senior citizens with
products for diminishing sight, arthritis, colon and weight loss problems. Its
additional target is the Hispanic population of the United States. The second
market extends this latter market to Latin America. Dr. Hector Rodriguez, a
director of StarMed Group and a physician with extensive contacts in Latin
America, especially in Colombia where he was born and educated, is the lead
physician in the marketing of Sierra Medicinal's products to the
Spanish-speaking population. Our third target market includes the growing weight
loss problem which is currently among the most pressing health issues in the
country, as significant as smoking.

         The Company's management is seeking contracts with businesses that are
developing new nutraceuticals that can be tested and marketed by the Company. We
believe that there is a need for expanded sales by a number of private
nutritional manufacturers of products for chronic health problems. The specific
products sought are for chronic illnesses where natural alternative medicines
have their greatest promise. Each product, to be acceptable to the Company, must
have proven research results supporting the product's claims.

         Our plan of business operation consists of developing natural
alternative medicines to assist in helping solve health problems where
conventional prescription drugs often have side effects and usually are costly.
Although acute illnesses are best served by conventional medicines, alternative
and herbal medicines often have beneficial results with chronic health problems.

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         We are exploring the opportunity to market our Sierra Medicinals
nutraceuticals in China and in Latin America. Our management recognizes the
considerable difficulty in exporting medicinals to foreign countries and the
need to meet foreign government regulations. Most foreign countries have strict
regulation governing the incorporation of medicinal products and there is no
assurance that the Company's products will be accepted.

         Our foreign contacts are the result of our management's experience.
Sierra Medicinals' president, Dr. Steven L. Rosenblatt, although a Western
trained physician, was also trained as an acupuncturist in China. Herman
Rappaport, President of StarMed Group, Inc. and CEO of Sierra Medicinals, Inc.
was an advisor on Foreign Trade policy to the US Department of Commerce for
approximately 12 years and was introduced to China by China's Ambassador Li
Dayou's Trade Representatives to the United States, Tao Wuxin and Xu Ji, both of
whom serve currently as our representatives in Beijing and Shanghai.

         Dr. Hector Rodriguez, our director, is Colombian born and trained, and
has an extensive Spanish speaking patient practice in the United States and
roots in Latin America.

         The Company has a contract with Perrigo Company, that has established
its own Dr. Rosenblatt Brand weight loss tablets for human consumption. This
product is presently being sold in mass markets including Wal-Mart, CVS, Target
and others. The Company receives a royalty from such sales.

         Sierra Medicinals, Inc. is a distributor for Pharmachem Laboratories'
ingredient, Phase 2(tm), a patented, natural weight loss product. Dr. Rosenblatt
is Pharmachem's leading spokesman for Phase 2(tm).

         Sierra Medicinals has an agreement with Natural Health Trends
Corporation, Inc. (NHTC) wherein Sierra sells Phase 2(tm) for incorporation into
a private brand label that is sold internationally. Lexxus International is
presently selling its product based on the Company's formula in China and has
plans underway to sell the product in other international markets.

         The Company organized a new, wholly-owned Nevada subsidiary on August
22, 2003 named Vet Medicinals, Inc. which business focus is the weight loss of
canines. Clinical trials were begun to test the efficacy of Phase 2(tm) starch
blocker product for canine weight loss. The Pharmachem Phase 2(tm) is a natural
ingredient presently being extensively used for humans. Results of the clinical
tests have been positive and the Company intends to produce and market its own
brand of weight loss for dogs.

         The Company has also commissioned the writing of a book on canine
weight loss which is to be used as a marketing tool for its products.

The Herbal Medicinal Industry

         The market for herbal remedies is increasing every year, not only in
public use, but in acceptance by mainstream Western medicine as well. According
to the NIH National Center for complementary and alternative medicine, the
people using complementary therapies increased from 33% in 1990 to more than 42%
in 1997. The NCCAM states that 75 out of 117 American Medical Schools now offer
courses in alternative medicine, educating Western doctors in herbal medicine,
etc. However, it must be recognized that competition is growing as well.

Our Strategy and Business Plan

         Our physicians are directing the Company's attention toward illnesses
where Western medicine can be supplemented in helping to treat certain diseases.
This is especially true of chronic illnesses where conventional Western
medicines focus primarily on treating the symptoms and are usually costly, and
often have ill side effects. In general, nutritionals such as those the Company
markets, do not provide such a quick cure as conventional prescription drugs,
but in our opinion are necessary for good health maintenance and may enhance the
traditional treatment offered by Western medicine.

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         The Company's physicians recognize the importance of conventional
Western medicine but believe that natural supplements have beneficial effect in
some chronic illnesses.

         Sierra Medicinal's products are not effective for all patients. Chronic
illnesses are, in many cases, long lasting and complex, as for example,
arthritis, where one formula is not of value for all cases. Similarly, Sierra
Medicinal's products are not satisfactory in many cases.

         Each formula, the sum of its tested ingredients, has been tested by our
doctors. There have been no ill side effects until now. All testing has been
done in the United States and in accordance with US government standards. All
are over-the counter medicinals, and as such, have not been tested nor approved
by the Federal Drug Administration ("FDA"), but do meet all appropriate
government standards and regulations.

         We are not marketing or manufacturing any of our products in any
foreign country at present, and therefore, we are not required to meet any
foreign regulations. Advertising and marketing in the United States is being
done in strict compliance with all U.S. government regulations e.g. FTC, FDA
labeling, Good Manufacturing Practices, etc. We are not required to meet any
regulations for China or Latin American countries at this time because we have
not attempted to import any products to those countries to date.

         Principals of our company have had a special interest in Chinese
products and Chinese approach to treatment of diseases. Dr. Steven Rosenblatt,
President of Sierra Medicinals, is not only a Western-trained medical doctor,
but was also trained in China in acupuncture and was the first licensed American
to practice acupuncture in the United States. He is a member of the national
examining board for acupuncture schools and a known lecturer on Chinese herbal
medicine. Dr. August Reader III is a well-known ophthalmologist with the Pacific
Eye Institute in San Francisco and a recognized authority on the use of natural
herbal medicines in the practice of ophthalmology. Similarly, each medical
director of the Company (i.e. Dr. Hector Rodriguez, Dr. Joel Feinstein, and Dr.
Avner Manzoor) is a Western- trained medical doctor who has applied alternative
medicine in his practice. Herman Rappaport has served with the U.S. Department
of Commerce, as an advisor on Foreign Trade for almost 12 years and has studied
the use of alternative medicine and foreign practices in medicine in Russia and
in China, as well as in the United States.

         Our network of American doctors consists at present of eight physicians
trained in Western medicine and on the staffs of or teaching in or have taught
in Cedars-Sinai Medical Center, UCLA Medical School, and others. The doctors are
also the shareholders of the Company and some of them also serve as the officers
and directors of the Company. The doctors provide us with the information and
findings beneficial to the development of our products on per project bases, as
may be requested by the Company. The doctors do not have a contractual duty to
provide us with such information but they do it voluntarily in an effort to make
the Company successful.

         Our strategy has been to form strategic alliance with major companies.

         Sierra's president, Dr. Steven L. Rosenblatt, Ph.D, L.Ac., is the lead
spokesman for this new weight loss supplement. Dr. Rosenblatt is also the
co-author with the well-known science writer, Cameron Stauth, of The Starch
Blocker Diet, published by Harper Collins. A multi-million dollar promotion
campaign has been budgeted by Pharmachem Laboratories, the patent holder of the
basic ingredient, Phase 2(tm). Dr. Rosenblatt is the key spokesman for the new
weight loss supplement and the authoritative book on weight loss. The new starch
blocker and book are being promoted on television, radio, print advertising and
conventions.

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The Company's Products

         The Company's operation subsidiary, Sierra, is the formulator and
marketer of a number of over the counter proprietary nutraceuticals formulated
by Sierra doctors and addressing major health problems where conventional
medicines have limited success. Sierra's products are sold nationally in all 50
states as well as internationally. The Company has formed strategic alliances
with several major companies for the marketing of its products as previously
described.

         Each product is backed by a medical doctor as the lead spokesperson;
each doctor is an experienced lecturer on radio and television and a recognized
authority in his field. All products are science based and research backed.

         Each Sierra product is unique, affordable, and has major markets and
most has limited competition. None require FDA approval.

         Sierra Sight D and W are blends of natural medicinals formulated to
help combat the effects of aging eyesight.

         SierraMed JT Penetrating Cream is a new Company topical cream that
penetrates the skin and reach deep into the arthritic joints.

         Sierra Colon IB helps reduce symptoms related to irritable bowel
syndrome. Colon IB is a blend of twenty Chinese herbs and minerals based on a
successful study reviewed in the November 11, 1998 issue of JAMA.

         Sierra Slim, our newest product, is a new proprietary weight loss
supplement based on a revolutionary patented starch blocker, Phase 2(tm). In
2003 UCLA completed a successful double-blind study supporting the efficacy and
safety of this main ingredient, Phase 2(tm), of the Company's product, Sierra
Slim. The medical investigator's study has been accepted for publication.

Marketing

         The Company plans to market its products through radio, Internet,
pharmacies, and doctor networks, as well as conventional print media. Each of
the Company's products will be accompanied by educational programs including
research authorities and articles written by the Company's medical specialists.

Competition

         There is expected to be limited competition for many of the Company's
niche products. There are very few products presently on the market that compete
with the Company's eyesight products. The Company is investigating the
possibility of obtaining patents on these and several other products. Although
there are many ointments on the market for sore muscles, we believe that our
ointment that succeeds in penetrating into the arthritic joint is unique.
Similarly, the Company's colon product, based on a long accepted Chinese herbal
formula, has been combined with an American high-tech development that affects
the immune system and greatly enhances the effectiveness of the original
formula. There are no independent studies done at this time that would prove
these claims.

         Although there are other companies that distribute herbal products
through similar channels, what makes us unique and competitive in this market,is
that we have medical doctors' backing in research and testing of all our
products.

         THORNE RESEARCH.

         Thorne manufactures nutritional supplements and similar products and
markets its products only to health care professionals. In fact, in marketing to
professionals, Thorne may be our biggest competitor, although our products are
different in nature than Thorne's. However, Thorne tends to cater to
Naturopathic Doctors, while the Company plans to market to a broader range of
professionals in the medical field, in addition to other markets.

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         DOUGLAS LABS.

         This company manufactures some products which are similar to ours and
does a lot of private labeling for members of the health care profession.
Although we feel that our products are as good or better than those of Douglas,
we are not yet equipped to compete with their products in the private labeling
market.

         JARROW FORMULAS.

         Jarrow manufactures high quality products which are marketed in the
retail market. The retail market for Jarrow products seems to be growing and may
be a potential competition for our products.

         TWINLAB.

         This is a mass market-focused company. The Company has plans to enter
the mass market in the next few years, but we do not have any specific marketing
plan at present.

         KAL.

         This company produces herbal products. This may be our a direct
competitor, since we are producing and marketing herbal products and
nutraceuticals. We are not aware at this point that KAL markets the products
targeting the same ailments that our products do.

         HERBALIFE

         This company is in the business of selling and marketing weight
management products, nutritional supplements, and personal care products, as
well as other types of products. Herbalife does not directly compete with our
specific products, but it is a substantially larger company than we are, and has
available considerably greater financial resources than we have. Our ability to
remain competitive depends, in significant part, on our success in making our
products unique in a sense that they cannot be easily duplicated by larger
companies.

         The business of marketing weight management products, nutritional
supplements, and personal care products also is highly competitive. This market
segment includes numerous manufacturers, distributors, marketers, retailers and
physicians that actively compete for the business of consumers both in the
United States and abroad. The market is highly sensitive to the introduction of
new products or weight management plans, including various prescription drugs,
that may rapidly capture a significant share of the market. As a result, our
ability to remain competitive depends in part upon the successful introduction
of new products. In addition, we anticipate that we will be subject to
increasing competition in the future from sellers that utilize electronic
commerce. We cannot be sure of the impact of electronic commerce or that it will
not adversely affect our business.

         ALLERGY RESEARCH GROUP, INC.

         This is another competitor with strong interest in nutritional
supplements, which are not a type of products that we offer, however, they may
have an interest and ability to compete with our products. The market in this
area is very competitive and has many growth companies with strong marketing and
sales abilities, quality products and sound management. According to the trade
magazine Whole Foods, health food store sales throughout the nation grew in
revenues from $9 billion to $17 billion in 1998. Nutritional supplements
represent approximately 25% of those revenues according to Whole Foods. Vitamins
and nutritional supplements are sold primarily through the following channels of
distribution: health and natural food stores, mass market retailers (drug store
chains, supermarkets and other mass merchandisers), and direct sales channels
(including network marketing, catalog and Internet distribution).

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         WEIDER NUTRITION INTERNATIONAL, INC.

         This company develops, manufactures, markets, distributes and sells
branded and private label vitamins, nutritional supplements and sports nutrition
products in the United States and throughout the world. It offers a broad range
of capsules and tablets, powdered drink mixes, bottled beverages and nutrition
bars. Its portfolio of recognized brands, including Schiff, Weider Sports
Nutrition, MetaForm and American Body Building, are primarily marketed in four
principal categories, sports nutrition, vitamins, minerals and herbs, weight
management and healthy snacks. Weider carries a range of products which are
different than those of our Company, and at present none are in direct
competition with our products.

         Some of the companies listed above, and many other corporations in the
health and nutritional or herbal supplement business for chronic disorders, are
better funded and possess superior managerial and marketing resources. We plan
to compete primarily on the basis of differentiating the Company by marketing
its products of high quality and by producing products which address needs that
have not been met by our competitors' products.

         We may also in the future expand into the field of research on other
nutraceuticals with the hope that such research may lead to discovery of new
uses for herbs which may be incorporated into our existing products or used to
develop new products. We do not have, however, any such current research
projects nor any specific plans for such projects.

Raw materials and supplies

         The Company is committed to using only standardized extracts and
ingredients of highest purity in its formulae.

         Our raw materials include vitamins, minerals, and herbals supplements.
Production has been by American Supplement Technologies, Inc. of Tempe, Arizona.
Raw materials are readily available from many sources, although present
suppliers include Stauber, Ashland, Kelatron, AIDP, Stryka, and Nebraska
Cultures. Major supplier of the Phase 2(tm) material is Pharmaceum Labs in New
Jersey.

Patents and Trademarks

         We have the trademark "Products that work from Doctors who care" and
have an application pending for "Steven L. Rosenblatt, M.D., Ph.D." and "Vet
Slim and Trim".

Product Warranties

         We plan to sell all products on a 30-day money-back guarantee.

Insurance

         We plan to have product liability insurance on our products.

Research and Development

         Company doctors have developed, and intend to continue to develop and
test, each of the Company's products that are being considered to be offered to
the public. All products, ingredients, and their manufacture conform to U.S.
government regulations. Company medical doctors plan also to appear as
spokespersons, backing the efficacy and safety of their products and also
educating their audiences.

         Chinese research institutes that have offered the Company the
opportunity to import their medicinal products are set forth below:

         The Affilianted 307 Hospital - Beijing
         Shanghai United Cell Biology Co. Ltd.
         Institute of Chinese Materia Medica
         Shanghai No. 1 Chinese Medical Works

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         Although a number of products were offered to the Company, some on an
exclusive basis, doctors before accepting such products are requiring that
clinical trials made in China be repeated here to conform to the United States
standards. The Company has not determined its continued interest in importing to
the US the fungus derivatives offered it.

         The amount spent on research and development for the year ended
December 31, 2002 was $0 out of the total expenditures of $345,461.

         Our current resources are sufficient for cash needs until the end of
fiscal year 2004. As of December 31, 2002, the Company had on hand inventory
wholesale valued at $40,865.

         At present, the Company does not have any ongoing research projects.

Employees

         The Company has 4 employees at present plus 2 part-time research
employees. We plan to hire on as needed basis professional level consultants,
accountants, pharmacologists, staff etc.

ITEM 2. DESCRIPTION OF PROPERTY

         The Company does not own any physical properties at this time excepting
office equipment and supplies.

         The Company's corporate officers are presently located in leased office
space in Century City, Los Angeles. 2029 Century Park East, Suite 1112 Los
Angeles, Ca. 90067. The Company entered into a twelve month lease for office
space commencing on November 1, 2003 and expiring on October 31, 2004. Rent
expenses incurred for the years ended December 31, 2002 and 2001 was $33,912 and
$14,750, respectively. Future minimum rental payments under the office lease are
$59,592.

         The Company believes that such space is currently sufficient for its
needs.

         The Company has a five-year lease on computers. The monthly payment is
$1,473 per month. The Company will acquire the computers for $1 at the end of
the lease. The Company has calculated the present value of the computers
assuming a 12% interest rate as $62,575 and has capitalized that value for
depreciation. The balance of the capital lease obligation was $47,297 and
$62,203 at December 31, 2002 and 2001, respectively.

ITEM 3. LEGAL PROCEEDINGS

         The Company is not a party to any pending legal proceeding. Management
is not aware of any threatened litigation, claims or assessments.

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

         No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year covered by this report.

PART II

ITEM 1. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         (a) Market Information

Currently there is no public market for the Company's common stock. At the
appropriate time, the Company's management plans to complete the pertinent
procedures for listing the Company's common stock on the National Association of
Securities Dealers Over The Counter Electronic Board.

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         (b) Holders

As of December 31, 2003, there were 837 shareholders. A total of 1,847,295
shares of common stock out of 6,936,424 shares outstanding may be freely traded
with the general public. The balance of the common stock are held by individuals
and the trusts and are restricted and can only be sold pursuant to the
provisions of Rule 144 adopted under the Securities Act as explained herein.

         (c) Dividends

The Company does not currently contemplate the payment of any dividend

The current policy of the Company is not to pay cash dividends but instead, to
retain future earnings, if any. to support the growth of the Company. However,
there are no restrictions that limit the ability to pay dividends on common
equity when it is lawful to do so.

         (d) Sales of Unregistered Securities.

In June 2002, the Company issued 200,000 warrants with an exercise
price of $0.10 and 75,000 warrants with an exercise price of $0.01 per
share. The warrants have a life of 2 years and will expire in June
2004.

On September 25, 2003, the Company issued 804,381 common shares for
services rendered and also as retainer fees valued at $8,044.

On December 31, 2003, the Company issued 1,000,000 common shares for
compensation to its officers valued at $10,000. The Company also issued
87,359 common shares for services rendered valued at $873.

On January 13, 2004, the Company issued 110,000 common shares for services
rendered valued at $1,110.

On March 16, 2004, the Company issued 10,000 common shares for cancellation of a
contract and in exchange for accounts payable of $20,822.

ITEM 6. PLAN OF OPERATION

Forward-Looking Statements
--------------------------

         This registration statement contains forward-looking statements. These
statements relate to future events or our future financial performance. In some
cases you can identify forward-looking statements by terminology such as "may,"
"will," "should," "except," "plan," "anticipate," "believe," "estimate,"
"predict," "feel," "confident," "potential," or "continue," the negative of such
terms or other comparable terminology. These statements are only predictions and
involve risks, uncertainties and other factors, that may cause our or our
industry's actual results, levels of activity, performance or achievements to be
materially different from any future results, levels of activity, performance or
achievements expressed or implied by such forward-looking statements.

         Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements. Moreover, neither we nor any
other person assumes responsibility for the accuracy and completeness of the
forward-looking statements. We may not achieve the results indicated by the
forward-looking statements.

Overview
--------

         StarMed Group, Inc., a Nevada corporation, referred herein to as "we",
"StarMed Group" or the "Company", is a holding company of Sierra Medicinals,
Inc., an Arizona corporation, and our wholly-owned subsidiary ("Sierra
Medicinals"). StarMed Group, through Sierra Medicinals is engaged in the
development and marketing of natural alternative medicinals.

         The Company's products include two products to help problems with
eyesight, one product to help those suffering from arthritis, one products for
colon distress and two products for weight loss. The Company's physicians have
formulated several levels of nutritionals for different levels of each patient's
need.

                                        10



<PAGE>

         The Company recognizes the need for product education not only to the
public, but also to doctors who are not trained in alternative medicine. The
Company, therefore, has as one of its primary efforts, the preparation of
educational material, including research data to support its products.

         The Company has engaged the services of two medical authors to write
two books on illnesses that effect the general public. The Company plans to
produce and market the products that help alleviate the problems discussed in
the books

Results of Operations for fiscal years 2002 and 2001
----------------------------------------------------

         The following discussion should be read in conjunction with the
Consolidated Financial Statements and Notes thereto appearing elsewhere in this
report.

FISCAL YEAR ENDED DECEMBER 31, 2002 COMPARED TO FISCAL YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------
2001
----

         TOTAL REVENUES. The Company's total sales were $0 in the fiscal years
ended December 31, 2002 and 2001.

         Revenues for the Company's from royalty payments in 2002 totaled
$9,270 compared to $1,018 in fiscal 2001, representing an increase of 811%.

         TOTAL EXPENSES. The Company's total expenses for the fiscal year ended
December 31, 2002 totaled $345,461 compared to $117,435 in the fiscal year ended
December 31, 2001, representing an increase of 194% due to equipment purchases,
product manufacture and other costs associated with starting a business.

         NET INCOME (LOSS). The Company had a net loss of $(382,407) for the
fiscal year ended December 31, 2002, compared to a net loss of (125,586) for the
fiscal year ended December 31, 2001, representing an increase of 204%. The loss
reflects the costs incurred for operations.

LIQUIDITY AND CAPITAL RESOURCES

         The Company had a cash balance of $6,476 at December 31, 2002 as
compared to $189,349 at December 31, 2001.

         The Company had negative working capital at December 31, 2002. The
Company has been able to borrow and raise sufficient capital to continue
operations.

         In 2002, the Company had a $400,000 convertible note payable with an
interest rate at 10% per annum which matured on August 31, 2003.

         On July 23, 2003, the Company entered into an agreement for the
cancellation of the note payable in the amount of $467,255 including accrued
interest through July 23, 2003, in exchange for the issuance 82,300 restricted
shares of common stock. The agreement includes a guarantee and option whereby

                                        11



<PAGE>

the Company guarantees a market price of $3.50 per share in the event of the
future sale of the shares by the related shareholder in the form of either cash
or additional shares of common stock valued at the bid price on the date of
payment. If the holder of the option and guarantee receives less than $3.50 per
share, or cannot sell the shares, the Company has to pay the difference between
the proceeds per share and $3.50 per share if such shares cannot be sold in a
brokered transaction. The Company's liability associated with the guarantee and
option clause of the agreement of $288,050 is included in accrued expenses on
the accompanying consolidated balance sheet at December 31, 2003. The Company
recorded a gain on forgiveness of debt as a result of this transaction in the
amount of $178,382 which is included on the accompanying consolidated statement
of operations for the year ended December 31, 2003.

ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The consolidated financial statements of the Company required to be included in
Item 7 are set forth in the Financial Statements Index.

                                TABLE OF CONTENTS

Report of Independent Registered Public Accounting Firm......................F-1

Consolidated Balance Sheets..................................................F-2

Consolidated Statements of Operations........................................F-3

Consolidated Statement of Shareholders' Equity (Deficit).....................F-4

Consolidated Statements of Cash Flows........................................F-5

Notes to Consolidated Financial Statements...................................F-6

                                        12



<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Shareholders
Starmed Group, Inc. and Subsidiary

We have audited the accompanying consolidated balance sheet of Starmed Group,
Inc. (a development stage company and a Nevada corporation) and its subsidiary,
as of December 31, 2002, and the related consolidated statements of operations,
shareholders' equity (deficit) and cash flows for the year then ended. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audit. The consolidated financial statements
of Starmed Group, Inc. and its subsidiary as of December 31, 2001 and for the
period from inception (January 10, 2000) through December 31, 2001, were audited
by another auditor, who has ceased operations, whose report dated April 15, 2001
on those consolidated financial statements, included an explanatory paragraph
that described the Company's significant operating losses that raised
substantial doubt about its ability to continue as a going concern discussed in
Note 3 to the 2001 consolidated financial statements.

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

In our opinion, the 2002 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Starmed
Group, Inc. and its subsidiary as of December 31, 2002, and the results of its
operations and its cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States.


MENDOZA BERGER & COMPANY, LLP



March 5, 2004, except for Note 9 which is dated May 26, 2004
Irvine, California

                                      F-1
<PAGE>
<TABLE>
                                      STARMED GROUP, INC. AND SUBSIDIARY
                                        (A DEVELOPMENT STAGE COMPANY)
                                         CONSOLIDATED BALANCE SHEETS
                                          DECEMBER 31, 2002 AND 2001
-------------------------------------------------------------------------------------------------------------
<CAPTION>

                                                    ASSETS

                                                                    DECEMBER 31, 2002      DECEMBER 31, 2001
                                                                    ------------------     ------------------
<S>                                                                 <C>                    <C>
   Current assets:
     Cash                                                           $           6,476      $         189,349
     Inventory                                                                 40,865                 18,820
     Prepaid expenses                                                           2,668                     --
                                                                    ------------------     ------------------

         Total current assets                                                  50,009                208,169

     Equipment and furniture:
       Office furniture and computers                                          65,063                 68,363
       Accumulated depreciation                                               (11,845)                (2,442)
                                                                    ------------------     ------------------

         Total equipment and furniture                                         53,218                 65,921
                                                                    ------------------     ------------------

         Total assets                                               $         103,227      $         274,090
                                                                    ==================     ==================


                               LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

   Current liabilities:
     Accounts payable                                               $          22,755      $           1,780
     Accrued expenses                                                          31,781                     --
     Note payable with accrued interest - current portion                     444,899                     --
     Capital lease obligation - current portion                                12,802                 11,934
                                                                    ------------------     ------------------

         Total current liabilities                                            512,237                 13,714

   Long term debt:
     Note payable with accrued interest  - less current portion                    --                305,205
     Capital lease obligation - less current portion                           34,495                 50,269
                                                                    ------------------     ------------------

         Total long term debt                                                  34,495                355,474
                                                                    ------------------     ------------------

         Total liabilities                                                    546,732                369,188

   Commitments                                                                     --                     --

   Shareholders' equity:
     Common stock (par value $0.01) 50,000,000 shares
        authorized; 4,962,384 and 4,945,384 shares issued and
        outstanding at December 31, 2002 and 2001, respectively                49,624                 49,454
     Paid in capital                                                           88,924                 55,094
     Deficit accumulated during development stage                            (582,053)              (199,646)
                                                                    ------------------     ------------------

         Total shareholders' equity (deficit)                                (443,505)               (95,098)
                                                                    ------------------     ------------------

         Total liabilities and shareholders' equity (deficit)       $         103,227      $         274,090
                                                                    ==================     ==================

                  The accompanying notes are an integral part of these financial statements

                                                     F-2
</TABLE>
<PAGE>
<TABLE>
                                       STARMED GROUP, INC. AND SUBSIDIARY
                                         (A DEVELOPMENT STAGE COMPANY)
                                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
                           AND FROM INCEPTION (JANUARY 10, 2000) TO DECEMBER 31, 2002
---------------------------------------------------------------------------------------------------------------
<CAPTION>

                                                                                                FROM INCEPTION
                                                      FOR THE               FOR THE           (JANUARY 10, 2000)
                                                     YEAR ENDED            YEAR ENDED             THROUGH
                                                  DECEMBER 31, 2002     DECEMBER 31, 2001     DECEMBER 31, 2002
                                                  -----------------     -----------------     -----------------
<S>                                               <C>                   <C>                   <C>
Income:
   Revenue from royalty                           $          9,270      $          1,018      $         10,288

Expenses:
   Compensation                                            118,005                44,470               231,475
   Professional fees                                        58,292                21,336                84,688
   Accounting fees                                          16,435                 4,275                20,710
   Office                                                   17,179                20,442                37,621
   Rent                                                     33,912                14,750                48,662
   Insurance                                                 5,532                 1,529                 7,061
   Advertising, marketing and promotion                     84,317                 3,493                87,810
   Depreciation                                              9,403                 2,442                11,845
   Travel                                                    2,386                    --                 2,386
   Impairment of goodwill                                       --                 4,698                 4,698
                                                  -----------------     -----------------     -----------------

 Total expenses                                            345,461               117,435               536,956
                                                  -----------------     -----------------     -----------------

Loss from operations before interest and
  income taxes                                            (336,191)             (116,417)             (526,668)
Interest expense                                           (46,216)               (9,169)              (55,385)
                                                  -----------------     -----------------     -----------------

Loss from operations before income taxes                  (382,407)             (125,586)             (582,053)
Provision for income taxes                                      --                    --                    --
                                                  -----------------     -----------------     -----------------

Net loss                                          $       (382,407)     $       (125,586)     $       (582,053)
                                                  =================     =================     =================
Net loss per share-basic                          $          (0.08)     $          (0.03)
                                                  =================     =================

Weighted average number of shares outstanding            4,949,354             4,671,339
                                                  =================     =================

                   The accompanying notes are an integral part of these financial statements

                                                      F-3
</TABLE>
<PAGE>
<TABLE>
                                                 STARMED GROUP, INC. AND SUBSIDIARY
                                                    (A DEVELOPMENT STAGE COMPANY)
                                      CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
                                       FROM INCEPTION (JANUARY 10, 2000) TO DECEMBER 31, 2002
------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>

                                                                      COMMON STOCK
                                                     ---------------------------------------------
                                                                                                         DEFICIT
                                                                                                       ACCUMULATED
                                                                       PAR VALUE                           IN
                                                       NUMBER OF         $0.01          PAID IN        DEVELOPMENT
                                                        SHARES         PER SHARE        CAPITAL           STAGE            TOTAL
                                                     -------------   -------------   -------------    -------------    -------------
<S>                                                  <C>             <C>             <C>              <C>              <C>
Balance at revival January 10, 2000                     4,040,592    $     40,406    $    (40,406)    $         --     $         --

Common shares issued for cash in October
  2000 at average price per share $0.23                   135,000           1,350          29,500               --           30,850

Adjustment for common shares issued for
  compensation for services in October 2000
  valued at average price per share of
  shares issued for cash $0.23                            300,000           3,000          66,000               --           69,000

Net loss                                                       --              --              --          (74,060)         (74,060)
                                                     -------------   -------------   -------------    -------------    -------------

Balance at December 31, 2000 (as restated)              4,475,592          44,756          55,094          (74,060)          25,790


Acquisition at July 27, 2001 of all of the
  469,792 shares (par value $0.01) outstanding
  of Sierra Medicinal, Inc. for 469,792 shares
  of the Company. Sierra had no assets and no
  liabilities. The fair market value of net
  assets acquired was zero. The fair market
  value of the shares issued is not determinable
  since there is no market for the Company's
  stock. The Company has used the common stock
  par value $0.01 to value the acquisition                469,792           4,698              --               --            4,698

Net loss                                                       --              --              --         (125,586)        (125,586)
                                                     -------------   -------------   -------------    -------------    -------------

Balance at December 31, 2001                            4,945,384          49,454          55,094         (199,646)         (95,098)

Common shares issued for cash in September
  2002, at $2 per share                                     5,000              50           9,950               --           10,000
Common shares issued for compensation for
  services, in September and October 2002
  valued at $2 per share                                   12,000             120          23,880               --           24,000

Net loss                                                       --              --              --         (382,407)        (382,407)
                                                     -------------   -------------   -------------    -------------    -------------

Balance at December 31, 2002                            4,962,384    $     49,624    $     88,924     $   (582,053)    $   (443,505)
                                                     =============   =============   =============    =============    =============

                              The accompanying notes are an integral part of these financial statements

                                                                F-4
</TABLE>
<PAGE>
<TABLE>
                                          STARMED GROUP, INC. AND SUBSIDIARY
                                            (A DEVELOPMENT STAGE COMPANY)
                                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  FOR THE YEAR ENDED DECEMBER 31, 2002 AND 2001 AND
                                FROM INCEPTION (JANUARY 10, 2000) TO DECEMBER 31, 2002
---------------------------------------------------------------------------------------------------------------------
<CAPTION>

                                                                                                     FROM INCEPTION
                                                         FOR THE                FOR THE            (JANUARY 10, 2000)
                                                        YEAR ENDED             YEAR ENDED               THROUGH
                                                     DECEMBER 31, 2002      DECEMBER 31, 2001      DECEMBER 31, 2002
                                                     ------------------     ------------------     ------------------
<S>                                                  <C>                    <C>                    <C>
Cash flows from operating activities:
      Net (loss) during development stage            $        (382,407)     $        (125,586)     $        (582,053)
Adjustments to reconcile net (loss) to net cash:
      Depreciation                                               9,403                  2,442                 11,845
      Shares issued for compensation                            24,000                     --                 93,000
      Impairment of goodwill                                        --                  4,698                  4,698
(Increase) decease in operating assets:
     Inventory                                                 (22,045)               (18,820)               (40,865)
     Prepaid expenses                                           (2,668)                    --                 (2,668)
Increase (decrease) in operating liabilities:
     Accounts payable                                           20,975                  1,780                 22,755
     Accrued expenses                                           31,781                     --                 31,781
                                                     ------------------     ------------------     ------------------

Net cash used in operating activities                         (320,961)              (135,486)              (461,507)

Cash flows from investing activities:
     Acquisition of equipment and furniture                         --                 (2,448)               (65,063)
                                                     ------------------     ------------------     ------------------

Net cash used in investing activities                               --                 (2,448)               (65,063)

Cash flows from financing activities:
      Increase in loans and interest                           139,694                305,205                444,899
      Capital lease                                            (11,606)                (3,712)                47,297
      Proceeds from issuance of common stock                    10,000                     --                 40,850
                                                     ------------------     ------------------     ------------------

Net cash provided by financing activities                      138,088                301,493                533,046
                                                     ------------------     ------------------     ------------------

Net increase (decrease) in cash                               (182,873)               163,559                  6,476
Cash, beginning of period                                      189,349                 25,790                     --
                                                     ------------------     ------------------     ------------------

Cash, end of period                                  $           6,476      $         189,349      $           6,476
                                                     ==================     ==================     ==================

SUPPLEMENTAL INFORMATION ON NON-CASH INVESTING
   AND FINANCIAL  ACTIVITIES
   Stock issued for compensation                     $          24,000      $              --      $          93,000
                                                     ==================     ==================     ==================

   Reduction of lease payments and computer
      costs based on adjustment of lease             $           3,300      $              --      $           3,300
                                                     ==================     ==================     ==================

SUPPLEMENTAL CASH FLOW INFORMATION:
   Cash paid during the period for:
     Stock issued for acquisition of subsidiary      $              --      $           4,698      $           4,698
                                                     ==================     ==================     ==================

     Payments of interest                            $           6,522      $           3,964      $          10,486
                                                     ==================     ==================     ==================

     Capital lease obligation                        $              --      $          65,875      $          65,875
                                                     ==================     ==================     ==================

                      The accompanying notes are an integral part of these financial statements

                                                         F-5
</TABLE>
<PAGE>

                       STARMED GROUP, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      FOR THE PERIOD FROM INCEPTION (JANUARY 10, 2000) TO DECEMBER 31, 2002
--------------------------------------------------------------------------------

1.       HISTORY AND ORGANIZATION OF THE COMPANY
         ---------------------------------------

         The Company was first incorporated on November 3, 1961 under the name
         of Riverside Homes, Inc. in North Carolina. On December 18, 1969 the
         Company's Articles of Incorporation were amended to change the name of
         the Company to Port Star Industries, Inc. In February, 1972, the
         Company had to sell all of its assets to pay existing debts. The
         Company became inactive until August 3, 1981 when its domicile was
         changed to Nevada from North Carolina. On March 20, 1984 the Company's
         shareholders voted to acquire a company called Energy Dynamics, Inc.
         and to change its name to Energy Dynamics, Inc. On March 20, 1985 this
         proposed acquisition was rescinded because of non-performance and the
         Company changed its name to Heathercliff Group Inc. The Company became
         inactive for several years. Heathercliff Group, Inc. was in real estate
         development, and Herman Rappaport, either directly or through his
         family trust, was a majority shareholder of that company.

         On January 10, 2000, the Company was revived and received its
         Certificate of Revival from the State of Nevada on January 24, 2001. At
         the time of its revival the Company had no assets and no liabilities.
         It had 4,040,592 shares of $0.01 par value stock issued and
         outstanding.

         On October 2, 2000, the Company changed its name to Starmed Group, Inc.

         On July 27, 2001 the Company acquired all of the 469,792 par value
         $0.01 shares of Sierra Medicinals, Inc.(Sierra), an Arizona
         corporation, incorporated March 2, 2000 in an exchange of shares on a
         one for one basis. The Company issued 469,792 par value $0.01 shares.

         Sierra plans to develop, manufacture and sell herbal health products.
         Royalty revenue is from formulas for the herbal health products.

         The Company has been in the development stage since it's revival
         January 10, 2000 and the acquired subsidiary Sierra is also in the
         development stage.

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
         ------------------------------------------

         PRINCIPALS OF CONSOLIDATION
         ---------------------------

         The consolidated financial statements include the financial statements
         of the Company and its wholly-owned subsidiary, Sierra Medicinals, Inc.
         All significant intercompany balances and transactions have been
         eliminated in consolidation.

                                      F-6
<PAGE>

                       STARMED GROUP, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      FOR THE PERIOD FROM INCEPTION (JANUARY 10, 2000) TO DECEMBER 31, 2002
--------------------------------------------------------------------------------

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
         ------------------------------------------

         USE OF ESTIMATES
         ----------------

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

         RECLASSIFICATIONS
         -----------------

         Certain reclassifications have been made in the financial statements of
         prior periods in order to make them comparable with the current
         financial statement presentation.

         FAIR VALUE OF FINANCIAL INSTRUMENTS
         -----------------------------------

         Financial instruments consist principally of cash, payables and accrued
         expenses. The estimated fair value of these instruments approximate
         their carrying value.

         INVENTORY
         ---------

         The Company contracts a third party to process and package its
         formulated herbal products. The Company accounts for its inventory of
         finished goods on a first-in, first-out basis or market, if it should
         be lower.

         INCOME TAXES
         ------------

         Deferred income taxes are reported using the liability method. Deferred
         tax assets are recognized for deductible temporary differences and
         deferred tax liabilities are recognized for taxable temporary
         differences. Temporary differences are the differences between the
         reported amounts of assets and liabilities and their tax bases.

         Deferred tax assets are reduced by a valuation allowance when, in the
         opinion of management, it is more likely than not that some portion or
         all of the deferred tax assets will not be realized. Deferred tax
         assets and liabilities are adjusted for the effects of changes in tax
         laws and rates on the date of enactment.

                                      F-7

<PAGE>

                       STARMED GROUP, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      FOR THE PERIOD FROM INCEPTION (JANUARY 10, 2000) TO DECEMBER 31, 2002
--------------------------------------------------------------------------------

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
         ------------------------------------------

         EQUIPMENT AND FURNITURE
         -----------------------

         Equipment and furniture is stated at cost and depreciated using the
         straight-line method over the estimated useful life of the assets,
         which was seven years. The Company has acquired its computers under a
         capital lease.

         NET LOSS PER SHARE
         ------------------

         In February 1997, the Financial Accounting Standards Board (FASB)
         issued SFAS No. 128 "Earnings Per Share" which requires the Company to
         present basic and diluted earnings per share, for all periods
         presented. The computation of loss per common share (basic and diluted)
         is based on the weighted average number of shares actually outstanding
         during the period. The Company has no common stock equivalents, which
         would dilute earnings per share.

         ADVERTISING COSTS
         -----------------

         The Company expenses advertising costs as incurred. For the years ended
         December 31, 2002 and 2001, the Company incurred advertising expense of
         $29,504 and $3,493, respectively. For the period from inception
         (January 10, 2000) to December 31, 2001, the Company incurred $32,997
         in advertising expense.


3.       LONG TERM DEBT
         --------------

         NOTE PAYABLE
         ------------

         In 2002, the Company had a $400,000 convertible note payable with an
         interest rate at 10% per annum which matured on August 31, 2003.

         On July 23, 2003, the Company entered into an agreement for the
         cancellation of the note payable in the amount of $467,255 including
         accrued interest through July 23, 2003, in exchange for the issuance
         82,300 restricted shares of common stock. The agreement includes a
         guarantee and option whereby the Company guarantees a market price of
         $3.50 per share in the event of the future sale of the shares by the
         related shareholder in the form of either cash or additional shares of
         common stock valued at the bid price on the date of payment. The
         Company's liability associated with the guarantee and option clause of
         the agreement is $288,050. The Company recorded a gain on forgiveness
         of debt as a result of this transaction in the amount of $178,382

                                      F-8

<PAGE>

                       STARMED GROUP, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      FOR THE PERIOD FROM INCEPTION (JANUARY 10, 2000) TO DECEMBER 31, 2002
--------------------------------------------------------------------------------

3.       LONG TERM DEBT (Continued)
         --------------

         NOTE PAYABLE (Continued)
         ------------

         which is included on the consolidated statement of operations for the
         year ended December 31, 2003.

         CAPITAL LEASE
         -------------

         The Company has a five-year lease on computers. The monthly payment is
         $1,563 per month. The Company will acquire the computers for $1 at the
         end of the lease. The Company has calculated the present value of the
         computers assuming a 12% interest rate and has capitalized that value
         which is included in equipment and furniture in the financial
         statements at December 31, 2002 and 2001. The balance of the capital
         lease obligation is $47,297 and $62,203 at December 31, 2002 and 2001,
         respectively.

         The equipment under capital lease is as follows:

                                          DECEMBER 31, 2002    DECEMBER 31, 2001
                                          -----------------    -----------------

         Computers                        $         62,575     $         65,875
         Less: accumulated depreciation            (11,383)              (2,326)
                                          -----------------    -----------------

                                          $         51,192     $         63,549
                                          =================    =================

         Minimum future minimum lease payments under the capital lease as of
         December 31, 2002 are as follows:

                FOR THE YEAR ENDED DECEMBER 31,
                -------------------------------

                              2003                         $          9,862
                              2004                                   21,976
                              2005                                   17,679
                              2006                                    7,367
                                                           -----------------

               Total minimum lease payments                          56,884
               Less: amount representing interest                    (9,587)
                                                           -----------------

         Present value of total minimum lease payments     $         47,297
                                                           =================

                                      F-9

<PAGE>

                       STARMED GROUP, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      FOR THE PERIOD FROM INCEPTION (JANUARY 10, 2000) TO DECEMBER 31, 2002
--------------------------------------------------------------------------------

4.       CAPITAL STOCK
         -------------

         On January 10, 2000, the Company was revived and received its
         Certificate of Revival from the State of Nevada on January 24, 2001. At
         the time of its revival the Company had no assets and no liabilities.
         It had 4,040,592 shares of $0.01 par value stock issued and
         outstanding. The Company valued its 4,040,592 shares of outstanding
         stock at its par value $0.01 per share totaling $40,406 and immediately
         recorded a discount from par value of $40,406 in accordance with
         U.S. generally accepted accounting principles.

         In October 2000 the Company issued 135,000 shares for cash at
         approximately $0.23 per share and issued 300,000 shares as compensation
         for services. The Company valued the services at the same value as
         shares issued for cash, $0.23 per share.

         On July 27, 2001 the Company acquired all of the 469,792 par value
         $0.01 shares of Sierra Medicinals, Inc. (Sierra), an Arizona
         corporation, incorporated March 2, 2000 in an exchange for shares of
         the Company's common stock on a one for one basis.

         Sierra issued 469,792 shares of $0.01 par value stock for services in
         connection with its formation on March 2, 2000. Sierra had no further
         activity until it was acquired by the Company on July 27, 2001. The
         Company issued 469,792 shares to acquire all of the outstanding shares
         of Sierra. Sierra had no assets and no liabilities. The fair market
         value of net assets acquired was zero. The fair market value of the
         shares issued is not determinable since there is no market for the
         Company's stock. The Company has used the common stock par value $0.01
         to value the acquisition, $4,698, and recorded goodwill for that same
         amount.

         In accordance with SFAS 121, "Accounting for the Impairment of
         Long-lived Assets and for Long-lived Assets to be Disposed of", the
         Company reviewed goodwill and determined that the carrying amount of
         the asset may not be recoverable and charged $4,698 to impairment loss
         in the year ended December 31, 2001.

         In June 2002, the Company issued 200,000 warrants with an exercise
         price of $0.10 and 75,000 warrants with an exercise price of $0.01 per
         share. The warrants have a life of 2 years and will expire in June
         2004.

         On September 23, 2002, the Company issued 5,000 common shares for cash
         at $2 per share, totaling $10,000.

         On September 23, 2002, the Company issued 2,000 common shares for
         services rendered at $2 per share, totaling $4,000.

         On October 15, 2002, the Company issued 10,000 common shares for
         services rendered valued at $2 per share, totaling $20,000.


                                      F-10

<PAGE>

                       STARMED GROUP, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      FOR THE PERIOD FROM INCEPTION (JANUARY 10, 2000) TO DECEMBER 31, 2002
--------------------------------------------------------------------------------

5.       INCOME TAXES
         ------------

         Reconciliation of the differences between the statutory tax and the
         effective income tax are as follows:

<TABLE>
<CAPTION>
                                                         DECEMBER 31, 2002     DECEMBER 31, 2001
                                                         -----------------     -----------------
<S>                                                               <C>                <C>
              Federal statutory tax                               (34.0%)            (34.0%)
              State taxes, net of federal tax
              Valuation allowance                                  (5.8%)             (5.8%)
                                                                   39.8%              39.8%
                                                         -----------------     -----------------

               Effective income tax rate                             --                 --
                                                         =================     =================
</TABLE>

         The effective income tax rate differs from the federal statutory rate
         primarily due to permanent timing differences and net operating loss
         carry forwards.

         The Company had available approximately $508,000 and $126,000 of unused
         federal operating loss carry-forwards at December 31, 2002 and 2001
         that may be applied against future taxable income. The State of
         California suspended the use of net operating loss carry-forwards for
         tax year 2002.

         SFAS No. 109 requires a valuation allowance to be recorded when it is
         more likely than not that some or all of the deferred tax assets will
         not be realized. At December 31, 2002 and 2001 a valuation allowance
         for $203,000 and $50,000 was recorded due to uncertainties as to the
         amount of taxable income that would be generated in future years and
         therefore limited the recognition of the income tax benefit as of
         December 31, 2002 and 2001.

                                      F-11

<PAGE>

                       STARMED GROUP, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      FOR THE PERIOD FROM INCEPTION (JANUARY 10, 2000) TO DECEMBER 31, 2002
--------------------------------------------------------------------------------

5.       INCOME TAXES (Continued)
         ------------

         The (benefit) provision for income taxes consists of the following as
         of December 31:

<TABLE>
<CAPTION>
                                                                  2002               2001
                                                             --------------     --------------
<S>                                                          <C>                <C>
         Current:
             Federal                                         $          --      $          --
             State                                                      --                 --
                                                             --------------     --------------

                                                                        --                 --
         Deferred:
             Federal                                              (173,000)           (43,000)
             State                                                 (30,000)            (7,000)
                                                             --------------     --------------

         Total provision (benefit) before valuation
            allowance                                             (203,000)           (50,000)
                                                             --------------     --------------

         Change in valuation allowance                             203,000             50,000
                                                             --------------     --------------
         Total (benefit) provision                           $          --      $          --
                                                             ==============     ==============


         The components of the net deferred income tax asset are as follows as of December 31:

                                                                  2002               2001
                                                             --------------     --------------

         Deferred income tax assets:
             Net operating loss carry forward                $     203,000      $      50,000
                                                             --------------     --------------

                                                                   203,000             50,000
                                                             --------------     --------------

         Deferred income tax asset, net before valuation
            allowance                                              203,000             50,000
         Less: valuation allowance                                (203,000)           (50,000)
                                                             --------------     --------------
         Deferred income tax asset, net                      $          --      $          --
                                                             ==============     ==============
</TABLE>

6.       OFFICE LEASE
         ------------

         The Company leases it offices on a month-to-month basis for $2,950 per
         month.

                                      F-12
<PAGE>

                       STARMED GROUP, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      FOR THE PERIOD FROM INCEPTION (JANUARY 10, 2000) TO DECEMBER 31, 2002
--------------------------------------------------------------------------------

7.       RELATED PARTY TRANSACTIONS
         --------------------------

         The Company owes a director, officer and shareholder $28,425 and $4,612
         in expense reimbursements as of December 31, 2002 and 2001,
         respectively. These balances are included in accrued liabilities on the
         consolidated balance sheet as of December 31, 2002 and 2001.

         During the year 2000 and until the Sierra acquisition on July 27, 2001,
         the Company's office was furnished by a shareholder at no cost to the
         Company. Since there was very minimal activity no value has been
         recorded for this service.

8.       ADJUSTMENTS TO AND RESTATEMENT OF THE YEAR ENDED DECEMBER 31, 2000
         ------------------------------------------------------------------

         The Company made the following adjustments to financial statements
         previously filed from inception January 10, 2000 to December 31, 2000.

         1.       Cash was decreased $30,850 to $25,790 ($5,060) for payments
                  made for expenses that were not recorded at December 31, 2000.

         2.       Accounts payable $2,950 and income tax payable $50 were
                  decreased to zero because all expenses had been paid at
                  December 31, 2000 (see 1. above).

         3.       Common stock at par value $44,350 did not take into account
                  the beginning stock outstanding, the additional stock sold and
                  stock issued for compensation, a total of 4,475,592 shares.
                  The Company adjusted stock issued to 4,475,592 and the par
                  value $44,756 ($406). (See Statement of Shareholders' Equity).

         4.       The Company issued 300,000 shares as compensation for services
                  but had not assigned a value. The Company assigned a value of
                  $0.23 based on the sales price of stock sold in the same
                  month. This resulted in an adjustment of $69,000 (see
                  Statement of Shareholders' Equity).

         5.       As result of the above adjustments the deficit for the period
                  January 10, 2000 to December 31, 2000 was increased $57,560.

                                      F-13

<PAGE>

                       STARMED GROUP, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      FOR THE PERIOD FROM INCEPTION (JANUARY 10, 2000) TO DECEMBER 31, 2002
--------------------------------------------------------------------------------

9.       SUBSEQUENT EVENTS
         -----------------

         CAPITAL STOCK
         -------------

         On September 25, 2003, the Company issued 804,381 common shares for
         services rendered and also as retainer fees valued at $8,044.

         On December 31, 2003, the Company issued 1,000,000 common shares for
         compensation to its officers valued at $10,000. The Company also issued
         87,359 common shares for services rendered valued at $873.

         On January 13, 2004, the Company issued 110,000 common shares for
         services rendered valued at $1,110.

         OFFICE LEASE
         ------------

         The Company entered into a twelve month lease for office space
         commencing on November 1, 2003 and expiring on October 31, 2004. Future
         minimum rental payments at December 31, 2002 under the office lease are
         $59,592.

                                      F-14




<PAGE>

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

The Board of Directors of StarMed Group, Inc. approved the engagement of Mendoza
Berger & Company, LLP ("MBC") on January 4, 2003 to serve as the Company's
independent public auditor and to conduct the audit of the Company's financial
statements for the fiscal year 2002 and accepted the resignation of its
independent public auditor of record, William D. Lindberg, CPA. William D.
Lindberg, CPA resigned as the Registrant's independent public auditor as of
January 4, 2003.  Mr. Lindberg ceased operations in 2003.

The audit report provided by the Registrant's previous auditor, William D.
Lindberg, CPA for the fiscal years ended December 31, 2000 and 2001, did not
contain any adverse opinion or disclaimer of opinion nor was any report
qualified or modified as to uncertainty, audit scope, or accounting principles.
During the Registrant's two most recent fiscal years ending December 31, 2000
and 2001, and the interim period from January 1, 2002 through January 4, 2003,
there have been no past disagreements between the Registrant and William D.
Lindberg, CPA on any matter of accounting principles or practices, financial
statement disclosure or auditing, scope or procedure.

The Board of Directors of the Company approved the engagement of William D.
Lindberg, CPA ("WL") on March 20, 2002 to serve as the Company's independent
public auditor and to conduct the audit of the Company's financial statements
for the fiscal years 2000 and 2001. The decision resulted from the fact that the
previous auditor, Bharti Sudan, CPA, informed the Company that she was resigning
as the Company's auditor for reasons unrelated to the Company.

The audit reports provided by the Company's previous auditor, Bharti Sudan, CPA,
for the previous fiscal years did not contain any adverse opinion or disclaimer
of opinion nor was any report modified as to uncertainty, audit scope or
accounting principles. There have been no past disagreements between the Company
and Bharti Sudan, CPA, on any matter of accounting principles or practices,
financial statement disclosure or auditing, scope or procedure prior to the
engagement of WL.

ITEM 8-A. CONTROLS AND PROCEDURES
          -----------------------

The Company has disclosure controls and procedures (as defined in Rules 13a-14
and 15d-14 under the Securities Exchange Act of 1934, as amended) to ensure that
material information contained in its filings with the Securities and Exchange
Commission is recorded, processed, summarized and reported on a timely and
accurate basis. The Company's principal executive officer and principal
financial officer have reviewed and evaluated the Company's disclosure controls
and procedures within 90 days prior to the filing date of this report. Based on
such evaluation, the Company's principal executive officer and principal
financial officer have concluded that the Company's disclosure controls and
procedures are effective at ensuring that material information is recorded,
processed, summarized and reported on a timely and accurate basis in the
Company's filings with the Securities and Exchange Commission. Since such
evaluation there have not been any significant changes in the Company's internal
controls, or in other factors that could significantly affect these control.

                                        13




<PAGE>

PART III

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

         The following individuals are officers and/or directors of the Company:

<TABLE>
<CAPTION>

Name and Age                        Current Position                             Director Since            Officer Since
------------                        ----------------                             --------------            -------------
<S>                         <C>     <C>                                          <C>                       <C>
Herman H. Rappaport         87      President, CEO, Director                     December 18, 1969         December 18, 1969

Dr. Steven L. Rosenblatt    57      Exececutive Vice President and Director      February 23, 2000         February 25, 2000

Dr. Hector Rodriguez        60      Vice President and Director                  February 23, 2000         February 23, 2000

Dr. Avner Manzoor-Mandel    55      Vice President and Director                  February 23, 2000         February 23, 2000

Dr. Joel Feinstein          55      Vice President and Director                  February 23, 2000         February 23, 2000

Dr. Semour Levine           61      Director                                     June 18, 2002
</TABLE>

         Each director's term will expire on next annual meeting. The date of
the next annual meeting of the shareholders was set by the Board of Directors to
be December 16, 2004 to vote on the length of the directors and executive
officers' terms. Directors are not compensated for their services.

Herman H. Rappaport, B.Ch.E., President, Chief Executive Officer, Director

         Mr. Rappaport received his degree from the University of the City of
New York in 1939. During the last seven years Mr. Rappaport has studied medical
systems and products in Russia, China as well as in the United States including
two winters in St. Petersburg and Moscow as well as trips to Beijing and
Shanghai to study natural medicine.

         Mr. Rappaport served as a member of two Advisory Boards on Foreign
Trade for the United States Department of Commerce from 1983 to 1996 and prior
to that time, served as a member for two terms on the Mass Transportation
Commission of the United States Department of Transportation.

         Mr. Rappaport was the Founder and President of the public, non-profit
Press, Education, Government Foundation for improved communications between the
media and government and hosted conferences at the Annenberg School of
Communications, University of Southern California on alternative energy, air
rights and others. He also served on the Economic Development Board of the City
of Los Angeles.

         Mr. Rappaport's business experience over the past 5 years consisted of
organizing and managing StarMed Group and Sierra Medicinals, working on the
establishment of formulas, and providing for the testing and marketing of the
same, also in preparing the design of the labels and brochures, and in general
running the office. Mr. Rappaport was also instrumental in establishing a group
of 13 medical doctors including medical authorities in ophthalmology,
gastroenterology, and other medical specialties, plus advisors in U.S.
government, Chinese government, and Latin America medicine, whose advise would
be used for the benefit of the Company. Mr. Rappaport also arranged for travel
to China with the medicinal director, August Reader III, and Helen Burroughs, an
expert in Chinese foreign trade. In Beijing, the group met with Ambassador Li
Dayou's former representatives on trade with the United States, Tao Wuxin and Zu
Ji. Mr. Rappaport was and continues to be responsible for all the Company's
business efforts, from its start, providing office facilities until September,
2001, directing production, to arranging for marketing.

                                        14

<PAGE>

Dr. Steven L. Rosenblatt, M.D., Ph.D., L.Ac. - Executive Vice President,
Director

         Dr. Rosenblatt holds a Ph.D, from the University of California at Los
Angeles, an M.D. from the School of Medicine, St. George University. He is a
founder and past president of the California Acupuncture College, founder and
director of the UCLA Acupuncture Clinic of UCLA School of Medicine. Dr.
Rosenblatt is a former director of the Complementary Medicine Program of
Cedars-Sinai Medical Center and is an examiner for the State of California
Acupuncture Board.

         Dr. Rosenblatt has conducted and been a participant of numerous medical
conferences of the subject of herbal medicines and has been in private practice
in Los Angeles for ten years and one of the leaders in the field of acupuncture
and oriental medicine for over thirty years.

Dr. Hector Rodriguez, M.D., Ph.D. Vice President, Director

         Dr. Rodriguez received an M.D. from the Universidad Nacional of Bogota,
Colombia and a Ph.D. from University of California at San Francisco with post
graduate work at Washington University School of Medicine, St. Louis, Mo. His
certifications include The American Board of Internal Medicine, Nephrology
Subspecialty and is licensed in Illinois, Missouri, and California where he has
practiced for the past twenty three years.

Dr. Avner Manzoor-Mandel, M.D. Vice President, Director

         Dr. Manzoor-Mandel holds medical degrees from Pahlavi University and
the University of Maryland. He is a member of the American College of Cosmetic
Surgery and the College of Obstetrics and Gynecology. For the past twenty years
he has been in private practice in Los Angeles.

Dr. Joel Feinstein, M.D., F.A.C.S., Vice President, Director

         Dr. Feinstein holds degrees from Penn State University, M.S. in
Physiology, and M.D. from Downstate Medical Center, Brooklyn, N.Y. Dr. Feinstein
is Gastroenterologist Consultant to Cedars-Sinai Medical Center and a Consultant
on Colon Cancer as well as Associate Clinical Professor of Medicine at UCLA. and
a member of the Education Committee, American Cancer Society, Los Angeles. Dr.
Feinstein has appeared as a medical authority on numerous conferences including
that of moderator at the World Congress of Gastroenterology. Dr. Joel Feinstein
has been a consultant to the Company since its inception and a director since
its formal organization. Dr. Feinstein is a practicing physician and specialist
in gastroenterology.

         Dr. Semour Levine, Director, an advisor on Rheumatology. Dr. Levine is
in private practice of Rheumatology and is the Clinical Chief of Rheumatology at
Cedars-Sinai Medical Center. Dr. Levine graduated from and completed his
residency at the John Hopkins University. Dr. Levine is a member of the
President's Task Force on Health Care Reform, founding member and past president
of Managed Care Providers at Cedars-Sinai Care in Los Angeles. His professional
affiliations include Diplomate American Board of Internal Medicines, American
Board of Rheumatology and American Medical Association.

                                        15




<PAGE>

ITEM 10. EXECUTIVE COMPENSATION

<TABLE>
                                    Summary Compensation Table
<CAPTION>

Name and                      Year    Salary    Bonus     Other    Restricted    Options   LTIF   Other
Position                                              Compensation  Stock (1)

<S>                           <C>     <C>        <C>       <C>       <C>           <C>     <C>    <C>
Herman Rappaport *            2003    18,000     -0-       -0-       500,000       -0-
President & CEO               2002    40,500**   -0-       -0-         -0-         -0-
                              2001    18,000     -0-       -0-         -0-         -0-

Dr. Steven Rosenblatt         2003    18,000     -0-       -0-       500,000       -0-
Executive Vice President      2002    40,500**   -0-       -0-         -0-         -0-
                              2001    13,500     -0-       -0-         -0-         -0-

Dr. Hector Rodriguez          2003      -0-      -0-       -0-        22,453       -0-
Vice President                2002      -0-      -0-       -0-         -0-         -0-
                              2001               -0-       -0-         -0-         -0-

Dr. Joel Feinstein            2003      -0-      -0-       -0-        22,453       -0-
Vice President                2002      -0-      -0-       -0-         -0-         -0-
                              2001               -0-       -0-         -0-         -0-

Dr. Avner Manzoor-Mandel      2003      -0-      -0-       -0-        22,453       -0-
Vice President                2002      -0-      -0-       -0-         -0-         -0-
                              2001               -0-       -0-         -0-         -0-
</TABLE>

*    Additionally, Herman Rappaport holds 2,727,000 shares of common stock in
     the Rappaport Family Trust which was issued in 1987 and prior to the
     issuance of the 500,000 shares issued to Herman Rappaport and noted above.
**   Includes $13,500 accrued and deferred salary which has not been paid.

(1)  The value of the restricted stock issued for the services provided was
     $0.01 (par value) per share.

         There is no plan to compensate directors for their services as
directors of the Company. Officers are not paid any cash compensation excepting
for a draw of $7,500 per month starting January 1, 2004 for services by Herman
Rappaport and Dr. Steven Rosenblatt. Officers have received stock in lieu of
cash for their work in such capacities.

The following table sets forth for each of the named executives certain
information concerning stock and stock options granted during fiscal 2003.

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
Name and Position      Number of Securities  % of Total Options
                           Underlying            Granted to      Exercise Price   Expiration
                            Options               Employees         per Share        Date
----------------------------------------------------------------------------------------------
<S>                           <C>                     <C>             <C>            <C>
Herman H. Rappaport           0                       0               $0             N/A
Dr. Steven Rosenblatt         0                       0               $0             N/A
Dr. Hector Rodriguez          0                       0               $0             N/A
Dr. Joel Feinstein            0                       0               $0             N/A
Dr. Avner Manzoor-Mandel      0                       0               $0             N/A
</TABLE>

The Company does not have at this time an audit or compensation committees. The
Company has not adopted yet a code of ethics, but plans to do so on its next
meeting of its board of directors.

                                        16




<PAGE> I NEED THIS INFORMATION AS OF 12-31-2002

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information as of December 31, 2002 with
respect to the beneficial ownership (as such term is defined under Section 13
(d) of the Securities Act of 1934 as amended of the common stock by (i) each
person who is the beneficial owner of more than 5% of the common stock
outstanding as of such date, (ii) each director of the Company, (iii) the named
officers, and (iv) all executive officers of the Company as a group.

Name, Position and Address of            Amount and Nature of         Percent of
Beneficial Owner                       Beneficial Ownership (1)         Class

Herman H. Rappaport (2) (3)                  3,320,489                  66.91%
President, CEO and Director

Dr. Steven L. Rosenblatt                       225,000                   4.53%
Executive Vice-President
and Director
11600 Wilshire Blvd, Suite 412
Los Angeles, Ca. 90025.

Dr. Hector Rodriguez (2)                        67,547                  1.36%
Vice-President and Director

Avner Manzoor-Mandel(2)                         67,547                  1.36%
Vice-President and Director

Dr. Joel Feinstein (2)                          67,547                  1.36%
Vice-President and Director

All Other Officers and Directors             3,748,130                  75.53%
 as a group (5)
_____________________
*   Less than 1%

(1)      Except as otherwise indicated, the Company believes that the beneficial
         owners of Common Stock listed below, based on information furnished by
         such owners, have sole investment and voting power with respect to such
         shares, subject to community property laws where applicable. Beneficial
         ownership is determined in accordance with the rules of the Securities
         and Exchange Commission and generally includes voting or investment
         power with respect to securities. Shares of Common Stock subject to
         options or warrants currently exercisable, or exercisable within 60
         days, are deemed outstanding for purposes of computing the percentage
         of the person holding such options or warrants, but are not deemed
         outstanding for purposes of computing the percentage of any other
         person.

(2)      C/o Company's address: 2029 Century Park East, Suite 1112, Los Angeles,
         California 90067.

(3)      2,838,089 shares are held by Herman and Rhoda Rappaport Living Trust,
         Susan Harris Trustee, are deemed to be beneficially owned by Mr.
         Rappaport with respect to the voting and investment power of such
         shares.

         There are no outstanding options. The number of shares of
         common stock outstanding as of December 31, 2002 was 4,962,384.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Initial Investment in the Company by Herman H. Rappaport

                                        17




<PAGE>

         Herman H. Rappaport purchased the shares now in the possession of the
Rappaport Family Trusts and totaling 2,727,000 shares of Heathercliff Group,
Inc, (originally Port Star Industries) for the sum of $200,000 in 1969. In
fiscal year 2000, the officers and directors of the Company, Messrs. Rodriguez,
Manzoor-Mandel and Feinstein each purchased 45,000 shares of the Company for
$10,283 (for a total amount of $30,850 for a total of 135,000 shares).

         The shares were issued without registration in reliance upon the
exemption provided by Section 4(2) of the Securities Act.

         Shares for services

         On March 28, 2001 the Board of Directors authorized the issuance of a
total of 300,000 shares of common stock for services performed and funds
advanced during the reorganizational process of the Company. These shares were
issued to the following named persons.

Herman H. Rappaport                                  150,000 shares
Dr. Steven L. Rosenblatt                             150,000 shares

         In fiscal 2003, the Company issued 500,000 shares of its common stock
to each of Messrs. Rappaport and Rosenblatt for their respective services to the
Company. The Company also issued in the same fiscal year 22,453 shares of its
common stock to each of Messrs. Rodriguez, Feinstein and Manzoor-Mandel for
their respective services to the Company. The shares were valued at $0.01 per
share.

         The shares were issued without registration in reliance upon the
exemption provided by Section 4(2) of the Securities Act.

         Shares for acquisition

         On July 27, 2001 to reflect the merger of Sierra Medicinals, Inc., a
wholly owned subsidiary of StarMed Group Inc., all of 469,792 outstanding shares
of Sierra Medicinals, Inc. were exchanged in a merger with StarMed Group Inc., a
Nevada corporation, on a one for one basis. The number of shares outstanding of
StarMed Group, Inc. is 4,945,384 as of December 31, 2001. Following the merger,
the Company has a wholly-owned subsidiary of Sierra Medicinals, Inc., an Arizona
corporation. The shares in the acquisition were issued without registration in
reliance upon the exemption provided by Section 4(2) of the Securities Act. The
shares were issued in a private transaction not involving a public offering to a
total of 23 shareholders, all of which except for 6 persons, were accredited
investors.

         Shareholder Loans

         The Company owes a director, officer and shareholder $28,425 and $0 in
expense reimbursements as of December 31, 2002 and 2001, respectively. These
balances are included in accrued liabilities on the consolidated balance sheet
as of December 31, 2002 and 2001.

         During the year 2000 and until the Sierra acquisition on July 27, 2001,
the Company's office was furnished by a shareholder at no cost to the Company.
Since there was very minimal activity no value has been recorded for this
service.

                                        18

<PAGE>

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibits.
                  ---------

         The following exhibits of the Company are included herein.

Exhibit Number      Description
--------------      -----------

2.1      Certificate of Merger of StarMed Group, Inc.*

3.1      Articles of Incorporation of Port Star Industries, Inc.*

3.2      Amendment to the Articles of Incorporation of Port Star, Industries,
         Inc.*

3.3      Amendment to the Articles of Incorporation of Energy Dynamics, Inc.*

3.4      Amendment to the Articles of Incorporation of StarMed, Inc. (Arizona)*

3.5      Certificate of Revival of StarMed Group, Inc. (Nevada)*

3.6      Certificate of Reinstatement of Heathercliff Group, Inc.*

3.7      Bylaws*

10.1     Loan Agreement*

10.2     Memorandum of Understanding with Natural Health Trends Corporation*

10.3     License Agreement with L. Perrigo Company.*

10.4     Customer Interaction Service Agreement*

22.      Subsidiaries of the Registrant

31.      CERTIFICATION OF CHIEF EXECUTIVE OFFICER
         AND CHIEF FINANCIAL OFFICER PURSUANT
         TO SECTION 302 OF THE SARBANES-OXLEY ACT

32.      CERTIFICATION OF CHIEF EXECUTIVE OFFICER
         AND CHIEF FINANCIAL OFFICER PURSUANT TO
         SECTION 906 OF THE SARBANES-OXLEY ACT

---------------------
* Previously filed with the Securities and Exchange Commission as exhibits to
the registration statement on Form 10-SB and subsequent amendments and as
exhibits to the annual report on Form 10-KSB.

         (b)      Reports on Form 8-K
                  -------------------

                  Reports on Form 8-K were filed in fiscal year ended December
                  31, 2002.

ITEM 14. PRINCIPAL FEES AND SERVICES.

         Set forth below are fees paid to the Company's independent accountants
         for the past two years for the professional services performed for the
         Company.

         Audit Fees: During 2002 and 2001 the Company paid William D. Lindberg
         and Mendoza Berger & Company LLP a total of $13,260 for professional
         services rendered in connection with performance of our independent
         audits for the years ending December 31, 2002 and 2001, respectively.

         Tax Fees: None

                                        19




<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized on June 29, 2004.

                               STARMED GROUP, INC.

                               By:  /s/ Herman Rappaport
                                    ------------------------------------
                                    Herman Rappaport
                                    President, CEO and Director

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

<TABLE>
<CAPTION>
<S>                             <C>                                             <C>
/s/ Herman Rappaport            President, CEO and Director                     Date: 6/29/04
----------------------------    (principal executive officer)
    Herman Rappaport

/s/ Dr. Steven L. Rosenblatt    Executive Vice- President and Director          Date: 6/29/04
----------------------------
    Dr. Steven L. Rosenblatt

/s/ Dr. Hector Rodriguez        Vice President and Director                     Date: 6/29/04
----------------------------
    Dr. Hector Rodriguez

/s/ Dr. Avner Manzoor-Mandel    Vice President and Director                     Date: 6/29/04
----------------------------
    Dr. Avner Manzoor-Mandel

/s/ Dr. Joel Feinstein          Vice President and Director                     Date: 6/29/04
----------------------------
    Dr. Joel Feinstein

/s/ Dr. Seymour Levine          Director                                        Date: 6/29/04
----------------------------
    Dr. Seymour Levine
</TABLE>

                                               20