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, 2002

[ ]      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.)

                            9091 North Military Trail
                                    Suites 12
                        Palm Beach Gardens, Florida 33418
                        ---------------------------------
                    (Address of Principal Executive Offices)

                                 (561) 721-2220
                           (Issuer's telephone number)

                             325 Wireless Boulevard
                            Hauppauge, New York 11788

              (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,
2002): $150,679

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, 2003: $

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 March 31, 2003
Common Stock, $.001 par value                        11,219,655*

*The shares issued and outstanding have been adjusted to take into account the
reverse stock split of 10 to 1 effectuated November 26, 2001 and subsequently
adjusted to take into account the forward stock split of 1 to 1.2 effectuated
April 10, 2002.

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                                                                            PAGE
PART I

ITEM 1.      DESCRIPTION OF BUSINESS                                          3

ITEM 2.      PROPERTIES                                                      12

ITEM 3.      LEGAL PROCEEDINGS                                               13

ITEM 4.      SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS             14

ITEM 5.      MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
               STOCKHOLDER MATTERS                                           15

ITEM 6.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
               CONDITION AND RESULTS OF OPERATIONS                           19

ITEM 7.      FINANCIAL STATEMENTS                                            23

ITEM 8.      CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS OF
               ACCOUNTING AND FINANCIAL DISCLOSURE                           24

ITEM 9.      DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
               CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a)
               OF THE EXCHANGE ACT                                           25

ITEM 10.     EXECUTIVE COMPENSATION                                          26

ITEM 11.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
               AND MANAGEMENT                                                29

ITEM 12.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                  30

ITEM 13.     EXHIBITS AND REPORTS ON FORM 8-K                                31

SIGNATURES                                                                   32



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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 (pre- split 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 (pre-split 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 APP3000 and the Eye Q series which was done in
conjunction with the Qualcomm communication system. During the fiscal year these
products and related products generated little revenues.

         During fiscal year 2002, 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. In March of 2002,
new management was put in place to drive the revenue side of the business and
assure that the Company is operated in the best interest of the shareholders.
Past management had spent many years in research and development and had done a
very credible job in that regard. But, the Company now feels it is the proper
time to get its products to the worldwide market place. 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.

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         During fiscal year ended December 31, 2002, sales of the APP On Board
Recording Systems products tot he Company's customers accounted for
approximately 100% of total revenues. For fiscal year ended December 31, 2002,
the Company had two unrelated customers that accounted for approximately 100% 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) non-transportation industries, such as the
medical fields. As of the date of this Annual Report, management of the Company
has been involved in multiple discussions and negotiations with members of the
European Economic Community and anticipates immediate generation of revenues
from the European marketplace from the sale of its APP On Board Recording
Systems. 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,
         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, and
         Eliminate non-authorized usage and theft.

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

         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

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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.

         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

                                        5
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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.

         Smart Card Technology. Management believes that the APP On Board
Recording Systems are unique in the industry due to use of the "Smart card"
technology. The use of APP On Board Recording Systems custom software gives the
APP On Board Recording Systems the ability to be easily upgraded and customized
to meet customer specifications and needs. It also gives the APP On Board
Recording Systems the ability to be utilized outside of the fleet vehicle
market.

         A Smart card is a small electronic device about the size of a credit
card that contains electronic memory and an embedded integrated circuit. The
integrated circuit laminated into the card holds information securely and
accurately. Smart cards can store information that they are programmed for. They
can be programmed and accessed by many types of electronic readers and writers.

         Management believes that use of the "Smart card" will allow the APP On
Board Recording Systems to be utilized by customers for non-transportation
operations, such as use in the medical field for recording and updating patient
records and in a wide variety of other fields where the monitoring, recording
and tracking of information is critical. "Smart card" technology may even be
used by customers of the Company to provide security in any area utilizing the
technology including, but not limited to, payroll, drivers' licenses, passports,
medical applications, debit cards, and student identification cards. See "Item
1. Description of Business - Business Operations - Manufacturing."

         MANUFACTURING

         During fiscal years 2001 and 2002, the APP On Board Recording Systems
products were primarily manufactured by Nexus Corporation, located in Vermont
("Nexus"). At December 31, 2001, Nexus had manufactured approximately 800 APP On
Board Recording Systems products.

         SCHLUMBERGER TECHNOLOGIES, INC. The Company entered into an agreement
dated May 12, 1999 with Schlumberger Technologies, Inc., a manufacturer of the
"Smart card" technology ("Schlumberger"). The agreement with Schlumberger
generally provides the Company with the non-exclusive right to implement and
utilize the Smart card technologies. As a part of such negotiations,
Schlumberger agreed to transfer to APP LLC all technology data relating to the
Smart card. Prior to the May 12, 1999 agreement, APP LLC and Schlumberger had
entered into a technology transfer agreement pursuant to which Schlumberger
agreed to provide APP LLC (i) access to all Smart card technology and associated
products for development and distribution by Schlumberger, and (ii) the ability
to employ the Smart card technology. APP LLC had also entered into
non-disclosure agreements with Schlumberger.

         As of the date of this Annual Report, the Company has the software,
tooling, readers and cards to program the APP On Board Recording Systems
products for various applications.

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         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. Management
anticipates a potential slight redesign, which would provide a manufacturing
cost reduction of approximately 12% based on 5,000 units. Personnel of the
Company have recently examined the APP3000 system and have provided a written
report to management describing certain features that may need to be addressed.
Management anticipates that such final modifications and testing will be
completed in approximately one month from the date of this Annual Report.

         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."

         As of the date of this Annual Report, the Company has finalized the
development of APP has designed, engineered and developed 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 operating 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.

         In July of 2002, APP entered into a QWBS (Qualcomm Wireless Business
Solution) Development Agreement with Qualcomm Inc. to develop and design new
hardware and software to interface with the Qualcomm "OmniTRACS" and
OmniExpress. In September of 202, the project was completed and successfully
tested. As a result, APP has started selling the units in the United States to
Qualcomm's customer base.

         Accident Prevention Plus, Inc. as developed a new Low Cost product line
that interfaces seamlessly with Qualcomm(R) OmniTRACS(R) and OmniExpress (TM)
products. This new product "EyeQ" will notify the depot of a hard braking
occurrence, accident or near-miss situation and enable them to request a
complete download of the real time data 50 seconds before and 10 seconds after a
mishap. The EyeQ Hardware connects to the vehicle data bus for data collection
as well as to the OmniTRACS(R) or

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OmniExpress(TM) J-1708 for data transmission to the depot. The ease of
installation effectively makes this a plug and drive operations. The EyeQ
Softawre is intuitive in its use and is installed alongside QTRACS(R) on a
computer in Risk Management, Safety Departments or anywhere seen fit.

EyeQ Will:

    Notify depot of hard braking occurrences, accidents or near miss situations.
    Allow the depot to view events upon request
    Shoe 50 seconds before and 10 seconds after the incidence
    Reduce insurance and or self-insurance expenditures.

         The Company has planned new product development to meet the needs of a
consumer related low-cost system to sell to the major automobile manufacturers.

         CUSTOMERS AND MARKETING

         MARKETING STRATEGY. The Company intends to seek to capture market
niches in the fields of transportation and medicine. Some of the proposed
developments in the medical field include the use of Smart card technology in
doctors' offices, hospitals, ambulances and insurance companies. 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 a close to three billion miles traveled by commercial trucks each
year. Any company

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that requires fleet management, and fuel consumption as a large part of its
budget, is a potential customer for APP.

         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 signed 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. Michel
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.

         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.

         AMERICAN TRUCKING ASSOCIATION. On August 1, 1999, the Company and
American Trucking Association ("ATA") entered into a contract (the "ATA
Contract") pertaining to a federally funded project administered by the Federal
Highway Administration and ATA that involves the use of the Company's products
to study fatigue in drivers. The ATA Contract provides for the integration of
certain "Fatigue Technologies" utilizing the Company's on-board recording
systems for data collection and validation of such

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technologies. The federally funded project is funded pursuant to legislation
passed under the Clinton administration, which is designed to reduce accidents
on the nation's highways due to driver fatigue.

         During fiscal year 2001, the Company ran successful pilot tests with
certain vehicles and worked on modifications to the interface unit that were
deemed necessary due to the changes made by the various technologies, which are
to be interfaced with the Company's APP On Board Recording Systems systems. As
of the date of this Annual Report, the Company is involved in the final
installation of the federally funded project by engaging in further pilot
project testing and the re-design of the interface to allow collection of data
from all the systems (safetrack, Perclos Camera and the Howard Power Center
Steering system). ATA is currently testing approximately six groups of four
drivers for a period of four weeks each and the Company is responsible for the
collection of all data, printing out summary reports by use of the Data
Acquisition System and associated software, and creating all required data
files. Management believes that the Company's APP On Board Recording Systems
systems may subsequently be installed on Challenger Motor Freight trucks located
in Canada.

         Other members of the federally funded project consortium include: (I)
the University of Pennsylvania, (ii) Canadian Trucking Alliance, (iii) Transport
Canada, (iv) Howard Power Steering, (v) Safe-Track, (vi) the United States
Department of Transportation, and (vii) Perclos Camera provided by CM.

         JB HUNT TRUCKING PILOT PROGRAM. As of the date of this Annual Report,
the Company and J.B. Hunt Trucking ("JBHT") have been engaged in a pilot program
test on two long-and local-haul vehicles. Management of the Company believes
that the data collected proves the economic savings of utilization of the
APP+Series systems and products, and have asked for a presentation of the
collected data to management of JBHT. A representative of JBHT was present at CM
Driver Training Institute on November 7, 2001 to see additional demonstrations
of the APP+Series systems. Management of the Company believes that to date the
pilot tests have been successful and anticipates that by the end of the first
quarter of 2002, a decision will be made by management of JBHT regarding the
potential purchase of lease by JBHT of the Company's APP On Board Recording
Systems systems.

         NORTH-SHORE LONG ISLAND JEWISH HEALTH SYSTEMS. The Company entered into
an agreement dated August 31, 1999 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. As of the date of
this Annual Report, the Company did not install any additional APP3000 onboard
recording systems. Therefore, on April 3, 2001, North Shore Hospital initiated a
lawsuit in the Supreme Court of the State of New York alleging that the Company
breached its agreement with North Shore Hospital. See "Item 3. Legal
Proceedings".

         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


                                       10
<PAGE>


         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 consultants.

         (I)      In the prior fiscal year, Accident Prevention Plus and Bristol
                  Consulting reached a settlement and terminated the contractual
                  obligations of Bristol Consulting, Ltd.

                  During fiscal years 2001 and 2000, Bristol performed certain
                  services on behalf of the Company including, but not limited
                  to, (i) the development of international markets and
                  consummation of the distribution contract with AOC; (ii) the
                  establishment of contractual relationships for the manufacture
                  of accelerometers in the Far East. During fiscal years 1998
                  and 1999, respectively, Bristol was primarily responsible for
                  the introduction to the Company of Asteria, which manufactures
                  the accelerometers for the Company, and for the introduction
                  to the Company of AOC.

                  As of August 24, 2001, the Company had accrued a total of
                  $890,916.44 relating to (i) the Bristol Consulting Agreement;
                  (ii) other consulting services rendered; (iii) funds advanced
                  to the Company; (iv) accrued interest; and (v) incurred
                  expenses. Therefore, the Company and Bristol entered into debt
                  forgiveness agreements and settlement agreements pursuant to
                  which the Company agreed to grant to Bristol an option to
                  convert such debt due and owing into shares of the Company's
                  restricted common stock as satisfaction and settlement of the
                  debt. See "Item 5. Market for Registrant's Common Equity and
                  Related Stockholder Matters - Recent Sales of Unregistered
                  Securities".

                  As of the date of this Annual Report, the Bristol Consulting
                  Agreement has been terminated and no longer has any force or
                  effect.

         (ii)     During 2002, the Company entered into employee agreements with
                  two executives.


                                       11
<PAGE>


         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 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. On approximately November 10, 2001, the Company
re-located its principal place of business to 9091 North Military Trail, Suite
12, Palm Beach Gardens, Florida 33409, telephone number 561.721.2220 and
facsimile number 561.721.2225. As of the date of this Annual Report, the Company
no longer maintains an office in Hauppauge, New York. The Board of Directors of
the Company approved the change of the Company's principal place of business
based upon several factors including, but not limited to, the annual reduction
of approximately 50% in monthly rental overhead. As of the date of this Annual
Report, the Company has entered into a two- year lease agreement with The
Marquis Corporation, at a monthly rental rate of $2,900, for an aggregate amount
of $69,600, as amended in November 2002, now provides for a monthly rate of
$1,000.

                                       12
<PAGE>

ITEM 3.      LEGAL PROCEEDINGS

         HSBC BANK USA

         On September 17, 1996, APP LLC entered into a one-year promissory note
with HSBC Bank USA ("HSBC") which provided that payments of interest only at
prime plus 2% per annum be made, with the principal amount of $470,715 due on
demand. Such promissory note was approximately 90% guaranteed by the Small
Business Administration. During fiscal year 1999, the Company ceased making
payments under the terms of the note, and subsequently entered into negotiations
with HSBC regarding a long-term payout.

         On approximately September 21, 2000, HSBC initiated legal proceedings
against the Company and Richard Goodhart and Steven Wahrman, individually as
guarantors, in the Supreme Court of New York in and for the County of New York
(the "HSBC Lawsuit"). In the HSBC Lawsuit, HSBC alleged that the Company failed
to comply with and was in default under the terms of the promissory note and
supporting financing documents.

         On November 3, 2000, HSBC, the Company and Messrs. Goodhart and Wahrman
entered into a settlement agreement (the "HSBC Settlement Agreement"), pursuant
to which (i) judgment was confessed for the amounts due and owing HSBC; (ii) the
personal guarantees of Messrs. Goodhart and Wahrman were provided and all of the
assets of the Company were pledged as collateral to secure the note; and (iii)
certain payments were made which included a final payment on or before August
20, 2001 of the outstanding balance of total indebtedness. The terms of the HSBC
Settlement Agreement further provided that HSBC (i) agreed to a stipulation of
discontinuance (to withdraw its pending suit without prejudice to the
re-commencement of same upon a default under the HSBC Settlement Agreement, (ii
agreed to forbear from commencing any other action or proceeding against the
Company and Messrs. Goodhart and Wahrman with respect to the indebtedness of the
Company until August 20, 2001, (iii) agreed to forbear from entering judgment
against the Company and Messrs. Goodhart and Wahrman until August 20, 2001, and
(iv) retain the right to commence an action against the Company and Messrs.
Goodhart and Wahrman in the event the Company defaults under the terms of the
HSBC Settlement Agreement.

         On approximately August 9, 2001, the Company and HSBC renegotiated the
payment terms of the balance due and owing, and HSBC, the Company, Steve Wahrman
and Richard Goodhart entered into a ratification and forbearance agreement (the
"Ratification Agreement"). At the time of execution of the Ratification
Agreement, the Company paid $1,000 to HSBC. The terms of the Ratification
Agreement required the Company to pay the balance due and owing in three monthly
equal installments by October 23, 2001. The forbearance provisions under the
HSBC Settlement Agreement as described above remained in effect.

         As of December 31, 2002, the Company had made all requisite payments
and the promissory note was paid in full.

         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

                                       13
<PAGE>


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.

         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



                                       14
<PAGE>


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

         MARKET INFORMATION

         On December 27, 2000, the Company's common stock commenced trading on
the Over-the-Counter Bulletin Board under the symbol "ACPL". The market for the
Company's common stock is limited, volatile and sporadic. The following table
sets forth the high and low sales prices relating to the Company's common stock
for fiscal year 2001 (as adjusted) and fiscal year 2002. These quotations
reflect inter-dealer prices without retail mark-up, mark-down or commissions,
and may not reflect actual transactions.



                                            FISCAL YEAR ENDED
                                                DECEMBER 31,
                                         2001                  2002
                                   HIGH BID  LOW BID     HIGH BID LOW BID

First Quarter                      $3.90     $1.73       $ .95      $0.21
Second Quarter                      1.26      0.54         .90       0.17
Third Quarter                       0.78      0.19         .30       0.15
Fourth Quarter                      0.21      0.18         .30       0.13

First Quarter 2003                 $0.35



         HOLDERS

         The  11,219,655 shares of common stock outstanding as of the date of
this Annual Report are held by approximately 300 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

         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 April 10,
2002. The Board of Directors based its decision upon an analysis of the
Company's potential business prospects, which the Board of Directors believes,
will quickly escalate the Company's growth over the next six months. The Board
of Directors further believes that the future per-share price of the common
stock will reflect that growth, and thus determined that this was an opportunity
to reward the Company's shareholders and increase the number of available shares
on the market.

         On March 25, 2002, the Company filed a 10b-17 notice with the National
Association of Securities Dealers, Inc. to effectuate the forward stock split as
of April 10, 2002. On April 10, 2002, the reverse stock split was effectuated
and the 8,783,931 shares of common stock issued and outstanding were increased
to 10,540,717 shares of common stock issued and outstanding.


         RECENT SALES OF UNREGISTERED SECURITIES

         (i) During fiscal years 1999 and 2000, the Company executed several
convertible promissory notes aggregating approximately $952,500. The terms of
the respective notes are generally (i) accrual of interest at either 10% or 15%
per annum payable monthly in arrears or upon maturity, (ii) due and payable on
December 31, 2001, and (iii) after

                                       15
<PAGE>


September 30, 2000, the noteholder has the right to convert the principal and
accrued interest in whole or in part into shares of common stock at $1.45 per
share.

         During January 2001, seven noteholders exercised their respective right
to convert the principal and accrued interest on the notes into shares of common
stock. Pursuant to the terms of the convertible notes, the Company issued an
aggregate of 55,923 shares of its common stock to the seven noteholders based
upon conversion of notes in the aggregate amount of $76,400 of principal and
$4,688 of interest. The Company issued the shares to the seven noteholders in
reliance upon the exemption from registration provided by Section 4(2) and
Regulation D, Rule 506, of the Securities Act of 1933, as amended (the
"Securities Act"). The noteholders represented to the Company that they acquired
the shares for their own respective accounts, and not with a view to
distribution, and that the Company made available to them all material
information concerning the Company.

         During April 2001, three noteholders exercised their respective right
to convert the principal and accrued interest on the notes into shares of common
stock. Pursuant to the terms of the convertible notes, the Company issued an
aggregate of 624,888 shares of its common stock to the three noteholders based
upon conversion of notes in the aggregate amount of $787,000 of principal and
$119,088 of interest. The Company issued the shares to the three noteholders in
reliance upon the exemption from registration provided by Section 4(2) and
Regulation D, Rule 506, of the Securities Act. The noteholders represented to
the Company that they acquired the shares for their own respective accounts, and
not with a view to distribution, and that the Company made available to them all
material information concerning the Company.

         (ii) On June 22, 2001, the Company entered into a settlement agreement
with Descap Financial Services ("DFS") pursuant to which the Company agreed to
settle a debt in the approximate amount of $103,400 due and owing to DFS which
included consulting fees, back rent for office space and funding assistance.
Pursuant to the terms of the settlement agreement, the Company agreed to issue
an aggregate of 220,000 shares of its restricted common stock to DFS at $0.47
per share as settlement of the aggregate debt due and owing to DFS; and (ii) DFS
agreed to accept the issuance of the 220,000 shares as settlement for such debt.
The Company issued the shares to DFS in reliance upon the exemption from
registration provided by Section 4(2) of the Securities Act. DFS represented to
the Company that it acquired the shares for its own account, and not with a view
to distribution, and that the Company made available to it all material
information concerning the Company.

         (iii) On June 22, 2001, the Company issued 55,000 shares of its
restricted common stock at $0.47 per share to a holder of a promissory note in
the amount of $25,000 in settlement for payment of the aggregate amount of
principal and interest due and owing. During October 2000, the Company had
entered into such promissory note, which provided for a two-year term and
interest at the rate of 7% per annum. The creditor agreed to accept issuance of
the 55,000 shares of restricted common stock at $0.47 per share in settlement of
an aggregate debt in the amount of $25,850 due and owing, inclusive of principal
and accrued interest. The Company issued the shares to the creditor in reliance

                                       16
<PAGE>


upon the exemption from registration provided by Section 4(2) and Regulation D,
Rule 506, of the Securities Act. The creditor represented to the Company that he
acquired the shares for his own account, and not with a view to distribution,
and that the Company made available to him all material information concerning
the Company.

         (iv) On May 1, 2001, the Company issued 175,000 shares of its
restricted common stock at $1.45 per share to DFS in settlement of a debt in the
amount of $253,750.00. DFS agreed to accept issuance of the 175,000 shares of
restricted common stock at $1.45 per share in settlement of an aggregate debt in
the amount of $253,750 due and owing. The Company issued the shares to the
creditor in reliance upon the exemption from registration provided by Section
4(2) of the Securities Act. The creditor represented to the Company that he
acquired the shares for his account, and not with a view to distribution, and
that the Company made available to him all material information concerning the
Company.

         (v) The Company and Bristol Consulting Ltd. ("Bristol") entered into a
consulting agreement dated July 30, 1998 for a period of five years (the
"Consulting Agreement") pursuant to which the Company agreed to pay Bristol a
monthly fee of $5,000.00 for the first three months of the Consulting Agreement
and thereafter a monthly fee of $10,000.00 for the duration of the Consulting
Agreement for services rendered by Bristol to the Company. In accordance with
the terms of the Consulting Agreement, Bristol has the option to convert any
debt due and owing Bristol under the Consulting Agreement into shares of the
Company's restricted common stock at the rate of $0.132 per share.

         During fiscal years 1999 and 2000, Bristol advanced funds to the
Company for working capital, which amounts were evidenced by a series of
promissory notes, as amended.

         As of August 6, 2001 and August 27, 2001, the Company and Bristol
entered into an agreement buyout and forgiveness of debt (the "Forgiveness of
Debt Agreement") evidencing an aggregate of $874,778.78 due and owing Bristol as
follows:

         (i) notes payable of $38,500.00; (ii) notes payable short term of
$156,000.00; (iii) accounts payable prior to year 2000 of $71,650.00; (iv)
accrued consulting fees year 2000 of $160,000.00; (v) accrued interest-long &
short term of $14,483.72; (vi) accrued travel & business expenses of $52,145.00;
(vii) accounts accrued payable of $102,000.06; and (viii) balance owed against
Consulting Agreement of $280,000.00.

         As of August 27, 2001, the Company and Bristol entered into a
settlement agreement (the "Settlement Agreement") pursuant to which the Company
ratified and confirmed that Bristol and its assignees have the option to convert
debt due and owing Bristol into shares of common stock at the rate of $0.132 per
share, and agreed to settle the aggregate debt of $874,778.78 due and owing by
the granting of such option to Bristol and its assignees to convert the
aggregate debt into 6,627,112 shares of the Company's restricted common stock at
the rate of $0.132 per share (which option would not be subject to adjustments
pursuant to any reverse stock split, recapitalization, combination of shares,
exchange of shares or other like change in the capital structure of the Company,
based upon Bristol's role in bringing new management to the Company, assistance
in raising additional capital in

                                       17
<PAGE>
         which certain shares of common stock issued to Bristol have been and
will be used to satisfy other contractual debts of the Company).

         On November 14, 2001, the Board of Directors held a meeting at which it
(i) ratified the Settlement Agreement and approved the issuance of 6,627,112
shares of its restricted Common Stock to Bristol and its assignees to satisfy
the debt of $874,778.78; (ii) acknowledged that Bristol had entered into certain
assignment agreements dated July 30, 1998 with Sampson Global Ltd., World Asset
Management Ltd. and Atlantic Financial Enterprises Ltd., respectively (the
"Entities") in which Bristol proportionately assigned to the Entities certain of
its rights to the debt and to its right to the option to convert the debt into
shares of common stock; (iii) acknowledged receipt of conversion notices from
the Entities, respectively; (iv) authorized the issuance of an aggregate of
1,098,485 shares of its restricted common stock to the Entities to settle a
portion of the debt due and owing to Bristol in the amount of $145,000.00.

         On November 30, 2001, the Company issued the shares to Sampson Global
Ltd., World Asset Management Ltd. and Atlantic Financial Enterprises Ltd. in
reliance upon the exemption from registration provided by Section 4(2) of the
Securities Act. Each of the Entities represented to the Company that it acquired
the shares for its own respective account, and not with a view to distribution,
and that the Company made available to it all material information concerning
the Company.

         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.

         As of December 13, 2001, the Company and Bristol entered into an
amendment to the Settlement Agreement pursuant to which the Company ratified and
confirmed that Bristol and its assignees have the option to convert debt due and
owing Bristol into shares of common stock at the rate of $0.132 per share, and
agreed to settle the aggregate debt of $890,916.44 due and owing by the granting
of such option to Bristol and its assignees to convert the aggregate debt into
6,749,367 shares of the Company's restricted common stock at the rate of $0.132
per share (which option would not be subject to adjustments pursuant to any
reverse stock split, recapitalization, combination of shares, exchange of shares
or other like change in the capital structure of the Company, based upon
Bristol's role in bringing new management to the Company, assistance in raising
additional capital in which certain shares of common stock issued to Bristol
have been and will be used to satisfy other contractual debts of the Company).

     On January 16, 2002, the Board of Directors held a meeting at which it (i)
approved the amendment to the Settlement Agreement and the issuance of 6,749,367
shares of restricted common stock to Bristol and its assignees to satisfy the
debt of $890,916.44; (ii) acknowledged that Bristol had entered into certain
assignment agreements dated July 30, 1998 with Sampson Global Ltd., World Asset
Management Ltd. and Atlantic Financial Enterprises Ltd., respectively, in which
Bristol proportionately assigned to the Entities certain of its rights to the
debt and to its right to the option to convert the debt into shares of common
stock; (iii) acknowledged receipt of a conversion notice from Sampson Global
Ltd.; (iv) authorized the issuance of an aggregate of 454,545 shares of its
restricted common stock to Sampson Global Ltd. and the issuance 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.

         On January 24, 2002, the Company issued the shares to Bristol and
Sampson Global Ltd. in reliance upon the exemption from registration provided by
Section 4(2) of the Securities Act. Bristol and Sampson Global Ltd. each
represented to the Company that it acquired the shares for its own respective
accounts, and not with a view to distribution, and that the Company made
available to it all material information concerning the Company.

                                       18
<PAGE>

During the year ended December 31, 2002, creditors converted 3,648,662 shares of
common stock valued at $1,294,667, resulting in a loss on debt extinguishment
totaling $163,599.

During 2002, holders of convertible debt converted principle of $125,000 into
1,550,000 shares of common stock.

During 2002, the Company issued 1,075,000 shares of its common stock with rights
outstanding to two executives valued at $270,250.

During the year ended December 31, 2002, the Company issued 200,000 shares to a
consultant for services valued at $50,000 charged to selling, general and
administrative expenses and 124,361 shares valued at $31,090 charged to debt and
equity financings


See "Item 11. Security Ownership of Certain Beneficial Owners and Management".

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. The design for the APP3000 systems has been
finalized and is ready for sale and distribution to the target market. In July
of 2002, APP entered into a QWBS (Qualcomm Wireless Business Solution)
Development Agreement with Qualcomm, Inc. to develop and design new hardware and
software to interface with the Qualcomm "OmniTRACS" and OmniExpress. In
September of 2002, the project was completed and successfully tested. As a
result, APP has started selling the units in the United States to Qualcomm's
customer base.

         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 2002, management of the Company deemed it imperative
that the
                                       19
<PAGE>

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.

         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 year ended December 31, 2002, 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.

         FISCAL YEAR ENDED DECEMBER 31, 2002 COMPARED WITH FISCAL YEAR ENDED
DECEMBER 31, 2001

         RESULTS OF OPERATION. The Company's net losses for fiscal year ended
December 31, 2002 were $857,130 compared to a net loss of $2,667,354 for fiscal
year ended December 31, 2001 (a decrease in the loss of $1,810,224 or an
improvement of 68%).

         Net sales for fiscal years ended December 31, 2002 and 2001 were
$150,679 and $64,628, respectively. Net sales increased by approximately
$150,679 or 233% for fiscal year ended December 31, 2002 as compared to fiscal
year ended December 31, 2001. The increase in net sales during fiscal year ended
December 31, 2001 was primarily due to customization of installed systems for
the Company's APP On Board Recording Systems products to its customers.

         Gross profit (loss) for fiscal years ended December 31, 2002 and 2001
amounted to $23,438 and $(52,053), respectively, or an increase of $75,491. The
improvement margins for 2002 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.

         The negative gross profit in 2001 was primarily a result of a decrease
in net sales during fiscal year ended December 31, 2001. Moreover, the overall
reduced net sales and negative gross profit during fiscal year ended December
31, 2001 was a result of discounts for volume purchases, and absorbed costs due
to the dramatic downturn in the technology investment of companies.


                                       20
<PAGE>

   Selling, general and administrative expenses for fiscal years ended
December 31, 2002 and 2001 were $873,135 and $1,921,972, respectively (a
decrease of $1,048,837 or 55 %). The decrease in selling, general and
administrative expenses for fiscal year ended December 31, 2002 were primarily
due to the Company incurring less costs associated with its officers salaries,
and outside consulting and professional fees, and reduced personnel costs.

         Research and development expenses for fiscal year ended December 31,
2002 were $40,583 as compared to $7,393 for fiscal year ended December 31, 2001
(an increase of $33,190). The additional research and development expenses
during fiscal year ended December 31, 2002 was primarily focused on upgrading
existing product lines and is still curtailed by the Company's limited funds and
the emphasis by the Company on the marketing of its products for specific uses.
Management believes that as the Company's cash flow increases, additional funds
will be expended on further research and development relating to new products.
Management intends to hire in-house engineers to lower the expenses related to
subcontracting out for the development of its products.

         Interest expense decreased to $ during fiscal year ended December 31,
2002 compared to interest expense of $139,634 during fiscal year ended December
31, 2001 (a decrease of $ or %). The decrease in interest expense resulted
primarily from the settlement of certain debts and accrued interest due and
owing and the conversion of certain convertible notes payable.

         Other losses during fiscal year ended December 31, 2001 include
amortization of debt discount in the amount of $526,451, resulting from the debt
settlement with Bristol.

         As a result of these factors, net loss for the year ended December 31,
2002 was $857,130 as compared to a net loss of $2,667,354 for the year ended
December 31, 2001. Management believes that the decrease in net loss during the
fiscal year ended December 31, 2002 as compared to fiscal year ended December
31, 2001 is attributable primarily to a substantial curtailment, the incurrence
of selling, general and administrative expenses, and the amortization of debt
discount. The Company's comprehensive net loss during fiscal year ended December
31, 2002 was approximately ($857,130) or ($.11) per common share compared to a
comprehensive net loss of ($2,673,029) or ($1.19) per common share during the
fiscal year ended December 31, 2001. The weighted average number of common
shares outstanding, as adjusted were 1,870,282 for fiscal year ended December
31, 2002 compared to 2,244,338 for fiscal year ended December 31, 2001.


                                       21
<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 $150 in net sales as of fiscal year ended
December 31, 2001, an increase of approximately 90% over revenues of $ generated
as of fiscal year ended December 31, 2000. Although there was a decrease in net
sales during fiscal year ended December 31, 2001, management anticipates that
overall generation of revenues will continue to increase on an annual basis
based on existing contracts and pilot programs for testing of the products that
are now coming to finalization. Pilot programs currently exist with
approximately seventeen companies.

         Management believes that the Company's continued growth and financial
success will depend on its ability to (i) strengthen and increase its customer
base by enhancing and diversifying use of the APP On Board Recording Systems
products and related products; (ii) increase the number of customers and expand
into additional markets; (iii) control production costs; and (iv) increase the
production rate of the APP On Board Recording Systems products and related
products.

         As of December 31, 2002, the Company's current assets were $ and its
current liabilities were $ , which resulted in a working capital deficit of $ .
As of December 31, 2002, the Company's total assets were $173,165 and its total
liabilities were $4,156,005. As of December 31, 2001, the Company's total
liabilities exceeded its total assets by $3,124,429. The Company's stockholders'
deficit decreased from ($4,660,145) for fiscal year ended December 31, 2001 to
($3,124,429) for fiscal year ended December 31, 20012

         As of December 31, 2001, the Company was in arrears with most of its
creditors. As of the date of this Annual Report, the financial institution has
either taken limited action or no action. Although management is optimistic that
they will be able to negotiate waivers and/or restructure this loan, investors
are cautioned that there can be no assurance that management will be able to
achieve these objectives.

                                       22
<PAGE>


         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.

         As of the date of this Annual Report, the Company is engaged in
negotiations with and has offered a compromise to the Internal Revenue Service
to reduce the Company'sliability. The Company has not entered into any formal
contractual arrangements with most of its creditors, for extension of terms and
conversions to equity. Management intends to continue making payments as funds
are available until such arrangements are consummated.

         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 2002.

         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".

                                       23

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

                                                                     Page No.

Independent Auditors' Report                                             F-1


Consolidated Balance Sheet At December 31, 2002                          F-2

Consolidated Statements of Operations and Comprehensive Loss
  For the Years Ended December 31, 2002 and 2001                         F-3

Consolidated Statements of Stockholders' Deficit
  For the Years Ended December 31, 2001 and 2002                         F-4


Consolidated Statements of Cash Flows For the Years
  Ended December 31, 2001 and 2002                                       F-8

Notes to Consolidated Financial Statements                               F-9






<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-1

<PAGE>



                 ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                              AT DECEMBER 31, 2002

      ASSETS

Current Assets:
  Cash                                                             $     1,383
  Accounts receivable                                                   18,848
  Inventory                                                             20,348
  Prepaid expenses and other current assets                              4,134
                                                                     ---------

      Total Current Assets                                              44,714

Property and Equipment, Net                                             14,679

Other assets                                                           113,772
                                                                      --------

      Total Other Assets                                               113,772
                                                                      --------

      Total Assets                                                     173,165
                                                                      ========



      LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities:
  Notes and loans payable, current portion                             165,700
  Notes and loans payable - related parties                            532,691
  Convertible notes payable                                            180,000
  Convertible notes payable - related parties                          250,000
  Accounts payable                                                     707,038
  Accrued expenses and other liabilities                               675,676
                                                                     ---------

      Total Current Liabilities                                      2,511,105

Notes and loans payable, net of current portion                        344,200

Common Stock Subject to Rescission Offer, - $.001 par value,
  14,995 shares issued and outstanding                                 181,189

Bridge loans expected to convert to equity                             261,100

Commitments & Contingencies                                                  -

Stockholders' Deficiency:
  Common stock - $.001 par value, 50,000,000 shares authorized;
   10,951,655 issued and outstanding                                    10,951
  Additional paid-in capital                                         6,747,115
  Accumulated deficit                                               (9,989,162)
                                                                     ---------

      Total Stockholders' Deficit                                   (3,231,096)
                                                                     ---------

      Total Liabilities and Stockholders' Deficit                   $   66,498
                                                                     =========


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

                                                                             F-2

<PAGE>

<TABLE>
<CAPTION>
                 ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
          CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

                                                                     For the Years Ended
                                                                         December 31,
                                                                   2001                2002
                                                                ----------          ----------
<S>                                                           <C>                 <C>

Net Sales                                                      $    64,628          $  150,679

Cost of Sales                                                      116,681             127,241
                                                                 ---------           ---------

Gross Profit (Loss)                                                (52,053)             23,438
                                                                 ---------           ---------

Expenses:
  Selling, general and administrative                            1,921,972             873,135
  Research and development                                           7,393              40,583
                                                                 ---------           ---------

      Total Expenses                                             1,929,365             917,718
                                                                 ---------            --------

Loss Before Other Income (Expenses)                             (1,981,418)           (890,280)
                                                                 ---------           ---------

Other Income (Expenses):
  Debt issue costs and extinguishment gains (net)                 (526,451)            149,840
  Loss on foreign currency transactions                            (19,851)           (116,690)
  Gain on sale of equipment                                              -             404,772
  Interest expense                                                (139,634)           (354,932)
                                                                 ---------           ---------

      Total Other Expenses                                        (685,936)             33,150
                                                                 ---------           ---------

Loss From Operations Before Provision For Income Taxes          (2,667,354)           (957,130)

Provision For Income Taxes                                               -                   -
                                                                 ---------           ---------

Net Loss From Operations                                        (2,667,354)           (957,130)

Other Items of Comprehensive Operations
  - Foreign Currency Translation                                    (5,675)                  -
                                                                 ---------           ---------

Comprehensive Loss                                             $(2,673,029)         $ (857,130)
                                                                 =========           =========


Basic Earnings Per Share:
  Net Loss                                                     $     (1.19)         $     (.11)
                                                                 =========           =========

  Weighted Average Number of Shares                              2,244,338           7,857,785
                                                                 =========           =========
    Outstanding

</TABLE>

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

                                                                             F-3
<PAGE>



                 ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
                      FOR THE YEARS ENDED DECEMBER 31, 2001


<TABLE>
<CAPTION>

                                                                              Other
                                                                            Accumulated
                                           Common Stock       Additional   Comprehensive
                                       --------------------    Paid-in        Income
                                         Shares     Amount     Capital        (Loss)
                                       ---------   --------   ---------    ------------
<S>                                   <C>         <C>      <C>            <C>

Balances at December 31, 2000          1,798,824   $1,799   $ 1,170,607    $ 5,675

Cash contribution by shareholder              --       --       440,866         --

Issuance of common stock for
  convertible notes                       68,081       68       987,108         --

Forgiveness of debt by shareholders       75,464       --            --         --

Common stock issuance cost                    --       --        (2,888)        --

Issuance of common stock for
  consulting and other expenses           75,162       75       347,396         --

Amortization of debt discount                 --       --       526,451         --

Foreign currency translation
  adjustment                                  --       --            --     (5,675)

Issuance of common stock for Bristol
  consulting fees                      1,098,485    1,099       143,901         --

Cancellation of accrued salaries due
  to officers                                 --       --       590,413         --

Net loss                                      --       --            --         --
                                       ---------   ------   -----------    -------

Balances at December 31, 2001          3,040,552   $3,041   $ 4,279,318    $    --
                                       =========   ======   ===========    =======

</TABLE>

(1) Share amounts for 2001 and prior have been restated to reflect the
one-for-ten reverse stock split on November 26, 2001.


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' DEFICIT
                      FOR THE YEAR ENDED DECEMBER 31, 2001




                                                           Total
                                        Accumulated    Stockholders'
                                         Deficit        Deficiency
                                       ------------   -------------

Balances at December 31, 2000          $(5,838,226)   $(4,660,145)

Cash contribution by shareholder                --        440,866

Issuance of common stock for
  convertible notes                             --        987,176

Forgiveness of debt by shareholders             --         75,464

Common stock issuance cost                      --         (2,888)

Issuance of common stock for
  consulting and other expenses                 --        347,471

Amortization of debt discount                   --        526,451

Foreign currency translation
  adjustment                                    --         (5,675)

Issuance of common stock for Bristol
  consulting fees                               --        145,000

Cancellation of accrued salaries due
  to officers                                   --        590,413

Net loss                                (2,667,354)    (2,667,354)
                                       ------------   -----------

Balances at December 31, 2001          $(8,505,580)   $(4,223,221)
                                       ============   ===========


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' DEFICIT
                      FOR THE YEAR ENDED DECEMBER 31, 2002




<TABLE>
<CAPTION>

                                                                          Other
                                                                        Accumulated
                                       Common Stock      Additional   Comprehensive
                                   --------------------   Paid-in        Income
                                    Shares      Amount    Capital        (Loss)
                                   --------    --------  -----------    ----------
<S>                               <C>         <C>       <C>           <C>

Balances at December 31, 2001      3,040,552   $ 3,041   $ 4,279,318    $       --

Adjustment 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     1,290,761     1,290,761

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            --

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   $ 6,227,330    $       --
                                  ==========   =======   ===========    ==========

</TABLE>


(1) Share amounts for 2001 and prior have been restated to reflect the
one-for-ten reverse stock split on November 26, 2001.


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


                                                                             F-6
<PAGE>


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






                                                    Total
                                  Accumulated    Stockholders'
                                    Deficit       Deficiency
                                  -----------    -----------

Balances at December 31, 2001     $(8,505,354)   $(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                            --      1.294,667

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

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)   $ 3,124,429
                                  ===========    ===========


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

                                                                             F-7

<PAGE>

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

<TABLE>
<CAPTION>
                                                                      For the Years Ended
                                                                          December 31,
                                                                    2001                2002
                                                                ------------        ------------
<S>                                                            <C>                 <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                      $(2,667,354)         $ (857,130)
  Adjustments to reconcile net loss to net
    cash used in operating activities:
  Amortization of debt discount                                     526,451              21,333
  Depreciation and amortization                                      52,251              49,124
  Net gains on cancellation of debt                                       -            (171,173)
  Common stock issued for consulting and other expenses             492,471              50,000
  Common stock issued in connection with employment
    agreements                                                            -             270,250
  Foreign currency translation                                       (5,675)                  -
  Changes in Assets (Increase) Decrease:
    Inventory                                                        23,273              18,327
    Accounts receivable                                              76,444             (18,848)
    Prepaid expenses and other current assets                        37,772              36,000
    Other assets                                                     10,962              (8,623)
  Changes in Liabilities Increase (Decrease):
    Cash overdraft                                                    8,623               8,623
    Accounts payable and accrued expenses                         1,126,473             293,868
                                                                  ---------            --------

      Net Cash Used In Operating Activities                        (318,309)           (316,872)
                                                                  ---------           ---------

CASH FLOWS USED IN INVESTING ACTIVITIES:
  Purchase of property and equipment                                (10,515)             (1,780)
                                                                  ---------           ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from issuance of notes and loans payable                  55,000                   -
  Repayments of notes and loans payable                            (368,105)           (120,542)
  Repayments of capital lease                                       (18,204)                  -
  Proceeds from issuance of convertible notes payable                     -             386,100
  Proceeds from issuance of common stock                                  -              78,239
  Repayment of notes and loans payable - related parties                  -             (30,000)
  Cash costs associated with common stock                            (2,888)                  -
  Proceeds from issuance of notes and loans payable -
    related parties                                                 221,565               6,238
  Cash contribution by shareholder                                  440,866                   -
                                                                  ---------           ---------

      Net Cash Provided By Financing Activities                     328,234             320,035
                                                                  ---------            --------

Net Increase (Decrease) in Cash                                        (590)              1,383

Cash and Cash Equivalents - Beginning of Year                           590                   -
                                                                 ----------           ---------


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

                                                                             F-8
</TABLE>

<PAGE>

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



NOTE 1 - ORGANIZATION AND NATURE OF BUSINESS

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 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.

EUROPEAN SUBSIDIARIES

On September 13, 1999, Accident Prevention Plus (UK) Limited ("APP UK") was
formed as a private limited company under the laws of England and Wales to
provide sales, marketing and technical support for the Company in Europe. APP UK
is a wholly-owned subsidiary of the Company. On December 17, 1999, Accident
Prevention Plus, France SARL ("APP France") was formed as a private Company
under the laws of France. APP France is a wholly-owned subsidiary of APP UK.
During the quarter ended December 31, 2001, management determined that it is in
the best economical interest of the Company to close its offices in France and
the U.K. effective December 31, 2001. As a result of the closings, the Company
wrote-off, all of its foreign assets totaling $49,436, which has been reflected
in the 2001 consolidated statement of operations. During 2002, certain of these
liabilities were discharged in the abandonment of these foreign subsidiaries,
and for the year ended December 31, 2002, the Company recorded gains on the
extinguishment of debt of $334,772 relating to these liabilities.

                                                                             F-9
<PAGE>

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


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, 2002 the
Company has incurred cumulative net losses of $9,362,711. Additionally, the
Company has a working capital deficit of $2,466,391 and a stockholders' deficit
of $3,124,429 and is in arrears on its bank debt and certain convertible notes
payable at December 31, 2001.

As of December 31, 2002, 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 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 and APP U.K. All
inter-company accounts and transactions have been eliminated in consolidation.

Inventory

Inventory amounting to $20,348 at December 31, 2002, 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. 109 "Accounting for Income Taxes"

                                                                            F-10
<PAGE>


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.

Fair Value Disclosure at December 31, 2001

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

Recently Accounting Pronouncements

In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statement No.
4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections."
SFAS No. 145 requires that gains and losses from extinguishment of debt be
classified as extraordinary items only if they meet the criteria in APB No. 30
("Opinion No. 30"). Applying the provisions of Opinion No. 30 will distinguish
transactions that are part of an entity's recurring operations from those that
are unusual and infrequent that meet the criteria for


                                                                            F-11
<PAGE>

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

classification as an extraordinary item. The Company is required to adopt SFAS
No. 145 no later than the first quarter of fiscal 2003, although early adoption
is allowed. The Company has not yet evaluated the impact from SFAS No. 145 on
its financial position and results of operations, if any.

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities." SFAS No. 146 addresses financial accounting
and reporting for costs associated with exit or disposal activities and
nullified Emerging Issues Task Force Issue No. 94-3, "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including certain costs incurred in a restructuring." SFAS No. 146 requires
that a liability at fair value for a cost associated with an exit or disposal
activity be recognized when the liability is incurred. However, an entity's
commitment to a plan, by itself, does not create a present obligation to others
that meets the definition of a liability. The provisions of this statement are
effective for exit or disposal activities that are initiated after December 31,
2002, with early application encouraged. The Company has not yet determined the
impact of SFAS No. 146 on its financial position and results of operations, if
any.

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 ending January 31, 2003. The Company does
not expect the adoption of FIN 45 will have a significant impact on its
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 Company does not expect the
adoption of FIN 46 will have a significant impact on its consolidated financial
position or results of operations.

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.

                                                                            F-12
<PAGE>

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

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 were 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:

<TABLE>
<CAPTION>

                                                                For the Years Ended
                                                                   December 31,
                                                               2002          2001
                                                             --------       -------
<S>                                                       <C>            <C>

Amortization (expense) of debt issuance costs               $(526,451)    $ (12,333)
Gain (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)       $(526,451)     $ 149,840
                                                             ========       ========

</TABLE>

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.

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.

                                                                            F-13
<PAGE>
                 ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
                                                                  For the Years Ended
                                                                      December 31,
                                                                    2002         2001
<S>                                                            <C>           <C>
Supplemental Disclosure of Non-Cash Flow Information:           ----------   ----------

  Cash paid during the year for:
    Interest                                                    $   32,594   $    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               $  987,177   $  125,000
                                                                ==========   ==========

  Issuance of 3,906,399 and 1,408,377 shares of common
     stock as a payment of accrued fees, other
     liabilities                                                $  492,471   $1,294,667
                                                                ==========   ==========



  Issuance of 1,275,000 and shares of common stock for
    services                                                    $        -   $  351,350
                                                                ==========   ==========
</TABLE>


  Cancellation of accrued salaries due to officers              $  590,413
                                                                ==========

  Contribution by shareholder to settle debt of Company         $   75,464
                                                                ==========


NOTE 4 - PROPERTY AND EQUIPMENT

Property and equipment are as follows at December 31, 2002:

        Furniture & Equipment                                   $   18,943
        Computer Equipment                                          52,236
                                                                    ------
                                                                    73,179
        Less: Accumulated depreciation                              58,500
                                                                    ------

                                                                $   14,679
                                                                    ======

Depreciation expense for the years ended December 31, 2002 and 2001 amounted to
$12,124 and $16,251, respectively.


                                                                            F-14
<PAGE>


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, 2001 and 2002 was $36,000
and $37,000, respectively. Accumulated amortization at December 31, 2002
amounted to $87,000.

NOTE 6 - NOTES AND LOANS PAYABLE

        Bank of Smithtown                                       $  414,200
        Other loan payable                                          95,700
                                                                   -------
                                                                $  509,900
                                                                  ========


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, 2002, 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,
                     ------------

                         2003                 $ 165,700
                         2004                    60,000
                         2005                    60,000
                         2006                    60,000
                         2007                    60,000
                         Thereafter             104,200
                                                -------

                         Total                $ 509,900
                                                =======


                                                                            F-15
<PAGE>


NOTE 7 - NOTES AND LOANS PAYABLE - RELATED PARTIES

As of December 31, 2002, loans payable to related parties totaling $816,453 are
comprised of the following:

         i)       The loans of the prior President of the Company as of December
                  31, 2001 amounted to $380,143 plus accrued interest 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 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 $50,353.

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.

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,

                                                                            F-16
<PAGE>


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


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 noteholders
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..

At December 31, 2002, the 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, 2002:

        Interest payable                                          $194,140
        Officer's salaries                                         167,500
        Customer deposits                                           71,016
        Payroll taxes                                               54,000
        Other                                                      189,020
                                                                   -------

                                                                 $ 675,676
                                                                   =======

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 the retained proceeds was $181,189 and the related shares were
14,995, as adjusted. As of December 31, 2002, no additional investors have
requested the Company to repurchase their shares.

                                                                            F-17

<PAGE>


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

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 the retained proceeds was $181,189 and the related shares were
14,995, as adjusted. As of December 31, 2002, no additional investors have
requested the Company to repurchase their shares.


NOTE 11 - COMMITMENTS AND CONTINGENCIES

Payroll Taxes

As of December 31, 2002, the Company owes approximately $54,000, 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

On January 1, 1999, the Company entered into three separate employment
agreements with its Chief Executive Officer, Chief Operating Officer and
Executive Vice President. The employment agreements are for an initial one-year
term with renewable (5) five one-year terms based on a majority vote of the
Board of Directors. Each officer is entitled to an annual salary of $120,000
with annual increases based on The Consumer Price Index, along with a cash bonus
of 1% of the annual net profits of the Company. Each agreement includes benefits
such as disability and health insurance coverage, automobile and expense
allowances, travel and entertainment allowances, and options to purchase 50,000
shares of the Company's common stock at $14.50 per share within five years from
the effective date of the agreements. The foregoing options are intended to
qualify as incentive stock options. Lastly, pursuant to the agreements, all
three officers had agreed to defer the first six months of their salary, which
were to be paid at a later date.

On July 1, 2000 the Company entered into a formal employment agreement with its
Chief Financial Officer. The employment agreement is for an initial one-year
term with renewable five one-year terms based on a majority vote of the Board of
Directors. Upon signing this agreement, the officer received 25,000 shares of
common stock of the Company. The officer is entitled to an annual salary of
$120,000 with annual increases based on the Consumer Price Index, along with a
cash bonus of 1% of the annual net profits of the Company.

The agreement includes benefits such as disability and health insurance
coverage, automobile and expense allowances, travel and entertainment
allowances, and options to purchase 50,000 shares of the Company's common stock
at $14.50 per share within five years from the effective date of the agreement.
The foregoing options were intended to qualify as incentive stock options.

The above described 1999 employment agreements were terminated on June 29, 2001.
Three new employment agreements dated July 1, 2001 were approved by the Board of

                                                                            F-18
<PAGE>


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

Directors of the Company.

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 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.

Advances from USF

In 1996, Inc-NY entered into a grantee award agreement with the University of
South Florida ("USF") for the project entitled Fuel Intake Monitoring System
("FIMS"). USF received a grant ($428,793) for the project and forwarded the
proceeds directly to a sub-contractor chosen by Inc-NY and USF. Inc-NY's role
was to direct the project, fund the research and development and to bring the
product technology to a saleable commercial product. Pursuant to the agreement,
USF was to receive structured repayments based on revenues generated from the
product sales.

Since there are no revenues within two years after the completion of the USF
funding, all rights to the product technology have in accordance with the
contract reverted to USF.

The Company intends to pursue negotiations with USF regarding its respective
percentage ownership interest in the rights to the technology relating to the
FIMS in view of the fact that the Company expended its own funds for payment of
research and development expenses prior to and after such funding. There is no
guarantee that the Company will be successful in such negotiations and may
potentially lose all rights to the technology relating to the FIMS.

                                                                            F-19
<PAGE>


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


American Overseas Corporation

The LLC and American Overseas Corporation, ("AOC"), an investment company formed
under the laws of British Virgin Islands, entered into a distributor agreement
dated August 20, 1998 pursuant to which AOC agreed to (i) assist in the
establishment of marketing and distributing services for certain of the
Company's products worldwide, and (ii) pay the LLC $5 million within thirty-six
(36) months for the non-exclusive unlimited rights to purchase products at a
price of 5% above cost and to sell those products worldwide. In accordance with
the agreement on August 20, 1999, AOC was to remit $2 million to the Company.

During July 1999, the LLC and AOC agreed to amend the contract, whereby the $5
million was to be paid as follows: (i) $1 million within 60 days from the date
that the Company becomes publicly traded, (ii) an additional $1 million is to be
paid within eight months of the beginning trade date and (iii) the balance of $3
million to be paid on or before thirty-six months from the date of the contract.
Lastly, AOC will purchase the Company's product at distributor's cost.

On December 27, 2000, the Company became publicly trading. During the first
quarter of 2001, the Company and AOC agreed that any monies remitted by AOC
under this agreement were to be classified as an equity investment. During the
year ended December 31, 2001, AOC remitted $440,866, which is included in the
accompanying consolidated financial statements as an addition to paid-in
capital. Shares due AOC pursuant to this investment were satisfied by Bristol.
On April 25, 2001, counsel for the Company notified AOC that they are not in
compliance with the minimum funding requirement under the contract.

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.

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

                                                                            F-20
<PAGE>

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

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 and treated the net
issuance of 3,581,058 shares as one contiguous transaction.

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

Royce Anderson and Monroe, Inc.

On July 30, 1998, the LLC entered into a consulting agreement with Royce
Anderson and Monroe, Inc. ("Royce Anderson") for the assistance and advice of
commercial application in the United States and the rest of the Western
Hemisphere as to corporate structure, capital acquisitions, contract
applications, and mergers and acquisitions. The consulting agreement is for a
period of five years. In connection with such consulting agreement, Royce
Anderson received 200,628 shares of common stock of the Company upon the
reorganization of the LLC in October 1998 for its 10% partnership interest in
the LLC.

KMR Telecom, Ltd.

The Company has a loan receivable from KMR Telecom, Ltd. ("KMR") a corporation
organized under the laws of India, which is affiliated with the Company through
common stock ownership with the chief executive officer of the Company. The loan
is held by IPS - NY and bears interest at 12% per annum. The Company's Chief
Executive Officer has pledged to the Company his 49% interest in KMR as
collateral for the loan.

Through December 31, 2000 the loan due from KMR amounted to $359,546. Management
recorded an allowance of $359,546 for the uncollectibility on the full amount of
the loan at December 31, 2000.

Lease Commitments

The Company entered into a lease agreement for office space effective January
10, 2000. The lease agreement is for two years, with options to renew. The
office lease requires monthly payments of $5,200 that includes maintenance and
use of a phone system and furniture. The Company executed the right to increase
the square footage of office space used at a rate of $6,800 per month. This
lease was terminated in October 2001.

The Company entered into a new 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.

                                                                            F-21
<PAGE>


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

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

                   Years Ending
                       2003                   $  11,000
                                                 ------
                                              $  11,000

Rent expense for the years ended December 31, 2002 and 2001 was $95,980 and
$30,000 respectively.

Litigation

The Company was 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,
2002 consolidated balance sheet.

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.

NOTE 12 - STOCKHOLDERS' DEFICIT

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.

         Options Granted Outside the Stock Option Plan

In July, 2001, pursuant to employment agreements, three officers were issued
options to purchase a total of 7,238,968 shares of restricted common stock at an
exercise price of $0.34 per share. The options are exercisable over a five-year
period. The options are not subject to adjustments pursuant to any reverse stock
split, recapitalization, combination of shares, exchange of shares and other
like change in the capital structure of the Company. During 2002 these options
were cancelled.

                                                                            F-22
<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 January 1, 2001              264,000         $12.09         $12.09
     Granted                             7,238,968         $ 0.34         $ 0.34
     Exercised                                   -              -              -
     Canceled                                    -              -              -
                                       ------------   ------------   -----------
   Balance at December 31, 2001          7,502,968         $12.09         $ 0.74
                                       ============   ============   ===========

     Granted                             3,000,000     $.75-$2.50         $ 1.42
     Exercised                                   -              -              -
     Canceled                           (7,238,968)         (.034)         (.34)
                                       ------------   ------------   -----------

   Balance at December 31, 2002          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, 2001 and 2002, adjusted to
reflect proforma amounts, are indicated below:

                                               Years Ended December 31,
                                                2001            2002
                                           ---------------   ---------------
         Net loss:
           As reported                         $(2,66,354)       $ (857,130)
                                           ===============   ===============

           Pro forma                          $(4,404,706)      $(1,198,620)
                                           ===============   ===============

         Basic and diluted loss per share:
           As reported                             $(1.12)           $(0.11)
                                                    ======           =======

           Pro forma                               $(1.97)           $(0.15)
                                                    ======           =======

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,
                                                 2001         2002
                                                ------       ------

         Weighted average fair value              $.24         $.11
         Expected volatility                       90%         1.15%
         Risk-free interest rate                  3.5%
         Expected life (years)                    5            3
         Expected dividend yield                  0            0


                                                                            F-23
<PAGE>


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


         Shares Issued for Consulting Fees and Other Expenses

During the year ended December 2001, the Company issued 1,173,647 shares of
common stock valued at $492,471 as consideration for consulting services and
other expenses due to three consultants, two of whom were related parties.

During the year ended December 31, 2002, the Company issued 200,000 shares to a
consultant for services valued at $50,000 charged to selling, general and
administrative expenses and 124,361 shares valued at $31,090 charged to debt and
equity financings.

         Additions to Paid-in Capital

During the year ended December 31, 2001, AOC remitted $440,866 to the Company,
which was accounted for as an addition to paid-in capital for 2001 (Note 11).

During the year ended December 31, 2001, three of the Company's
officers/directors canceled accrued salaries of $590,413. This transaction was
accounted for as an increase to paid-in capital for 2001 (Note 11).

During the year ended December 31, 2001, debt totaling $75,464 was contributed
to capital by such holders.

         Common Stock for Settlement of Debt

During the year ended December 31, 2001, various holders of convertible debt
converted principal of $863,400 and interest of $123,776 into 68,081 shares of
common stock (Note 8).

During the year ended December 31, 2002, creditors converted 3,648,662 shares of
common stock valued at $1,294,667, resulting in a loss on extinguishment
totaling $163,599.

During 2002, holders of convertible debt converted principle of $125,000 into
1,550,000 shares of common stock.

         Common Stock for Employment

During 2002, the Company issued 1,075,000 shares of its common stock with rights
outstanding to two executives valued at $270,250.

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 expected to convert to equity              2,175,000
  Prior Convertible Debentures                                   29,655
                                                              ---------

  Total as of December 31, 2002                               5,468,655
                                                             ==========

                                                                            F-24
<PAGE>

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


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, 2001 is the Company's net
operating loss carryforwards ("NOL's"), which amounted to approximately
$4,400,000 for the Company. The deferred tax asset associated with the Company's
NOL's amounted to approximately $1,627,000 as of December 31, 2002.

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 NOL's amounting to approximately $4,400,000 will expire in
the years 2003 through 2022 if not utilized prior.

The Company and its subsidiaries file separate tax returns for federal and state
tax purposes. As such, income tax is based on the separate taxable income or
loss of each entity. For the year ended December 31, 2001, the Company is
eligible to file consolidated federal tax returns.

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, 2001 and 2002 are as follows:

<TABLE>
<CAPTION>
                                       2001                           2000
                              Segment       Consolidated      Segment       Consolidated
                            ------------   --------------   ------------   --------------
<S>                        <C>            <C>              <C>             <C>

Sales:
  Foreign                      $ 28,184                       $ 144,851
  Domestic                       36,444                           5,828
                            ------------                    ------------

    Total Sales                                 $ 64,628                       $ 150,679

Gross Profit
  Foreign                      $(24,492)                       $ 22,094
  Domestic                      (27,561)                          1,344
                            ------------                    ------------

      Total Gross Profit                        $(52,052)                      $  23,438
                                           ==============                  ==============
</TABLE>


                                                                            F-25
<PAGE>


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

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, 2001 and 2000, respectively, the Company had
two unrelated customers, which accounted for approximately 60% and 83%, of total
revenues.









                                                                            F-26

<PAGE>

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

         On September 7, 2001, the board of directors of the Company approved
and authorized the engagement of Grassi & Co., P.C., 2001 Marcus Avenue, Suite
265, Lake Success, New York 11042 as the principal independent accountant for
the Company. Prior to such engagement the Company did not consult with Grassi
regarding either the application of accounting principles to a specific
transaction, either completed or proposed, or the type of audit opinion that
might be rendered on the Company's consolidated financial statements, and
neither a written report nor oral advice was provided to the Company that Grassi
concluded was an important factor considered by the Company in reaching a
decision as to an accounting, auditing or financial reporting issue.

         Effective as of August 16, 2002, Accident Prevention Plus, Inc. (The
"Company") dismissed Grassi & Co., CPA's, P.C. as its independent accountant.
Effective as of August 19, 2002, the Company engaged Schuhalter, Coughlin &
Suozzo, P.C. (Formerly LLC) as its independent accountant. The decision to
change accountants was approved by the Board of Directors of the Company.

         The Grassi & Co., CPA's, P.C. report on the Company's financial
statements for the year ended December 31, 2001 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.

         None of the reportable events described under Item 304(a)(1)(v) of the
Regulation S-K had occurred within the two most recent fiscal years of the
Company year ended December 31, 2001 and the subsequent interim period to the
date of the change.

         During the two most recent fiscal years of the Company ended December
2001 and, the subsequent interim period to the date hereof, the Company did not
consult with Schuhalter, Coughlin & Suozzo, PC regarding any of the matters or
events set forth in Item 304(a)(2)(i) and (ii) of Regulation S-K.

                                       24
<PAGE>

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

Steven H. Wahrman          44                Director, Executive Vice 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 was the founder
of a company which he started with a $70,000 initial investment, the Company was
involved in the selling of materials and handling equipment and grew to a volume
of 15 million dollar before he sold his interest therein. Mr. Schwartz has also
specialized in corporate financing and structure. Mr. Schwartz graduated from
CCNY.

         STEVEN H. WAHRMAN has been a Director, the President and Chief
Operating Officer of the Company since February of 1996. Mr. Wahrman is
currently an Executive Vice President for the Company and responsible for all
phases of worldwide implementation of market research, strategic planning and
promotion and the daily operations. Mr. Wahrman has twenty years of experience
in sales and marketing. For a period of fourteen years, Mr. Wahrman was
President of S.W. Intimates. Mr. Wahrman holds a Bachelor of Science degree in
Marketing with a minor in Advertising from The American University.

         JEAN PAUL DAVEAU has been a Director and the Executive Vice President
of Engineering and Design of the Company since October of 1993. Mr. Daveau is
responsible for establishing and overseeing the engineering and design staff and
all aspects of technical research, including the compilation of specifications
and manuals. Mr. Daveau has spent over a decade designing and developing onboard
recording systems, and has worked with Royal Dutch Shell, Schlumberger, and
Western Atlas. In addition, Mr. Daveau has extensive experience in the fields of
hardware and software, and has acted as a consultant engineer in the industrial
computing industry. For a period of five years, Mr. Daveau was the President and
Managing Director of Microsam.

         JENNIFER SWANSON has been an Executive Vice President 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.

                                       25
<PAGE>

         RHETT KIRCHOFF has been a Director of the Company since November 2001.
Mr. Kirchoff has been involved with various retail brokerage firms for the past
thirty years having worked in the brokerage retail sectors at Butcher & Singer,
Inc., Wheat First Securities and PaineWebber Inc. During such time, Mr.
Kirchhoff acquired knowledge and experience in all aspects of security
transactions, corporate financing, securities trading, and pension and profit
sharing. Mr. Kirchhoff also worked in the insurance industry during which he
acquired knowledge and experience in international banking. From 1995 to 2000,
Mr. Kirchhoff was the founder and owner of DiMeclior, Kerchhoff & Co., a broker
dealer firm, which represented high net worth clients and sports personalities.
>From 1999 to current, Mr. Kirchhoff is the founder and owner of New Alliance
Corporation, a business consulting firm. Mr. Kirchhoff graduated from Glassboro
College with a degree in economics and minor in finance.

         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 had entered into employment agreements dated July 1, 2001
with three of its executive officers/directors, Mr. Richard Goodhart, Mr.
Steven Wahrman and Mr. Jean Paul Daveau, respectively (collectively, the
"Employment Agreements"). On March 1, 2002, Mr. Goodhart resigned as the
Executive Vice President of the Company, therefore, Mr. Goodhart's Employment
Agreement is no longer in force and effect.


                                       26
<PAGE>


     Commencing July 1, 2001 and automatically renewable annually for a five
year period, the terms and provisions of the respective Employment Agreements
are as follows: (i) each officer/director receives an annual salary of $120,000;
(ii) each officer/director receives an annual cash bonus equal to one percent
(1%) of the annual net profits for the preceding fiscal year; and (iii) each
officer/director was granted stock options pursuant to the Company's
Non-Qualified Stock Option Plan to purchase 60,000 shares (as adjusted) of
restricted Common Stock of the Company at $12.09 per share within five years
from the effective date of the Employment Agreement. Other benefits provided for
in the Employment Agreements are disability and health insurance coverage,
automobile and expense allowances and travel and entertainment allowances. Mr.
Wahrman and Mr. Jean Paul Daveau have not received accrued compensation under
their respective agreements for 2002. Mr. Wahrman is no longer an officer or
director.


         For December 31, 2001, the officer/director each has respectively
waived the accrual and payment of such salary and interest in the aggregate
amount of $590,000, and released the Company from any liability thereunder.

         As of the date of this Annual Report, management of the Company intends
to enter into negotiations regarding termination of the respective Employment
Agreements.

         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 transferable 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.

         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.


                                       27
<PAGE>

                                                          Weighted
                                                          Average
                                Number of      Date of    Exercise     Date of
                            Options Granted*    Grant      Price
Expiration

Jennifer Swanson....         1,500,000         02-15-02    $ 1.42     11-02-03

Alan Schwartz........        1,500,000         02-15-02    $ 1.42     11-02-03

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 ................         264,000



*        The original grant of options has been adjusted in accordance with the
         reverse and forward stock splits.

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

A.       Executive will have the right to purchase options that represent five
         hundred thousand (500,000) shares of common stock at two dollars and
         fifty cents ($2.50) per share with five (5) years of the signing of
         this agreement.

B.       Executive will have the right to purchase options (*) that represent
         five hundred thousand (500,000) shares of common stock at seventy five
         cents ($0.75) per share, five hundred thousand (500,000) common stock
         at one dollar ($1.00) within five (5) years of the signing of this
         agreement.


                                       28
<PAGE>

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 112,219,655 shares outstanding.

<TABLE>
<S>                <C>                             <C>                    <C>

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

                                                          (1) (4)
Common Stock        Alan Schwartz                       2,200,000          17.14%
                    C/0 9091 North Military Trail
                    Palm Beach Gardens, FL 33410         (1) (4) (6)
Common Stock        Jennifer Swanson                     2,155,000         16.79%
                    C/0 9091 North Military Trail
                    Palm Beach Gardens, FL 33410

                                                          (1)
Common Stock        Richard Goodhart                       604,373          5.40%
                    11730 Briarwood Circle
                    #1
                    Boynton Beach, FL 11788
                                                          (1)(2)
Common Stock        Steven Wahrman                         326,880          2.89%
                    C/O 9091 North Military Trail
                    Palm Beach Gardens, FL 33410

                                                            (1)
Common Stock        Bristol Consulting Ltd.              2,729,271         24.32%
                    7101 Shore Road
                    Suite 3J
                    Brooklyn, New York 11209
                                                             (5)
Common Stock        Edmund Tennenhaus                    1,583,333         12.36%
                    C/O 9091 North Military Trail
                    Palm Beach Gardens, FL 33410
                                                           (1)(2)
Common Stock        All officers and                     5,286,253         42.22%
                    directors as a group
                    (5 persons)

</TABLE>


*        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.
(3) Does not include shares issuable 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 Richard 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.
(4) Includes options 1,500,000 granted in connection with employment agreement
in 2002, or an aggregate of 3,000,000.
(5) Includes approximately 1,583,333 shares issuable pursuant to convertible
notes.
(6) Includes 30,000 shares held in street name acquired before employment.

                                       29
<PAGE>


ITEM 12.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         ACQUISITION OF IPS-NY

         On October 28, 1998, the Company entered into an agreement and plan of
reorganization with International Purchasing Service, Inc. ("IPS-NY"). Pursuant
to the terms and provisions of the Plan of Reorganization, the Company agreed to
transfer and assign to Mr. Richard Goodhart, the then sole shareholder of
IPS-NY, 297,500 shares of its restricted common stock in exchange for all of the
issued and outstanding shares of common stock of IPS-NY. Prior to execution of
the Plan of Reorganization, Mr. Goodhart was a director and the president of
IPS-NY and was also a member of APP LLC holding an approximate 32% equity
ownership interest in APP LLC. After consummation of the Plan of Reorganization
and the Exchange Agreement, the Company issued to Mr. Richard Goodhart 297,500
shares of its restricted common stock in accordance with the terms of the Plan
of Reorganization and 156,196 shares of its restricted common stock in
accordance with the terms of the Exchange Agreement. On October 28, 1998, Mr.
Richard Goodhart was elected as a director and Chairman of the Board, Chief
Executive Officer of the Company. On March 1, 2002, Richard Goodhart resigned as
a director and the Executive Vice President of the Company.

         Among the factors considered by the board of directors of the Company
in evaluating the acquisition of IPS-NY were (i) the financial condition,
performance and prospects of IPS-NY; (ii) analysis of the value of exclusive
representation agreements between IPS-NY and certain manufacturers, including
Teledyne Vacuum Technologies, Omnirel Corporation and Jaco Electronics
International Division; (iii) analysis of the value of the international sales
structure established by IPS-NY and the existence of certain contacts; (iv)
utilization by the Company of a portion of the line of credit held by IPS-NY
with Bank of Smithtown; (v) analysis of the experience of personnel in IPS-NY in
component purchasing and the value of the existence of a purchasing department;
and (vi) future potential role of IPS-NY, which included control production and
arrangement of sub-contract manufacturing facilities.

         The board of directors of the Company valued IPS-NY at approximately
$215,688 and approved the issuance of 10% of the total proposed outstanding
shares of common stock of the Company as fair and just compensation for the
acquisition of IPS-NY. For financial statement purposes, the assets and
liabilities of IPS-NY have been recorded at predecessor cost.

         EMPLOYMENT AGREEMENTS

         The Company has entered into employment agreements dated January 1,
1999, amended June 29, 2001, with two of its executive officers/directors. As of
December 31, 2001, the respective officers/directors each waived the accrual and
payment of such salary and released the Company from liability thereunder.

         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.

                                       30
<PAGE>

         LOANS/NOTES PAYABLE TO OFFICERS

         As of December 31, 2002, the Company owed an aggregate of approximately
$380,143 pursuant to loans made by Mr. Steven Wahrman, a director and Executive
Vice President. Of the aggregate amount of $378,758 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.

                  None.

(b) Reports on Form 8-K:

                  Filed on August 20, 2002, event dated August 19, 2002.



                                       31
<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: May 21, 2003                          By: /s/ Alan Schwartz
                                            -------------------------
                                            Alan Schwartz, President and CEO




                                       32
<PAGE>



                                  CERTIFICATION

I, Alan Schwartz, President & CEO, certify that:

     1. I have reviewed this annual report on Form 10-KSB of Accident Prevention
Plus, Inc.;

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

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

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

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

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

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

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

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

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

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

Dated: May 21, 2003                         by: /s/ Alan Schwartz
                                            -------------------------
                                               Alan Schwartz,
                                               President & CEO

                                       33
<PAGE>




                                  CERTIFICATION

I, Jennifer Swanson, Chief Financial Officer, certify that:

     1. I have reviewed this annual report on Form 10-KSB of Accident Prevention
Plus, Inc.;

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

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

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

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

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

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

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

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

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

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

Dated: May 21, 2003                         by: /s/ Jennifer Swanson
                                            ----------------------------
                                                    Jennifer Swanson,
                                                    Chief Financial Officer



                                       34