U.S. SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549


                               AMENDMENT NO. 1 TO
                                   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, 1999

[ ]  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 0-000000

                         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.)

                             325 Wireless Boulevard
                            Hauppauge, New York 11788
                            -------------------------
                    (Address of Principal Executive Offices)

                                 (631) 360-0600
                           (Issuer's telephone number)


                                       N/A
              (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            No    X

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,
1999): $ 701,526

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, 2000: $ -0-.

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 July 12, 2000
Common Stock, $.001 par value                  17,778,196

<PAGE>

                                     PART I


ITEM 1. DESCRIPTION OF BUSINESS

BUSINESS DEVELOPMENT AND ORGANIZATION

     The Company and APP LLC

     Accident Prevention Plus, Inc. (the "Company") 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").

     Accident Prevention Plus, Inc. was formed during 1993 as a corporation
under the laws of the State of New York. During February 1996, Accident
Prevention Plus, Inc. converted to a limited liability company under the laws of
the State of New York ("APP LLC"). Since its inception in 1993, APP LLC has been
engaged in the design, marketing and distribution of onboard computer recording
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. In accordance with
the terms and provisions of the Exchange Agreement, 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.
As of the date of this Annual Report, IPS-NY is primarily responsible to the
Company for general shipping, receiving and warehousing services, and for
providing general purchasing services for the supply of electromechanical active
and passive components.

     Termination of KMR Telecom Ltd.

     On October 28, 1998, the Company also simultaneously acquired KMR Telecom,
Ltd., a corporation organized under the laws of India ("KMR") by entering into
an Agreement and Plan of Reorganization with KMR. During October 1999, however,
management of the Company determined that there was a mistake of fact involving
the Agreement and Plan of Reorganization with KMR. Management discovered that
the laws of India prohibited a foreign entity from holding more than a 49%
equity ownership interest in a company organized under the laws of India.
Therefore, the Agreement and Plan of Reorganization between the Company and KMR
was in violation of the laws of India. On November 21, 1999, retroactively
effective to October 28, 1998, the Company entered into a Rescission Agreement
with KMR pursuant to which it was agreed that the Agreement and Plan of
Reorganization with KMR would be set aside and KMR would cease to be a
wholly-owned subsidiary of the Company with no further rights or duties to the
Company.

     Establishment of United Kingdom Subsidiary - Accident Prevention Plus (UK)
     Limited

     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. As of
the date of this Annual Report, APP UK is a wholly-owned subsidiary of the
Company and will provide services including, but not limited to, sales and
marketing, administration, and technical support for the United Kingdom
marketplace.

     Acquisition of Accident Prevention Plus, France (SARL)

     On December 17, 1999, APP UK formed Accident Prevention Plus, France ("APP
France") as a limited liability company under the laws of France. As of the date
of this Annual Report, APP France is a wholly-owned subsidiary of APP UK and
will provide services including, but not limited to, sales and marketing,
administration, and technical support for the European marketplace.

<PAGE>


     The Company's principal executive offices are located at 325 Wireless
Blvd., Hauppauge, New York 11788. Its telephone number is (631) 360-0600, its
facsimile number is (631) 265-3351, and its e-mail address is
appinc@mindspring.com.

PRODUCTS

     Onboard Recording Systems

     The Company designs, develops, markets and sells a comprehensive line of
onboard computer recording systems, the APP1000, APP2000 and APP3000
(hereinafter called the "AP+Series"). The AP+Series products include a dual axis
accelerometer designed and developed by the Company to measure the sway of a
vehicle, and onboard systems that monitor and record data for accident
prevention, driver training and evaluation, and maintenance operations for fleet
vehicles. The basic unit hardware is the same for the three series, although the
APP2000 and APP3000 series have upgrades and will perform more functions to meet
the requirements of the customer. The AP+Series 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 AP+Series 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 AP+Series are often dubbed "black boxes" after the ones used in large
aircraft. The AP+Series 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 AP+Series
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 such as "near misses" and actual
accidents. The AP+Series are flexible in their monitoring and can be custom
tailored to meet required specifications.

     Specific Features. Management believes that certain features of the
AP+Series 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, and an effective driver training tool, and the potential for reduced
insurance rates.

     Safety/Accident Prevention. Management considers the AP+Series to be
proactive management tools designed to promote safe and efficient driving
practices. The AP+Series constantly monitors adherence by drivers to established
company driving standards, such as acceleration, deceleration, engine rpm and
speed. The AP+Series 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 AP+Series 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 AP+Series help in preventing accidents, but it also is a
beneficial tool when accidents do occur.

     Reporting. The AP+Series automatically records vehicle operational data
concurrent with sudden accelerations and decelerations, or collisions. The
AP+Series 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 AP+Series 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.

<PAGE>


     Security. The AP+Series provides security for vehicles and for vehicle
data. With the use of an APP+Series smartcard, 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 AP+Series 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 AP+Series are unique in
the industry due to use of the "Smart card" technology. The use of AP+Series
custom software gives the AP+Series the ability to be easily upgraded and
customized to meet customer specifications and needs. It also gives the
AP+Series the ability to be utilized outside of the fleet vehicle market.

     Management further believes that use of the "Smart card" will allow the
AP+Series to be utilized by customers for non-transportion 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.

     As of the date of this Annual Report, the Company has under development
other products including, but not limited to, the AP+Series 4000, the Fuel
Intake Monitoring System ("FIMS"), and a proprietary opacity sensor.

MANUFACTURING

     The Company is currently engaging the services of manufacturers which are
ISO 9000 certified. As of the date of this Annual Report, the AP+Series products
are primarily manufactured by Nexus Corporation, a division of Jaco Electronics
located in Vermont ("Nexus"). As of the date of this Annual Report, Nexus has
manufactured approximately 600 APP+Series products. Management believes that its
relationship with Nexus will enable the Company to manufacture unlimited
quantities of product through this source.

     APP LLC and Lockheed Martin Corporation ("Lockheed") entered into a
manufacturing agreement dated January 24, 1997 whereby Lockheed generally agreed
to manufacture the printed circuit board assemblies for the FIMS and other
product lines for a five year period upon request by the Company. The Company is
not obligated to utilize Lockheed for its manufacturing requirements. During
fiscal year 1999, the Company did not utilize Lockheed for the manufacture of
its products, and the Company does not anticipate that Lockheed will manufacture
any of its products during fiscal year 2000. Management has not made any
determination whether it will use Lockheed for the manufacture of any of its
products in the future.

     The Company also established relationships with another manufacturing
company relating to the manufacture of the accelerometers. The Company entered
into a purchase agreement dated October 16, 1998 with Asteria Electronics SDN
BHD ("Asteria"), whereby Asteria agreed to manufacture the accelerometers. As of
the date of this Annual Report, the Company has placed an order with Asteria to
purchase 300 accelerometers with 150 delivered to date.

     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 AP+Series products for
various applications.

<PAGE>


PRODUCT RESEARCH/DEVELOPMENT AND CURRENT STATUS

     AP+Series

     As of the date of this Annual Report, the Company is currently developing
the APP4000 system. Management anticipates that the APP4000 system will include
features such as a global positioning system ("GPS") for vehicular tracking,
mapping and communications, an in-vehicle alcohol sensor/breathalyzer unit, a
fatigue sensor which will monitor and record driver alertness, and a fingerprint
application for greater security when used in conjunction with the "Smart card".
Management anticipates that development of the APP4000 system will be completed
in approximately six to eight months from the date when adequate funding becomes
available, and will require approximately $250,000 of funding.

     As of the date of this Annual Report, the Company has installed the
AP+Series units in over 200 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 AP+Series
products. Management believes that the Company's relationship with AFT-IFTM will
enhance the marketability of its products in other countries.

     In the United States, the Company has installed one AP+Series unit on a
driver training simulator located at Carnegie Mellon University/Driver Training
& Satefy Institute in Connersville, Pennsylavania ("CM"). Management believes
that installation of the AP+Series unit on the driver training simulator creates
a strategic marketing edge for the Company because of the high visibility of
such installation to governmental agencies, such as the U.S. Department of
Transportation, the Federal Highway Administration and other universities and
driver training schools. Management believes that use of the AP+Series products
on CM's vehicles and simulators will provide the AP+Series products with greater
visibility for the driver training industry.

     The Company has received a letter of intent from CM whereby CM will
distribute the AP+Series products to be used for driver education and research
applications. CM will also receive a commission for any AP+Series products sold
from their referral. The Company is currently in the process of finalizing an
agreement with CM regarding use of the CM Driver Training Institute as a test,
training and research center.

     The Company entered into a contract dated August 1, 1999 with the American
Trucking Association ("ATA") pertaining to a federally funded project to study
fatigue in drivers administered by the Federal Highway Administration and ATA
that involved the use of one of the Company's products.

     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 has been
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. As of the date of this Annual Report, the Company has installed one
APP3000 onboard recording system on an ambulance as a test unit and, subject to
performance, the Company will be required to install an additional 29 APP3000
onboard recording systems.

     As of the date of this Annual Report, the Company is engaged in discussions
with various companies to integrate alcohol breathalyzers with the AP+Series
products. Some states in North America have enacted legislation mandating
individuals who have been convicted of driving while intoxicated ("DWI") or
driving under the influence ("DUI") to use alcohol sensors and breathalyzers in
their vehicles. Management believes that the design of the AP+Series products
provides flexibility for integration with other types of technologies, such as
alcohol breathalyzers.

     The Company is also engaged in discussions with various manufacturers of
driving training simulators used by CM to install the AP+Series products on all
such driver training simulators.

     Fuel Intake Monitoring Systems

     The Fuel Intake Monitoring System ("FIMS") was designed to automate and
simplify many aspects of the fueling process. Through the technological use of
radio frequency communication, the FIMS will provide a fleet owner with the
ability to prevent fuel theft, receive paperless billing for fuel consumed, and
reduce vehicle downtime by simplifying and speeding up the fueling process.

<PAGE>


     Design/Usage. The design of the FIMS consists of a vehicle unit which is
capable of storing and transmitting data concerning the vehicle, including fuel
level, odometer reading, fuel type required, and the maximum amount of fuel
permitted per filling. The other components of the system include a nozzle unit,
tank inlet antenna, ground loop antenna, station controller and a LCD display on
the fuel pump at the retail filling station.

     An additional advantage of the FIMS is the elimination of the need for
drivers to carry cash or credit cards for refueling purposes. Fueling is
completely controlled by a company using the FIMS with computerized monitoring
of all relevant vehicle data and subsequent paperless billing.

     As of the date of this Annual Report, the Company has pilot tested the FIMS
at two Shell Oil locations in Ruffec and St. Cloud, France. Management believes
that these pilot tests have proven the concept of FIMS to be valuable and
successful. The FIMS was also tested in the manufacturing laboratories of
Schlumberger, Shell Retail Petroleum Europe and Lockheed Martin. The FIMS also
received "CE" approval for sale in Europe from Emitech (the equivalent of the
Underwriters Laboratory in the United States).

     Management has made a strategic business decision to hold introduction of
the FIMS into the marketplace until patent searches are completed and
negotiations are completed with the University of South Florida ("USF") with
respect to the Company's rights to the FIMS technology. (See the next paragraph
for additional information relating to the FIMS technology and the Company's
right to that technology.) Management anticipates that upon its introduction
into the marketplace, the integration of the FIMS into the AP+Series will be
completed.

     During fiscal year 1996, APP LLC entered into a grant award agreement with
the Technology Deployment Center, Pinellas County, FL. in conjunction with the
University of South Florida ("USF") for the research, development and design of
the FIMS. USF had received a grant of approximately $428,793 for the research,
development and design of the FIMS and forwarded such proceeds to a
sub-contractor chosen jointly by USF and APP LLC. Pursuant to the terms of the
agreement, APP LLC agreed to (i) direct the research, development and design of
the FIMS and bring such technology to a saleable commercial product, and (ii)
repay to USF structured payments based on revenues generated from the FIMS
product sales. Pursuant to the terms of the agreement, in the event no revenues
were generated from sales of the FIMS within two years after completion of the
funding, all rights to the technology relating to the FIMS will revert
exclusively to USF. As of the date of this Annual Report, the Company has not
sold FIMS products and according to the terms of the agreement, rights to the
technology relating to the FIMS should have 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 loose
all rights to the technology relating to the FIMS.

     Other Products

     In conjunction with a sub-contractor, the Company has also designed and
developed a proprietary opacity sensor for incorporation into the AP+Series,
which is capable of reading vehicle emissions during the operation of the
vehicle. This function will provide fleet managers with the ability to monitor
and record in real time and ensure their ability to maintain compliance with
measurement requirements of exhaust emissions established under rules and
regulations promulgated by the Environmental Protection Agency ("EPA").
Management intends to conduct patent research on this technology which has been
designed to meet such measurement requirements.

     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

     Customers

     The Company currently sells the AP+Series and related products in Europe,
North American, Africa and Australia. Customers for the AP+Series and related
products are primarily transport companies and driver training institutions. The
Company's current market concentration has been in Europe due to existing
relationships with certain clients. Management's primary objective is to
penetrate the European, North American, African and Australian markets.

<PAGE>

     For fiscal year ended December 31, 1999, the Company had three unrelated
customers which accounted for approximately 42%, 36% and 17%, respectively, of
total revenues. As of the date of this Annual Report, the Company has two
unrelated customers who account for approximately 80% and 20%, respectively, of
accounts receivables.

     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 AP+Series Products with Smart card technology may
be utilized in emergency vehicles for police, fire and ambulance departments. In
addition, the AP+Series 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 AP+Series and related products through
the use of distribution agreements, joint ventures, direct sales and independent
commissioned representatives. To aid in the marketing of the AP+Series and
related products, the Company intends to utilize several marketing approaches
including advertising in trade publications, press 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 89% of the Company's total revenues in fiscal
year 1999 (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.

     Contractual Arrangements

     The Company has representatives and distributors in Israel, Europe, Africa,
Mexico and India. From April 1997 through June 1997, APP LLC entered into four
separate installation and service agreements with World Asset Management, Inc.,
which is headquartered in New Milton Hampshire, United Kingdom ("WAM"), Atlantic
Financial Management, Inc., which is headquartered in Fouesnant, France ("AFM"),
Avignon Trading, Inc., which is headquartered in Savion, Israel ("Avignon"), and
Darien Partners Investments, Inc., which is headquartered in Malaysia
("Darien"). Pursuant to the terms of the respective installation and service
agreements, WAM, AFM, Avignon and Darien are responsible for (i) establishing
distribution and sales channels along with the necessary infrastructure required
for the successful marketing of the AP+Series products; and (ii) installation
and maintenance of the AP+Series products. In accordance with the terms of the
respective installation and service agreement, WAM, AFM, Avignon and Darien
received an approximate 4.9% membership interest in APP LLC.

     Although the Company has not generated any significant revenues to date,
the Company has established these contractual relations with WAM, AFM, Avignon
and Darien in anticipation of future sales and distribution of its products. As
of the date of this Annual Report, the contractual arrangements with WAM, AFM,
Avignon and Darien primarily provide 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 AP+Series and related products.
Management believes that this would not only strengthen the Company's structure
and potential marketability of the AP+Series and related products, but also
places the Company in a favorable position to properly service the AP+Series and
related products sold and distributed in those foreign markets.

     In addition, APP 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 distribution services for the
AP+Series and related products worldwide, and (ii) pay APP LLC $5,000,000 within
a thirty-six (36) month period for the non-exclusive unlimited rights to
purchase the AP+Series and related products and to sell those products
worldwide, with an initial payment of $2,000,000 due and owing on August 20,
1999. During July 1999, the agreement was amended to provide that (i) $1,000,000
payment will be due and owing sixty days from the date that the Company's shares
of common stock commence trading, (ii) an additional $1,000,000 will be due and
owing within eight months from the date that the Company's shares of common
stock commence trading, and (iii) the balance of $3,000,000 will be due and
owing on or before August 20, 2001.

<PAGE>


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 AP+Series 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 AP+Series onboard
recording systems perform, giving the Company a competitive edge within the
industry.

EMPLOYEES AND CONSULTANTS

     As of the date of this Annual Report, the Company employs fifteen persons
on a full time and two persons on a part time basis. The Company's President and
Chief Executive Officer are primarily responsible for all day-to-day operations
of the Company. 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)  APP LLC and Bristol Consulting Ltd. ("Bristol") entered into a
          consulting agreement dated July 30, 1998 pursuant to which Bristol
          agreed for a period of five years to (i) assist in the development of
          an international market for the AP+Series and related product lines,
          and (ii) provide advice regarding corporate structure, capital
          acquisition, contracts, equity partners and mergers and acquisitions
          pertaining to the Middle East and Far East. The agreement further
          provides that APP LLC would pay to Bristol a monthly fee of $5,000 for
          the first three months of the agreement and, thereafter, a monthly fee
          of $10,000 for the duration of the agreement.

          During fiscal year 1999, 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 year
          1999, the Company accrued $120,000 and paid $62,500 to Bristol for
          services rendered.

     (ii) APP LLC and Royce Anderson & Monroe, Inc. ("Royce Anderson") entered
          into a consulting agreement dated July 30, 1998 pursuant to which
          Royce Anderson agreed for a period of five years from the date of the
          agreement to (i) assist with development of a market within the United
          States and the Western Hemisphere for the AP+Series and related
          products, and (ii) provide advice regarding corporate structure,
          acquisitions, mergers and equity partners. During fiscal year 1999,
          the Company did not pay any fees to Bristol.

          During fiscal year 1999, Royce Anderson performed certain services on
          behalf of APP LLC including, but not limited to, (i) assistance with
          the establishment of the marketing and sales structure within APP LLC;
          and (ii) assistance with the negotiation and consummation of major
          contractual arrangements.

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. Prior to December 31,
2000, management intends to file an application for trademark protection for its
AP+Series products with the United States Patent and Trademark Office. If a
certificate of registration for the trademark "AP+Series" is issued, such
registration will remain in full force and effect for a period of ten years,
subject to satisfaction of certain requirements. 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.

<PAGE>


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 AP+Series 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
AP+Series 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, Africa and
the Far East and Middle East. As a result, the Company's operations and sale of
the AP+Series 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. Moreover, economic reforms and growth in the Far East and
Middle East countries have been initiated, and success in certain countries has
been more prevalent than in others. The continuation or increase of any such
disparities regarding economic reforms and growth could affect the political and
social stability of the Far East and Middle East, 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 described above, the Company does not own any other real estate
or other properties. The Company leases office space and its offices are located
at 325 Wireless Boulevard, Hauppauge, New York 11788.

ITEM 3. LEGAL PROCEEDINGS

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


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

     No matters were submitted to a vote of the Company's shareholders through
the solicitation of proxies or otherwise during fiscal year ended December 31,
1999.


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

MARKET INFORMATION

     As of the date of this Annual Report, there has been no public market for
the shares of Common Stock of the Company. It is the intention of management
that the shares of Common Stock of the Company will be traded in the
over-the-counter market and quoted on the NASDAQ. The Company, however, must
meet certain criteria in order to qualify for inclusion on NASDAQ.

HOLDERS

     The 17,778,196 shares of Common Stock outstanding as of the date of this
Annual Report are held by 172 holders of record.

<PAGE>


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.

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

     This section should be read in conjunction with the Company's Consolidated
Financial Statements included herein. Certain of the financial statements and
the discussion below in the comparative fiscal year ends include reference to
amounts and balances of the Company and APP LLC for the entire year and from
October 28, 1998 (the acquisition date) to December 31, 1998 for IPS-NY.

GENERAL

     During the prior fiscal years, the Company focused primarily on the
research, development and design of the AP+Series 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.

     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
AP+Series products, and other related products to customers generally in the
fleet management and driver training industries. Additional revenues are
generated by the Company through the implementation of maintenance contracts and
integration contracts and its subsidiaries.

     During fiscal year ended December 31, 1999, sales of the AP+Series 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 AP+Series and related products in non-transportation industries, such as the
medical fields, management of the Company believes that sales of the AP+Series
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.

FOR FISCAL YEAR ENDED DECEMBER 31, 1999 COMPARED WITH FISCAL YEAR ENDED DECEMEBR
31, 1998

     Results of Operation

     The Company's net losses for fiscal year ended December 31, 1999 were
approximately $1,173,172 compared to a net loss of approximately $605,241 for
fiscal year ended December 31, 1998.

     Net revenues for fiscal year ended December 31, 1999 and 1998 were $701,526
and $237,688, respectively. Net revenues increased by approximately $463,838 or
195% for fiscal year ended December 31, 1999 as compared to fiscal year ended
December 31, 1998. Gross profit for fiscal years ended December 31, 1999 and
1998 amounted to $487,465 and $90,680, respectively, or a net increase of
$396,785. Gross profit percentages for fiscal year ended December 31, 1999 and
1998 were 69% and 38%, respectively, or a net increase of 82%.

     The substantial increase in gross profit is a result of larger purchases of
systems, reduced component costs, price re-negotiations with vendors, and
redesign of the PC board layout for cost economy. The increase in sales and
gross profit during fiscal year ended December 31, 1999 as compared to fiscal
year ended December 31, 1998 is attributable to a stronger marketing campaign,
fulfillment of major contracts, which are either executed or in the final stage
of execution. The Company and its subsidiaries have entered into various
agreements with certain entities in order to establish distribution channels,
corporate structures, contract applications in foreign and domestic countries,
performance of certain pilot tests, and development of new products.

<PAGE>


     The substantial increase in net loss during fiscal year ended December 31,
1999 as compared to fiscal year ended December 31, 1998, however, is
attributable primarily to a substantial increase in selling, general and
administrative expenses and an increase in research and development expenses.
Selling, general and administration expenses include general corporate overhead,
administrative salaries, shipping and warehousing costs, selling expenses,
consulting costs, and professional fees.

     Selling, general and administrative expenses for fiscal year ended December
31, 1999 and 1998 were $1,155,616 and $565,301, respectively (an increase of
$590,315 or 104%). The increase in selling, general and administrative expenses
for fiscal year ended December 31, 1999 were primarily due to the Company
incurring costs associated with its marketing efforts, officers salaries,
professional fees, and personnel costs.

     Research and development expenses for fiscal year ended December 31, 1999
were $402,980 as compared to $37,510 for fiscal year ended December 31, 1998 (an
increase of $365,470). The increase in research and development expenses is
primarily due to the development of an upgradeable modular unit to assist in the
diversification of the Company's product lines, the dedication of significant
funds to the development of an advanced system which will be used in ambulances
pertaining to the contract between the Company and North Shore - Long Island
Hospital, and the Company's ongoing perfecting and expanding of the capabilities
of its products. Moreover, the expenditures for research and development were
reduced during fiscal year 1998 since the Company had limited funds and utilized
available funds for the anticipated marketing and sale of its equity securities
during 1999. During 1998, the Company had redirected its use of available funds
in order to obtain contracts and raise additional funds, which were utilized for
further research and development expenses and establishment of a corporate
infrastructure.

     As a result of these factors, comprehensive net loss for the year ended
December 31, 1999 was $1,173,172, an increase of $567,931 or 93.83%, as compared
to a comprehensive net loss of $605,241 for the year ended December 31, 1998.
Management believes that the substantial increase in comprehensive net loss
during the fiscal year ended December 31, 1999 as compared to fiscal year ended
December 31, 1998, is attributable primarily to a substantial increase in
selling, general and administrative expenses and an increase in research and
development expenses. Selling, general and administration expenses include
general corporate overhead, administrative salaries, shipping and warehousing
costs, selling expenses, consulting costs, and professional fees.

     Liquidity and Capital Resources

     The Company is experiencing a severe liquidity crisis and must raise
additional capital. 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 and through bank loans 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 raise substantial amounts 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 $701,526 in net revenues as of fiscal year ended
December 31, 1999, an increase of approximately 195% over revenues of $237,688
generated as of fiscal year ended December 31, 1998. Management anticipates that
such generation of revenues will continue to increase on an annual basis.

<PAGE>


     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 AP+Series 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 AP+Series products and related products.

     As of December 31, 1999, the Company's current assets were $315,559 and its
current liabilities were $2,541,954, which resulted in a working capital deficit
of $2,226,395. As of December 31, 1999, the Company's total liabilities were
$3,140,009, and the Company's total liabilities exceeded its total assets by
$2,293,621. The Company's stockholders' deficit increased from ($1,760,467) for
fiscal year ended 1998 to ($2,496,560) for fiscal year ended 1999.

     As of December 31, 1999, the Company was not in compliance with terms of
loans due to financial institutions totaling $1,022,358 requiring the loans to
be reflected as current liabilities. To date the financial institutions have not
taken any actions. Although management is optimistic that they will be able to
negotiate waivers of these defaults or to restructure these loans, investor are
cautioned that there can be no assurance that management will be able to achieve
these objectives. Also, included in the current liabilities are accounts payable
of $833,278, $435,675 of accrued expense of which $360,000 is accrued officers
salaries, $92,760 of payroll taxes, $19,917 of other taxes payable and $137,966
of customer deposits. Long term liabilities include loans due to financial
institutions of $25,701, convertible notes payable of $150,000, loans due
Officers and Directors of $422,354. The Company's assets consisted primarily of
cash of $23,746; $147,071 in accounts receivable; $130,121 in inventory; $14,621
in prepaid expenses; $323,314 owing from KMR; and $159,997 owing from an officer
of the Company and $25,696 of other assets.

     For the fiscal year ended December 31, 1999, the net cash used for
operating activities was $557,989 compared to $311,109 for fiscal year ended
December 31, 1998 (an increase of $246,880 or 79.3%). The main increase was
comprised of a net loss of $1,173,837 for fiscal year ended December 31, 1999
compared to a net loss of $605,241 for fiscal year ended December 31, 1998 (an
increase of $568,596 or 94.0%. Inventory of $115,169 at December 31, 1999
increased from $14,952 at December 31, 1998 (an increase of $100,217 or 670.2%)
and accounts payable increased to $645,210 at December 31, 1999 compared to
$203,031 at December 31, 1998 (an increase of $442,179 or 217.8%).

     The Company increased its capital expenditures to $12,238 for fiscal year
ended December 31, 1999 compared to $2,782 for fiscal year ended December 31,
1998, all of which relate to the purchase of equipment.

     The Company increased its net cash from financing activities for fiscal
year ended December 31, 1999 to $593,781 compared to $309,509 for fiscal year
ended December 31, 1998 (an increase of $284,272 or 91.8%). The major components
were proceeds received from sale of Common Stock of $640,018 for fiscal year
ended December 31, 1999 compared to $0 for fiscal year ended December 31, 1998
and proceeds from convertible promissory note of $150,000 for fiscal year ended
December 31, 1999 compared to $0 for fiscal year ended December 31, 1998.

     The Company may have violated federal and state securities laws in
connection with the sales of its shares of Common Stock to investors under a
private placement offering that was not registered under the federal securities
laws. The offering and sale of such shares of the Company's Common Stock
pursuant to its Private Placement Memorandum dated January 27, 1999 and April 7,
1999, respectively, was conducted pursuant to an exemption from registration in
accordance with Regulation D, Rule 504, under the Securities Act of 1933, as
amended (the "1933 Securities Act"). The Company continued to sell its shares of
Common Stock to investors after the date the Company effectively became a
reporting company under the Securities Exchange Act of 1934, as amended (the
"1934 Exchange Act"). The exemption under Rule 504 of Regulation D and any other
exemption may not have been available to the Company for these sales. As a
result, the private placement may have violated federal securities laws.
Moreover, certain state securities rules and regulations may not have been
complied with to ensure availability of a private placement transactional
exemption. As of December 31, 1999, the Company had received proceeds in the
amount of $202,939 from the issuance of shares of Common Stock to investors
under the private placement offerings, which may be in possible violation of
federal and state securities laws. As of the date of this Annual Report,
management estimates that the Company's potential rescission liability is in the
amount of $202,939.

<PAGE>


MATERIAL COMMITMENTS

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

     A significant and estimated commitment for the Company for fiscal year 2000
is the amounts due and owing under a promissory note with Bank of Smithtown. On
November 30, 1998, the Company, its subsidiaries, IPS-NY and APP LLC, and
Richard Goodhart entered into a settlement agreement with the Bank of Smithtown
in connection with a default by IPS-NY under a promissory note dated April 13,
1995 in the amount of $100,000 and a second promissory note dated December 24,
1996 in the amount of $500,000. Pursuant to the terms of the settlement
agreement, IPS-NY made two separate payments of $23,208 and $20,000 during
November 1998 and a payment of $16,792 during March 1999. Additionally, IPS-NY
executed a new promissory note in the amount of $60,620 bearing interest at 9%
per annum and maturing in one year (representing the accrued and unpaid interest
on the original note of $500,000). In lieu of canceling the original $500,000
note, the Company also executed a new promissory note in the amount of $500,000
bearing interest at prime plus 2% per annum. Pursuant to the terms of the new
promissory note, the Company is required to make monthly payments of (i) $5,000
during the first year (December 1, 1998 through November 30, 1999), (ii) $10,000
during the second year (December 1, 1999 through November 30, 2000, and
(iii)$15,000 during the third year (December 1, 2000 through November 30, 2001.
At the end of the third year, the entire principal balance remaining together
with any accrued interest shall be due and payable. Such notes associated with
the settlement agreement are secured by the assets of the Company and the shares
of Common Stock owned of record by Richard Goodhart, the Company's Chief
Executive Officer. As of December 31, 1999, the principal balance on the newly
issued $500,000 note, the newly issued $60,620 note and the original $100,000
note are $490,774, $43,828 and $42,742, respectively. As of December 31, 1999,
the Company was not in compliance with its monthly payment schedule.

     A significant and estimated commitment for the Company for fiscal year 2000
is the amounts due and owing to HSBC Bank USA (formerly Marine Midland Bank)
pursuant to a one-year promissory note dated September 17, 1996 The terms of the
promissory note require the Company to make payments of interest only at prime
plus 2% per annum, with the principal amount of $470,715 due on demand. Such
promissory note is approximately 90% guaranteed by the Small Business
Administration. On April 12, 2000, the Company received approval from HSBC Bank
for a long-term payout, subject to documentation.

     As of December 31, 1999, the Company owes approximately $92,760 for payroll
taxes and related estimated penalties and interest. The Internal Revenue Service
and the Employment Commission of the State of New York have filed liens against
the Company, respectively. Such taxing authorities have the power to generally
seize the assets of the Company to pay off such amounts due and owing. As of the
date of this Annual Report, the Company has not entered into any formal
contractual arrangements with either taxing authority for repayment of such
taxes, penalties and interest. Management intends to continue making payments as
funds are available until such arrangements are consummated.

     The Company has entered into employment agreements dated January 1, 1999
with three of its executive officers/directors, Mr. Richard Goodhart, Mr. Steven
Wahrman and Mr. Jean Paul Daveau (collectively, the "Employment Agreements").
Pursuant to the terms and provisions of the Employment Agreements, commencing
January 1, 1999, each officer/director will receive (i) an annual salary of
$120,000 (of which the first six months of fiscal year 1999 have been deferred
and accrued without interest); (ii) an annual cash bonus equal to one percent
(1%) of the annual net profits for the preceding fiscal year; and (iii) stock
options to purchase 500,000 shares of restricted Common Stock of the Company at
$1.45 per share within five years from the effective date of the employment
agreement. Other benefits provided for in each respective employment agreement
are disability and health insurance coverage, automobile and expense allowances
and travel and entertainment allowances. As of December 31, 1999, the Company
has accrued approximately $360,000 in aggregate salary and paid $-0-.

<PAGE>


     The Company entered into a consulting agreement dated July 30, 1998 with
Bristol Consulting Ltd ("Bristol"), pursuant to which the Company is obligated
to pay Bristol a monthly fee of $10,000 for the duration of the agreement, which
terminates July 30, 2003. As of December 31, 1999, the Company has accrued
$77,900 of payments to Bristol and has paid $62,500 to Bristol for services
rendered.

     A significant and estimated commitment for the Company for fiscal year 2000
is the execution by the Company of a $250,000 convertible promissory note dated
December 16, 1999. The terms of the note are interest is to be accrued at 15%
per annum payable monthly in arrears or upon maturity. The principal is payable
in full on December 31, 2001. The convertible promissory note contains a
provision that beginning January 31, 2001, the note is payable on demand upon
providing a ten day demand. The note is convertible at any time any time
subsequent to September 30, 2000 into restricted shares of Common Stock at the
rate of $1.45 per share. In addition, there is a prepayment penalty provision if
the Company prepays the note in the first thirteen months. At December 31, 1999,
the Company had received $150,000 related to the convertible promissory note and
the remaining $100,000 received during January 2000.

     Moreover, during the three-month period ended March 31, 2000, the Company
issued additional convertible promissory notes in the aggregate of $379,000. The
terms of two of the notes are interest is to be accrued at 15% per annum payable
monthly in arrears or upon maturity. The terms of the remaining notes are
interest is to be accrued at 10% per annum payable monthly in arrears or upon
maturity. All notes are payable in full on December 31, 2001. The notes are
convertible at any time subsequent to September 30, 2000 into restricted shares
of Common Stock at the rate of $1.45 per share.

     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
AP+Series 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 2000.

YEAR 2000 COMPLIANCE

     The Year 2000 problem referred to existing computer programs' ability to
appropriately distinguish the year 2000 from the year 1900 when processing
transactions. The Company developed and executed a plan to achieve compliance
with Year 2000 issues that included reviewing its hardware and software that
support its operations and infrastructure, as well as its internal systems that
support the Company's administrative functions. For each of these areas, the
plan called for the Company to identify the systems, address their compliance
with the Year 2000 problem, test their compliance and make any upgrades
considered necessary to ensure compliance. As of the date of this Annual Report,
the Company is successfully running all of its systems and has encountered no
issuers or malfunctions related to the Year 2000 problem. No contingency plans
had to be initiated, and no additional costs were incurred.

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 Financial Statements".

     Index to Financial Statements

          Report of Independent Public Accountants
          Consolidated Balance Sheets at December 31, 1999
          Consolidated Statements of Operations for years ended December 31,
              1999 and 1998
          Consolidated Statements of Cash Flow for years ended December 31,
              1999 and 1998
          Consolidated Statements of Stockholders' Equity (Deficiency) for
              Years ended December 31, 1999 and 1998
          Notes to Consolidated Financial Statements

<PAGE>

                 ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS

                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998



                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


                                                                         Page
                                                                        Number
                                                                        ------

Independent auditors' report                                              F-1

Consolidated Balance Sheets at December 31, 1999                          F-2

Consolidated Statements of Operations and Comprehensive Income
     for the years ended December 31, 1999 and 1998                       F-3

Consolidated Statement of Stockholders' Deficiency for the
    years ended December 31, 1999 and 1998                                F-4

Consolidated Statements of Cash Flows for the
    years ended December 31, 1999 and 1998                            F-5 to F-6

Notes to Consolidated Financial Statements                           F-7 to F-24


<PAGE>

                          INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Stockholders of
Accident Prevention Plus, Inc.

We have audited the accompanying consolidated balance sheet of Accident
Prevention Plus, Inc. and Subsidiaries (the "Company") as of December 31, 1999,
and the related consolidated statements of operations and comprehensive income,
stockholders' deficiency and cash flows for the years ended December 31, 1999
and 1998. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits. We did not audit the
financial statements of Accident Prevention Plus (UK) Limited, a wholly owned
subsidiary, whose statements reflect total assets of $53,815 as of December 31,
1999, with no revenues for the related years then ended. Those statements were
audited by other auditors whose report has been furnished to us, and our
opinion, insofar as it relates to the amounts included for Accident Prevention
Plus (UK) Limited, is based solely on the report of the other auditors.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of the Company as of
December 31, 1999, and the results of its operations and cash flows for the
years ended December 31, 1999 and 1998 in conformity with generally accepted
accounting principles.

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, as of December 31, 1999 has a
working capital deficiency of $2,226,395. In addition, for the years ended
December 31, 1999 and 1998, the Company reported net losses amounting to
$1,173,837 and $605,241, respectively. These factors raise substantial doubt
about the Company's ability to continue as a going concern. Management's plans
in regard to these matters are described in Note 2. The consolidated financial
statements do not include any adjustments that might result from the outcome of
these uncertainties.



/s/ Massella, Tomaro & Co., LLP
-------------------------------
Massella, Tomaro & Co., LLP
Jericho, New York
March 28, 2000


                                      F - 1
<PAGE>

                 ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                              AT DECEMBER 31, 1999

                                     ASSETS
                                     ------
Current Assets:
     Cash                                                           $    23,746
     Accounts receivable, net                                           147,071
     Inventory                                                          130,121
     Prepaid expenses                                                    14,621
                                                                    -----------
          Total Current Assets                                          315,559
                                                                    -----------

Property and Equipment, Net                                              21,822
                                                                    -----------
Other Assets:
     Due from officer                                                   159,997
     Due from affiliate                                                 323,314
     Other                                                               25,696
                                                                    -----------
          Total Other Assets                                            509,007
                                                                    -----------

           Total Assets                                             $   846,388
                                                                    ===========

                    LIABILITIES AND STOCKHOLDERS' DEFICIENCY
                    ----------------------------------------
Current Liabilities:
     Notes payable                                                  $ 1,022,358
     Accounts payable                                                   833,278
     Accrued expenses                                                   435,675
     Payroll taxes payable                                               92,760
     Other taxes payable                                                 19,917
     Customer deposits                                                  137,966
                                                                    -----------
          Total Current Liabilities                                   2,541,954
                                                                    -----------

Long Term Liabilities:
     Notes payable                                                       25,701
     Convertible note payable                                           150,000
     Loans payable - officers                                           384,854
     Notes payable - director                                            37,500
                                                                    -----------
          Total Long Term Liabilities                                   598,055
                                                                    -----------

Total Liabilities                                                     3,140,009
                                                                    -----------

Common Stock Subject to Rescission Offer, - $.001  par value,
     139,958 shares issued and outstanding (Note 9)                     202,939
                                                                    -----------

Commitments & Contingencies  (Note 10)

Stockholders' Deficiency:
     Common stock - $.001 par value,
     50,000,000 shares authorized,
     17,638,238 shares issued and outstanding, respectively              17,638
     Additional paid-in capital                                         660,055
     Accumulated - other comprehensive income (loss)                        665
     Accumulated deficit                                             (3,174,918)
                                                                    -----------
          Total Stockholders' Deficiency                             (2,496,560)
                                                                    -----------

               Total Liabilities and Stockholders' Deficiency       $   846,388
                                                                    ===========

           See accompanying notes to consolidated financial statements

                                      F - 2
<PAGE>


                 ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
         CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998


                                                      1999             1998
                                                  ------------     ------------

Net Sales                                         $    701,526     $    237,688

Cost of Sales                                          214,061          147,008
                                                  ------------     ------------

Gross Profit                                           487,465           90,680
                                                  ------------     ------------

Expenses:
     Selling, general and administrative             1,155,616          565,301
     Research and development                          402,980           37,510
                                                  ------------     ------------
Total Expenses                                       1,558,596          602,811
                                                  ------------     ------------
Loss Before Other Income (Expenses)
     And Provision For Income Tax                   (1,071,131)        (512,131)
                                                  ------------     ------------

Other Income (Expenses)
     Interest income                                    35,454            5,610
     Gain on foreign currency transaction                2,659             --
     Interest expense                                 (140,819)         (98,720)
                                                  ------------     ------------

     Total Other Income (Expenses)                    (102,706)         (93,110)
                                                  ------------     ------------

Loss Before Provision for Income Taxes              (1,173,837)        (605,241)
                                                  ------------     ------------

Provision For Income Taxes                                --               --
                                                  ------------     ------------
Net Loss                                            (1,173,837)        (605,241)

Other Items Of Comprehensive Income                        665             --
                                                  ------------     ------------

Comprehensive Net Loss                            $ (1,173,172)    $   (605,241)
                                                  ============     ============

Basic Earnings Per Share:
     Net Loss                                     $       (.07)    $       (.04)
                                                  ============     ============


Weighted Average Number of Shares
     Outstanding                                    17,629,462        7,195,345
                                                  ============     ============


          See accompanying notes to consolidated financial statements.

                                      F - 3
<PAGE>
<TABLE>
<CAPTION>

                                           ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
                                          CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY
                                            FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998


                                                                                           Accumulated
                                        Common Stock          Additional      Member's        Other                        Total
                                   ------------------------    Paid-in         Capital    Comprehensive  Accumulated   Stockholders'
                                     Shares        Amount      Capital      (Deficiency)  Income (Loss)    Deficit       Deficiency
                                   ----------   -----------   ----------    -----------   ------------   -----------    -----------

<S>                                <C>           <C>           <C>            <C>           <C>            <C>          <C>
Balances at December 31, 1997            --     $      --     $      --     $  (843,413)   $      --     $      --      $  (843,413)

Recapitalization of the LLC        14,205,970        14,206          --         843,413           --        (857,619)          --

Purchase of subsidiary              2,975,000         2,975          --            --             --        (538,221)      (535,246)

90,000 shares of common stock
contributed by officers' for
services rendered to the Company         --            --         130,500          --             --            --          130,500

Issuance of common stock in
    connection with
   settlements of debt               115,000           115        92,818          --             --            --            92,933

Net loss for the year ended
 December 31, 1998                       --            --            --            --             --        (605,241)      (605,241)
                                  -----------   -----------   -----------   -----------    -----------   -----------    -----------

Balances at December 31, 1998      17,295,970        17,296       223,318          --             --      (2,001,081)    (1,760,467)

Issuance of common stock in
     connection with private
     placement memorandums,
     net of offering costs            342,268           342       436,737          --             --            --          437,079

Foreign currency
     translation adjustment              --            --            --            --              665          --              665

Net loss for the year ended
   December 31, 1999                     --            --            --            --             --      (1,173,837)    (1,173,837)
                                  -----------   -----------   -----------    -----------   -----------    -----------    -----------

Balances at
 December 31, 1999                 17,638,238   $    17,638   $   660,055   $      --      $       665   $(3,174,918)   $(2,496,560)
                                  ===========   ===========   ===========    ===========   ===========    ===========    ===========


                                    See accompanying notes to consolidated financial statements.

                                                               F - 4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                        ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
                             CONSOLIDATED STATEMENTS OF CASH FLOWS
                         FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998


                                                                      1999             1998
                                                                   -----------      -----------

Operating activities
<S>                                                                <C>              <C>
     Net loss                                                      $(1,173,837)     $  (605,241)
     Adjustments to reconcile net loss to net
             Cash used for operating activities:
             Depreciation and amortization                               6,837            5,265
             Foreign currency translation                                  665
             Common stock for services                                    --            130,500
     Decrease (increase) in:
             Inventory                                                (115,169)         (14,952)
             Accounts receivable                                      (115,335)         (30,365)
             Prepaid expenses                                           68,379           (8,250)
             Other assets                                              (23,750)            (446)
     (Decrease) increase in:
              Cash overdraft                                           (19,813)          19,813
              Accounts payable and accrued expenses                    645,210          203,031
              Payroll taxes payable                                     10,941            3,346
              Other taxes payable                                       19,917             --
              Customer deposits                                        137,966          (13,810)
                                                                   -----------      -----------
     Net cash used for operating activities                           (557,989)        (311,109)
                                                                   -----------      -----------

Investing activities
      Purchase of property and equipment                               (12,238)          (2,782)
                                                                   -----------      -----------
      Net cash used for investing activities                           (12,238)          (2,782)
                                                                   -----------      -----------

Financing activities
     Proceeds from notes payable                                          --             61,238
     Repayments of notes payable                                       (42,824)            --
     Repayments of capital lease contributions                          (2,896)          (1,698)
     Proceeds from convertible note payable                            150,000             --
     Proceeds from common stock subject to rescission                  202,939             --
     Proceeds from sale of common stock                                437,079             --
     Proceeds from officers loans payable                               50,178          126,454
     Repayment of officers loans payable                               (64,455)            --
     Proceeds from directors note payable                                 --              4,000
     (Advances to) proceeds from affiliate                             (52,174)          32,904
     Advances to officer                                               (84,066)         (75,931)
     Proceeds from IPS-NY prior to acquisition                            --            162,542
                                                                   -----------      -----------

     Net cash provided by financing activities                         593,781          309,509
                                                                   -----------      -----------

Net increase (decrease) in cash                                         23,554           (4,382)

Cash and cash equivalents at beginning of year                             192            4,574
                                                                   -----------      -----------

Cash and cash equivalents at end of year                           $    23,746      $       192
                                                                   ===========      ===========


                  See accompanying notes to consolidated financial statements.

                                             F - 5
</TABLE>
<PAGE>


                 ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998


                                                           1999         1998
                                                        ----------   ---------

Supplemental disclosure of non-cash flow information:
    Cash paid during the year for:
             Interest                                   $   81,584   $ 128,580
                                                        ==========   =========
             Income taxes                               $     --     $    --
                                                        ==========   =========
Schedule of non-cash operating activities:
     Issuance of 115,000 shares of common
     stock in connection with settlement of debt        $     --     $ (92,933)
                                                        ==========   =========

Schedule of non-cash investing activities:
     Issuance of 115,000 shares of common
     stock in connection with settlement of debt        $     --     $  92,933
                                                        ==========   =========

     90,000 shares of common stock contributed
     by officers' for services rendered                 $     --     $ 130,500
                                                        ==========   =========

     In connection with acquisition
     of IPS - NY 2,975,000 shares of
     common stock issued                                $     --     $(535,246)
                                                        ==========   =========










          See accompanying notes to consolidated financial statements.

                                       F-6
<PAGE>


                 ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998



NOTE 1 -- ORGANIZATION

     THE COMPANY
     -----------

     Accident Prevention Plus, Inc. (the "Company") was incorporated in the
     State of Nevada on October 28, 1998 to become the holding company of
     Accident Prevention Plus, LLC a Limited Liability Company, (the "LLC") and
     International Purchasing Services, NY, Inc. ("IPS-NY").

     INC-NY/LLC
     ----------

     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 a Limited Liability Company. The
     LLC is treated as a partnership for financial and income tax purposes. The
     entities are engaged in the design, marketing and distribution of onboard
     computer recording and fuel monitoring systems for commercial and fleet
     vehicles.

     IPS-NY
     ------

     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.

     REORGANIZATION
     --------------

     During October 1998, pursuant to an Agreement and Plan of Reorganization
     (the "Reorganization Agreement") the Company issued 14,205,970 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.

     ACQUISITION OF IPS-NY
     ---------------------

     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 2,975,000 shares of its common stock. The
     acquisition was accounted for by the purchase method of accounting.

                                      F - 7
<PAGE>


                 ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998



NOTE 1 -- ORGANIZATION (cont'd)

     KMR TELECOM, LTD.
     -----------------

     Simultaneously with the reorganization during October 1998, the Company
     also intended to acquire all of the issued and outstanding common stock of
     KMR Telecom, Ltd ("KMR"), a corporation organized under the laws of India
     for 800,000 shares of its common stock. During June of 1999, it was
     discovered that the laws of India prohibit a foreign entity from holding
     more than a 49% equity interest in a company organized under the laws of
     India. Accordingly, the Company and the shareholders of KMR entered into a
     rescission agreement canceling the transaction. The financial statements do
     not reflect the intended acquisition. In accordance with the rescission
     agreement, the rescission was effectuated retroactively to October 1998.

     APP U.K. Ltd.
     -------------

     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.

NOTE 2 -- GOING CONCERN

     The accompanying consolidated financial statements have been prepared
     assuming that the Company will continue as a going concern. For the years
     ended December 31, 1999 and 1998, the Company generated net losses of
     $1,173,837 and $605,241, respectively. Additionally, as of December 31,
     1999, the Company has a working capital deficiency amounting to $2,226,395.

     As of December 31, 1999, the Company owes approximately $93,000 of payroll
     taxes and related penalties and interest. Certain taxing authorities have
     filed liens against the Company as a result of the unpaid 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
     has not complied with the payment schedules of their bank debt. Should the
     banks take action against the Company the results could adversely affect
     the Company.

     The Company is aggressively attempting to obtain additional contracts in
     order to mitigate future losses. The Company is in the process of complying
     with the Securities and Exchange Commission's (SEC) rules regarding
     fulfillment of eligibility Rule 15c2-11, adopted under the Securities Act
     of 1934, as amended, in order for broker dealers to publish quotations in
     the Company's securities. Management is optimistic that this will enable
     the Company to raise additional capital. However, there can be no assurance
     that it will be able to obtain additional contracts, pay its payroll taxes
     or to comply with SEC eligibility requirements for publishing of quotations
     in the Company's securities.

     These facts raise substantial doubt about the Company's ability to continue
     as a going concern. The 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.

                                      F - 8
<PAGE>


                 ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998


NOTE 3 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     a) Principles of consolidation
        ---------------------------

     The accompanying consolidated balance sheet at December 31, 1999 include's
     the accounts of the Company and its wholly owned subsidiaries, LLC, IPS-NY
     and APP UK (the "Companies") after elimination of all significant
     intercompany transactions and accounts. The statements of operations and
     cash flows for the year ended December 31 1998 include the balances of the
     Company and the LLC for the entire year and from October 28, 1998, (the
     acquisition date) to December 31, 1998 for IPS-NY since purchase accounting
     requires the elimination of all operating transactions of the acquired
     subsidiary prior to the date of the acquisition. If the operating
     transactions of IPS-NY from January 1, 1998 to October 27, 1998 were
     included in the December 31, 1998 consolidated statement of operations, the
     effect of major components would be as follows:

                                                            Proforma
                                                            --------

                   Net Sales                                $ 443,088
                   Cost of Sales                              202,950
                                                           ----------
                   Gross Profit                               240,138
                   Expenses                                   801,424
                                                           ----------
                   Net Loss                                 $(561,286)
                                                            ==========


     b) Cash and cash equivalents
        -------------------------

     The Company considers highly liquid investments with maturities of three
     months or less at the time of purchase to be cash equivalents.

     c) Accounts Receivable
        -------------------

     The Company utilizes the allowance method for recognizing the
     collectibility of its accounts receivables. The allowance method recognizes
     bad debt expense based on a review of the individual accounts outstanding
     based on the surrounding facts. As of December 31, 1999, no allowance was
     deemed necessary by management.

     d) Inventory
        ---------

     Inventory amounting to $130,121 at December 31, 1999, consists of
     components and finished goods and are valued at the lower of cost (using
     the specific identification method) or market. All inventory is pledged as
     collateral pursuant to the notes payable as discussed in Note 6.

                                      F - 9
<PAGE>


                 ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998



NOTE 3 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

     e ) 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.

     f) Earnings per share
        ------------------

     During 1997, the Financial Accounting Standards Board issued SFAS No. 128,
     "Earnings Per Share." SFAS No. 128 replaced the previously required
     reporting of primary and fully diluted earnings per share with basic and
     diluted earnings per share, respectively. Unlike the previously reported
     primary earnings per share, basic earnings per share excludes the dilutive
     effects of stock options. Diluted earnings per share are similar to the
     previously reported fully diluted earnings per share. Earnings per share
     amounts for all periods presented have been calculated in accordance with
     the requirements of SFAS No. 128.

     g) Use of estimates
        ----------------

     In preparing the consolidated financial statements in conformity with
     generally accepted accounting principles, 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.

     h) Fair value disclosure at December 31, 1999
        ------------------------------------------

     The carrying value of cash, accounts receivable, 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.

     i) Organizational costs
        --------------------

     Organizational costs consist of legal costs incurred in the establishment
     of the Company. Organizational costs are being amortized on a straight-line
     basis over a five year estimated useful life.

                                     F - 10
<PAGE>


                 ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998



NOTE 3 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

     j) Effect of New Accounting Standards
        ----------------------------------

     The Company does not believe that any recently issued accounting standards,
     not yet adopted by the Company, will have a material impact on its
     financial position and results of operations when adopted.

     k) Property and Equipment
        ----------------------

     Property and equipment are recorded at cost less accumulated depreciation
     which is provided on the straight line basis over the estimated useful
     lives of the assets which range between five and seven years. Expenditures
     for maintenance and repairs are expensed as incurred.

     l) Deferred Offering Costs
        -----------------------

     Deferred offering costs consist of $10,000 in professional fees at December
     31, 1998 in connection with the Company's private placement memorandum
     affected during 1999, which were included in prepaid expenses. Accordingly,
     all such costs were charged to additional paid-in capital during the year
     ended December 31, 1999.

     m) Research and Development Costs
        ------------------------------

     Research and development costs are expensed as incurred. Such costs
     amounted to $402,980 and $37,510 for the years ended December 31, 1999 and
     1998, respectively.

     n) 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 shareholders' equity. The functional currency of all
     the Company's subsidiaries is the United State dollar with the exception of
     APP U.K. and APP France whose functional currency's are the British pound
     sterling and the French franc.

     Monetary assets and liabilities denominated in foreign currencies are
     translated into U.S. dollars at the year-end rate of exchange. Non-monetary
     assets and liabilities denominated in foreign currencies are translated at
     historic rates and revenue and expenses are translated at average rates
     prevailing during the month of the transaction. Exchange gains or losses
     arising from the translation of long-term monetary assets and liabilities
     are deferred and amortized on a straight-line basis over the remaining life
     of the asset or liability. All other exchange gains or losses are reflected
     in the consolidated statements of operations. At December 31, 1999 and
     1998, there were no foreign exchange gains or losses associated with
     long-term monetary assets and liabilities.

                                     F - 11
<PAGE>

                 ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998



NOTE 3 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

     o) Segment Information
        -------------------

     The Company has adopted SFAS No. 131, "Disclosures about Segments of an
     Enterprise and Related Information." SFAS No. 131 supercedes SFAS 14,
     Financial Reporting for Segments of a Business Enterprise, replacing the
     "industry segment" approach with the "management" approach. The management
     approach designated the internal organization that is used by management
     for making operating decisions and assessing performance as the source of
     the Company's reportable segments. SFAS No.131 also requires disclosures
     about products and services, geographic areas, and major customers. The
     adoption of SFAS No. 131 did not significantly affect the disclosures of
     segment information previously reported.

     p) Comprehensive Income
        --------------------

     The Company adopted SFAS No. 130, "Accounting for Comprehensive Income,"
     during the fiscal year ended 1998. This statement establishes standards for
     reporting and disclosing comprehensive income and its components (including
     revenues, expenses, gains and losses) in a full set of general-purpose
     financial statements. The Company had comprehensive income of $665 and $nil
     in the years ended December 31, 1999 and 1998.

NOTE 4 -- PROPERTY AND EQUIPMENT

     Property and equipment are as follows at:

                                                          December 31, 1999
                                                          -----------------

               Furniture & fixtures                          $      1,220
               Computer equipment                                  56,468
                                                              -----------
                                                             $     57,688
               Less: accumulated depreciation                      35,866
                                                             ------------
                                                             $     21,822
                                                             ============

     Depreciation expense for the years ended December 31, 1999 and 1998
     amounted to $6,837 and $5,265, respectively.

NOTE 5 -- DUE FROM AFFILIATE

     Due from affiliate consists of 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.
     At December 31, 1999 the loan due from KMR amounted to $323,314. Interest
     income recorded by the Company in connection with the loan amounted to
     $35,454 and $5,610, respectively for the years ended December 31, 1999 and
     1998.

                                     F - 12
<PAGE>


                 ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998



NOTE 6 -- NOTES PAYABLE

     a) Bank of Smithtown
        -----------------

     On November 30, 1998, the Company, IPS-NY, LLC and the Company's Chief
     Executive Officer entered into a settlement agreement with the Bank of
     Smithtown ("Smithtown") in connection with a default by IPS-NY under a U.S.
     Small Business Administration ("SBA") promissory note dated April 13, 1995
     in the sum of $100,000 and a second promissory note dated December 24, 1996
     in the sum of $500,000. In accordance with the settlement, IPS-NY made the
     following payments as scheduled: $23,208 and $20,000 both in November 1998
     and $16,792 in March 1999.

     Additionally, IPS-NY executed a new note in the amount of $60,620 bearing
     interest at 9% per annum and maturing in one year. Such note represented
     the accrued and unpaid interest on the original IPS-NY note of $500,000
     dated December 24, 1996. Lastly, in lieu of canceling the original IPS-NY
     $500,000 note dated December 24, 1996, the Company executed a new note in
     the amount of $500,000, bearing interest at prime plus 2% per annum. The
     new note was to be paid at the rate of $5,000 per month during the first
     year, $10,000 per month during the second year and $15,000 per month during
     the third year. At the end of the third year, the entire principal balance
     remaining, together with any accrued interest, shall be due and payable. As
     of December 31, 1999 the principal balances on the newly issued $500,000
     note, the newly issued $60,620 note and the original $100,000 SBA note are
     $490,774, $43,828 and $42,742, respectively.

     All notes associated with the above settlement agreement are secured by the
     Company's common stock owned by its Chief Executive Officer and all assets
     of the Company.

     As of December 31, 1999, the Company was not in compliance with the payment
     schedule as agreed to above for the $500,000 note and $60,620 note. 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 December 31, 1999.

     b) HSBC Bank USA (formerly Marine Midland Bank)
        --------------------------------------------

     On September 17, 1996, the LLC borrowed $500,000 by executing a promissory
     note with HSBC Bank USA (formerly Marine Midland Bank) ("HSBC") with the
     note being partially guaranteed by the SBA. Such note was for a term of one
     year. The current terms of the note are payments of interest only at prime
     plus 2% per annum and due on demand. The Company is currently in the
     process of negotiating a long-term payout for this note with HSBC. As of
     December 31, 1999 the balance due is $470,715 and is classified as current.

                                     F - 13
<PAGE>


                 ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998



NOTE 6 -- NOTES PAYABLE (cont'd)

     Annual aggregate maturities of notes payable are as follows as of December
     31, 1999:

                   Year ended December 31:
                           2000                             $    17,041
                           2001                                  19,012
                           2002                                   6,689
                                                            -----------
                                                            $    42,742
                                                            ===========

NOTE 7 -- ACCRUED EXPENSES

     Accrued expenses consist of the following at December 31, 1999:

              Payroll                          $     9,953
              Professional fees                     24,348
              Officers salaries                    360,000
              Interest                              40,776
              Other                                    598
                                               -----------
                                               $   435,675
                                               ===========

NOTE 8 -- CONVERTIBLE NOTE PAYABLE

     On December 16, 1999, the Company executed a $250,000 convertible
     promissory note with an individual, bearing interest at 15% per annum with
     principal payable in full on December 31, 2001. The promissory note
     contains a provision stating that beginning January 2, 2001 that upon a 10
     day notice the note is due on demand. On September 30, 2000 the note is
     convertible into common stock at the rate of $1.45 per share. There also is
     a prepayment penalty provision if the Company prepays the note in the first
     thirteen months. At December 31, 1999, the Company had received $150,000
     related to the note with the remaining $100,000 received in January 2000.
     On February 27, 2000 and March 21, 2000, the Company executed additional
     convertible promissory notes, with this individual, totaling $100,000. See
     Note 15 for the terms of these notes.

NOTE 9 -- 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, as discussed in
     note 11 (e), 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 139,958 shares of common stock through December 31, 1999 have been
     classified outside of equity in the balance sheet and classified as common
     stock subject to rescission. As of December 31, 1999, no investors have
     requested the Company to repurchase their shares.

                                     F - 14
<PAGE>


                 ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998



NOTE 10 -- COMMITMENTS AND CONTINGENCIES

     a) Payroll taxes
        -------------

     As of December 31, 1999, the Company owes approximately $93,000, 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.

     b) Advances from grant
        -------------------

     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 loose all
     rights to the technology relating to the FIMS.

     c) 401K Employee Benefit Plan
        --------------------------

     During 1994, IPS-NY established a non-contributory 401K-employee benefit
     plan on behalf of its employees. As of December 31, 1999, IPS-NY has failed
     to remit approximately $5,000 to such plan, and accordingly, such amount
     has been included in accounts payable.

     d) Lack of insurance
        -----------------

     The Companies ceased maintaining any product liability, officer's life
     insurance or any other form of general insurance in October 1997. In
     December 1999, the Companies obtained general and product liability
     insurance. Although the Companies are not aware of any claims resulting
     from lack of insurance, there is no assurance that none exists.

     e) Significant customers and vendors.
        ---------------------------------

     For the years ended December 31, 1999 and 1998, the Company had three and
     three unrelated customers, respectively, which accounted for approximately
     42%, 36%, and 17%, and 56%, 17%, and 16%, respectively, of total revenues.
     As of December 31, 1999, the Company had two unrelated customers who
     accounted for approximately 80% and 20% of accounts receivables.

                                     F - 15
<PAGE>


                 ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998



 NOTE 10 -- COMMITMENTS AND CONTINGENCIES (cont'd)

     f) Lease Commitments
        -----------------

     i) Office Space
        ------------

     Prior to April 1998, IPS-NY, had office space which was rented on a
     month-to-month basis. In April 1998, IPS-NY entered into a reciprocal
     agreement with Jaco Electronics, Inc. ("Jaco"). The agreement stipulates
     that Jaco will provide, for eighteen months, office space valued at $1,500
     per month and warehousing and shipping support valued at $5,000 per month.
     In lieu of such support, IPS-NY agreed to transfer its then existing
     backlog sales orders to Jaco, which amounted to approximately $300,000. The
     warehousing and shipping services provided by Jaco have been accounted for
     as services provided to the LLC. For the year ended December 31, 1999 and
     1998, the Company has recorded $47,500 and $42,500 of warehousing and
     shipping cost related to this agreement. For the year ended December 31,
     1999 and 1998, the Company has recorded rent expense of $21,970 and
     $19,879, respectively.

     The Company entered in to a sublease agreement for office space effective
     January 10, 2000. The sublease agreement is for two years, with two (one
     year) options to renew. The office lease requires monthly payments of
     $5,200 which includes maintenance and use of a phone system and furniture.
     The Company has the right upon 60 days notice to increase the square
     footage of office space used at a rate of $7,500 per month.

     ii) Vehicles
         --------

     The Company leases four vehicles under non-cancelable operating leases.
     Total leasing expense was approximately $18,607 and $18,561 for the years
     ended December 31, 1999 and 1998, respectively. The Company's approximate
     future minimum lease payments under these non-cancelable operating leases
     in effect on December 31, 1999 are as follows:

                      2000                             $   18,059
                      2001                                 14,621
                      2002                                  4,874
                                                       ----------
                                                       $   37,554
                                                       ==========

     g) Independent Contractors' Installation and Service Agreements
        ------------------------------------------------------------

     From April 1997 through June 1997, the LLC entered into four separate
     installation and service agreements (the "Agreements") with four foreign
     corporations whereby such corporations received a 4.9% partnership interest
     in the LLC for $2,500. Pursuant to the agreements, the corporations are
     responsible for establishing distribution and sales channels along with the
     necessary infrastructure required for the successful marketing of the LLC's
     products. Lastly, the corporations are also responsible for installation
     and maintenance of the LLC's products. Pursuant to the agreements, the
     corporations will be compensated based on a fixed hourly rate for any
     installation and/or maintenance service.

                                     F - 16
<PAGE>


                 ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998



NOTE 10 -- COMMITMENTS AND CONTINGENCIES (cont'd)

     g) Independent Contractors' Installation and Service Agreements(cont'd)
        --------------------------------------------------------------------

     From inception through December 31, 1999, no services have been performed
     by the above four foreign entities. In connection with the LLC's
     reorganization during October 1998, the four foreign corporations exchanged
     each of their respective 4.9% interests in the LLC for a total of 3,180,000
     shares of the Company.

     h) Bristol Consulting Ltd.
        -----------------------

     On July 30, 1998, the LLC entered into a consulting agreement with Bristol
     Consulting Ltd. ("Bristol") for the assistance and advise 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 is 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 837,414 shares of common stock of the Company upon the
     reorganization of the LLC in October 1998 for its 5% partnership interest
     in the LLC. For the years ended December 31, 1999 and 1998, the LLC paid a
     total of $62,500 and $14,600, respectively, to Bristol. As of December 31,
     1999, the LLC has accrued a total of $77,900 of payments due to Bristol.

     i) Royce Anderson and Monroe, Inc.
        -------------------------------

     On July 30, 1998, the LLC entered into a consulting agreement with Royce
     Anderson & Monroe, Inc. ("Royce Anderson") for the assistance and advise 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 2,006,276 shares of common stock of the Company upon the
     reorganization of the LLC in October 1998 for its 10% partnership interest
     in the LLC.

     j) Software Hardware Specialists, Inc.
        -----------------------------------

     On December 17, 1998, the Company entered into a three year joint venture
     agreement with Software Hardware Specialists, Inc. ("SHS") which became
     effective on January 4, 1999. SHS, a current shareholder will jointly
     provide the engineering and manufacturing management along with engineering
     design of the Company's products. The Company will pay SHS for a period of
     three years at established hourly rates. For the year ended December 31,
     1999, the Company paid to SHS $182,969 for research and development.

                                     F - 17
<PAGE>


                 ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998



NOTE 10 -- COMMITMENTS AND CONTINGENCIES (cont'd)

     k) ATA Foundation, Inc.
        --------------------

     During August 1999, the Company entered into a consulting agreement with
     ATA Foundation, Inc., ("ATA") a non profit corporation, whereby the Company
     is to provide electronic recording and data collection interface in a
     project to pilot test fatigue management technologies. The period of
     performance shall be from August 1, 1999 through December 31, 2001. The
     agreement fee of $217,875 will be earned on a cost reimbursement basis with
     the Company providing monthly invoices upon completion of services as
     prescribed in the agreement. As of December 31, 1999, the Company billed a
     total of $118,000 in connection with such agreement.

     l) Carnegie Mellon Research Institutes
        -----------------------------------

     On November 19, 1998, the LLC entered into a non-disclosure agreement with
     Carnegie Mellon Research Institute and Carnegie Mellon Driver Training and
     Safety Institute ("Carnegie") in connection with a letter of intent dated
     January 6, 1998. The letter of intent stipulated Carnegie's cooperation in
     working with the LLC for the development of new products and research and
     development of new prototypes. The non-disclosure agreement established the
     terms governing the use and protection of certain confidential information
     by both Carnegie and the LLC.

     As of December 31, 1999, the LLC and Carnegie have not entered into a
     formal contract regarding such joint venture. However, the LLC has made
     payments to Carnegie totaling $25,000 for the year ended December 31, 1999
     for research and development.

     m) 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) month's 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 is 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 (8) months of the beginning trade date and iii)
     the balance of $3 million to be paid on or before thirty-six (36) months
     from the date of the contract. Lastly, AOC will purchase the Company's
     product at distributor's cost.

                                     F - 18
<PAGE>


                 ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998



NOTE 11 -- STOCKHOLDERS' DEFICIENCY

     a) Reorganization
        --------------

     During October 1998, pursuant to an Agreement and Plan of Reorganization
     (the "Reorganization Agreement") the Company issued 14,205,970 shares of
     its common stock to the partners of the LLC for 100% of the LLC. The
     transaction with the LLC was accounted for by the Company as a corporate
     reorganization. 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 2,975,000
     shares of its common stock.

     b) Issuance of Common Stock for Settlement of Debt
        -----------------------------------------------

     During November 1998, the Company issued 115,000 shares of common stock to
     certain professionals and vendors as consideration for forgiveness of
     accrued expenses associated with accounting and tax services, software
     consulting and design services. The shares issued have been valued at the
     balance of the accrued expenses amounting to $92,933.

     c) Officers' Contribution
        ----------------------

     During November 1998, the officers of the Company transferred 90,000 shares
     of common stock, which they held personally, to consultants, professionals
     and employees of the Company in consideration for services. Accordingly, in
     connection with the issuance of such shares, the Company recorded general
     and administrative expenses and additional paid-in capital of $130,500
     related to such issuances.

     d) 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 director of the Company. The
     price for each share of common stock purchasable according to the Stock
     Option Plan is a $1.45 per share. For the year ended December 31, 1999 no
     options were granted.

                                     F - 19
<PAGE>


                 ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998



NOTE 11 -- STOCKHOLDERS' DEFICIENCY (cont'd)

     e) Limited Offering Memorandums
        -----------------------------

     During January and April 1999, the Company commenced two Limited Offering
     Memorandums (the "Offerings") pursuant to Rule 504 of Regulation D
     promulgated under the Securities Act of 1933. The Company's first offering
     was for 500,000 shares of its common stock at $1.45 per share before a 10%
     selling commission. Such offering was terminated during April 1999 with the
     Company selling approximately 340,000 shares. The second offering in April
     1999 was for 408,475 shares of its common stock at $1.45 per share before a
     10% selling commission. As of December 31, 1999, the Company has sold an
     aggregate of 482,226 shares for the two offerings, yielding net proceeds of
     $640,018 after offering costs.

     Common stock sold subsequent to August 3, 1999 pursuant to the Company's
     limited offering memorandums, 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 139,958 shares of common stock through December 31,
     1999 have been classified outside of the equity section in the balance
     sheet and classified as common stock subject to rescission. As of December
     31, 1999, no investors have requested that the Company repurchase their
     shares.

NOTE 12 -- 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, 9% state and 20% for APP-UK pursuant to
     SFAS No. 109.

     The only material tax effect of significant items comprising the Companies'
     current deferred tax assets as of December 31, 1999 is the Companies' net
     operating carryforward losses "NOL's" which amounted to approximately
     $1,202,000, $575,000 and $57,000, respectively, for the Company, IPS-NY and
     APP-UK. The deferred tax asset associated with the Companies' NOL's
     amounted to approximately $602,000 as of December 31, 1999.

     A portion of IPS-NY's net operating loss carry forwards are subject to
     provisions of the Internal Revenue Code, Section 382, which limits the use
     of net operating loss carry forwards 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 asset would be
     realized in the future. The Company's NOL's amounting to approximately
     $1,834,000 will expire in the years 2008 through 2014 if not utilized
     prior.

                                     F - 20
<PAGE>


                 ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998



NOTE 12 -- PROVISION FOR INCOME TAXES (cont'd)

     The Company and its subsidiaries file separate tax returns for federal and
     state tax purposes for the tax year ended December 31, 1998. As such,
     income tax is based on the separate taxable income or loss of each entity.
     For the year ended December 31, 1999, the Company has begun filing
     consolidated federal tax returns.

NOTE 13 -- RELATED PARTY TRANSACTIONS

     a) Loans Payable - Officers
        ------------------------

     As of December 31, 1999, loans payable-officers amounting to $384,854,
     represent loans made by the President, Chief Executive Officer and Chief
     Financial Officer of the Company and are comprised of the following:

          i)   The loans of the President of the Company as of December 31, 1999
               amounted to $377,930 as follows:

               A $50,000 promissory note with interest accruing at 8% per annum,
               which is due on demand (See note 13d(i)).

               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.

               The remainder is comprised of advances to the Company and
               unreimbursed expenses amounting to $87,930 which are non-interest
               bearing.

          ii)  The loans due the Chief Executive Officer amounting to $1,924 at
               December 31, 1999, are non- interest bearing and represent
               advances to the Company and unreimbursed expenses.

          iii) A note due the Chief Financial Officer's spouse at December 31,
               1999 amounted to $5,000 and is non-interest bearing. The note has
               been paid in full in January 2000.

     b) Due From Officer
        ----------------

     As of December 31, 1999, due from officer amounting to $159,997, represents
     advances to an officer which are non-interest bearing and due on demand.

                                     F - 21
<PAGE>

                 ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998



NOTE 13 -- RELATED PARTY TRANSACTIONS (CONT'D)

     c) Employment agreements
        ---------------------

     Between November 1995 and January 1996, the LLC entered into three separate
     employment agreements with its then Vice President of Engineering, Chief
     Executive Officer and President. The employment agreements were for a term
     of five years with annual salaries of $51,600, $60,000 and $60,000
     respectively. The Vice President of Engineering, pursuant to his agreement,
     was also entitled to commissions on the LLC's gross sales ranging from 2%
     to 1/2% based on certain sales levels. In addition, all of the employment
     agreements allowed for certain other fringe benefits such as health
     insurance, travel and entertainment reimbursements, full reimbursement of
     auto insurance, and $500 per month each towards auto leases. As a result of
     the LLC not generating any profits, none of the salaries pursuant to the
     above agreements were paid through December 31, 1998.

     Accordingly, effective December 31, 1998, the three officers of the LLC
     signed a release which forgave all past consideration pursuant to the
     employment agreements and entered into new agreements effective January 1,
     1999 as discussed below.

     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 Director. 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 500,000 shares of the Company's common
     stock at $1.45 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. As of December 31, 1999, the Company has accrued $360,000
     of salary and paid $ 0 to the officers.

     d) Notes Payable
        -------------

          i)   During June 1996, the LLC borrowed $50,000 from its President at
               an interest rate of 8% for a term of 180 days pursuant to a
               promissory and demand note. As of December 31, 1999, such note
               remains unpaid as a result of the Company receiving a waiver of
               repayment until December 31, 2001. The LLC has continued to
               accrue interest on the note at the rate of 8% per annum through
               December 31, 1999. As of December 31, 1999, accrued interest on
               such note amounted to $14,000.

          ii)  During August and December 1997, the LLC borrowed $16,500 and
               $17,000, respectively, from a director of the Company without
               interest, payable ninety days from date of borrowing. In March
               1998, IPS - NY borrowed $4,000 from the same director with the
               same terms as the LLC. As of December 31, 1999, such notes remain
               unpaid as a result of the Company receiving a waiver of repayment
               until December 31, 2001.

                                     F - 22
<PAGE>


                 ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998



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, 1999 and 1998 are as follows:
<TABLE>
<CAPTION>


                                            1999                              1998
                                            -----                             ----
                                   Segment       Consolidated         Segment    Consolidated
                                   -------       ------------         ----    ---    ------------
<S>                               <C>              <C>               <C>      <C>
        Sales:
            Foreign              $ 627,301                          $ 231,688
            Domestic                74,225                                  -
                                ----------                          ---------
        Total Sales                               $  701,526                      $   231,688
                                                  ==========                      ===========
        Gross profit:
          Foreign                $ 435,889                          $  87,680
          Domestic                  51,576                              3,000
                                ----------                          ---------
        Total Gross Profit                        $  487,465                      $    90,680

        Corporate:
            Selling, general and
             administrative
             expense:
              Foreign            $ (57,652)                         $       -
              Domestic          (1,097,964)                          (565,301)
                                ----------                          ----------
                                                  (1,155,616)                        (565,301)

        Interest and finance expense                (140,819)                         (98,720)
        Interest and other income                     38,113                            5,610
        Research and development                    (402,980)                         (37,501)
                                                 -----------                       ----------

        Loss from operations                                       (1,173,837)      ( 605,241)

        Provision for income tax                                        -               -                                        -
                                                                   ----------      -----------

        Net (loss)                                               $ (1,173,837)     $  (605,241)
                                                                  ===========      ===========

        Identifiable assets:
              Foreign                                            $    524,200      $   302,879
              Domestic                                                322,188           92,442
                                                                 ------------      -----------

        Total assets                                             $    846,388      $   495,321
                                                                 ============      ===========
</TABLE>

     Gross profit is total revenue less cost of sales and excludes general
     corporate expenses, interest expense, and income taxes. Identifiable assets
     are those used by each segment of the Company's operations.

                                     F - 23
<PAGE>


                 ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998



NOTE 15 -- SUBSEQUENT EVENT

     Convertible notes payable
     -------------------------

     During March 2000, the Company entered into five convertible 10% promissory
     notes aggregating $254,500. The promissory notes are due on December 31,
     2001, bearing interest at 10% per annum and are payable monthly in arrears
     or upon maturity or any earlier conversion of the note. At any time
     subsequent to September 30, 2000, the noteholder will have the right to
     convert the principal and accrued interest in whole or in part into common
     stock at a $1.45 per share.

     As discussed in Note 8, in February and March 2000, the Company entered
     into two convertible 15% promissory notes with the individual in Note 7
     aggregating $100,000. 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 September 30, 2000 the noteholder will have the right to convert the
     principal and accrued interest in whole or in part into common stock at a
     $1.45 per share.









                                     F - 24
<PAGE>


ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS OR ACCOUNTING AND
FINANCIAL DISCLSOURE


     The Company's former principal independent accountant, Jeff R. Pearlman,
declined to stand for re-election in July of 1999, and subsequently, management
of the Company engaged the accounting firm of Massella, Tomaro & Co., LLP, as
the Company's independent auditors. The decision to change accountants was
approved by the Board of Directors. During the Company's two most recent fiscal
years and any subsequent interim period preceding the resignation of Mr.
Pearlman, there were no disagreements with Mr. Pearlman which were not resolved
on any matter concerning accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements, if not resolved
to the satisfaction of Mr. Pearlman, would have caused Mr. Pearlman to make
reference to the subject matter of the disagreements in connection with his
reports.

     Further, there have been no disagreements with the Company's current
principal independent accountant which were not resolved on any matter
concerning accounting principles or practices, financial statement disclosure,
or auditing scope or procedure.

     Neither the Company's current principal independent accountant nor its
former principal independent accountant have provided an adverse opinion or
disclaimer of opinion to the Company's financial statements, nor modified their
respective opinion as to uncertainty, audit scope or accounting principles.

     The Company's principal independent accountant from January 1997 to July
28, 1999 was Jeff R. Pearlman, 19 West 34th Street, Suite 1118, New York, New
York 10001. The Company's principal independent accountant from August 1, 1999
to the current date is Massella, Tomaro & Co., LLP, 375 North Broadway, Suite
103, Jericho, New York 11753.


                                    PART III

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
-------------------        ---              -------------------------------

Richard J. Goodhart        51               Director and Chairman of the
                                            Board, Chief Executive Officer

Steven H. Wahrman          42               Director and President, Chief
                                            Operating Officer

Jean Paul Daveau           44               Director and Executive Vice
                                            President of Engineering/Design

Julius J. Valente Jr.      60               Chief Financial Officer

Ives Wahrman               75               Director

Martin Goodhart            78               Director


     RICHARD J. GOODHART has been a Director, the Chairman of the Board and
Chief Executive Officer of the Company since October of 1993. Mr. Goodhart has
had nineteen years in international sales and marketing in the electronic
component industry and ten years in purchasing management. Prior to his
involvement in the Company, Mr. Goodhart held positions as the Vice President of
Sale and Finance for Ex-Electronics and was International Sales and Marketing
Manager for Jaco Electronics. Mr. Goodhart holds a Bachelor of Science degree in
Business Management from Western New England College.

<PAGE>


     STEVEN H. WAHRMAN has been a Director, the President and Chief Operating
Officer of the Company since February of 1996. Mr. Wahrman is responsible for
all phases of worldwide implementation of market research, strategic planning
and promotion and the daily operations of the Company. 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 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.

     JULIUS J. VALENTE, JR. has been the Chief Financial Officer of the Company
since December 1999. Mr. Valente has over three decades of experience in
accounting, lending, financial consulting and corporate management. In addition
to his association with the financial services industry, Mr. Valente established
his own financial consulting firm in 1979 known as United Financial Resources
Corporation ("UFRC"). UFRC specializes in developing successful recovery
programs for clientele in manufacturing, retail and service industries.

     IVES WAHRMAN has been a Director of the Company since February of 1996. Mr.
Wahrman has an extensive background in the field of merchandise marketing. Mr.
Wahrman has been retired for the past eight years.


     MARTIN GOODHART has been a Director of the Company since February of 1996.
Mr. Goodhart Mr. Goodhart has nearly fifty years of experience in the commercial
finance industry having held senior management positions with various credit or
lending institutions. Mr. Goodhart has been retired for the past six years.

     As of the date of this Annual Report, two family relationships exist among
the named directors. Mr. Martin Goodhart is the father of Mr. Richard Goodhart
and Mr. Ives Wahrman is the father of Mr. Steven Wahrman. No other family
relationships exist among any of the named directors and executive officers. No
arrangement or understanding exists between any such director or officer and any
other persons pursuant to which any director or executive officer was elected as
a director or executive officer of the Company. The directors of the Company are
elected annually and serve until their successors take office or until their
death, resignation or removal. The executive officers serve at the pleasure of
the Board of Directors of the Company.

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACTG

     Section 16(a) of the 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 Exchange Act. The Company believes that these persons will
comply with all applicable filing requirements during the fiscal year ended
December 31, 1999, based solely on representations made to the Company by the
reporting persons.

ITEM 10. EXECUTIVE COMPENSATION

COMPENSATION OF OFFICERS AND DIRECTORS

     As of the date of this Annual Report, none of the officers or directors of
the Company have received any compensation for their respective roles nor during
fiscal years ended December 31, 1999, 1998 and 1997. On January 1, 1999, the
Company entered into employment agreements with three of its executive
officers/directors, Mr. Richard Goodhart, Mr. Steven Wahrman and Mr. Jean Paul
Daveau. Pursuant to the provisions of the employment agreements, each officer

<PAGE>


will receive an annual salary of $120,000 (of which the first six months
commencing January 1, 1999 will be deferred and will accrue without interest).
Each officer will also receive a yearly bonus equal to 1% of the net profits for
the preceding year. Each employment agreement provides for an initial period of
one year, with the ability to be renewed on a yearly basis for a period of five
years upon majority vote of the Board of Directors. In addition, each
officer/director has been granted stock options to purchase 500,000 shares of
restricted Common Stock of the Company at $1.45 per share.The employment
agreements also provide for disability and health insurance coverage, automobile
and expense allowances and travel and entertainment allowances.

     As of fiscal year ended December 31, 1999, the Company accrued
approximately $360,000 and paid $-0- to its executive officers/directors as
executive compensation.


SUMMARY COMPENSATION TABLE

Insert

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 Common Stock at $1.45
per share. The purpose of the SOP is to make options available to directors,
management and significant contractors of the Company in order to encourage them
to secure an increase on reasonable terms of their stock ownership in the
Company and to remain in the employ of the Company, and to provide them
compensation for past services rendered.

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

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

     As of the date of this Annual Report, options have been granted in the
aggregate of 1,500,000 shares to the following individuals. All options granted
are exercisable by the respective individual from the date of grant through the
date of expiration.

AGGREGATED OPTIONS/SAR EXERCISED AND FISCAL YEAR-END OPTIONS/SAR VALUE TABLE


                      Number of          Date          Exercise       Date of
                    Shares Granted     of Grant         Price        Expiration
                    --------------     --------         -----        ----------

Richard Goodhard        500,000        01-01-99         $1.45         01-01-19

Steven Wahrman          500,000        01-01-99         $1.45         01-01-19

Jean Paul Daveau        500,000        01-01-99         $1.45         01-01-19

TOTAL                  1,500,000

<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.

--------------------------------------------------------------------------------
Title of Class         Name and Address           Amount and Nature   Percent of
                      Of Beneficial Owner             of Class          Class
--------------------------------------------------------------------------------
             (1)                                              (2)            (3)
Common Stock          Richard J. Goodhart            6,736,148          37.9%
                      325 Wireless Blvd.
                      Hauppauge, New York 11788

             (1)                                              (2)            (3)
Common Stock          Steven H. Wahrman              2,224,000          12.5%
                      325 Wireless Blvd.
                      Hauppauge, New York 11788

             (1)                                              (2)
Common Stock          Jean Paul Daveau               1,549,680           8.7%
                      325 Wireless Blvd.
                       Hauppauge, New York 11788

             (1)                                              (2)
Common Stock          All officers and directors    10,509,828          59.1%
                      As a group (3 persons)
--------------------------------------------------------------------------------

     (1)  These are all restricted shares of Common Stock.

     (2)  Includes the assumption of the exercise of options by each option
          holder pursuant to the terms of the Non-Qualified Stock Option Plan to
          purchase 500,000 shares of restricted Common Stock at $1.45 per share,
          on an aggregate of 1,500,000 shares of restricted Common Stock at
          $1.45 per share.

     (3)  As of July 10, 2000, Mr. Goodhart's ownership of shares of Common
          Stock increased to 6,736,148 shares (37.9%) and Mr. Wahrman's
          ownership of shares of Common Stock decreased to 2,224,000 shares
          (12.5%) pursuant to an agreement to rectify an error in the number of
          shares of Common Stock issued in accordance with the Exchange
          Agreement.

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, 2,975,000 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 51% equity
ownership interest in APP LLC. After consummation of the Plan of Reorganization
and the Exchange Agreement, the Company issued to Mr. Richard Goodhart 2,975,000
shares of its restricted Common Stock in accordance with the terms of the Plan
of Reorganization and 1,561,960 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.

<PAGE>


     Employment Agreements

     The Company has entered into employment agreements dated January 1, 1999
with three of its executive officers/directors. As of December 31, 1999, the
Company had accrued approximately $360,000 of salary and paid $-0- to the
officers.

     Loans/Notes Payable to Officers

     As of March 31, 2000, the Company owed an aggregate of approximately
$371,063 pursuant to loans made by Mr. Steven Wahrman, the President, Mr.
Richard Goodhart, the Chief Executive Officer, and Mr. Julius Valente, the Chief
Financial Officer of the Company. Of the aggregate amount of $371,063,
approximately $365,063 is due and owing to the President, represented by a
$50,000 promissory note, a $240,000 loan personally secured by the President on
behalf of the Company through a financial institution, and $75,063 in advances
and unreimbursed expenses. The Company also owes the Chief Executive Officer
$1,924 and the Chief Financial Officer $5,000 pursuant to respective
non-interest bearing notes.

     During June 1996, APP LLC borrowed $50,000 from the President of the
Company pursuant to a promissory and demand note. As of March 31, 2000, such
note remains unpaid as a result of the execution by Mr. Wahrman of a waiver of
repayment until December 31, 2001. The note continues to accrue interest at the
rate of 8% per annum. As of March 31, 2000, accrued interest on such note amount
is $15,000.

     During August and September 1997, APP LLC borrowed $16,500 and $17,000,
respectively, from Mr. Ives Wahrman, a director of the Company, without
interest, payable ninety days from the date of borrowing. In March 1998, IPS-NY
borrowed $4,000 from Mr. Ives Wahrman under the same terms as APP LLC. As of
March 31, 2000, such notes remain unpaid as a result of the execution by Mr.
Wahrman of two separate waivers of repayment until December 31, 2001,
respectively.

     Loans Due From Affiliate

     As of March 31, 2000, Mr. Jean Paul Daveau, the Executive Vice President
and the Chief Executive Officer owed the Company approximately $193,018. Of the
aggregate amount of $193,018, Mr Jean Paul Daveau owed the Company approximately
$188,073 resulting from non-interest bearing advances due on demand. Mr. Richard
Goodhart owed the Company approximately $4,945 resulting from a non-interest
bearing advance payable on demand.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

     The following exhibits are filed as part of this Annual Report.

--------------------------------------------------------------------------------
Exhibit No. Description
--------------------------------------------------------------------------------

Not Applicable


     The following reports on Form 8-K were filed during the last quarter of the
period and to date of this Annual Report:

Item                            Date
----                            ----

8-K Amendment                   April 21, 2000

8-K                             March 30, 2000

8-K                             March 23, 2000

<PAGE>


SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

                            ACCIDENT PREVENTION PLUS, INC.,
                              a Nevada corporation


                            By:/s/ Steven H. Wahrman
                               -----------------------------
                               Steven H. Wahrman, President


DATE: July 15, 2000