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

                                   FORM 10-KSB

(Mark One)

[X]  ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934

     For the fiscal year ended December 31, 2003

[ ]  TRANSITION  REPORT  PURSUANT  TO SECTION  13 OR 15(d) OF THE  SECURITIES
     EXCHANGE ACT OF 1934

     For the transition period from to______ - _______

                         Commission file number 0-26257

                         ACCIDENT PREVENTION PLUS, INC.

       (Exact name of small business issuer as specified in its charter)

            NEVADA                                            11-3461611
(State or other jurisdiction of                            (I.R.S. Employer
incorporation of organization)                             Identification No.)

                               21 N. Hepburn Ave.
                                    Suites 21
                             Jupiter, Florida 33438

                    (Address of Principal Executive Offices)

                                 (561) 741-4450
                           (Issuer's telephone number)

                           9091 N. Military Trail, #12
                          Palm Beach Gardens, FL 33418

              (Former name, former address and former fiscal year,
                          if changed since last report)

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

Check here if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this Form, and no disclosure will be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

State the issuer's revenues for its more recent fiscal year (ending December 31,
2003): $49,376.

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked prices of such common equity, as of
January 31, 2004: $

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the most practicable date:

Class                                      Outstanding as of April 11, 2004
Common Stock, $.001 par value                         12,748,354


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PART I                                                                     PAGE

ITEM 1.  DESCRIPTION OF BUSINESS                                              3

ITEM 2.  PROPERTIES                                                          10

ITEM 3.  LEGAL PROCEEDINGS                                                   10

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                 11

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
              STOCKHOLDER MATTERS                                            11

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
              CONDITION AND RESULTS OF OPERATIONS                            14

ITEM 7.  FINANCIAL STATEMENTS                                                17

              CONSOLIDATED BALANCE SHEET                                     F-3

              CONSOLIDATED STATEMENTS OF OPERATIONS AND
                COMPREHENSIVE LOSS                                           F-4

              CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY       F-5 - F-6

              CONSOLIDATED STATEMENTS OF CASH FLOWS                          F-7

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     F-8

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS OF
              ACCOUNTING AND FINANCIAL DISCLOSURE                            18

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
              CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a)
              OF THE EXCHANGE ACT                                            18

ITEM 10  .EXECUTIVE COMPENSATION                                             19

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
              AND MANAGEMENT                                                 21

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                      22

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K                                    23

SIGNATURES                                                                   24

<PAGE>


ITEM 1.  DESCRIPTION OF BUSINESS

FORMATION OF THE COMPANY AND APP LLC

         Accident Prevention Plus, Inc. (the "Company"), which currently trades
on the Over-the-Counter Bulletin Board under the symbol "ACPL", was incorporated
under the laws of the State of Nevada on October 28, 1998 to become the holding
company of Accident Prevention Plus, LLC, a limited liability company ("APP
LLC") and International Purchasing Services, Inc., a New York corporation
("IPS-NY"). Since the inception of APP LLC in 1993, APP LLC has been engaged in
the design, marketing and distribution of onboard recording systems and fuel
monitoring systems for commercial and fleet vehicles.

         Effective as of October 28, 1998, the Company entered into an Exchange
Agreement (the "Exchange Agreement") with all of the equity members of APP LLC
pursuant to which it was agreed that the equity members would exchange their
interests in APP LLC for shares of common stock of the Company and the Company
would issue to the equity members shares of its common stock. As of October 28,
1998, the Company issued 14,205,970 shares of its restricted common stock to the
equity members of APP LLC in accordance with the terms and provisions of the
Exchange Agreement.

         In accordance with the terms and provisions of the Exchange Agreement
and the Plan of Reorganization, the Company acts as the holding company of APP
LLC and IPS-NY. As used in this Annual Report, the term "Company" will include
the subsidiaries of the Company unless otherwise individually referenced.

         ACQUISITION OF INTERNATIONAL PURCHASING SERVICES, INC.

         International Purchasing Services, Inc. ("IPS-NY") was incorporated
under the laws of the State of New York on March 3, 1993 to provide general
purchasing services for other companies, and is a wholly-owned subsidiary of the
Company. Effective as of October 28, 1998, the Company acquired IPS-NY by
entering into an Agreement and Plan of Reorganization ("Plan of Reorganization")
with IPS-NY pursuant to which it was agreed that (i) the sole shareholder of
IPS-NY would transfer all of the issued and outstanding shares of IPS-NY to the
Company in exchange for shares of common stock of the Company, and (ii) the
Company would issue to the sole shareholder of IPS-NY 2,975,000 shares of its
common stock. As of October 28, 1998, the Company issued 2,975,000 shares of its
restricted Common Stock to the sole shareholder of IPS-NY.

BUSINESS OPERATIONS

         GENERAL

         Accident Prevention Plus, Inc. is a technology company which designs,
manufactures and distributes on board recorders and specialty interface
equipment for all types of vehicles. The Company specializes in the safety,
economic enhancement of and security for vehicles, drivers and cargo.

         During the prior fiscal years, the Company focused on the research,
development and design of the TSTI Recorder, which will be available for all
vehicles at a much lower cost.

         During fiscal year 2003, management of the Company deemed it imperative
that the business operations of the Company be directed and focused on the
distribution, marketing and sales channels for its products. New management was
put in place to drive the revenue side of the business and as of the date of
this Annual Report, the Company derives its revenues principally from the
marketing and sale of its onboard recording systems, and other related products
to customers generally in the fleet management and driver training industries.
Additional revenues may be generated by the Company through the implementation
of maintenance contracts related to the APP On Board recording products.


                                       3
<PAGE>


         During fiscal year ended December 31, 2003, sales of the APP On Board
Recording Systems products to the Company's customers accounted for
approximately 100% of total revenues. For the fiscal year ended December 31,
2003, the Company had two unrelated customers that accounted for approximately
95% of total revenues.

         The Company intends to concentrate its business operations on the
distribution, marketing and sales of its APP On Board Recording Systems and
related products in (i) the trucking and commercial fleet and driver training
industries nationwide and worldwide; (ii) related transportation industries
nationwide and worldwide; and (iii) all vehicle owners. Management of the
Company believes that sales of the APP On Board Recording Systems and related
products to its customers in the fleet management and driver training industries
will continue to be an important line of business for the Company for the next
several years. See "Item 1.

Description of Business - Business Operations - Contractual Relations."

OPERATION

Some of the operations features provided by the Company's products are:

         Reduce fuel and oil consumption,
         Monitor driver's performance
         Identify problem and inefficient units;
         Identify poor fuel performance vehicles as compared to fleet average,
         Reduce costly downtime, Save on reduced maintenance costs,

         Maintenance histories and repair summaries for each vehicle, Transfer
         information to your computer without timely data entering, Eliminate
         time and paperwork, Reduce liability by inspiring driver safety,
         Provide accountability, Improve productivity of drivers, Increase the
         efficient and life of fleet, Simplistic to operate with virtually no
         driver interaction, Fully programmable and able to be upgraded, Access
         data for more strategic decision making, Produce central control
         without sacrificing local data access, Eliminate non-authorized usage
         and theft, and Promote driver safety and road awareness.

REPORTING

Some of the reporting features provided by the Company's products are:

         Real Time warnings while driving. Analysis of accidents or near misses,
         Appropriate training of drivers, Evaluation and management of drivers'
         performance, Evaluation and management of vehicle usage, Evaluation and
         management of vehicle maintenance, Pinpoint maintenance problems, and
         Create custom report and graphs and overall fleets' performance or by
         specific vehicle or driver.

         APP On Board Recording Systems and Related Products


                                       4
<PAGE>

         ONBOARD RECORDING SYSTEMS. The Company designs, develops, markets and
sells a comprehensive line of onboard computer recording systems, the APP1000,
the APP2000 and the APP3000 and the Eye Q System (hereinafter, collectively
called the "APP On Board Recording Systems"). The APP On Board Recording Systems
Products include a dual axis accelerometer designed and developed by the Company
to measure the sway of a vehicle, and onboard systems that monitor and record
data for accident prevention, driver training and evaluation, and maintenance
operations for fleet vehicles. The basic unit hardware is the same for the three
series, although the APP2000 and APP3000 series have upgrades and will perform
more functions to meet the requirements of the customer. The APP On Board
Recording Systems were designed to (I) promote safe and efficient driving
practices, (ii) provide security for unauthorized operational use of a vehicle;
(iii) automatically monitor and record vehicle operational data for accident
prevention, driver training, driver evaluation and maintenance purposes; and
(iv) reduce the overall costs of maintaining and operating fleet vehicles. Each
of the APP On Board Recording Systems onboard recording systems are fully
programmable data recorder systems that include a data recorder for each fleet
vehicle, a Smart-card for each driver, a central card-reader with management
computer software which is compatible with Microsoft Windows.

         The APP On Board Recording Systems are often dubbed "black boxes" after
the ones used in large aircraft. The APP On Board Recording Systems units can be
custom-designed to specific requirements by using individual operating
parameters and are upgradable to meet further needs of fleet management
companies as they adapt to a changing world. The APP On Board Recording Systems
have the ability to monitor, record and retrieve numerous types of data
depending on the individual customer's specific requirements. Some examples of
the analyzed categories for the transportation industry include, but are not
limited to, (I) driving chronologies (maximum speed, deceleration, idling, last
20 overspeedings, brake occurrences and intensities), (ii) trip chronologies
(driver identification, date and time of vehicle usage, total driving time and
distance, dangerous braking occurrences), and (iii) vehicular chronologies
(distance/speed, engine rpm, lights, water temperature, oil temperature, air
pressure, vehicular sway). This data is permanently recorded thus often
providing a record of critical information.

         SPECIFIC FEATURES. Management believes that certain features of the APP
On Board Recording Systems onboard recording systems provide many cost-effective
benefits including reduced fuel consumption, reduction in the occurrence of
accidents, better preventative maintenance, reduced over-speeding by drivers,
reduced theft, an effective driver training tool, and the potential for reduced
insurance rates.

         Safety/Accident Prevention. Management considers the APP On Board
Recording Systems to be pro-active management tools designed to promote safe and
efficient driving practices. The APP On Board Recording Systems constantly
monitors adherence by drivers to established company driving standards, such as
acceleration, deceleration, engine rpm and speed. The APP On Board Recording
Systems also assists drivers on the road by warning them when they may be
violating established company safety standards. It also records the parameters
of actual vehicle operation for appropriate use in driver training programs.
Furthermore, the APP On Board Recording Systems can educate drivers to adapt
their driving patterns to road conditions and environment and provide a powerful
tool for performance evaluation of both driver and vehicle. Management believes
that not only does the APP On Board Recording Systems help in preventing
accidents, but it also is a beneficial tool when accidents do occur.

         Some of the safety features provided by the Company's products are:

         Decrease speeding and improve driving habits, Alert drivers when limits
         are exceeded using an audible alarm, Discourage over-braking and fast
         stops, Schedule vehicles for regular maintenance based on accurate and
         correct information, Educate drivers to adapt their driving patterns to
         road conditions and their environment, Provide a powerful tool for
         performance evaluation of drivers and vehicles, Reduce accident rates,
         Improve company's image both on and off the road, and Automatically
         record data during an accident providing fleet managers with "BLACK
         BOX" documentation.


                                       5
<PAGE>


         As of the date of this Annual Report, the Company has developed a range
of "MS Windows Compatible Software", which allows data analysis in both the
driver evaluation and training industry and the general fleet management fields
of application. The APP On Board Recording Systems automatically records vehicle
operational data concurrent with sudden accelerations and decelerations, or
collisions. The APP On Board Recording Systems are designed to ensure that the
data is secure from power failure and tampering. Such unbiased recorded data may
be used for later analysis, such as in accident reports, or to confirm or refute
claims that may be made against a company or its drivers. All data recorded from
the APP On Board Recording Systems can be printed from an office printer in a
variety of standard or customized reports or graphs. These reports can be used
in driver education programs, maintenance evaluation of vehicles, and for other
general fleet management programs.

         Security. The APP On Board Recording Systems provides security for
vehicles and for vehicle data. With use of an APP+Series, operational access to
company vehicles can be carefully, quickly and conveniently controlled by the
fleet manager.

         Cost-Effective Use. Management believes that by constantly monitoring
fleet vehicles, the APP On Board Recording Systems permits a company to more
accurately schedule preventive maintenance, increase fuel economy, and extend
overall vehicle service life. System data feedback to drivers should encourage
more careful driving habits that will serve to reduce the frequency of repairs
and replacements, as well as the occurrence accidents. Use of excessive
quantities of fuel or oil, high maintenance vehicles and other dangerous vehicle
conditions can also be identified before they become hazardous to the company's
financial status or to the general public.

         MANUFACTURING

         The APP On Board Recording Systems products were primarily manufactured
by Nexus Corporation, located in Vermont ("Nexus").

         PRODUCT RESEARCH/DEVELOPMENT AND CURRENT STATUS

         APP On Board Recording Systems. The APP On Board Recording Systems
products have been designed to meet the requirements for the driver evaluation
type of application and for the general vehicle management system. During prior
fiscal years, product, research and development was designed to expand the
Company's potential market by (i) creating and ensuring compatibility between
the APP On Board Recording Systems products and communication interface busses,
(ii) developing specific sensors, (iii) developing an interface for real time
communication and global positioning systems, and (iv) developing products
specifically for the needs and requirements of driver training schools. As of
the date of this Annual Report, the Company has upgraded its APP On Board
Recording Systems products to fill the increased and enhanced capability demands
from past and future clients.

         As of the date of this Annual Report, the Company has finalized the
APP3000 system. The APP3000 system has been designed to operate properly in
countries where temperature, dust and rough conditions are the factors that
could adversely affect the operating mode of such a system.

         As of the date of this Annual Report, the Company has installed the APP
On Board Recording Systems units in over 172 vehicles pursuant to an agreement
with AFT-IFTM, the largest driver training institute in Europe ("AFT-IFTM").
AFT-IFTM, which generally promotes the driver training standards for the
European Economic Community, has subsequently trained over 30,000 drivers using
the APP On Board Recording Systems products in years 2000 and 2001. Management
believes that the Company's relationship with AFT-IFTM will enhance the
marketability of its products in other countries. See "Item 1. Description of
Business - Business Operations - Contractual Relations."


                                       6
<PAGE>

         As of the date of this Annual Report, the Company has finalized the
development of a system that allows the customers who are now employing a
satellite communication system to have instant access to any vehicular
occurrences including "hard braking" events. The term "hard braking occurrence"
refers to any near miss situations or a road accident. By installing this
product, the customer is sent a message indicating that a "BLACK BOX" situation
has occurred. The customer then has the ability to contact the vehicle to
inquire what occurred, or down load the information to see exactly how the
vehicle was operated 50 seconds prior to the braking/accident and 10 seconds
after the occurrence. This will allow the customer to know exactly how the
vehicle was operated. (SPEED, RPM, ACCELERATION AND DECELERATION).

         This unit works in conjunction with the AP+ recorder to allow the
customer all the information it records. As a stand-alone unit it will record
"BLACK BOX" features that may be reviewed later. The unit constantly records, no
matter how many events occur. This allows the customer's management team to see
exactly how the vehicle is being operated on a regular basis. So if the customer
received three messages in a day or any given time period, they are aware that
something is affecting the driver. This could by anything from a problem with
the vehicle, weather conditions or operator negligence.

         CUSTOMERS AND MARKETING

         MARKETING STRATEGY. The Company intends to seek to capture market
niches in the fields of transportation. Management believes that within the
transportation industry, the APP On Board Recording Systems products with Smart
card technology may be utilized in emergency vehicles for police, fire an
ambulance departments. In addition, the APP On Board Recording Systems products
with the Smart card technology may be used by a variety of businesses or
governmental agencies to create and track drivers' licenses, or to create
passports, medical cards or insurance cards, which would provide instant access
to critical information.

         The Company intends to market the APP On Board Recording Systems and
related products through the use of distribution agreements, joint ventures,
direct sales and independent commissioned representatives. To aid in the
marketing of the APP On Board Recording Systems and related products, the
Company intends to utilize several marketing approaches including advertising in
trade publications, pres releases, Company sponsored training seminars, speaking
engagements and advertising promotional tools, such as CD-ROMs, catalogs and
participation in trade shows. The Company intends to make its operational
software available in various languages to meet the needs of the particular
markets. The Company's services and products are also electronically advertised
on the Company's web page at www.applus.com. The Company will continue to
emphasize attendance at trade shows, Company sponsored training seminars, press
releases, speaking engagements and independent third party distribution
agreements in its marketing efforts. The Company's international sales
represented approximately 100% of the Company's total revenues in fiscal year
200 (excluding the continent of North American). Management intends to direct a
significant portion of its marketing efforts toward further market penetration
in international markets, with its primary emphasis upon Europe, Africa and
Australia.

         APP has dramatically extended its potential customer base with the
agreements signed for representation in Europe and North America. APP is in
discussions with representatives in the Pacific Rim countries as well and hopes
to have agreements in place within the next six months. In addition to
increasing the Company's sales, this will allow APP to seek off shore
manufacturing to lower costs per unit and increase profitability. With the
signing of the sales agreements APP is able to concentrate efforts on sales in
Mexico, united States and Canada from the home office in Florida while APP's
partners focus abroad.

         APP has just completed a six-month study run by the American Trucking
Association, Transport Canada and Federal Highway Motor Carriers Association at
Challenger Motor Freight of Ontario, Canada. The tests showed that the APP 3000
recorder was 99.9999% accurate. Due to this tremendous showing, the Company is
awaiting contracts for Transport Canada to install the recorders in several
companies in Canada. In addition, APP expects the American Trucking Association
to run the same tests in the United States giving APP greater visibility at
home. And, logically, help generate a domestic customer base that may generate
significant revenues.

         The number of commercial vehicles in the USA exceeds forty-nine million
and there is close to three billion miles traveled by commercial trucks each
year. Any company that requires fleet management, and fuel consumption as a
large part of its budget, is a potential customer for APP.


                                       7
<PAGE>


         APP will be working with insurance companies to get premium reductions
for customers that install our units. Management believes that a ten to twenty
percent reduction may be in line. The Company's aim is to show that APP
recorders save lives by the use of seat belts and other features therefore
deserve the premium reduction.

         With the development of our new "Specialty Interface," APP has opened a
market area of over 280,000 trucks in the United States alone. When adding
Canada and Europe the customer and revenue potential is enormous.

         DISTRIBUTION AGREEMENTS

         In September of 2002 the Company entered into a distribution agreement
with ATSR Europe. This agreement was singed for the sole purpose of furthering
the ongoing and constant sales channels of the APP On Board Recorder throughout
Europe and expanding this market place while giving the Company the
representation it requires. It is essential that our Company has constant
representation in Europe due to their advancement in this marketplace through
commercial, private sector and governmental mandates requiring our system. This
Agreement will allow Accident Prevention to be one of the worldwide leaders in
this industry. ATSR Europe is made up a group of gentlemen, which have a long
history of experience and success in this industry. Jean Luc Brocvielle, has
over 20 years experience owning a transportation and logistics Company. Michael
Gervis has also owned and operated a transportation and logistic company
throughout Europe. Alain Ronzeau has over 20 years experience in managerial,
sales and engineering for major electronics company. Rolland Chollet, heads up
the installation and service division with many years experience in this field
and Jean Paul Daveau, who is the original designer and engineer with Accident
Prevention Plus, Inc. This group came together through the consensus that the
APP On Board Recorder is the most dynamic and demanded system out there today.
It has been made apparent through international news that this system is going
to be an invariable necessity in Europe. AST Sarl is located in France and their
territories will include France, Germany, Spain, Portugal, Netherlands, Belgium,
Luxembourg, Greece and Morocco.

         Although the Company has not generated any significant revenues to
date, the Company has established these contractual relations in anticipation of
future sales and distribution of its products. As of the date of this Annual
Report, the contractual arrangements primarily provides the Company with
installation and service management in the event the Company establishes a
presence in these foreign markets through the distribution and sale of the APP
On Board Recording Systems and related products. Management believes that these
contractual relations will strengthen the Company' structure and potential
marketability of the AP On Board Recording Systems and related products, and
also places the Company in a favorable position to properly service the APP On
Board Recording Systems and related products sold and distributed in those
foreign markets.

                                       8

<PAGE>


         CONTRACTUAL ARRANGEMENTS

         APACHE FUTURE, INC. On approximately April 15, 2003, the Company and
Apache Future, Inc. ("Apache Future") entered into a distribution and
installation agreement. Management of the Company believes that Apache Future
has established long-standing relationships in the transportation industry by
working on a variety of vehicles throughout the United States including fire
trucks, motor coaches, transit, light rail, heavy rail, commuter trains and
truck resulting in a broad range of experience and expertise. Management of the
Company further believes that the contractual relationship between the Company
and Apache Future will provide the Company with continual and successful
installation, training and on-going support relating to the Company's APP On
Board Recording Systems products.

         COMPETITION

         The onboard recording systems industry is highly competitive. The
Company's major competitors in the marketplace are primarily Cadec, a division
of Cummings Engine, Mobile Data Systems, Orpak, Qualcomm, VDO, Elextor, Rockwell
Tripmaster and Eaton Corporation. Such competition appears to be related to the
Global Positioning Systems. Data Express and Qualcomm have similar products, and
Mobile Data Systems has developed a system closely resembling the APP On Board
Recording Systems products. The Company may also face competition from other,
similar companies with financial resources far greater than those of the
Company. However, management believes that although there is a large degree of
competition, most competitive systems only perform a portion of the functions
that the APP On Board Recording Systems onboard recording systems perform,
giving the Company a competitive edge within the industry.

         EMPLOYEES AND CONSULTANTS

         As of the date of this Annual Report, the Company employs three persons
on a full time and two person on a part time basis. The Company's President and
Executive Vice Presidents are primarily responsible for all day-to-day
operations of the Company. See "Item 9. Directors, Officers, Promoters and
Control Persons; Compliance with Section 16(a) of the Exchange Act." Other
services are provided by outsourcing and management contracts. As the need
arises and funds become available, however, management may seek additional
employees as necessary in the best interests of the Company. The following lists
and describes certain services performed for the Company by a consultant during
the prior fiscal year.

         PATENTS, LICENSES, TRADEMARKS, CONCESSIONS AND ROYALTY AGREEMENTS

         The Company has no patents, licenses, franchises, concessions or
royalty agreements that are material to its business as a whole. During fiscal
year 2002, management may file an application for trademark protection for its
APP On Board Recording Systems products with the United States Patent and
Trademark Office. If a certificate of registration for the trademark "APP On
Board Recording Systems" is issued, such registration will remain in full force
and effect for a period of ten years, subject to satisfaction of certain
requirements. Management believes that the Company has not infringed on any
existing patents, trade secrets or confidential information because the Company
developed its own proprietary software that is used with the APP On Board
Recording Systems products. Although management believes that there is no
infringement on existing patents, trade secrets or confidential information,
there is no assurance that such legal proceedings might not be initiated against
the Company.

         GOVERNMENT REGULATION

         The Company's operations may be subject to a variety of laws,
regulations and licensing requirements of federal agencies including, but not
limited to, the U.S. Department of Transportation and the Federal Highway
Administration, as well as state and local authorities. Each of these agencies
may regulate various aspects of licensing, permitting and operations of the APP
On Board Recording Systems and related products. In certain jurisdictions, the
Company may be required to obtain licenses or


                                       9
<PAGE>

permits, to comply with standards governing employee selection and training, and
to meet certain standards in the design and manufacture of the APP On Board
Recording Systems and related products. The loss of such licenses, or the
imposition of conditions to the granting or retention of such licenses, could
have a material adverse effect on the Company. Although management believes that
imposition of any such regulations will not impose great burdens upon the
operation of the Company, such regulations are subject to constant change.
Unforeseen changes in such regulations may have a significant impact on the
Company.

         POLITICAL AND ECONOMIC POLICIES IN FOREIGN COUNTRIES

         The Company intends to enter the global marketplace which includes, but
is not limited to, the marketplaces within the United Kingdom, Israel and
Africa. As a result, the Company's operations and sale of the APP On Board
Recording Systems and related products in these countries may be subject to
political, economic, legal and other uncertainties occurring within these
countries. Changes in policies by the respective governments may result in
changes in laws, regulations or the interpretation thereof, confiscatory
taxation, restrictions on imports and sources of supply, import duties,
corruption, and currency revaluation, all of which may materially and adversely
affect the Company. The continuation or increase of any such disparities
regarding economic reforms and growth could affect the political and social
stability of such countries, and thus the operations of the Company. Moreover,
there can be no assurance that future controversies will not arise which would
threaten trade relations between the United States and the respective country.
In any of such eventualities, the business of the Company could be adversely
affected.

ITEM 2.  PROPERTIES

         Except as otherwise described herein, the Company does not own any real
estate or other properties. The Company leases office space in Florida. Its
principal executive offices are located at 21 N. Hepburn Ave., Ste. 12, Jupiter,
FL 33458. As of the date of this filing the Company has entered into a lease.
(i) the term is for one-year with an option to renew for an additional two-year
period; and (ii) the Company must make monthly payments of $1,007 for the
remainder of the term of the Lease Agreement. Management of the Company believes
that the office space is adequate for its reasonable foreseeable needs. The
Company does not intend to acquire any real property.

ITEM 3.  LEGAL PROCEEDINGS

         NORTH SHORE HOSPITAL

         On August 31, 1999, the Company entered into an agreement with
North-Shore Long Island Jewish Health Systems ("North Shore Hospital") regarding
(I) installation of the APP3000 onboard recording system (which was customized
for use by North Shore Hospital) and related products on North Shore Hospital
ambulances, and (ii) provision of services to integrate the installed APP3000
and related products with existing technologies utilized by North Shore
Hospital. During fiscal year 2000, the Company installed one APP3000 onboard
recording system on an ambulance as a test unit and, subject to performance, the
Company would then be required to install an additional twenty-nine APP3000
onboard recording systems.

         On approximately April 3, 2001, North Shore Hospital initiated legal
proceedings against the Company in the Supreme Court of the State of New York,
in and for the County of Nassau (the "North Shore Lawsuit"). In the North Shore
Lawsuit, North Shore Hospital alleges breach of contract relating to a purchase
order under which the Company was to install a monitoring system on North Shore
Hospital's fleet of ambulances.


                                       10
<PAGE>
         On approximately May 29, 2001, the Company filed its answer and
counter-claim in which it disputes these allegations and asserted counter-claims
alleging breach of contract and tortuous interference of contractual rights.
Management anticipates that the parties will engage in discovery and document
production. The Company believes it has meritorious counter-claims and intends
to aggressively pursue all such legal actions and available remedies. The
Company has also suspended performance of its duties under the agreement with
North Shore Hospital.

         As of the date of this Annual Report, management of the Company and
North Shore are engaged in negotiations regarding settlement of the North Shore
Lawsuit.

         Management is not aware of any other legal proceedings contemplated by
any governmental authority or other party involving the Company or its
properties. No director, officer or affiliate of the Company is (i) a party
adverse to the Company in any legal proceedings, or (ii) has an adverse interest
to the Company in any legal proceedings. Management is not aware of any other
legal proceedings pending or that have been threatened against the Company or
its properties. Although the Internal Revenue Service and the Employment
Commission of the State of New York have filed liens against the Company,
respectively, as a result of unpaid payroll taxes, these governmental entities
have not initiated legal proceedings against the Company to seize the Company's
assets to pay such taxes.

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

         No matters were submitted to a vote of the Company's shareholders
through the solicitation of proxies or otherwise during fiscal year ended
December 31, 2003.

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         MARKET INFORMATION

         The Company's Common Stock is traded on the Over-the-Counter Bulletin
Board under the symbol "ACPL". The market for the Company's Common Stock is
limited, volatile and sporadic and could be subject to wide fluctuations in
response to quarter to quarter variations in operating results, news
announcements, trading volume, sales of Common Stock by officers, directors and
principal shareholders of the Company, general market trends, changes in the
supply and demand for the Company's shares, and other factors. The following
table sets forth the high and low sales prices relating to the Company's common
stock for fiscal year 2001. These quotations reflect inter-dealer prices without
retail mark-up, mark-down or commissions, and may not reflect actual
transactions.

                                        FISCAL YEARS ENDED
                                            DECEMBER 31,

                                   2002                         2003
                         HIGH BID        LOW BID       HIGH BID       LOW BID
                         --------        --------      --------       -------
First Quarter             $ .95          $ .21          $ .35         $ .105
Second Quarter              .90            .17            .18            .06
Third Quarter               .30            .15            .27            .10
Fourth Quarter              .30            .13            .20            .05

First Quarter 2004

         HOLDERS


                                       11
<PAGE>

         As of the date of this Annual Report, the 12,667,032 shares of common
stock are held by approximately 465 holders of record.

         DIVIDENDS

         The Board of Directors has never authorized or declared the payment of
any dividends on the Company's common stock and does not anticipate the
declaration or payment of cash dividends in the foreseeable future. The Company
intends to retain future earnings, if any, to finance the development and
expansion of its business. Future dividend policies will be subject to the
discretion of the Board of Directors and will be contingent upon, among other
things, future earnings, the Company's financial condition, capital
requirements, general business conditions, level of debt, restrictions with
respect to payment of dividends with respect to bank loans, and other relevant
factors.

         FORWARD STOCK SPLIT

         The Company's Common Stock is traded on the Over-the-Counter Bulletin
Board under the symbol "ACPL". The market for the Company's Common Stock is
limited, volatile and sporadic and could be subject to wide fluctuations in
response to quarter to quarter variations in operating results, news
announcements, trading volume, sales of Common Stock by officers, directors and
principal shareholders of the Company, general market trends, changes in the
supply and demand for the Company's shares, and other factors.


                                       12
<PAGE>

         SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

         As of the date of this Annual Report, there are instrument, contractual
Arrangements or other equity compensation plans under which the shares of the
Company's Common Stock are (i) subject to outstanding options or warrants to
purchase shares of Common Stock; or (ii) securities convertible into shares of
Common Stock.

         As of the date of this Annual Report, there are certain convertible
notes issued and outstanding as follows: (i) a $250,000.00 convertible
promissory note bearing interest at prime per annum (4.75% at December 31, 2001)
convertible into shares of Common Stock at the rate of $14.50 per share; (ii)
seven convertible promissory notes aggregating $450,000.00 bearing interest at
15% per annum convertible into shares of Common Stock at the rate of $14.50 per
share; (iii) sixteen convertible promissory notes aggregating $593,400.00
bearing interest at 10% per annum convertible into shares of Common Stock at the
rate of $14.50 per share (of which certain holders thereof converted an
aggregate of $863,400.00 of principal and $123,776 of accrued interest into
68,081 shares of Common Stock); and (iv) various additional convertible
promissory notes aggregating $386,100.00 bearing interest at 10% per annum
convertible into shares of Common Stock at the rate of $12.00 per share (of
which certain holders thereof converted an aggregate of $125,000.00 of principal
into 1,550,000 shares of Common Stock).

<TABLE>
<CAPTION>
                                    Equity Compensation Plan Information
--------------------------------------------------------------------------------------------------------------
                           Number of Securities      Weighted-Average Exercise       Number of Securities
                            To be Issued Upon          Price of Outstanding         Remaining Available for
Plan Category            Exercise of Outstanding         Options, Warrants           Future Issuance Under
                            Options, Warrants                and Rights            Equity Compensation Plans
                                and Rights                                           (excluding column (a))
                                    (a)                          (b)                         (c)
--------------------------------------------------------------------------------------------------------------
<S>                                <C>                           <C>                       <C>
Equity Compensation                 n/a                            n/a                      n/a
Plans Approved by
Security Holders
                                              (1)
Equity Compensation                452,500 shares                  $14.50                   -0-
Plans Not Approved by                         (2)
Security Holders -                 181,660 shares                  $14.50                   -0-
Convertible Promissory                        (3)
Notes                                      shares                  $14.50                   -0-
                                              (4)
                                           shares                  $12.00                   -0-
                                              (5)
Total                              849,860 shares
</TABLE>

         (1) Shares are estimated based on conversion of principal amount only.
On December 16, 1999, the Company issued the convertible promissory note in the
aggregate amount of $250,000.00 bearing interest at prime per annum (4.75% at
December 31, 2001) convertible into shares of Common Stock at the rate of $14.50
per share.

         (2)Shares are estimated based on conversion of aggregate principal
amount only. During fiscal year ended December 31, 2000, the Company issued
seven convertible promissory notes in the aggregate amount of $450,000.00
bearing interest at 15% per annum convertible into shares of Common Stock at the
rate of $14.50 per share.

         (3)Shares are estimated based on conversion of aggregate principal
amount only. During fiscal year ended December 31, 2000, the Company issued
sixteen additional convertible promissory notes in the aggregate amount of
$593,400 bearing interest at 10% per annum convertible into shares of Common
Stock at the rate of $14.50 per share (of which certain holders thereof
converted an aggregate of $863,400.00 in principal and $123,776 in accrued
interest into 68,081 shares of Common Stock).

         (4)Shares are estimated based on conversion of aggregate principal
amount only. During fiscal year ended December 31, 2002, the Company issued
various convertible promissory notes in the aggregate amount of $386,100.00
bearing interest at 10% per annum convertible into shares of Common Stock at the
rate of $12.00 per share (of which


                                       13
<PAGE>

certain holders thereof converted an aggregate of $125,000.00 in principal into
1,550,000 shares of Common Stock).

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

         Statements made in this Form 10-KSB that are not historical or current
facts are "forward-looking statements" made pursuant to the safe harbor
provisions of Section 27A of the Securities Act and Section 21E of the
Securities Exchange Act of 1934. These statements often can be identified by the
use of terms such as "may," "will," "expect," "believe," "anticipate,"
"estimate," "approximate" or "continue," or the negative thereof. The Company
intends that such forward-looking statements be subject to the safe harbors for
such statements. The Company wishes to caution readers not to place undue
reliance on any such forward-looking statements, which speak only as of the date
made. Any forward-looking statements represent management's best judgment as to
what may occur in the future. However, forward-looking statements are subject to
risks, uncertainties and important factors beyond the control of the Company
that could cause actual results and events to differ materially from historical
results of operations and events and those presently anticipated or projected.
These factors include adverse economic conditions, risks of foreign operation,
entry of new and stronger competitors, inadequate capital and unexpected costs.
The Company disclaims any obligation subsequently to revise any forward-looking
statements to reflect events or circumstances after the date of such statement
or to reflect the occurrence of anticipated or unanticipated events.

         GENERAL

         As of the date of this Annual Report, management of the Company
believes that the Company is in a viable operational position. Management of the
Company also believes that the APP On Board Recording Systems products are now
fully integrated logistic solution systems that have increased the Company's
marketability expotentially.

         During the prior fiscal years, the Company focused primarily on the
research, development and design of the APP On Board Recording Systems products
and related products, and generated little revenues. During those prior fiscal
years, the principals of the Company invested personal funds, arranged for loans
and lines of credit from private lenders and financial institutions, and secured
grants to support the research and development expenses of the Company.

         During fiscal year 2003, management of the Company deemed it imperative
that the business operations of the Company be directed and focused on the
distribution, marketing and sales channels for its products. As of the date of
this Annual Report, the Company derives its revenues principally from the
marketing and sale of onboard recording systems, called the APP On Board
Recording Systems products, and other related products to customers generally in
the fleet management and driver training industries. The Company through its
implementation of maintenance contracts and integration contracts and its
subsidiary generated additional revenues.

         The Company has devoted most of its time and energy to enhancing its
product. The new product will be more cost-effective and "user friendly".

         Management intends to focus the Company's marketing strategy for the
sale and distribution of its APP On Board Recording Systems products in North
American, South America, Central America, Europe and the Pacific Rim. The
Company has entered into contractual relations regarding sales, service and
installation with two prominent companies within the transportation industry.
One agreement covers the United Kingdom and the other agreement covers North
America.

          During fiscal years ended December 31, 2002 and 2003, sales of the APP
On Board Recording Systems and related products to the Company's customers
accounted for approximately 100% of total gross revenues. Although the Company
intends to expand its marketing of the APP On Board Recording Systems and
related products in non-transportation industries, such as the medical fields,
management of the Company believes that sales of the APP On Board Recording
Systems and related products to its customers in the fleet management and driver
training industries will continue to be an important line of business for the
Company for the next several years.


                                       14
<PAGE>

         FISCAL YEAR ENDED DECEMBER 31, 2003 COMPARED WITH FISCAL YEAR ENDED
DECEMBER 31, 2002

         RESULTS OF OPERATION. The Company's net losses for fiscal year ended
December 31, 2003 was $575,710 compared to a net loss of $857,130 for fiscal
year ended December 31, 2002 (a decrease in the loss of $281,420 or an
improvement of 33%).

         Net sales for fiscal years ended December 31, 2003 and 2002 were
$49,376 and $150,679, respectively. Net sales decreased by approximately
$101,303 or 67% for fiscal year ended December 31, 2003 as compared to fiscal
year ended December 31, 2002. The decrease in net sales during fiscal year ended
December 31, 2003 was primarily due to reduced customization of installed
systems for the Company's APP On Board Recording Systems products to its
customers.

         Gross profit for fiscal years ended December 31, 2003 and 2002 amounted
to $22,583 and $23,438, respectively, or a slight decrease of $855. The
improvement in gross margins for 2003 as a percentage was the result to only
take on projects with nominal equipment cost and re- engineering and software
modifications which were completed on a project-by-project basis.

         Selling, general and administrative expenses for fiscal years ended
December 31, 2003 and 2002 were $367,011 and $873,135, respectively (a decrease
of $506,124 or 58%). The decrease in selling, general and administrative
expenses for fiscal year ended December 31, 2003 were primarily due to the
Company incurring fewer costs associated with administrative salaries and
outside consulting and professional fees.

         Research and development expenses for fiscal year ended December 31,
2003 were $14,550 as compared to $40,583 for fiscal year ended December 31, 2002
(a decrease of $26,033). The additional research and development expenses during
fiscal year ended December 31, 2002 was primarily focused on upgrading existing
product lines; and the emphasis by the Company on the marketing of its products
for specific uses.

         Interest expense increased to $131,400 during fiscal year ended
December 31, 2003 compared to interest expense of $116,690 during fiscal year
ended December 31, 2002 (an increase of $14,710). The increase in interest
expense resulted from increased debt outstanding during 2003.

         Other losses during fiscal year ended December 31, 2003 include
amortization of debt discount in the amount of $85,332, compared with net
settlement income of $149,840 for 2002. Management realizes that the settlement,
overall containment and ultimately reduction of the Company's debt will be
necessary until either significant capital, operational margins, or both improve
the working capital condition of the Company.

          As a result of these factors, net loss for the year ended December 31,
2003 was $575,710, or $(.05) per share, as compared to a net loss of $857,130,
or $(.11) per share, for the year ended December 31, 2002. Management believes
that the decrease in net loss during the fiscal year ended December 31, 2003 as
compared to fiscal year ended December 31, 2002 is attributable primarily to a
substantial curtailment, the incurrence of selling, general and administrative
expenses, and the amortization of debt discount. The weighted average number of
common shares outstanding, as adjusted were 11,193,726 for fiscal year ended
December 31, 2003 compared to 7,857,785 for fiscal year ended December 31, 2002.

                                       15

<PAGE>

          LIQUIDITY AND CAPITAL RESOURCES. The Company is experiencing a
liquidity crisis and is presently raising additional capital through the
issuance of equity and debt. Further, the Company has not generated sufficient
cash flow to fund its operations and activities. Historically, the Company has
relied upon internally generated funds, funds from the sale of shares of stock
and loans from its shareholders and private investors to finance its operations
and growth. Management intends to raise additional capital through further
public or private offerings of its stock or loans from private investors,
although there can be no assurance that the Company will be able to obtain such
financing. The Company's future success and viability are entirely dependent
upon the Company's ability to generate sufficient revenues and to raise of
additional capital. Management is optimistic that the Company will be successful
in its capital raising efforts; however, there can be no assurance that the
Company will be successful in raising additional capital. The failure to raise
additional capital will have a material and adverse affect upon the Company and
its shareholders.

         The Company's financial statements have been prepared assuming that it
will continue as a going concern and, accordingly, do not include adjustments
relating to the recoverability and realization of assets and classification of
liabilities that might be necessary should the Company be unable to continue in
operations.

          The Company generated $49,376 in net sales as of fiscal year ended
December 31, 2003, a decrease of approximately 300% over revenues of $150,679
generated as of fiscal year ended December 31, 2002. Although there was a
decrease in net sales during fiscal year ended December 31, 2003, management
anticipates that overall generation of revenues will increase on an annual basis
based on pilot programs for testing of the products that are now coming to
finalization. Products are designed to be lower cost per unit, and lower cost
per home base installation and thus provide lower implementation costs for
customers which need less sophisticated applications of the Company's system.
Revenue increases will have to come from increasing the quality of customers as
average revenue per customer is expected to go down. The Company believes it
will increase its customer base by offering the lower cost product line.

         As of December 31, 2003, the Company's current assets were $69,925 and
its current liabilities were $2,921,451, which resulted in a working capital
deficit of ($2,851,526). As of December 31, 2003, the Company's total assets
were $88,686 and its total liabilities were $3,760,140. As of December 31, 2003,
the Company's total liabilities exceeded its total assets by $3,671,454. The
Company's stockholders' deficit increased from ($3,231,096) for fiscal year
ended December 31, 2002 to ($3,671,454) for fiscal year ended December 31, 2003

         MATERIAL COMMITMENTS

         In connection with the research and development expenses and other
overhead costs over the prior fiscal years, the Company, through its subsidiary
and other arrangements with its officers/shareholders, borrowed funds pursuant
to various contractual arrangements representing the following material
commitments.

         Effective October 2003, the Company entered into an agreement with the
Internal Revenue Service to pay-off the Company's payroll tax liability relating
to tax periods in 2001. The Company is required to make monthly payments of
$1,000 until the balance is paid in full. Interest will continue on the
outstanding balance. The Company has entered into arrangements with some of its
creditors, for extension of terms and conversions to equity.

         Management of the Company anticipates that its ability to raise
additional capital from private investors through the sale of debt or equity
instruments, and the ability of the Company to generate future revenues from the
sale of its APP On Board Recording Systems products and related products, will
provide the necessary funds to the Company for payment of such expenses
associated with its material commitments for fiscal year 2003.


                                       16
<PAGE>

         AUDIT COMMITTEE

         As of the date of this Annual Report, the Company has not appointed
members to an audit committee and, therefore, the respective role of an audit
committee has been conducted by the board of directors of the Company. When
established, the audit committee's primary function will be to provide advice
with respect to the Company's financial matters and to assist the board of
directors in fulfilling its oversight responsibilities regarding finance,
accounting, tax and legal compliance. The audit committee's primary duties and
responsibilities will be to: (i) serve as an independent and objective party to
monitor the Company's financial reporting process and internal control system;
(ii) review and appraise the audit efforts of the Company's independent
accountants; (iii) evaluate the Company's quarterly financial performance as
well as its compliance with laws and regulations; (iv) oversee management's
establishment and enforcement of financial policies and business practices; and
(v) provide an open avenue of communication among the independent accountants,
management and the board of directors.

         The board of directors has considered whether the regulatory provision
of non-audit services is compatible with maintaining the principal independent
accountant's independence.

ITEM 7.  FINANCIAL STATEMENTS

         The information required under Item 310(a) of Regulation S-B is
included in this report as set forth in the "Index to Consolidated Financial
Statements".


                                       17
<PAGE>

                 ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
                        CONSOLIDATED FINANCIAL STATEMENTS
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                      PAGE NO.

Independent Auditors' Reports                                        F-1 - F-2

Consolidated Balance Sheet At December 31, 2003                            F-3

Consolidated Statements of Operations and Comprehensive Loss
  For the Years Ended December 31, 2003 and 2002                           F-4

Consolidated Statements of Stockholders' Deficiency
  For the Years Ended December 31, 2002 and 2003                     F-5 - F-6

Consolidated Statements of Cash Flows For the Years
  Ended December 31, 2003 and 2002                                         F-7

Notes to Consolidated Financial Statements                           F-8 - F-24



<PAGE>

                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors
Accident Prevention Plus, Inc.

We have audited the accompanying consolidated balance sheet of Accident
Prevention Plus, Inc. and Subsidiaries as of December 31, 2003, and the related
consolidated statements of operations, stockholders' 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.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Accident Prevention
Plus, Inc. and Subsidiaries as of December 31, 2003 and the results of their
operations and their cash flows for the year ended December 31, 2003 in
conformity with accounting principles generally accepted in the United States of
America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company has suffered recurring losses
from operations, has yet to generated significant revenue from its operations
and at December 31, 2003 has both a net working capital deficit and a
stockholders' deficit. These factors raise substantial doubt about the Company's
ability to continue as a going concern. Management's plans regarding to these
matters are also described in Note 2. These consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.

Rosenberg Rich Baker Berman & Company

Bridgewater, New Jersey

April 22, 2004


                                                                             F-1
<PAGE>


                          INDEPENDENT AUDITORS' REPORT





To the Board of Directors
Accident Prevention Plus, Inc.


We have audited the accompanying consolidated balance sheet of Accident
Prevention Plus, Inc. and Subsidiaries as of December 31, 2002, and the related
consolidated statements of operations, stockholders' deficit and cash flows for
the years then ended. The consolidated financial statements of Accident
Prevention Plus, Inc. and subsidiaries as of December 31, 2001 were audited by
other auditors' whose report dated March 14, 2002 which is included in the
Company's Form 10-KSB for the fiscal year ended December 31, 2001, was qualified
regarding the Company's ability to continue as a going concern. 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 Accident Prevention Plus, Inc. and subsidiaries as of December 31, 2001 were
audited by other auditors' whose report dated March 14, 2002 which is included
in the Company's Form 10-KSB for the fiscal year ended December 31, 2001, was
qualified regarding the Company's ability to continue as a going concern.

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

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

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company has suffered recurring losses
from operations, has yet to generated significant revenue from its operations
and at December 31, 2002 has both a net working capital deficit and a
stockholders' deficit. These factors raise substantial doubt about the Company's
ability to continue as a going concern. Management's plans regarding to these
matters are also described in Note 2. These consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.



                                          Schuhalter, Coughlin & Suozzo, P.C


Raritan, New Jersey

May 20, 2003
                                                                             F-2
<PAGE>


                 ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                              AT DECEMBER 31, 2003

      ASSETS
Current Assets:
  Cash                                                              $     1,022
  Accounts Receivable                                                    20,028
  Inventory                                                              44,741
  Prepaid expenses and other current assets                               4,134
                                                                    -----------
      Total Current Assets                                               69,925

Property and Equipment, Net                                              11,777
Other assets                                                              6,984
                                                                    -----------
      Total Assets                                                  $    88,686
                                                                    ===========
      LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current Liabilities:
  Notes and loans payable, current portion                              265,500
  Notes and loans payable - related parties                             532,981
  Stockholders' Loan Payable                                            183,500
  Convertible notes payable                                             180,000
  Convertible notes payable - related parties                           250,000
  Accounts payable                                                      682,765
  Accrued expenses and other liabilities                                826,705
                                                                    -----------
      Total Current Liabilities                                       2,921,451

Notes and loans payable, net of current portion                         314,200
Common Stock Subject to Rescission Offer, - $.001 par value,
  14,995 shares issued and outstanding                                  181,189
Bridge loans expected to convert to equity                              343,300
                                                                    -----------
Total Liabilities                                                     3,760,140

Stockholders' Deficiency:
  Common stock - $.001 par value, 50,000,000 shares authorized;
    11,669,655 issued and outstanding                                    11,670
  Additional paid-in capital                                          6,255,297
  Accumulated deficit                                                (9,938,421)
                                                                    -----------
      Total Stockholders' Deficiency                                 (3,671,454)
                                                                    -----------
      Total Liabilities and Stockholders' Deficiency                $    88,686
                                                                    ===========

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

                                                                             F-3
<PAGE>

                ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
          CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

                                                       For the Years Ended
                                                          December 31,
                                                      2003           2002
                                                 ------------    ------------
Net Sales                                        $     49,376    $    150,679
Cost of Sales                                          26,793         127,241
                                                 ------------    ------------
Gross Profit                                           22,583          23,438
                                                 ------------    ------------
Expenses:
  Selling, general and administrative                 367,011         873,135
  Research and development                             14,550          40,583
                                                 ------------    ------------
      Total Expenses                                  381,561         913,718
                                                 ------------    ------------
Loss Before Other Income (Expenses)                  (358,978)       (890,280)
                                                 ------------    ------------
Other Income (Expenses):
  Debt issue costs and extinguishment gains (net)     (85,332)        149,840
  Loss on foreign currency transactions                    --              --
  Interest expense                                   (131,400)       (116,690)
                                                 ------------    ------------
      Total Other Expenses                           (216,732)         33,150
                                                 ------------    ------------
Loss Before Provision For Income Taxes               (575,710)       (857,130)
Provision For Income Taxes                                 --              --
                                                 ------------    ------------
Net Loss                                         $   (575,710)   $   (857,130)
                                                 ============    ============
Basic Earnings Per Share:
  Net Loss                                       $       (.05)   $       (.11)
                                                 ============    ============
  Weighted Average Number of Shares
    Outstanding                                    11,193,726       7,857,785
                                                 ============    ============

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


                                                                             F-4
<PAGE>

                 ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2003

<TABLE>
<CAPTION>
                                                                                  Other
                                                                                Accumulated
                                           COMMON STOCK           Additional   Comprehensive
                                    ------------------------       Paid-in        Income
                                       SHARES        AMOUNT        CAPITAL        (LOSS)
                                    -----------   -----------   -----------    ----------
<S>                                  <C>         <C>           <C>            <C>
Balances at January 1, 2002           3,040,552   $     3,041   $ 4,279,318    $       --

Adjustments for forward split of
1.2 shares to 1 effective
April 10, 2002                          608,110           608          (608)           --
                                    -----------   -----------   -----------    ----------
Opening balance, as adjusted
 January 1, 2002                      3,648,662         3,649     4,278,710            --

Issuance of common stock to
 cancel accrued expenses,
 other liabilities and
 trade payables                       3,906,399         3,906     1,278,428            --

Issuance of common stock for
 convertible notes, net of
 direct issued costs of $19,144       1,550,000         1,550       123,450            --

Issuance of common stock for
cash, net of expenses of $11,946        571,594           572        77,667            --

Amortization of debt issue costs             --            --        12,333            --

Issuance of common stock for
 services                             1,275,000         1,275       350,075            --

Net loss for the year                        --            --            --            --
                                    -----------   -----------   -----------   -----------

Balances at December 31, 2002        10,951,655   $    10,952   $ 6,120,663    $       --
                                    ===========   ===========   ===========   ===========

Amortization of debt issue costs             --            --        85,332            --

Issuance of common stock for cash       450,000           450        34,550            --

Issuance of common stock in
 conjunction with employment
 agreements                             250,000           250        12,250            --

Issuance of common stock for
 services                                18,000            18         2,502            --

Net loss for the year                        --            --            --            --
                                    -----------   -----------   -----------    ----------

Balances at December 31, 2003        11,669,655   $    11,670   $ 6,255,297    $       --
                                    ===========   ===========   ===========    ==========
</TABLE>


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

                                                                             F-5
<PAGE>

                 ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2003

                                                      Total
                                    Accumulated    Stockholders'
                                      DEFICIT      DEFICIENCY
                                    -----------    -----------
Balances at JANUARY 1, 2002        $(8,505,580)   $(4,223,221)
                                    ===========    ===========
Adjustment for forward split of
 1.2 shares to 1 effective
 April 10, 2002                              --             --
                                    -----------    -----------

Opening balance, as adjusted
 January 1, 2002                      8,505,354     (4,223,221)

Issuance of common stock to
 cancel accrued expenses,
 other liabilities and
 trade payables                              --      1,282,334

Issuance of common stock for
 convertible notes, net of
 direct issued costs of $19,144              --        125,000

Issuance of common stock for
 cash, net of expenses of $11,946            --         78,239

Amortization of debt issue costs             --         12,333

Issuance of common stock for
 services                                    --        351,350

Net loss for the year                  (857,130)      (857,130)
                                    -----------    -----------

Balances at December 31, 2002       $(9,362,711)   $(3,231,096)
                                    ===========    ===========

Amortization of debt issue costs             --         85,332

Issuance of common stock for cash            --         35,000

Issuance of common stock in
 conjunction with employment
 agreements                                  --         12,500

Issuance of common stock for
 services                                    --          2,520

Net loss for the year                  (575,710)      (575,710)
                                    -----------    -----------

Balances at December 31, 2003       $(9,938,421)   $(3,671,454)
                                    ===========    ===========

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


                                                                             F-6
<PAGE>

                 ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                          For the Years Ended
                                                             December 31,
                                                           2003         2002
                                                        ---------    ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                              $(575,710)   $(857,130)
  Adjustments to reconcile net loss to net
    cash used in operating activities:
  Amortization of debt discount                            85,332       21,333
  Depreciation and amortization                             4,988       49,124
  Net gains on cancellation of debt                            --     (171,173)
  Common stock issued for consulting and other expenses     2,520       50,000
  Common stock issued in connection with employment
    agreement                                              12,500      270,250
  Foreign currency translation                                 --           --
  Changes in Assets (Increase) Decrease:
    Inventory                                             (24,394)      18,327
    Accounts receivable                                    (1,180)     (18,848)
    Prepaid expenses and other current assets                  --       36,000
    Other assets                                               --       (8,623)
  Changes in Liabilities Increase (Decrease):
    Cash overdraft                                             --           --
    Accounts payable and accrued expenses                 202,133      293,868
                                                        ---------    ---------
      Net Cash Used In Operating Activities              (293,811)    (316,872)
                                                        ---------    ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of property and equipment                           --       (1,780)
                                                        ---------    ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from issuance of notes and loans payable            --           --
  Repayments of notes and loans payable                    (7,550)    (120,542)
  Repayments of capital lease                                  --           --
  Proceeds from issuance of convertible notes payable      82,500      386,100
  Proceeds of issuance of common stock                     35,000       78,239
  Repayment of notes and loans payable - related parties       --      (30,000)
  Costs associated with common stock                           --           --
  Proceeds from issuance of notes and loans payable -
    related parties                                            --        6,238
  Proceeds from Notes Payable - shareholders'             183,500           --
                                                        ---------    ---------
      Net Cash Provided By Financing Activities           293,450      320,035
                                                        ---------    ---------
Net Increase (Decrease) in Cash                              (361)       1,383

Cash and Cash Equivalents - Beginning of Year               1,383           --
                                                        ---------    ---------
Cash and Cash Equivalents - End of Year                 $   1,022    $   1,383
                                                        =========    =========

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


                                                                             F-7
<PAGE>

                 ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION

THE COMPANY

Accident Prevention Plus, Inc. (the "Company") was incorporated in the State of
Nevada on October 28, 1998 to become the holding company of Accident Prevention
Plus, LLC, a Limited Liability Company, (the "LLC") and International Purchasing
Services, NY, Inc. ("IPS-NY"). Accident Prevention Plus, Inc. is a technology
company which designs, manufactures and distributes on board recorders and
specialty interface equipment for all types of vehicles. The Company specializes
in the safety, economic enhancement of and security for vehicles, drivers, roads
and cargo.

INC-NY/LLC AND IPS-NY

Accident Prevention Plus, Inc. ("Inc-NY") was incorporated during 1993 in the
State of New York as a standard corporation. During February 1996, Inc-NY was
reorganized and converted to an LLC and treated as a partnership for financial
and income tax purposes. IPS-NY was incorporated in the State of New York on
March 3, 1993 to provide various support services to the LLC including but not
limited to shipping, receiving and warehousing. IPS-NY was also responsible for
purchases of product components, providing financing, and other general overhead
support for the LLC and for its own business purposes. The sole shareholder of
IPS-NY was also the majority partner of the LLC until the reorganization and
acquisition discussed below.

REORGANIZATION AND ACQUISITION OF IPS-NY

During October 1998, pursuant to an Agreement and Plan of Reorganization (the
"Reorganization Agreement") the Company issued 1,420,597 shares of its common
stock to the partners of the LLC for 100% of the LLC. The Company accounted for
the transaction with the LLC as a corporate reorganization and accordingly, no
goodwill was recorded. In connection with the reorganization, the founding
partners in the LLC were elected as the officers of the Company. Accordingly,
after such reorganization, the LLC became a wholly-owned subsidiary of the
Company. Simultaneously with the reorganization during October 1998, the Company
acquired from IPS-NY's sole shareholder, 100% of the issued and outstanding
common stock of IPS-NY by issuing 297,500 shares of its common stock. The
acquisition was accounted for by the purchase method of accounting.

NOTE 2 - GOING CONCERN

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. Through December 31, 2003 the
Company has incurred cumulative net losses of $9,938,421. Additionally, the
Company has a working capital deficit of $2,851,526 and a stockholders' deficit
of $3,671,454 and is in arrears on certain convertible notes payable and is in
default on its bank debt at December 31, 2003.

As of December 31, 2003, the Company is in arrears with trade creditors and
payroll taxes. Should the taxing authorities take further actions, the results
could be detrimental to the Company's ability to operate. In addition, the
Company is in arrears with respect to revised payment arrangements with its bank
debt. Should the banks take action against the Company the results could
adversely affect the Company.

The Company is attempting to obtain additional contracts and operating revenue
in order to mitigate future losses. Management is seeking to raise additional
capital and to renegotiate certain liabilities in order to alleviate the working
capital deficit. However, there can be no assurance that it will be able to
obtain additional contracts, raise additional capital, or obtain satisfactory
terms with its creditors. These factors raise substantial doubt about the
Company's ability to continue as a going concern. The consolidated financial
statements do not include adjustments relating to


                                                                             F-8
<PAGE>

                 ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

the recoverability and realization of assets and classification of liabilities
that might be necessary should the Company be unable to continue in operation.

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries, LLC, IPS-NY for all periods presented
and APP U.K. and APP France through December 31, 2002. All inter-company
accounts and transactions have been eliminated in consolidation.

Inventory

Inventory amounting to $44,741 at December 31, 2003, consists of components and
finished goods and are valued at the lower of cost (using the specific
identification method) or market. All inventories are pledged as collateral
pursuant to the notes payable as discussed in Note 6.

Intangible Assets

The Company periodically assesses the recoverability of long-lived assets,
including property and equipment, intangibles and technology rights, when there
are indications of potential impairment, based on estimates of undiscounted
future cash flows. The amount of impairment is calculated by comparing
anticipated discounted future cash flows with the carrying value of the related
asset. In performing this analysis, management considers such factors as current
results, trends, and future prospects, in addition to other economic factors.
The Company accounts for long-lived assets in accordance with Statement of
Financial Accounting Standards "SFAS" No. 144.

Income Taxes

The Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards ("SFAS") No. 109 "Accounting for Income Taxes" which
requires the use of the "liability method" of accounting for income taxes.
Accordingly, deferred tax liabilities and assets are determined based on the
difference between the financial statement and tax bases of assets and
liabilities, using enacted tax rates in effect for the year in which the
differences are expected to reverse. Current income taxes are based on the
respective periods' taxable income for federal and state income tax reporting
purposes.

Earnings Per Share

Basic loss per common shares ("EPS") is computed as net loss divided by the
weighted-average number of common shares outstanding during the period. Diluted
EPS includes the impact of common stock potentially issuable upon the exercise
of options and warrants. Potential common stock has been excluded from the
computation of diluted net loss per share as their inclusion would be
anti-dilutive.

Use of Estimates

In preparing the consolidated financial statements in conformity with accounting
principles generally accepted in the United States of America, management is
required to make estimates and assumptions which affect the reported amounts of
assets and liabilities and the disclosure of contingent assets and liabilities
at the date of the financial statements and revenues and expenses during the
reporting period. Actual results could differ from those estimates.


                                                                             F-9
<PAGE>

                 ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fair Value Disclosure at December 31, 2003

The carrying value of cash, accounts payable and accrued expenses are a
reasonable estimate of their fair value because of the short-term maturity of
these investments. The carrying value of long-term debt closely approximates its
fair value based on the instruments' interest rate terms, maturity date, and
collateral, if any in comparison to the Company's incremental borrowing rates of
similar financial instruments.

Effect of New Accounting Standards

Recent Accounting Pronouncements

   In April 2002, the FASB issued SFAS No. 145 "Rescission of FASB Statements
No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections." This statement rescinds SFAS No. 4, "Reporting Gains and Losses
from Extinguishment of Debt," and an amendment of that statement, SFAS No. 44,
"Accounting for Intangible Assets of Motor Carriers," and SFAS No. 64,
"Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements." This
statement amends SFAS No. 13, "Accounting for Leases," to eliminate
inconsistencies between the required accounting for sale-leaseback transactions
and the required accounting for certain lease modifications that have economic
effects that are similar to sale-leaseback transactions. Also, this statement
amends other existing authoritative pronouncements to make various technical
corrections, clarify meanings, or describe their applicability under changed
conditions. Provisions of SFAS No. 145 related to the rescission of SFAS No. 4
were effective for the Company on October 1, 2002 and provisions affecting SFAS
No. 13 were effective for transactions occurring after May 15, 2002. The
adoption of SFAS No. 145 did not have a material impact on our financial
statements.

   In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities." This statement covers restructuring type
activities beginning with plans initiated after December 31, 2002. Activities
covered by this standard that are entered into after that date will be recorded
in accordance with the provisions of SFAS No. 146. The adoption of SFAS No. 146
did not have a significant impact on our consolidated financial position or
results of operations.

   In December 2002, the FASB issued SFAS 148, "Accounting for Stock-Based
Compensation--Transition and Disclosure," which provides alternative methods of
transition for a voluntary change to fair value based method of accounting for
stock-based employee compensation as prescribed in SFAS 123, "Accounting for
Stock-Based Compensation." Additionally, SFAS 148 required more prominent and
more frequent disclosures in financial statements about the effects of
stock-based compensation. The provisions of this Statement are effective for
fiscal years ending after December 15, 2002, with early application permitted in
certain circumstances. The Company has adopted in fiscal 2003 the disclosure
provisions in our consolidated financial statements as disclosed above under
Stock Based Compensation.

                                                                            F-10
<PAGE>

                 ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

   In November 2002, the FASB issued Interpretation No. 45, Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others ("FIN 45"). FIN 45 requires a company, at
the time it issues a guarantee, to recognize an initial liability for the fair
value of obligations assumed under the guarantee and elaborates on existing
disclosure requirements related to guarantees and warranties. The initial
recognition requirements of FIN 45 are effective for guarantees issued or
modified after December 31, 2002 and adoption of the disclosure requirements are
effective for the Company during the first quarter of fiscal 2003. The adoption
of FIN 45 did not have a significant impact on our consolidated financial
position or results of operations.

   In January 2003, the FASB issued FASB Interpretation No. 46 ("FIN 46"),
"Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51."
FIN 46 requires certain variable interest entities to be consolidated by the
primary beneficiary of the entity if the equity investors in the entity do not
have the characteristics of a controlling financial interest or do not have
sufficient equity at risk for the entity to finance its activities without
additional subordinated financial support from other parties. FIN 46 is
effective for all new variable interest entities created or acquired after
January 31, 2003. For variable interest entities created or acquired prior to
February 1, 2003, the provisions of FIN 46 must be applied for the first interim
or annual period beginning after June 15, 2003. The adoption of FIN 46 in the
third quarter of fiscal 2003 did not have a significant impact on our
consolidated financial position or results of operations.

   In May 2003, the FASB issued SFAS Statement No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity". This
Statement establishes standards for how an issuer classifies and measures
certain financial instruments with characteristics of both liabilities and
equity. It requires that an issuer classify a financial instrument that is
within its scope as a liability (or an asset in some circumstances). This
statement is effective for financial instruments entered into or modified after
May 31, 2003, and otherwise is effective at the beginning of the first interim
period beginning after June 15, 2003, except for mandatorily redeemable
financial instruments of nonpublic entities, if applicable. It is to be
implemented by reporting the cumulative effect of a change in an accounting
principle for financial instruments created before the issuance date of the
Statement and still existing at the beginning of the interim period of adoption.
The adoption of this statement in the third quarter of fiscal 2003 did not have
a significant impact on the Company's results of operations or financial
position.



                                                                            F-11
<PAGE>

                 ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Stock Based Compensation

   Financial Accounting Statement No. 123, Accounting for Stock Based
Compensation, encourages, but does not require companies to record compensation
cost for stock-based employee compensation plans at fair value. The Company has
chosen to continue to account for stock-based compensation using the intrinsic
method prescribed in Accounting Principles Board Opinion No. 25, Accounting for
Stock Issued to Employees, and related interpretations. Accordingly,
compensation cost for stock options is measured as the excess, if any, of the
quoted market price of the Company's stock at the date of the grant over the
amount an employee must pay to acquire the stock. The Company has adopted the
"disclosure only" alternative described in SFAS 123 and SFAS 148, which require
pro forma disclosures of net income and earnings per share as if the fair value
method of accounting had been applied.

Long-lived Assets

    In June 2001,  the FASB  issued Statement No. 142, "Goodwill  and Other
Intangible Assets," ("FAS 142"), which became effective for the Company January
1, 2002 for the fiscal year ended December 31, 2002. As a result of this new
standard, goodwill will no longer be amortized, but has been tested annually for
impairment beginning in fiscal 2002. Goodwill impairment testing will require
that the Company make judgments concerning future cash flows and appropriate
discount rates.



                                                                            F-12
<PAGE>

                 ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Property and Equipment

Property and equipment are stated at cost less appropriate valuation allowances
and accumulated depreciation and amortization. Depreciation is provided on the
straight-line method over the estimated useful lives of the related assets,
generally three to five years. Amortization of leasehold improvements is
provided on the straight-line method over the lesser of the estimated useful
lives of the improvements or the initial term of the lease. Gain or loss is
recognized upon sale or other disposition of property and equipment.

Research and Development Costs

Research and development costs are expensed as incurred.

Foreign Currency Translation

The accounts of the Company's foreign operations are translated into U.S.
dollars using the current rate method. Assets and liabilities are translated at
the year-end exchange rate and revenues and expenses are translated at average
exchange rates. Gains and losses arising from the translation of financial
statements of foreign operations are deferred in the "Foreign currency
translation adjustment" account included as a separate component of
stockholders' deficiency. The functional currency of all the Company's
subsidiaries is the United States dollar with the exception of APP U.K. and APP
France whose functional currencies are the British pound sterling and the French
franc. All other exchange gains or losses are reflected in the consolidated
statements of operations.

Debt Issue Costs and Gains From Extinguishment of Debt

         The Company has issued convertible debt, exchanged shares to cancel
certain liabilities and abandoned certain subsidiaries, and has recorded debt
issuance costs, gains on cancellation of debt and amortization of debt issue
costs as follows:

                                                          For the Years Ended
                                                              December 31,
                                                           2003         2002
                                                        ---------    ---------
Amortization (expense) of debt issuance costs           $ (85,332)     (12,333)
(Loss) on extinguishment of cancellation of debt               --     (163,599)
Gain (Loss) on abandonment of foreign subsidiary               --      334,772
                                                        ---------    ---------
Debt Issuance Costs and Gain an Extinguishments (Net)   $ (85,332)   $ 149,840
                                                        =========    =========

Revenue Recognition

Revenue from hardware sales is recognized when the product has been shipped and
collectibility is reasonably assured. Revenue recognized from these sales is net
of applicable provisions for refunds, discounts and allowances. Engineering
service sales are recognized upon the service having been performed.


                                                                            F-13
<PAGE>

                 ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Cash and Cash Equivalents

For the purposes of the statement of cash flows, the Company includes cash and
all short term investments with relationships of 90 days or less in cash and
cash equivalents.

<TABLE>
<CAPTION>
                                                                   For the Years Ended
                                                                       December 31,
                                                                   2003          2002
                                                                ----------    ---------
<S>                                                             <C>         <C>
SUPPLEMENTAL DISCLOSURE OF NON-CASH FLOW INFORMATION:

  Cash paid during the year for:
    Interest                                                    $   5,400   $    6,490
                                                                =========   ==========
    Income taxes                                                       --           --

SUPPLEMENTAL DISCLOSURES OF NON-CASH OPERATING ACTIVITIES:

  Issuance of 1,550,000 shares of common  stock in connection
    with conversion of notes payable and interest                      --   $  125,000
                                                                =========   ==========

  Issuance of 1,408,377 shares of common
    stock as a payment of accrued fees, other
    liabilities                                                        --   $1,282,334
                                                                =========   ==========

  Issuance of 268,000 and 1,275,000 shares of common
    Stock for services                                             15,020   $  351,350
                                                                =========   ==========
</TABLE>

NOTE 4 - PROPERTY AND EQUIPMENT

Property and equipment are as follows at December 31, 2003:

          Furniture & Equipment                              $ 21,029
          Computer Equipment                                   54,236
                                                               ------
          Less: Accumulated depreciation                      (63,488)
                                                               ------
                                                             $ 11,777
                                                               ======

Depreciation expense for the years ended December 31, 2003 and 2002 amounted to
$4,988 and $12,124, respectively.

NOTE 5 - OTHER ASSETS

Other assets consist primarily of software, which the Company acquired in July
2000 for $87,000 through the issuance of 6,000 shares of common stock of the
Company. The software is recorded at cost less accumulated amortization, which
is computed on a straight - line basis over a period of three years.
Amortization expense for the years ended December 31, 2003 and 2002 was $0 and
$33,000, respectively. Accumulated amortization at December 31, 2003 amounted to
$87,000.


                                                                            F-14
<PAGE>

                 ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6 - NOTES AND LOANS PAYABLE

        Bank of Smithtown     $484,000
        Other loan payable      95,700
                              --------
                              $579,700
                              ========

Bank of Smithtown

a)   Bank of Smithtown

As of March 31, 2003, the Company was not in compliance with payment term
schedule as agreed by both parties. To date, Smithtown has not taken any action
against the Company, but should they decide to proceed with an action, the
impact could have a material effect upon the Company. Due to the non-compliance,
these notes with Smithtown have been classified as current liabilities at March
31, 2003.

Other

At December 31, 2003, the Company has other notes and loans payable to
individuals, due on demand, in the amount of $95,700. Interest rate on these
notes is 10% per annum.

Aggregate maturities of long-term debt is as follows:

                     Year Ending
                     December 31,
                         2004               $ 265,500
                         2005                  60,000
                         2006                  60,000
                         2007                  60,000
                         2008                  60,000
                         Thereafter            74,200
                                            ---------
                         Total              $ 579,700

NOTE 7 - NOTES AND LOANS PAYABLE - RELATED PARTIES

As of December 31, 2003 loans payable to related parties totaling $532,981 are
comprised of the following:

         i)       The loans of, the former President of the Company as of
                  December 31, 2001 which amounted to and still total $380,143
                  on December 31, 2003 as follows:

                  A $50,000 promissory note with interest accruing at 8% per
                  annum, which is due on demand.

                  A $240,000 loan, which the officer has secured personally
                  through a financial institution. The Company has guaranteed to
                  reimburse the officer


                                                                            F-15
<PAGE>

                 ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                  for all interest and the direct cost of such loan. This loan
                  bears interest at 9.25% per annum and is due on demand.

                  A $7,500 promissory note with interest accruing at 10% per
                  annum which is due on demand.

                  A $3,500 promissory note with interest accruing at 10% per
                  annum which is due on demand.

                  The remainder is comprised of advances to the Company and
                  un-reimbursed expenses amounting to $79,143 which are
                  non-interest bearing.

                  ii) Various promissory notes with interest accruing at 10% per
                  annum due to the parents of the Company's president totaling
                  $102,295 which are due on demand.

                  iii) Other loans, unpaid reimbursed expenses and advances from
                  officer of approximately $50,543.

NOTE  8 - CONVERTIBLE NOTES PAYABLE

On December 16, 1999, the Company executed a $250,000 convertible promissory
note with an officer and director, bearing interest at prime per annum (4.75% at
December 31, 2001) with principal payable in full on December 31, 2001.
Commencing on September 30, 2000 the note is convertible into common stock at
the rate of $14.50 per share. This note is in arrears and is included in short
term liabilities.

During the year ended December 31, 2000, the Company executed seven additional
15% promissory notes aggregating $450,000. The promissory notes are due on
December 31, 2001, bearing interest at 15% per annum and are payable monthly in
arrears or upon maturity or any earlier conversion of the note. At any time
subsequent to December 31, 2000 the noteholder will have the right to convert
the principal and accrued interest in whole or in part into common stock at
$14.50 per share.

During the year ended December 31, 2000, the Company entered into sixteen
convertible 10% promissory notes aggregating $593,400. The promissory notes are
due on December 31, 2002, bearing interest at 10% per annum and are payable
monthly in arrears or upon maturity or any earlier conversion of the note. The
promissory notes contain a provision stating that beginning January 2, 2001 that
upon a 10 day notice the note is due on demand. At any time subsequent to
December 31, 2000, the noteholders will have the right to convert the principal
and accrued interest in whole or in part into common stock at $14.50 per share.

During the period of January 2001 through April 2001, convertible note holders
converted principal and related interest on the notes they were holding into
common stock of the Company. The noteholders converted an aggregate of $863,400
of principal and $123,776 of interest into 68,081 shares of common stock.

During 2002, the Company issued various convertible notes, totaling $386,100, of
which $125,000 was converted into 1,550,000 shares of the Company's common
stock. At December 31, 2002 $261,100 of the notes remain outstanding which
converted into shares approximately 3,200,000 of the Company's common stock.
These notes are expected to be converted over the next 18 months, at an average
price of $12 per share, which bear interest at 10%. The Company recorded
$128,000 of debt issuance costs based on the value of the conversion and charges
of $21,333 of amortization of debt issue costs during 2002 and $85,332 during
2003.

During 2003, the Company issued various convertible notes, totaling $82,500.
These notes can be converted at a price of $.10 per share and bear interest at
10%. The


                                                                            F-16
<PAGE>

                 ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Company also received proceeds of $183,500 from a note payable from a related
party. This note will not accrue interest until a full commitment amount of
$350,000 is received by the Company.

At December 31, 2003, the principal balance due on "prior" convertible notes
payable is $180,000 and the balance due on related party convertible notes
payable is $250,000, all of which are in arrears.

NOTE 9 - ACCRUED EXPENSES

Accrued expenses consist of the following at December 31, 2003:

        Interest payable                            $ 260,140
        Officer's salaries                            266,430
        Payroll taxes                                  23,446
        Other                                         276,689
                                                      -------
                                                    $ 826,705
                                                      =======

NOTE 10 - COMMON STOCK SUBJECT TO RESCISSION OFFER

Common stock sold subsequent to August 3, 1999 pursuant to the Company's limited
offering memorandums of January and April 1999, may be in violation of the
requirements of the Securities Act of 1933. In addition, certain state
securities rules and regulations may not have been complied with to ensure
availability of a private placement transaction exemption. As such, the proceeds
of $202,939 from the issuance of 13,996 shares of common stock through December
31, 1999 were classified outside of equity in the balance sheet and classified
as common stock subject to rescission. On April 18, 2000, the Company
repurchased 1,500 shares of common stock from two of the related shareholders.
The Company has subsequently canceled these shares. As of December 31, 2002, the
balance of proceeds was $181,189 and the related shares were 12,496. As of
December 31, 2003, no additional investors have requested the Company to
repurchase their shares.

NOTE 11 - COMMITMENTS AND CONTINGENCIES

Payroll Taxes

As of December 31, 2003, the Company owes approximately $23,446 of payroll taxes
and related estimated penalties and interest. Federal and state tax liens have
been filed against the Company in connection with unpaid payroll taxes. Although
the Company has not entered into any formal repayment agreements with the
respective tax authorities, it has been attempting to make payments as funds
become available.

Employment Agreements

Commencing July 1, 2001, and automatically renewable annually for a five-year
period, the terms and provisions of the respective 2001 Employment Agreements
are as follows: (i) each officer/director will receive an annual salary of
$120,000; and (ii) each officer/director will receive an annual cash bonus equal
to one percent (1%) of the


                                                                            F-17
<PAGE>

                 ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

annual net profits for the preceding fiscal year.
Other benefits provided for in the 2001 Employment Agreements are disability and
health insurance coverage, automobile and expense allowances and travel and
entertainment allowances.

Pursuant to the provisions of Mr. Richard Goodhart's 2001 Employment Agreement,
stock options (not to be governed by the Non-Qualified Stock Option Plan) were
granted to Mr. Goodhart to purchase 4,121,128 shares of restricted common stock
at $0.34 per share within five years from the effective date of the 2001
Employment Agreement (collectively, the "Stock Options"). The Stock Options may
not be diluted for future reorganizations, recapitalizations, reverse stock
splits, combinations of shares, merger or consolidation. The options were
canceled by the Company during 2002. Pursuant to the provisions of Mr. Steve
Wahrman's 2001 Employment Agreement, stock options (not to be governed by the
Non-Qualified Stock Option Plan) were granted to Mr. Wahrman to purchase
1,617,840 shares of restricted common stock at $0.34 per share within five years
from the effective date of the 2001 Employment Agreement (collectively, the
"Stock Options"). The Stock Options may not be diluted for future
reorganizations, recapitalizations, reverse stock splits, combinations of
shares, merger or consolidation. These options were canceled by the Company
during 2002.

Pursuant to the provisions of Mr. Daveau's 2001 Employment Agreement, stock
options (not to be governed by the Non-Qualified Stock Option Plan) were granted
to Mr. Daveau to purchase 1,500,000 shares of restricted common stock at $0.34
per share within five years from the effective date of the 2001 Employment
Agreement (collectively, the "Stock Options"). The Stock Options may not be
diluted for future reorganizations, recapitalizations, reverse stock splits,
combination of shares, merger or consolidation. The options were canceled by the
Company during 2002.

Effective December 31, 2001, Richard Goodhart resigned and terminated his
employment contract.

As of December 31, 2001, four officers and shareholders of the Company elected
to forgive their entire accrued payroll that were recorded as expenses in the
years 2000 and 2001. The total amount of debt forgiveness was approximately
$590,000 and it is included in additional paid-in capital.

During 2002, the Company entered into employment agreements with two executive
officers, which provide for annual salaries of $120,000 and $114,000; common
stock grants of 575,000 and 500,000 shares during the year ended December 31,
2002 valued at $155,250 and $115,000 respectively. During the year ended 2003,
in connection with this agreement, the Company granted 125,000 shares of its
common stock to each of its two executive officers valued at $6,250 per officer
for a total of $12,500. The executives were each awarded options to purchase
500,000 shares at $2.50; 500,000 shares $1.00; and 500,000 shares at $.75, for
a period of five years.

The agreements provide for certain expenses and annual raises based upon the
ability of the Company to fund the same.



                                                                            F-18
<PAGE>

                 ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Bristol Consulting Agreement

On July 30, 1998, the LLC entered into a consulting agreement with Bristol
Consulting Ltd. ("Bristol") for the assistance and advice of commercial
application in Europe, the Middle East and the Far East as to corporate
structure, capital acquisitions, contract applications, and mergers and
acquisitions.

The consulting agreement was initially for a period of five years requiring
monthly payments of $5,000 for the first three months and $10,000 a month for
the remaining term of the consulting agreement. In addition, Bristol received
83,741 shares of common stock of the Company upon the reorganization of the LLC
in October 1998 for its 5% partnership interest in the LLC.

As of December 13, 2001, the Company and Bristol entered into an amendment to
the Forgiveness of Debt Agreement evidencing an aggregate of $890,916.44 due and
owing Bristol as follows: (i) accounts payable of $71,650.00; (ii) notes payable
of $223,403.89; (iii) accrued interest of $10,862.55; (iv) accrued consulting
fees payable of $345,000.00; and (v) balance owed against Consulting Agreement
of $240,000.00.


                                                                            F-19
<PAGE>

                 ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On January 16, 2002, the Board of Directors of APP held a meeting at which it
(I) ratified the amendment to the Settlement Agreement and approved the issuance
of 6,749,367 shares of common stock to Bristol or its assignees to satisfy the
debt of $890,916.44; (ii) acknowledged that Bristol had entered into assignment
agreements dated July 30, 1998, respectively, with Sampson Global Ltd., World
Asset Management Ltd. and Atlantic Financial Enterprises Ltd., in which Bristol
proportionately assigned to the Entities certain of its rights to the debt and
to its right to convert the debt into shares of restricted common stock; (iii)
acknowledged receipt of a conversion notice from Sampson Global Ltd.; (iv)
authorized the issuance of 454,545 shares of its restricted common stock to
Sampson Global Ltd. to settle a portion of the debt due and owing Bristol under
the Consulting Agreement; and (v) authorized the issuance of an aggregate of
5,196,337 shares of its restricted common stock to Bristol to settle the
remaining debt due and owing to Bristol in the amount of $745,916.44. The
454,545 shares were issued on January 11, 2002 and 5,196,337 shares were issued
on January 24, 2002 and additionally 1,130,176 shares were issued in
cancellation with the 1.2 forward split. In October 2002, the Company negotiated
the return of 3,200,000 of these shares to the Company which were cancelled in
April of 2004 and treated the net issuance of 3,581,058 shares as one contiguous
transaction.

Lease Commitments

The Company entered into a lease agreement for office space effective November
15, 2001. The lease agreement is for two years, with options to renew for
another two years. The office lease requires monthly payments of $2,900. In
November, 2002 the Company relocated in the same building and the amended lease
provides for rent of $1,000 per month for the remainder of its term. In January
2004, the Company relocated and entered into a new lease agreement. The term o
this lease is for one year with an option to renew for an additional two-year
period; the monthly payments are $1,007.

The Company leases its office facility under a non-cancellable operating lease
requiring future minimum rentals as follow:

                   Years Ending
                       2004                    $ 12,084
                                               --------
                                               $ 12,084

Rent expense for the years ended December 31, 2003 and 2002 was $13,532 and
$30,000 respectively.

Litigation

The Company is a named defendant in a lawsuit filed in the New York Supreme
Court County of Nassau. The lawsuit claims that the Company breached a contract
claim stemming from the Company's failure to install certain devices in the
Plaintiff's fleet of ambulances, and seeks compensatory damages in the amount of
$195,000. The Company has asserted counter-claim based upon tortuous
interference with contract, and has denied all of the Plaintiff's allegations. A
settlement offer has been made by the Company, whereby the Company would
complete installation of its devices in exchange for a general release. The
plaintiff has not responded to that offer.

While the Company cannot predict the outcome of any settlement, the Company
estimates that its liability under this litigation will not exceed $71,000.
Accordingly, an accrual of $71,000 was reflected in the accompanying December
31, 2003 consolidated balance sheet.


                                                                            F-20
<PAGE>

                 ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Management is not aware of any other legal proceedings contemplated by any
governmental authority or other party involving the Company or its properties.
No director, officer or affiliate of the Company is (i) a party adverse to the
Company in any legal proceedings, or (ii) has an adverse interest to the Company
in any legal proceedings. Management is not aware of any other legal proceedings
pending or that have been threatened against the Company or its properties.
Although the Internal Revenue Service and the Employment Commission of the State
of New York have filed liens against the Company, respectively, as a result of
unpaid payroll taxes, these governmental entities have not initiated legal
proceedings against the Company to seize the Company's assets to pay such taxes.

From time to time, the Company may be involved in various legal proceedings and
other disputed matters arising in the normal course of business, involving
amounts recorded as accrued expenses relating to unre-imbursed expenses of prior
management. The Company believes no such actions would result in liabilities in
excess of amounts accrued in the financial statements.

NOTE 12 - CAPITAL STOCK

On November 26, 2001, the Company completed a one-for-ten reverse stock split of
its common stock. On January 19, 2002 the board of directors of the Company
authorized and approved a forward stock split of 1 to 1.2 common shares;
effective for shares outstanding as of April 10, 2002. All per share data and
stock issuances have been restated to reflect this transaction.

Stock Options

         NON-QUALIFIED STOCK OPTION PLAN

Effective January 1, 1999, the Company established a non-qualified stock option
plan ("Stock Option Plan") pursuant to which 6,000,000 shares of common stock
are reserved for issuance upon the exercise of options. The option plan is
designed to serve as an incentive for retaining qualified and competent key
employees, officers and the director of the Company. The price for each share of
common stock purchasable according to the Stock Option Plan is $14.50 per share.



                                                                            F-21
<PAGE>

                 ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A summary of the Company's stock option activity and related information
follows:

                                 Number of                        Weighted
                                  Shares        Range of          Average
                                  Under       Option Price        Exercise
                                  Option        Per Share          Price
                               ----------   -----------------   --------------
Balance at December 31, 2002    7,502,968   $           12.09   $         0.74
  Granted                       3,000,000   $       .75- 2.50   $         1.42
  Exercised                            --                  --               --
  Canceled                     (7,238,968)               (.34)            (.34)
                               ----------   -----------------   --------------
Balance at December 31, 2002    3,264,000   $      .75- 14.50   $         2.28
                               ==========   =================   ==============
  Granted                              --                  --               --
  Exercised                            --                  --               --
  Canceled                             --                  --               --
                               ----------   -----------------   --------------
Balance at December 31, 2003    3,264,000   $      .75- 14.50   $         2.28
                               ==========   =================   ==============

In compliance with SFAS No. 123, the Company has elected to provide the proforma
disclosure of net income (loss) and earnings per share as if the fair value
based method had been applied to the Company's financial statements. The Company
continued its use of APB Opinion No. 25. As such, the Company's net loss and
loss per share for the years ended December 31, 2002 and 2003, adjusted to
reflect proforma amounts, are indicated below:

                                     Years Ended December 31,
                                       2002           2003
                                    -----------    -----------
Net loss:
  As reported                       $  (857,130)   $  (575,710)
                                    ===========    ===========
  Pro forma                         $(1,198,620)   $  (575,710)
                                    ===========    ===========
Basic and diluted loss per share:
  As reported                       $     (0.11)   $      (.05)
                                    ===========    ===========
  Pro forma                         $     (0.15)   $      (.05)
                                    ===========    ===========

The fair value of stock options granted were estimated at the date of grant
using the Black-Scholes option-pricing model with the following weighted-average
fair value and related assumptions:

                                 At December 31,
                                2002        2003
                              --------    --------
Weighted average fair value   $    .11         N/A
Expected volatility               1.15%        N/A
Risk-free interest rate            4.5%        N/A
Expected life (years)                3         N/A
Expected dividend yield              0         N/A


                                                                            F-22
<PAGE>

Significant Common Stock Transactions for 2003:

         Shares Issued for Consulting Fees and Other Expenses

         During the year ended December 31, 2003, the Company issued 18,000
shares to a consultant for services valued at $2,520 charged to selling, general
and administrative expenses.

         Additions to Paid-in Capital

         During the year ended December 13, 2003, the Company issued 450,000
shares of its common stock in private placements for receiving a total of
$35,000 in cash.

         Common Stock for Employment

         During 2003, the Company issued 250,000 shares of its common stock to
two executives valued at $12,500.

Loss Per Share

         Securities that could potentially dilute basic earnings per share
("EPS") in the future, and that were not included in the computation of diluted
EPS because to do so would have been anti-dilutive for the periods presented,
consist of the following:

         Options to purchase common stock                          3,264,000
         Convertible Debt - Bristol, issued January 2002           2,175,000
         Convertible Debentures                                       29,655
                                                                   ---------
         Total as of December 31, 2003                             5,468,655
                                                                   =========

NOTE 13 - PROVISION FOR INCOME TAXES

Income taxes are provided for the tax effects of transactions reported in the
financial statements and consist of taxes currently due plus deferred taxes
related to differences between the financial statement and tax bases of assets
and liabilities for financial statement and income tax reporting purposes.
Deferred tax assets and liabilities represent the future tax return consequences
of these temporary differences, which will either be taxable or deductible in
the year when the assets or liabilities are recovered or settled. Accordingly,
measurement of the deferred tax assets and liabilities attributable to the
book-tax basis differentials are computed at a rate of 34% federal, 6% state,
pursuant to SFAS No. 109.

The only material tax effect of significant items comprising the Company's
current deferred tax assets as of December 31, 2003 is the Company's net
operating loss carryforwards ("NOL's"), which amounted to approximately
$4,975,000 for the Company. The deferred tax asset associated with the Company's
NOL's amounted to approximately $1,840,000 as of December 31, 2003.

A portion of IPS-NY's NOL's are subject to provisions of the Internal Revenue
Code, Section 382, which limits the use of NOL's when changes in ownership of
more than 50 percent occur during a three year testing period.

In accordance with SFAS 109, the Company has recorded a 100% valuation allowance
for such deferred tax asset since management could not determine that it was
"more likely than not" that the deferred tax assets would be realized in the
future. The Company's


                                                                            F-23
<PAGE>

NOL's amounting to approximately $4,975,000 will expire in the years 2004
through 2023 if not utilized prior.

NOTE 14 - INDUSTRY SEGMENTS

The Company's operations have been classified into two segments: foreign and
domestic sales. Information about the two segments for the years ended December
31, 2003 and 2002 are as follows:

                                        2003           2002
                                     Consolidated  Consolidated
Sales:
  Foreign                             $ 23,313       $144,851
  Domestic                              26,063          5,828
                                      --------       --------
    Total Sales                       $ 49,376       $150,679
Gross Profit
  Foreign                             $ 11,540       $ 22,094
  Domestic                              11,043          1,344
                                      --------       --------
      Total Gross Profit              $ 22,583       $ 23,438
                                      ========       ========

Gross profit is total revenue less cost of sales and excludes general corporate
expenses, interest expense, and income taxes.

NOTE 15 - SIGNIFICANT CUSTOMERS

For the years ended December 31, 2002 and 2003, respectively, the Company had
two and two unrelated customers, which accounted for approximately 83% and 95%,
of total revenues.


                                                                            F-24
<PAGE>

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

          Effective as of April 13, 2004, Accident Prevention Plus, Inc. (the
"Company") accepted the resignation of Schuhalter Coughlin & Suozzo PC. as its
independent accountant. The Schuhalter Coughlin & Suozzo PC. resignation is not
the result of its relationship with the Company. The Schuhalter firm informed
the Company that although they had expected in good faith to have obtained
acceptance by this time, they have yet to obtain approval from the "PCAOB" as a
Registered Firm" and do not expect such approval in time to complete the 2003
audit in a timely fashion that would enable the Company to meet its filing
requirements for its periodic reports. Schuhalter Coughlin & Suozzo PC. has
recommended the Company engage a "Registered Firm" to complete the 2003 audit
and the Company has agreed. Effective as of April 13, 2004, the Company engaged
Rosenberg Rich Baker Berman & Company as its independent accountant. The
decision to change accountants was approved by the Board of Directors of the
Company.

         The Schuhalter Coughlin & Suozzo PC. report on the Company's financial
statements for the year ended December 31, 2002 did not contain an adverse
opinion or a disclaimer of opinion, the report was neither qualified or modified
as to audit scope or accounting principles. The report on the financial
statements was qualified regarding the Company's ability to continue as a going
concern.

         During the year ended December 31, 2002, the preceding and subsequent
interim periods June 2002, September 2002, March 31, 2003, June 30, 2003,
September 30, 2003 and until the resignation of Schuhalter Coughlin & Suozzo
PC., there were no disagreements with Schuhalter Coughlin & Suozzo PC. on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope of procedure, which disagreements, if not resolved to the
satisfaction of Schuhalter Coughlin & Suozzo PC., would have caused Schuhalter
Coughlin & Suozzo PC. to make reference to the subject matter of the
disagreement in connection with its report.

         None of the reportable events described under Item 304(a)(1)(v) of
Regulation S-K occurred within the two most recent fiscal years of the Company
year ended December 31, 2002 and the subsequent interim period to date hereof.

         During the two most recent fiscal years of the Company ended December
31, 2002 and the subsequent interim period to the date hereof, the Company did
not consult with Rosenberg Rich Baker Berman regarding any of the matters or
events set forth in Item 304(a)(2)(i) and (ii) of Regulation S-K.

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

         IDENTIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS

         The directors and executive officers of the Company are as follows:

Name                      Age               Position with the Company
Alan Schwartz             59                Director and President
Jennifer Swanson          39                Executive Vice President
Rhett Kirchoff            37                Director

         ALAN SCHWARTZ has been a Director and the President of the Company
since October 2001. During the past twenty years, Mr. Schwartz has been involved
in the sales and


                                       18
<PAGE>

marketing of materials and handling industry. Mr. Schwartz was the founder of a
company which he started with a $70,000 initial investment. Mr. Schwartz has
also specialized in corporate financing and structure. Mr. Schwartz graduated
from CCNY.

         JENNIFER SWANSON has been an Executive Vice President and Chief
Financial Officer of the Company since February 2002. During the past twenty
years, Ms. Swanson has been involved in the marketing and corporate structure
industry, specializing in investor relations, corporate financing and corporate
communications. More recently, Ms. Swanson has worked with public companies
emphasizing development of guidelines for handling correspondence, development
of standard responses to frequently asked questions, advisement to management of
trends and issues of concern that are manifested in correspondence, development
of a system of recording contracts, development of a corporate overview or
outlook correspondence to shareholders, evaluation of transfer agent
performance, confirmation of regulatory filings and compliances with the Federal
and State securities laws and regulations, and coordination of internal
procedures regarding company stock option plans, restricted securities,
convertible preferred stock and employee benefit plans. Ms. Swanson graduated
from the University of Minnesota with a Bachelor of Arts Degree in Business
Administration.

         As of the date of this Annual Report, no director or executive officer
of the Company is or has been involved in any legal proceeding concerning (I)
any bankruptcy petition filed by or against any business of which such person
was a general partner or executive officer either at the time of the bankruptcy
or within two years prior to that time; (ii) any conviction in a criminal
proceeding or being subject to a pending criminal proceeding (excluding traffic
violations and other minor offenses) within the past five years; (iii) being
subject to any order, judgment or decree permanently or temporarily enjoining,
barring, suspending or otherwise limiting involvement in any type of business,
securities or banking activity; or (iv) being found by a court, the Securities
and Exchange Commission or the Commodity Futures Trading Commission to have
violated a federal or state securities or commodities law (and the judgment has
not been reversed, suspended or vacated).

         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

         Section 16(a) of the 1934 Exchange Act requires the Company's directors
and officers, and the persons who beneficially own more than ten percent of the
common stock of the Company, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Copies of all filed
reports are required to be furnished to the Company pursuant to Rule 16a-3
promulgated under the 1934 Exchange Act. Based solely on the reports received by
the Company and on the representations of the reporting persons, the Company
believes that these persons have complied with all applicable filing
requirements during the fiscal year ended December 31, 2002.

ITEM 10. EXECUTIVE COMPENSATION

         COMPENSATION OF OFFICERS AND DIRECTORS

         The Company entered into employment agreements with Ms. Jennifer
Swanson effective February 15, 2002 and Mr. Alan Schwartz effective March 12,
2002, respectively (individually, the "Schwartz Employment Agreement" and
"Swanson Employment Agreement" or collectively, the "Employment Agreements").

         Pursuant to the terms of the Schwartz Employment Agreement, Mr.
Schwartz is to be paid a monthly salary of $10,000, and shall receive an initial
575,000 shares of the


                                       19
<PAGE>

Company's restricted Common Stock and thereafter on an annual basis 125,000
shares of restricted Common Stock.

         Pursuant to the terms of the Swanson Employment Agreement, Ms. Swanson
is to be paid a monthly salary of $9,500, and shall receive an initial 500,000
shares of the Company's restricted Common Stock and and thereafter on an annual
basis 125,000 shares of restricted Common Stock.

         Pursuant to the further terms and provisions of the Employment
Agreements: (i) the employment period commences on February 15, 2002 for an
initial term of three years and renewable automatically thereafter for a period
of up to six consecutive one year periods; (ii) each officer/director is to
receive an annual cash bonus equal to one percent (1%) of the annual gross
revenues for the preceding fiscal year; and (iii) each officer/director was
granted stock options to purchase within five years from the signing of the
Employment Agreements 500,000 shares of Common Stock at $2.50 per share, 500,000
shares of Common Stock at $0.75 per share and 500,000 shares of Common Stock at
$1.00 per share. Other benefits provided for in the Employment Agreements are
disability and health insurance coverage, automobile and expense allowances and
travel and entertainment allowances. See "Part III, Item 10. Executive
Compensation."

         As of the date of this Annual Report, the Company has not paid the full
salary amounts to the executive officers/directors under the Employment
Agreements. During the year ended December 31, 2003, the Company recorded
accrued salaries in the amount of $63,000 for its president ant $35,930 for its
CFO representing the unpaid compensation amounts due per the respective
employment contracts.

                                   Summary Compensation Table
                            Annual Compensation     Awards    Payouts
                             $      $       $     $     #       $
Name and Position   Year  Salary  Bonus   Other  RSA  Options LTIP  Other
Alan Schwartz       2002    0       0       0     0  1,500,000  0     0
Pres./CEO and       2003 $120,000   0       0     0       0     0     0
Director
Jennifer Swanson    2002    0       0       0     0  1,500,000  0     0
Exec.VP/CFO         2003 $114,000   0       0     0       0     0     0

         NON-QUALIFIED STOCK OPTION PLAN

         On January 1, 1999, the Board of Directors of the Company adopted the
Non-Qualified Stock Option Plan (the "SOP") which provided for the grant of
options to purchase an aggregate of 6,000,000 shares of restricted common stock
at $14.50 per share. The purpose of the SOP is to make options available to
directors, management and significant contractors of the Company in order to
encourage them to secure an increase on reasonable terms of their stock
ownership in the Company and to remain in the employ of the Company, and to
provide them compensation for past services rendered.

         The SOP is administered by the Board of Directors which determines the
persons to be granted options under the SOP, the number of shares subject to
each option, the exercise price of each option and the option period, and the
expiration date, if any, of such options. The exercise of an option may be less
than fair market value of the underlying shares of common stock. No options
granted under the SOP will be transfereable by the optionee other than by will
or the laws of descent and distribution and each option will be exercisable,
during the lifetime of the optionee, only by such optionee.

         The exercise price of an option granted pursuant to the SOP may be paid
in cash, by the surrender of options, in common stock, in other property,
including the optionee's promissory note, or by a combination of the above.


                                       20
<PAGE>

         As of the date of this Annual Report, options have been granted in the
aggregate of 3,264,000 shares to the following individuals. All options granted
are exercisable by the respective individual from the date of grant through the
date of expiration.

                                Number of      Date of    Exercise     Date of
                            Options Granted*    Grant      Price     Expiration
Jennifer Swanson .....         500,000         02-15-02     $2.50     02-15-07
                               500,000         02-15-02     $0.75     02-15-07
                               500,000         02-15-02     $1.00     02-15-07

Alan Schwartz .....            500,000         02-15-02     $2.50     02-15-07
                               500,000         02-15-02     $0.75     02-15-07
                               500,000         02-15-02     $1.00     02-15-07

Richard Goodhart .....          60,000         01-01-99    $12.09     01-01-04

Steven Wahrman .......          60,000         01-01-99    $12.09     01-01-04

Jean Paul Daveau .....          60,000         01-01-99    $12.09     01-01-04

Jeffrey Carus ........          24,000         07-01-00    $12.09     07-01-05

Julius J. Valente, Jr.          60,000         07-01-00    $12.09     07-01-05

TOTAL ................       3,264,000

* The original grant of options has been reduced in accordance with the reverse
stock split.

         No share options have been exercised as of the date of this Annual
Report.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth the name and address, as of the date of
this Annual Report, and the approximate number of shares of common stock of the
Company owned of record or beneficially by each person who owned of record, or
was known by the Company to own beneficially, more than five percent (5%) of the
Company's common stock, and the name and shareholdings of each officer and
director, and all officers and directors as a group as of the date of this
Annual Report based upon 12,219,655 shares outstanding.

Title of Class       Name and Address         Amount and Nature*     Percent
                     of Beneficial Owner     of Beneficial Owner     of Class

                                                          (1)(4)

Common Stock        Alan Schwartz                   2,325,000          13.4%
                    C/O 9091 North Military Trial
                    Palm Beach Gardens, FL 33410

                                                          (1)(4)(6)

Common Stock        Jennifer Swanson                2,280,000          13.1%
                    C/O 9091 North Military Trial
                    Palm Beach Gardens, FL 33410

                                                          (1)

Common Stock        Richard Goodhart                  604,373           3.5%
                    11730 Briarwood Circle
                    #1
                    Boynton Beach, FL 11788


                                       21
<PAGE>

Title of Class       Name and Address         Amount and Nature*     Percent
                     of Beneficial Owner     of Beneficial Owner     of Class

                                                          (1)

Common Stock        Bristol Consulting Ltd.         2,729,271          15.7%
                    7101 Shore Road
                    Suite 3J
                    Brooklyn, New York 11209

                                                          (5)

Common Stock        Edmund Tennenhaus               1,583,333           9.1%
                    C/O 9091 North Military Trail
                    Palm Beach Gardens, FL 33410

                                                         (1)(2)

Common Stock        All officers and                5,209,373          29.9%
                    directors as a group
                    (3 persons)

*        The original issuance of shares has been reduced in accordance with the
         reverse stock split and subsequently increased in accordance with the
         forward stock split.

(1) These are restricted shares of common stock.

(2) This figure includes (a) 8250 shares of common stock held of record by Mr.
Schwartz; and (b) an assumption of the exercise by Mr. Schwartz of an aggregate
of 1,500,000 Stock Options to acquire 1,150,000 shares of common stock. As of
the date of this Annual Report, no Stock Options have been exercised.

(3) This figure includes (a) 750,000 shares of common stock held of record by
Ms. Swanson; and (b) an assumption of the exercise by Ms. Swanson of an
aggregate of 1,500,000 Stock Options to acquire 1,500,000 shares of common
stock. As of the date of this Annual Report, no Stock Options have been
exercised.

(4) This figure includes (a) 544,397 shares of common stock held of record by
Mr. Goodhart; and (b) an assumption of the exercise by Mr. Goodhart of an
aggregate of 60,000 Stock Options to acquire 60,000 shares of common stock. In
the event the Company should default on the promissory note with the Bank of
Smithtown, pursuant to the terms of the settlement agreement, the Bank of
Smithtown may foreclose on the Shares held of record by Mr. Goodhart, which have
been pledged to secure the Company's Obligations to the Bank of Smithtown, and
may sell such shares to a third party. As of the date of this Annual Report, no
Stock Options have been exercised.

(5) This figure includes (a) 1,325,000 shares of common stock held of record;
and (b) an assumption of the exercise of an aggregate of 3,000,000 Stock Options
to acquire 3,000,000 shares of common stock.

         There are no arrangements or understanding among the entities and
individuals referenced above or their respective associates concerning election
of directors or any other matters which may require shareholder approval.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         EMPLOYMENT AGREEMENTS

         During 2002, the Company entered into employment agreements with two
executive officers, which provide for annual salaries of $120,000 and $114,000;
common stock grants of 575,000 and 500,000 shares during the year ended December
31, 2002 valued at $155,250 and $115,000 respectively. The executives were each
awarded options to purchase 500,000 shares at $2.50; 500,000 shares$1.00; and
500,000 shares at $.75, for a period of five years. The agreement also provides
for stock awards of up to 125,000 shares of common stock on each anniversary
through 2007.

         LOANS/NOTES PAYABLE TO OFFICERS


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<PAGE>

         As of December 31, 2003, the Company owed an aggregate of approximately
$551,000 pursuant to loans made by Mr. Steven Wahrman, a director and Executive
Vice President. Of the aggregate amount of $380,143 due and owing to Mr.
Wahrman, $50,000 is represented by a promissory note with interest accruing at
8% per annum due on demand, $240,000 is represented as a loan personally secured
by Mr. Wahrman on behalf of the Company through a financial institution which
bears interest at 9.25% and due on demand, $7,500 is represented by a promissory
note with interest accruing at 10% per annum due on demand, $3,500 is
represented by a promissory note with interest accruing at 10% per annum due on
demand, and $79,143 is represented as advances and unreimbursed expenses, which
are non-interest bearing.

         The Company also owes a prior director, Mr. Ives Wahrman, approximately
$102,000 with interest accruing at 10% per annum due on demand.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a) The following exhibits are filed as part of this Annual Report: None.

                  31.1 and 31.2 Certifications Pursuant to 18U.S.C. Section 1350
                  as adopted pursuant to Section 906 of the Sarbones - Oxley
                  Act.

                  32.1 and 31.2 Certification Pursuant to 18U.S.C. Section 1350
                  as adopted pursuant to Section 906 of the Sarbones - Oxley
                  Act.

(b) Reports on Form 8-K:

                  Filed on or about April 19, 2004, regarding an event dated
                  April 13, 2004.

ITEM 14. CONTROLS AND PROCEDURES

         The Company, under the supervision of the President, has conducted an
evaluation of the effectiveness of the design and operation of the Company's
disclosure controls and procedures within ninety (90) days of the filing date of
this Annual Report. Based upon the results of this evaluation, the Company
believes that they maintain proper procedures for gathering, analyzing and
disclosing all information in a timely fashion that is required to be disclosed
in its reports under the Securities Exchange Act of 1934, as amended. There have
been no significant changes in the Company's controls subsequent to the
evaluation date.

         There were no significant changes in the Company's internal control or
in other factors that could significantly affect the Company's internal controls
subsequent to the evaluation date.


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<PAGE>

                                   SIGNATURES

         In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                 ACCIDENT PREVENTION PLUS, INC.

Date: April 28, 2004             BY: /S/ ALAN SCHWARTZ
                                     ---------------------------------
                                 Alan Schwartz, President and CEO


Date: April 28, 2004             BY: /S/ JENNIFER SWANSON
                                   -----------------------------------
                                 Jennifer Swanson, Executive Vice
                                 President and Chief Financial Officer


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