SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                FORM 10-KSB/A

                 Annual Report Under Section 13 or 15(d) of the
                         SECURITIES EXCHANGE ACT OF 1934

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

                              For Fiscal Year Ended
                                December 31, 2002

                            Commission File #0-30440

                              THE AUXER GROUP, INC.
             (Exact name of registrant as specified in its charter)

                                    Delaware
         (State or other jurisdiction of incorporation or organization)

                                   22-3537927
                      (IRS Employer Identification Number)

           954 Business Park Drive, Suite #2, Traverse City, MI 49686
               (Address of principal executive offices)(Zip Code)

                                 (231) 946-4343
               (Registrant's telephone no., including area code)

               12 Andrews Avenue, West Paterson, New Jersey 07424
              (Former name, former address and former fiscal year,
                          if changed since last report)

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

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.001
par value

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B not contained in this form, and no disclosure will be contained,
to the best of the 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. ( )

<PAGE>

Revenues for year ended December 31, 2002: $1,418,199

Aggregate  market value of the voting  common stock (on a fully  diluted  basis)
held by non-affiliates  of the registrant as of April 14, 2003, was:  $6,302,116
(based on a stock price of $.01).

Number of shares of the  registrant's  common stock  outstanding as of April 14,
2003 is: 671,211,566

Transfer Agent as of April 14, 2003:

                          Interstate Transfer Agent
                          874 E. 5900 South, Suite 101
                          Salt Lake City, Utah 84107


PART I

ITEM 1.  DESCRIPTION OF BUSINESS

                                    Business

On January 15, 2003, we completed a stock exchange agreement and plan of
reorganization with Viva Airlines, Inc. In accordance with such agreement, we
issued 246,000,000 of our shares of common stock to the shareholders of Viva
Airlines, Inc. After the transaction was completed, the aggregate number of our
shares held by the following Viva Airlines shareholders represented more than
50% of our issued and outstanding common stock: Old Mission Assessment
Corporation, Robert J. Scott, Joan Jolitz, Enterprises D and D, Lazaro Canto and
Bash, LLC. In addition, all of our officers and directors resigned and Robert J.
Scott became our sole officer and director. Based on this transaction, we intend
to change our name to Viva International Inc. or a similar name. To date, this
name change has not been undertaken.

The stock exchange agreement and plan of reorganization also requires that our
only active subsidiary, Harvey Westbury Corp., shall be spun off to a company
controlled by our former officer and director, Eugene Chiaramonte, Jr. To date,
this has not been undertaken.

As of today, our other subsidiaries are inactive or in the process of being
dissolved.

On January 17, 2003, Viva Airlines appointed Juan Carlos Hernandez as its Vice
president and Chief Operating Officer for Dominican Republic operations. As of
April 15, 2003, Mr. Hernandez has opted not to accept his appointment.

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On January 21, 2003, Viva Airlines commenced acquisition negotiations with Kick
Communications of New York, an international provider of long distance telephone
services. To date, Viva has not finalized any agreement with Kick
Communications.

On January 22, 2003, we issued a letter of intent to purchase 3 Boeing 727-200
aircraft from Airframe Consultants, Inc. To date, we have not finalized any
agreement.

On February 19, 2003, we formed Viva Dominicana, Inc., S.A., and signed an
agreement for the purpose of acquiring Aerocontinente Dominicana, S.A. This
transaction is intended to close on or about April 30, 2003.

On February 20, 2003, we entered into negotiations with Mojave jet to purchase 2
Boeing 737-200 aircraft. To date, we have not finalized out agreement with
Mojave Jet.

On March 10, 2003, we announced out intention to acquire a 49% interest in Queen
Air. To date, we have agreed in principal to proceed with this transaction.

On March 27, 2003, we announced the following executive appointments: Rudy
Dominquez as Viva Airline's President and Chief Operating Officer, and Oscar
Hasan as Viva's Vice President of Sales and Marketing.

On April 14, 2003, we signed a letter of intent with Tristar Capital LLC to
purchase one Lockheed wide-body passenger aircraft.

The  following is the business  plan for Viva  Airlines,  Inc.,  our only active
subsidiary:

On September 17, 2002,  Viva Airlines,  Inc., was  incorporated as a Puerto Rico
Corporation.  It's principal office are located in Traverse City, Michigan.  The
founders of Viva have extensive experience in consumer aviation.

The intent of Viva is to introduce a new consumer airline being organized to
take advantage of a specific gap in the Caribbean air travel market and the
Caribbean to the United States air travel market. Presently, there is a gap that
exists in low cost service out of Puerto Rico and the Dominican Republic to the
United States and other Caribbean destinations. The gap in the availability of
low cost service in and out of these hubs coupled with the local demand for
passenger travel on selected routes from the Caribbean indicates that a new
entrant airline is needed for current air travel business from those hubs.

Viva's research and projections indicate that air travel to and from the
Caribbean hubs in San Juan, Puerto Rico and the Dominican Republic is sufficient
to establish a new carrier utilizing eight aircraft and selected routes. The
Viva plan has the potential for a more rapid ramp-up due to the nature of the
routes, the demand for travel currently in the targeted markets

<PAGE>

served and the proposed acquisition of Aerocontinente Dominica, S.A. On February
19,  2003,  Viva formed  Viva  Dominicana,  Inc.,  S.A.,  a  Dominican  Republic
corporation  and agreed to acquire  Aerocontinente  Dominica,  S.A. on or before
April 30, 2003. The proposed  agreement  provides for the acquisition of 100% of
the issued and outstanding common stock in exchange of $1,200,000 in cash.

In the first year of formative operations of Aerocontinente Dominica, we expect
that we will burn excessive cash until revenue can fall into place as additional
routes are established. This is due to the organizational and regulatory
obligations of a new air carrier. Investment activity is needed to handle the
expenses of this phase of the business.

Viva has the following objectives:

1.   To obtain required  D.O.T.  and F.A.A.  certifications  on or before May 1,
     2003.

2.   To commence revenue service on or before May 15, 2003.

3.   To raise  sufficient  "bridge"  capital in a timely  fashion to financially
     enable these objectives.

4.   To commence  operations  with two Boeing 727 series  aircraft in month one,
     five aircraft by the end of month three,  and eight  aircraft by the end of
     month four.

Viva Airlines has a mission to provide safe, efficient, low-cost consumer air
travel service. Its service will emphasize safety as its highest priority, will
strive to operate timely flights and will provide friendly and courteous "no
frills" service.

Viva believes that the keys to success are:

o    Obtaining the required governmental approvals.

o    Securing financing.

o    Experienced management and crews.

o    Marketing;  either dealing with channel  problems and barriers to entry; or
     solving  problems with major  advertising and promotion  budgets.  Targeted
     market share must be achieved even amidst expected competition.

o    Product quality. Always with safety foremost.

o    Services  delivered on time, costs  controlled,  marketing budgets managed.
     Rapid growth will be curtailed in order to keep maintenance  standards both
     strict and measurable.

o    Cost control.  The over-all cost per ASM (available seat mile) is pegged at
     10 cents or less in 2003 dollars.

In the second year of operations, Viva intends to add flights to the most
demanded and popular routes in current operation. This will serve to make its
schedule the most convenient to these destinations. The expected expanded

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routes will  initially  include  Chicago,  Boston,  and  Orlando.  Second  level
expansions would include Mexico City, Madrid and Rome.

The following sections describe Viva's description of service, competitive
comparison, technology, fulfillment, and future services.

Service Description

Viva is in the business of providing lower cost, "price competitive" air travel
to selected destinations from their Caribbean hubs. The service approach is "no
frills" with emphasis on safe, courteous handling of domestic and international
passenger travel.

All consumer surveys still indicate that the air travel customer's preference is
for "low fares." However, he or she is not willing to compromise on issues of
safety or on-time performance. Customers will however, settle for lower levels
of in-flight service in order to reduce the cost of travel.

Viva provides the type of service today's air travel passenger demands.

Competitive Comparison

The primary competition in our market is American Airlines and Continental
Airlines, which account for 80% of the air travel volume in this market. This is
as high a single market dominance that exists in any United States market. Also,
this results in the highest fares in the nation for travel in-and-out of the
Caribbean.

Viva feels that it can obtain a significant portion of this business. Our costs
will be lower than either airline (10 cents per ASM vs. 12 cents per ASM).
American Airlines is already in financial difficulty. This identifies a gap for
only a "hub-based" carrier in the Caribbean market.

Operation of a single type of aircraft will have significant cost, maintenance,
and training expense reduction.

Viva's aircraft will operate out of these two hubs with high utilization based
on price advantage. Viva will have an over-all competitive advantage since we
don't have aircraft or operations outside of our limited focus. Other airlines
must maintain "system-wide" load factors and utilization, while Viva will
operate profitably within its "niche" market. This will serve as a barrier to
entry from other competitors once Viva is entrenched in this market. It is
unlikely that larger airlines will be able to compete with Viva's low fares nor
will they probably have the desire as they focus on more profitable "long-haul"
routes with larger airplanes.

Viva will achieve its target cost of $0.10 cents or less per available seat mile
by a combination of cost saving measures. Savings will come in the areas of
labor costs and from operational economies. Viva will utilize its flight

<PAGE>

crews  significantly more than its competition.  Flight crew utilization will be
60% above industry  average.  Both pilots and flight attendants will be deployed
an average  of 85 hours per month vs. an  industry  average  of 50-60  hours per
month. Viva will realize  additional savings in the insurance and benefits areas
by virtue of having fewer crew members.

Efficiently operating the meal service in-flight will save approximately $3.00
per seat per flight. It is Viva's goal to utilize its fleet an average of 11
hours per day, 7 days per week.

All aircraft will be configured to a coach seating capacity of 131 seats and a
business class seating of 10 seats. This will maximize revenue on short-haul
flights. Boeing 727 series will be the only aircraft initially operated by Viva.

Our state-of-the-art reservations system will save time, allow us to employ
fewer reservation employees, and save training costs for new reservation
personnel.

Fulfillment

Aircraft will be obtained on a "dry lease" basis (without fuel) from one of
several aircraft lessors at an approximate cost of $100,000 per month. Viva
management has already been in contact with ROHR, a division of Goodrich.

Generally, first and last month's lease payments are required in advance. Lease
is usually a five-year operating lease and most often qualifies as an expense
item to the lessee. Terms of renewal are negotiable and no buy-out provision is
included. There may or may not be an additional deposit required by the lessor
as a maintenance reserve. Viva management feels that this will not be a
requirement but is prepared to make such a deposit if it becomes required to
obtain necessary aircraft for operations.

It is expected that up to 20 airplanes will be available over the next two years
with an average of 120 days lead-time required.

Outsourcing of services are as follows:

Maintenance:

All regular "A" and "B" maintenance will be performed by Falcon Air Express
personnel at their own facilities in Miami Florida. Viva management feels that
it is both necessary and prudent in today's regulatory environment to outsource
this regular and routine maintenance. Periodic "C" and "D" overhauls and major
maintenance will also be outsourced. Costs are budgeted at $452 per flight hour
for maintenance reserves and $500 per flight hour for line maintenance and
parts. It is common for many carriers in the aviation industry (including some
large carriers) to "sub-out" "C" and "D" scheduled

<PAGE>

maintenance.  Thus, it is not viewed as a competitive or regulatory disadvantage
to Viva to do likewise.

Ground Handling:

Airplane parking services, baggage loading and unloading, and baggage and
freight handling services will be outsourced at all airports other than the
Caribbean hubs where these services will be performed by Viva personnel.

Food Service:

All condiments and beverages served on Viva flights will be purchased from
in-flight food service providers.

Technology

All equipment and systems that will be utilized by Viva have been carefully and
diligently evaluated. Management feels that it is an advantage to be starting an
airline today vs. using many of the systems that burden even the largest
domestic carriers with extra cost due to outmoded technology. The technological
advantages to management's choices are outlined below:

Airplane advantages:

Management is well acquainted with all facets of operation of its airplanes from
prior experience.

Reservation advantages:

The predominate reservations systems in the airline industry today, "Sabre" and
"Apollo," are outmoded and obsolete. The major carriers are slow to change
because of the huge capital requirement to "roll over" their entire reservations
system at one time. Therefore, they keep using the old and outdated systems.

The GABRIEL reservations system that Viva will use has three main advantages
that all contribute to cost savings: 1) Speed, 2) Learning Curve, and 3)
Integration. Since today's PC's operate much faster than earlier versions,
Viva's reservation employees will be able to complete a typical reservation
procedure up to 75% faster than industry averages. Most reservations will be
completed in two minutes or less (as opposed to the frequent 8 to 10 minutes
that almost everyone has experienced from time to time). The system simply
searches and retrieves data faster. The result is not only higher levels of
customer satisfaction but also substantial savings in communications cost to
Viva.

Training costs are also reduced exponentially. There is characteristically high
turnover among airline reservation employees. "Sabre" and "Apollo" take

<PAGE>

two weeks to learn.  Viva's use of GABRIEL will enable a basic computer literate
employee to learn the system in only one day.

The GABRIEL system also integrates with other management information systems
used by Viva. It is also designed to operate in a "ticketless" environment,
something the other systems have difficulty accomplishing.

Operational advantages:

Over-all operations will be seamless from area-to-area of Viva's management
information systems as a whole. Most systems utilized by the major carriers
today were put in place more than 20 years ago. Thus, there is a constant need
for each operational area to "talk" or "re-transmit" essential data. Not only
will Viva's information systems operate "seamlessly" but they will also enhance
the ability to conform to all FAA compliance requirements. The biggest and
toughest compliance issue facing carriers today is "record keeping." It is not
enough to comply, but one must be able to prove compliance as well as have full
and clearly defined and documented internal accountability.

Future Services

Viva's service will be coach and business class with all aircraft configured for
a seating capacity of 131 coach class passengers and 10 business class
passengers. Reservations will be handled predominately by Viva's own reservation
system (even though Viva has budgeted travel agent commissions as 10% of sales).
Paid service will be for alcoholic beverages only. Meals will be served on
long-haul flights, and Viva has allowed a $7.50 cost for all coach seats sold.

Market Segmentation

The airline industry is dominated by the major carriers. It is an industry
characterized by merger, acquisition, and consolidation. Like so many other
industries it has quickly evolved into an industry that has room only for major
players and smaller "specialty" or "niche" participants. There are two specialty
segments that have characteristically been exploited by new entrants. One is the
"price" niche and the other is the "route" niche. One focuses on charging less,
the other on providing either the only service between two given points (the
"commuter" or "feeder" concept) or else superior or more convenient or less
costly service between two heavily traveled destinations.

In today's marketplace the "price" positioning, in and of itself, is no longer a
sufficient concept on which to build an airline. Since de-regulation the flying
public has been inundated with low fares. Low fares have become an expectation,
not a promise. Thus, the true market segment opportunities today have become a
combination of service mix, price, and route selection. The more critical
decision has become one of deciding on service mix and price in conjunction with
length of route. The specialty carrier is now relegated to

<PAGE>

either "short-haul" or "long-haul" concentration.  There is room for a long-haul
carrier who efficiently  serves limited routes with only the equipment  designed
to serve those routes and, conversely, there is room for a short-haul carrier to
take advantage of similar economies available with new technology and the proper
equipment.  Viva feels that the likelihood of competition from major carriers is
less likely in the Caribbean segment.

This enables consolidation of services and economies of down-sized scale. At the
same time, the revenues available from short hauls are comparatively higher than
long hauls on a per-passenger-mile basis.

Thus Viva may be said to target the short-haul, dual hub, discount fare
Caribbean market segment. This is a new segment defined by the demands of
today's traveler.

Service Business Analysis

The Federal Government de-regulated the airline industry in 1978. Prior to that
time the government virtually guaranteed the profitability of the airline
industry, at the expense of the consumer. Routes were restricted. Fares were
fixed. Costs got out of control. Today some of the major carriers still continue
to operate at less than optimum efficiency. This has spawned the success of
various "discount" carriers, most notably Southwest Airlines and the Jet Blue.

The low cost carriers have proven that they can operate profitably, can garner
market share, and have even spawned an increase in travel by luring those who
would previously have traveled by bus, rail, or automobile or who would not have
traveled at all.

Many major airlines today are experiencing significant losses. The management of
Viva feels that these losses can be traced directly to the high cost of labor,
operational inefficiency, and poor management. Management further believes that
the major carriers cannot profitably compete against start-up carriers with
limited and specific market focus and lower over-all cost structures.

In retrospect, de-regulation has succeeded in providing air travelers with
better service but has not necessarily provided service at a lower price. In the
recent times of financial trouble many airlines have complained of an under
supply of air travelers, when in fact there is an under supply of affordable
seats. It is Viva's goal to provide these affordable seats while maintaining a
profitable airline.

Business Participants

The major air  carriers in the U.S. are not the focus of Viva's  business  plan.
They are not  viewed  as  competition  to a  single  hub,  short-haul,  low cost

<PAGE>

entrant. The following three airlines are our competition:  Southwest,  Jet Blue
and US Air.

Southwest Airlines is the model for operating a safe and successful discount
carrier. Even though Southwest has the lowest cost per ASM in the airline
industry for short-haul carriers they have never experienced a fatal crash in
more than 25 years of operation.

Viva management has studied extensively the history of the above three airlines.
All three have grown to substantial revenue size amidst the major airlines. None
of the three existed in the not-too-distant past. Viva has taken the best parts
of each growth story. The result is Viva Airlines plan.

Distributing a Service

Sales of airline tickets have historically been either direct from the airline
itself or through various travel agents. Modern computer technology and
communications capability are changing the mix dramatically. Travel agents once
accounted for 80% of ticket sales. This channel of distribution has been one of
very high cost to the airlines. Travel agent commissions at one time became the
highest individual cost item to an airline. The physical cost of printing and
distributing tickets is also substantial. Travel agents estimate that it costs
them an average of $30 in total cost to originate an airline ticket. Many of
them have begun to add their own service fees to the actual cost of a ticket.

Available technology has now afforded the opportunity both to sell one's own
tickets and to eliminate the physical ticket altogether. The critical element
for both strategies to be successful for an airline is simply to create the
demand for travel on one's airline. If the airline makes it desirable for the
consumer to want to fly it then it is just as easy to order tickets directly
from the airline as it is from any other source. Viva will have its own
reservations agents available via an 800 number (the service will be 24 hours
from an available pool of 90 agents in total). In addition, we will have an
Internet site where schedules are available and customers can book their own
reservations and buy tickets via credit card.

Viva expects to sell as much as 90% of its air travel "direct" and "ticketless."
It has budgeted 10% of sales as commission to sales agents.

"Ticketless" travel has an additional advantage since Viva will not wait 30 days
for collection of clearinghouse funds from other airlines on combined-carrier
tickets. Also, it is not expected to be a competitive disadvantage for Viva's
passengers to connect to other airlines. They will want to fly Viva to available
destinations to save money even if they need to buy a paper ticket on another
airline. Viva flights will be listed in all available flight information
systems.

<PAGE>

Competition and Buying Patterns

The most critical factor for Viva or any new airline to overcome is the issue of
brand awareness and name recognition. Customers prefer to fly with carriers they
know and trust. There is little doubt that Viva will need to spend heavily and
frequently to advertise and promote its product. The needed amounts are budgeted
in this plan. The advantage is that local media can be utilized which is more
cost effective on a per-impression basis. It can also be highly targeted. It has
been proven in the past that market share can be achieved for a new airline.

Critical in today's environment is safety. Consumers will switch for lower
costs, but not at the expense of a perception of a safety risk, or not at the
expense of expected on-time performance. Viva will emphasize these two main
themes.

In the Caribbean market, Viva expects to appeal to a mix of business oriented
travelers and personal travelers. One issue is whether or not "frequent flier
miles" are needed to compete and sell tickets. Management feels they are not.
Industry estimates show that as many as 10% of occupied seats on domestic
flights are currently "no revenue" as a result of redemption of premiums earned.
It is also very expensive for an airline to administer its frequent flyer
program. Viva feels that our cost advantage in our market will outweigh the lack
of "incentive" rewards. It expects that casual and personal travelers don't fly
often enough for "points" to be significant. At the same time, Viva will
initiate a concerted sales effort directly to all major corporations in our
market.

Main Competitors

In the past, a major competitor in our market was US Air. At one time Eastern
Airlines and Piedmont dominated the market. Eastern Airlines went out of
business and Piedmont was acquired by US Air. US Air was highly vulnerable
because of its high operating costs. ASM short-haul cost is currently the
highest in the United States.

US Air's problems can be traced to two main factors. The first is the fact that
their growth strategy was by acquisition. The consolidation of these carriers
did not produce the operational cost advantages that were anticipated. Secondly,
and most important, has been out-of-control labor costs. US Air's stronghold was
in the Northeastern United States. The strongest labor unions are located in
this part of the country and prior management was completely ineffective in
obtaining any concessions from these unions.

In spite of high costs, US Air had grown to become the nation's sixth largest
carrier. However, bankruptcy and recent press articles indicate a large measure
of uncertainty in their future path.

<PAGE>

Viva concludes that the Caribbean opportunity is likely to be free from imposing
competition unless it comes from another start-up. If Viva is able to attack the
market first with sufficient capitalization, it feels it will be difficult to
overcome and should be able to build critical mass within two years.

Strategy and Implementation Summary

Viva's market presence will be achieved by relying on the strategy of
identifying and serving a specialized niche market well.

     o    Media executions will utilize local media, which is highly targeted
          and cost effective on a cost-per-impression basis.
     o    Air operations will be centralized and cost effective.
     o    Reservations will be centralized and cost effective.
     o    Marketing will be media generated to the leisure market and combined
          media/direct sales generated to corporate accounts.

Marketing Strategy

Marketing is targeted locally. The advantage of a local and highly identifiable
market is that media selections can be limited in scope. There is no need for a
national media program to launch Viva. The most effective media is expected to
be outdoor billboards and radio.


Other media will be local spot TV on highly visible programs such as local news
and sports and local radio. Newspapers and other print will not be used.


Pricing Strategy

Due to its low cost operating structure Viva will be able to offer service at
25% less than the competitive airfares to its selected destinations from
Caribbean hubs. Projected round trip fares are as follows:

                    ROUTE                         ADVANCE
----------------------------------------------------------------------
SDQ-JFK                                                          $309
----------------------------------------------------------------------
MIA-SDQ                                                          $289
----------------------------------------------------------------------
STI-JFK                                                          $309
----------------------------------------------------------------------
MIA-STI                                                          $329
----------------------------------------------------------------------
SDQ-SJU                                                          $199
----------------------------------------------------------------------
SDQ-HAV                                                          $779
----------------------------------------------------------------------
SDQ-CUN                                                          $643
----------------------------------------------------------------------
SDQ-GEO                                                          $359
----------------------------------------------------------------------

<PAGE>

Promotion Strategy

Promotion will be primarily outdoor advertising, radio and TV targeted at the
business and leisure traveler.

In addition, Viva will employ a public relations firm for both consumer and
financial purposes.

The combined amount budgeted for advertising, public relations, and reservations
will be held under 5% of sales. Thus, the first year expenditure in these
categories is expected to be $1.8 million. Past experience has demonstrated that
this expenditure is sufficient to launch airline service in a dual hub.

Distribution Strategy

In addition to other marketing programs outlined, Viva will also market via the
World Wide Web. It will establish its own website with reservation, purchase,
and payment capability.

Sales Strategy

In order to attract the business traveler without the use of frequent flyer
miles, Viva will make direct sales contacts with the travel departments based
corporations and businesses. It is expected that its cost structure will be
attractive to these businesses. It expects business travel to amount to at least
25% of its over-all revenue.

The original background of Auxer is as follows:

The Auxer Group, Inc. was incorporated in Idaho on June 24, 1920 under the name
"The Auxer Gold Mines, Inc." The Auxer Group's original business was mining.
Auxer's life was changed from a life of 50 years to a term of existence of
perpetuity on August 27, 1960. In 1972 the mining assets were transferred to
Idora Silver Mines, Inc. and Auxer maintained a dormant status for a majority of
the 1970's and 1980's.

Effective May 2, 1994, we began trading on the OTC Bulletin Board under the
symbol AUXI. On April 18,1995, Auxer acquired all of the issued and outstanding
shares of CT Industries, which became our wholly owned subsidiary and issued
4,000,000 shares of our common stock to shareholders of CT Industries. CT's
assets included the distribution rights to an oil treatment formulation, called
Formula 2000. At such time, Auxer moved its offices to Ridgewood, New Jersey.
Auxer continued to develop the engine treatment and test market the product it
acquired from CT Industries through infomercials and by sponsoring regional
races.

In 1996, Auxer established Wayne, New Jersey as its principal place of business
and acquired the issued and outstanding shares of two companies. On

<PAGE>

February 8, 1996, it acquired Universal Filtration Industries, Inc. a company
that manufactured and delivered products for dry cleaners. Auxer issued
1,500,000 of its shares of common stock to Universal Filtration shareholders for
all the outstanding shares of Universal Filtration. 500,000 of the 1,500,000
shares were issued and delivery was contingent upon meeting various performance
objectives.

On March 24, 1999, our board of directors approved closing down Universal
Filtrations operating account. Currently, Universal Filtration is dormant with
no operating activity. Universal Filtration is no longer an active subsidiary.
No products are currently being developed or marketed.

On October 25, 1996, Auxer acquired Harvey Westbury Corporation, Inc. a light
manufacturer and wholesaler of aftermarket automotive products. Auxer issued
170,000 shares of its common stock to Harvey Westbury shareholders for all
outstanding shares of Harvey Westbury Corp. Consideration value was based upon
the market value of Auxer's securities at the time of the acquisition.

In August 1997, shareholders of Auxer voted to exchange their shares on a one
for one basis for shares in The Auxer Group, Inc., the new Delaware corporation.

The Auxer Group, was incorporated in the State of Delaware on August 11, 1997
and was authorized to issue 25,000,000 shares at $.001 par value. Of those
shares, 20,000,000 shares were common stock, while the remaining 5,000,000
shares were preferred stock. On September 22, 1997, the Auxer Group filed an
amendment to its articles of incorporation whereby it increased its authorized
shares to 75,000,000. Of those shares, 50,000,000 shares are preferred stock. In
August 1997, Auxer merged into the Auxer Group. Effective on or about August 7,
1997, the Auxer Group began trading on the OTC Electronic Bulletin Board under
the symbol AXGI. In June 1998, the Auxer Group divested itself of its software
business for the amount of the investment, $353,000, which was received in the
form of a promissory note. As of September 30, 1999, the Auxer Group determined
the collectability of the promissory note was doubtful and wrote it off.

On March 19, 1999, the Auxer Group amended its articles of incorporation to
increase the number of shares the Auxer Group had authority to issue to
175,000,000 shares. Of such shares, 150,000,000 shares are common stock, while
the remaining 25,000,000 shares are preferred stock.

On April 22, 1999, the Auxer Group purchased automotive parts inventory from
Ernest DeSaye, Jr., employed Mr. DeSaye and placed these assets in Hardyston
Distributors, Inc., one of the Auxer Group's wholly owned subsidiaries.
Hardyston was incorporated in New Jersey on April 22, 1999. The Auxer Group
issued 836,700 shares of its common stock plus $15,000 cash for the purchase of
the automotive parts inventory to Ernest DeSaye, Jr.

Effective September 4, 1999, the Auxer Group began trading on the National
Quotation Service Pink Sheets because it did not comply with the OTC Bulletin
Board Eligibility Rule.


<PAGE>

Effective June 6, 2000, Auxer complied with the OTC Bulletin Board Eligibility
Rule and it began trading on the OTC Bulletin Board.

On July 12, 2000 the Auxer Group's board of directors approved the formation of
a telecommunication group for the purpose of acquiring and/or investing in
Telecommunications companies and/or related technology.

In July 2000, the Auxer Group signed two letters of intent. One letter of intent
was with Sponge Technologies to acquire assets of a switch operation. The other
was with Clifton Telecard Alliance, a northeast United States distributor of
prepaid phone cards, to acquire its assets.

In August 2000, shareholders of Auxer voted to amend its articles of
incorporation to increase its authorized number of shares of common stock to
1,000,000,000.

Auxer Telecom Inc. was incorporated on August 7, 2000 in Delaware. The Auxer
Group acquired 2 telecommunications excel switching platforms, which is a series
of equipment that enables companies to track and bill telecommunications
traffic. These assets were placed into Auxer Telecom Inc. on August 24, 2000. At
such time, Auxer Telecom Inc. was one of the Auxer Group's wholly owned
subsidiaries. In August 2000, the Auxer Group added two members to the Auxer
Telecom team: Samir Khalaf and Richard Lydiate. Mr. Khalaf is a special
consultant in telecommunications, financing, acquisitions and international
business. Richard Lydiate was responsible for the transition and overseeing of
the switch operations group in Los Angeles, California. Mr. Lydiate also
assembled a management team with experience in telecommunications sales &
marketing, engineering, switch operations and customer services.

On September 21, 2000, the Auxer Group purchased the assets of Clifton Telecard
Alliance, Inc., employed Mustafa Qattous and placed these assets in Clifton
Telecard, Inc., one of the Auxer Group's wholly owned subsidiaries. Clifton
Telecard, Inc. was incorporated in Delaware on August 7, 2000. The Auxer Group
issued 2,000,000 shares of its common stock plus $500,000 in cash and $200,000
in promissory notes to the shareholders of Clifton Telecard Alliance, Inc.

On March 9, 2001 CT Industries, Inc.'s Board of Directors approved the expansion
of its business focus to include telecommunications related business.

On May 16, 2001, The Auxer Group sold 100% of the stock of Clifton Telecard,
Inc.

On March 18, 2002, The Auxer Group dissolved its subsidiary Auxer Telecom, Inc.,
a Delaware corporation.

Neither the Auxer Group nor any of its subsidiaries has filed any petition for
bankruptcy and is not aware of any actions related to bankruptcy. Furthermore,
there are no known personnel of the Auxer Group who currently

<PAGE>

have any petitions filed under the Bankruptcy Act or under any state insolvency
laws.

Employees

The Auxer Group and its subsidiary has 1 employee, Robert J. Scott. Our sole
employee is not covered by labor agreements or contracts.

ITEM 2. DESCRIPTION OF PROPERTY

We presently utilize approximately 500 square feet of office space located at
954 Business Park Drive, Suite #2, Traverse City, MI 49686. We do not pay any
rent for this space. Our sole officer and director is the sole owner of a
professional corporation that pays $500 per month for this space.

ITEM 3.  LEGAL PROCEEDINGS

(1) The Auxer Group, Auxer Telecom, Inc. and CT Industries, Inc. vs. Husni
Hassan, Clifton Telecard Alliance, Kattosko Communications, Mohd Qattous and
Mustafa Qattous - Superior Court of New Jersey, Law Division, Passaic County -
Index No. L1120-02, filed on February 22, 2002. Auxer is requesting a sum of
$1,250,000 plus interest for default of promissory note, violation of stock
purchase agreement and violation of employment contract. On April 12, 2002,
Clifton Telecard Alliance, Kattosko Communications, Mohd Qattous and Mustafa
Qattous filed a counterclaim for violation of stock purchase agreement. The
parties have entered into settlement negotiations. The present proposal is for
the defendant, Kattosko Communications, to pay the plaintiffs $15,000. In return
for such consideration, plaintiffs agree to allow Mustafa Qattous' stock to be
traded and sold and undertake certain filings and provide other financial
information for Clifton Telecard, Inc.


<PAGE>

(2) Trans National Communications vs. Auxer Telecom Inc. dba Auxer Group-
Superior Court of New Jersey Law Division, Passaic County - Docket No. L793-02.
On April 17, 2002, a judgment in the amount of $339,381.84 was obtained against
the defendants. The plaintiff, Trans National Communications attached Auxer's
bank account even though the responsible party was Auxer Telecom. Auxer's
litigation counsel successfully separated the defendants in this case and the
judgment is only against Auxer Telecom Inc., Auxer's inactive subsidiary. The
attachment on Auxer's bank account should be released shortly. Auxer does not
intend to contest the judgment against Auxer Telecom Inc. since it was dissolved
on March 18, 2002.

(3) International Access dba Access International, Inc. v. CT Industries, Inc. -
Los Angeles Superior Court, Central District - Case No. BC 282393, filed on
September 30, 2002. International Access ("IA") claims that CT Industries, Inc.,
Auxer's subsidiary, entered into an agreement (Switch Port Lease and Service
Agreement) with IA whereby IA would provide one year of telecommunications
services to CT Industries. IA claims it provided the services and was not paid
because checks from CT Industries were returned for insufficient funds. IA is
requesting payment of $76,095.34 plus 10% interest per annum from March 13,
2002. Auxer does not intend to respond to this lawsuit and will allow a judgment
to be entered against CT Industries, its inactive subsidiary.

(4) Mahure, LLC vs. Auxer Group, Inc. - Superior Court of New Jersey, Law
Division, Passaic County; Docket No. L-4245-02. Filed August 14, 2002. Mahure,
LLC, was Auxer's landlord for the premises known as 12 Andrews Drive, West
Patterson, New Jersey, Auxer's former business address. It is suing Auxer for
failure to pay base rent of $7,083.33 from October 2001 through August 2002,
plus 50% of real estate taxes, insurance premiums and other fixed charges
contained in Auxer's lease. Mahure, LLC is requesting $58,465.49 attorney's
fees, cost of suit and interest. Auxer is trying to settle this matter.

(5) Canete Landscape, Inc. vs. Auxer Group - Superior Court of New Jersey, Law
Division, Passaic County - Docket No. DC-11893-02. Filed October 25, 2002.
Plaintiff, Canete Landscape claims that Auxer owes them $2,353.90 together with
interest and costs of suit. Auxer intends to settle this matter.

(6) Colbie Pacific Capital - On April 24, 2002, Auxer entered into a
Modification and Restructuring Agreement with Colbie Pacific Capital. The
agreement required Auxer to make a $350,000 payment to Colbie by September 28,
2002. Auxer failed to make such payment and the sum of $450,000 is now due to
Colbie. On October 8, 2002, Auxer received a settlement offer from Colbie's
attorney whereby Colbie agreed to allow Auxer to sell certain assets and make
the required payment. Auxer is trying to sell such assets, specifically
telecommunications switching equipment.

(7) Abel Estrada vs. CT Industries, Inc. - Labor Commissioner, State of
California - State Case Number 06-67045 JAH - Hearing Date: November 20, 2002 in
Los Angeles, California. Abel Estrada, a former employee of Auxer's subsidiary,
CT Industries, Inc., filed a claim against CT in the amount of $10,376.08 with
the Labor Commissioner, State of California, for the following claims: unpaid
wages - $1,068; unpaid commissions - $8,000; unpaid vacation time - $861.33;
unpaid expenses $43.75; and unauthorized deduction from wages - $403.00. CT
Industries does not intend to appear at the hearing and contest this matter.

(8) Ronald Shaver and Ryan Shaver - (a) On September 30, 2002, Auxer's
litigation counsel sent a letter to Ryan Shaver, Auxer's former employee,

<PAGE>

requesting the return of equipment and a data base taken by Ryan and his
brother, Ronald Shaver, Auxer's former officer; (b) On October 30, 2002, Ronald
Shaver sent Auxer a letter dated October 10, 2002, from the State of New Jersey,
Department of the Treasury, Division of Taxation regarding outstanding tax
liabilities for Clifton Telecard Inc., formerly owned by Auxer; and (c) On
August 30, 2002, Auxer received letters from Ryan Shaver and Ronald Shaver
requesting payments Auxer owed each of them under their terminated employment
agreements, continuation of healthcare, settlement of cash compensation and
equity obligations. They did not specify the amount owed.

(9) Panel Prints Inc. v. Harvey Westbury Corporation - Superior Court of New
Jersey, Law Division, Passaic County - Docket No. DC-004164-02. Auxer agreed to
pay Panel Prints $3,000. To date, Auxer has paid it $1,500 and is paying the
balance of $1,500 at a rate of $500 per month.

(10) One of Auxer's shareholders, Daniel Kahraman, has requested that Auxer have
an annual shareholders meeting. Auxer informed him that it does not have
sufficient funds to undertake its annual meeting. Mr. Kahraman has responded
that he will be taking legal action against Auxer in the future.

(11) Paul R. Lydiate - Labor Claim in California against Auxer Telecom Inc. for
$20,192. Auxer did not appear at the hearing on May 6, 2002. Auxer Telecom Inc.
was dissolved on March 18, 2002.

Other than as stated above, we are not currently aware of any other pending,
past or present litigation that would be considered to have a material effect
us. There are no known bankruptcy or receivership issues outstanding and we have
no known securities law violations. Additionally, we have no known legal
proceedings in which certain corporate insiders or affiliates of us are in a
position that is adverse to us.

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

None

PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

As of April 15, 2003, we had 430 shareholders of record. However, based on
information received from brokers and others in fiduciary capacities, we
estimate that the total number of shareholders of our common stock exceeds
1,000. Our shares of common stock are currently traded on the OTC Electronic
Bulletin Board under the symbol "AXGI".

The reported high and low bid prices for our common stock are shown below for
each quarter during the last three complete fiscal years. The high and low bid
price for the periods in 2001 and 2002 shown below are quotations from the OTC
BB. The quotations reflect inter-dealer prices and do not include retail
mark-ups, mark-downs or commissions. The prices do not necessarily reflect
actual transactions.

<PAGE>

Period                HIGH BID             LOW BID
------                --------             -------
2002

First Quarter         0.009                0.004
Second Quarter        0.036                0.006
Third Quarter         0.020                0.003
Fourth Quarter        0.028                0.002

2001

First Quarter         0.078                0.047
Second Quarter        0.05                 0.01
Third Quarter         0.02                 0.0060
Fourth Quarter        0.01                 0.0050

DIVIDENDS

We do not intend to retain future earnings to support our growth. Any payment of
cash dividends in the future will be dependent upon: the amount of funds legally
available therefore; our earnings; financial condition; capital requirements;
and other factors which our Board of Directors deems relevant.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The following discussion should be read in conjunction with the consolidated
financial statements and notes. In addition to historical information, this
discussion and analysis contains forward-looking statements that involve risks,
uncertainties and assumptions, which could cause actual results to differ
materially from Management's expectations. Factors that could cause differences
include, but are not limited to, continued reliance on external sources on
financing, expected market demand for the Auxer Group's products, fluctuations
in pricing for products distributed by the Auxer Group's subsidiaries and
products offered by competitors, as well as general conditions of the
telecommunications and automotive marketplace.

As of January 15, 2003, the Auxer Group is a holding company that consists of
one subsidiary, Viva Airlines, Inc.

Results of Operations for the Three Months Ended December 31, 2001 and 2002.

The Auxer Group had sales of $138,518 for the quarter ended December 31, 2002 as
compared to sales of $543,420 for the quarter ended December 31, 2001. The
decrease in sales was attributed to the decrease in prepaid phone card sales as
well as the decrease in automotive sales.

The Auxer Group had net losses of $112,651 for the quarter ended December 31,
2002 as compared to net losses of $765,282 for the quarter ended December 31,
2001. The decrease in net losses was primarily attributed to the relative
decrease in sales combined with the reduced General and Administrative expenses
initiated as part of the restructuring in the first quarter of 2002.

The Auxer Group had general administrative expenses of $21,567 for the
Quarter ended December 31, 2002 as compared to general administrative expenses
of $550,659 for the quarter ended December 31, 2001. The decrease in these

<PAGE>

expenses was attributed to the restructuring initiative set forth in the first
quarter of 2002.

The Auxer Group had interest expenses of $53,437 for the quarter ended December
31, 2002 as compared to $36,556 for the quarter ended December 31, 2001. The
increase in these expenses was attributed to the high rate interest loans
acquired to fund the business operations and purchase needed inventory.

Results of Operations for the Twelve Months Ended December 31, 2001 and 2002

The Auxer Group had sales of $1,418,198 for the twelve-month period ended
December 31, 2002 as compared to sales of $2,714,017 for the twelve-month period
ended December 31, 2001. The decrease in sales was attributed to the decrease in
prepaid phone card sales as well as the decrease in automotive sales.

The Auxer Group had net losses of $1,151,488 for the twelve-month period ended
December 31, 2002 as compared to net losses of $3,802,961 for the twelve-month
period ended December 31, 2001. The decrease in net losses was primarily
attributed to the restructuring initiative set forth in the first quarter of
2002.

The Auxer Group had general administrative expenses of $879,760 for the
twelve-month period ended December 31, 2002 as compared to general
administrative expenses of $3,174,608 for the twelve-month period ended December
31, 2001. The decrease in these expenses was attributed to the restructuring
initiative set forth in the first quarter of 2002.

The Auxer Group had interest expenses of $156,801 for the twelve-month period
ended December 31, 2002 as compared to $517,905 for the twelve-month period
ended December 31, 2001. The decrease in these expenses was due to the reduction
of the interest from the convertible note, which was a one-time expense.

Our principle source of revenue for the three-month period ending December 31,
2002 was the sale of the automotive inventory. Additional funding was provided
by an approved banking credit line; as well as substantial loan contributions
from the President and CEO. The company's telecommunications subsidiaries were
unable to continue to remain current on their terms with its carriers, which
have resulted in the loss of its carriers, causing a termination of service. As
of the twelve month period ended December 31 2002, the Telecommunications
subsidiaries are inactive.

On January 3, 2002, The Auxer Group announced restructuring to accommodate
future acquisition opportunities. The restructuring is to take place during the
first quarter. Management has agreed to defer compensation for Mr. Chiaramonte,
CEO. This restructuring phase has continued through the third quarter of 2002.
To date, Management's restructuring efforts have resulted in a cumulative
reduction of general & administrative expenses in excess of $1,765,000.
Additionally, the company has relocated its administrative and operational
facilities in a continuing effort to reduce current expenses.

On January 11, 2002, CT Industries introduced its new website,
www.ctiprepaid.com. This site is an informational site on CT Industries'
------------------
products. Auxer also plans to introduce new sites for its investor and
distributor companies as well. As of November 15, 2002, no new sites have been
introduced.

On March 15, 2002, the Board of Directors approved the dissolution of Auxer
Telecom and consolidation of the telecom assets into CT Industries. Auxer

<PAGE>

Telecom was dissolved on March 18, 2002. Management's plan was for CT Industries
to continue to distribute prepaid phone cards. Due to Auxer's inability to raise
additional external financing CT Industries has been unable to continue to
remain current on their terms with its carriers and has resulted in the loss of
its carriers which caused a termination of service. As of November of 2002, the
Telecommunications subsidiaries are inactive.

On April 15, 2002, Auxer announced its initial phase of restructuring neared
completion. The company announced a reduction in loss due to restructuring. The
reduction in losses and reduction in general administrative expenses continued
during the three month period ended June 30, 2002 as well as the three month
period ended September 30, 2002. As of the three month period ended December 31,
2002 the company completed it's restructuring plans.

On May 2, 2002, Auxer announced it has entered into an agreement with certain
debenture holders to settle its convertible debentures for $1 Million. Under the
terms of the agreement, 92 Million shares of common stock which were registered
under Form SB2 were issued and placed in escrow and a lock up arrangement. Upon
the debenture holders receiving the settlement payment, through a third party,
the registration and debenture agreements are to be retired. As of the three
month period ended September 30, 2002, the debenture holders have not received
adequate funds from the third party to retire their debenture. Furthermore, the
agreement has been terminated for lack of funding and is now in negotiations for
future settlement.

On May 7, 2002, Auxer announced that the Board of Directors is focusing its
corporate resources on sourcing acquisition candidates in the telecommunications
and technology industry sectors. Management has since identified candidates to
invest in and/or acquire within the Transportation Industry.

On May 21, 2002, Auxer announced an increase in revenues and a reduction of
expenses due to its restructuring initiatives. While the company's revenues have
decreased; the company expenses continued to decrease in the three months ended
September 30, 2002. As of the three months ended December 31, 2002, the
company's comparative interest expenses from 2001 have increased due to high
rate interest loans acquired to fund continuing operations and purchase
inventory. However, overall expenditures have comparatively decreased from 2001.

On June 20, 2002, Auxer announced sales for products sold by its automotive
group increased compared to last year for the three month period ended March 31,
2002 and March 31, 2001, respectively. Sales in the forth quarter ended December
31, 2002 has decreased compared to sales in the forth quarter ended December 31,
2001. These results are primarily a result of the operating subsidiaries
inability to purchase adequate inventory to grow and/or maintain sales of the
telecommunications and automotive products.

On July 3, 2002, Auxer announced Harvey Westbury completed an agreement to
produce, manufacture and distribute a line of motor vehicle filters. The company
plans to introduce this line at the 2002 AAPEX Show in Las Vegas. As of the
third quarter ending September 30, 2002, Auxer has been successful in commencing
its launch of their new DiamondTM Oil & Air filter lines. However, the new
product lines were not introduced at the 2002 AAPEX Show due to financial
restrictions from the restructuring initiated in January 2002.

On September 12, 2002, Auxer announced that it launched a search for an interim
CEO to focus on the company's acquisition strategy. As of November 15, 2002,

<PAGE>

the company has reviewed several acquisition candidates, but has not made any
final decisions regarding the position. Subsequent events to the three month
period ended December 31, 2002, the company completed a merger transaction,
which included the replacement of the current CEO in office.

On December 2, 2002, Auxer announced that is signed a letter of intent to
acquire Viva Airlines based in San Juan, Puerto Rico. Subsequent events to the
period ended December 31, 2002 show that this transaction was completed in
January 2003.

On December 12, 2002, Auxer announced that the merger transaction with Viva
Airlines was approaching finalization and to report that Viva had entered into a
$500,000 advertising promotion. Subsequent events to the period ended December
31, 2002 show that this transaction was completed in January 2003.

On December 17, 2002, Auxer announced that its merger candidate, Viva Airlines
was planning to change its name to Viva International, Inc. As of December 31,
2002, the name change had not been completed.

On December 19, 2002, Auxer announced current events occurring with its merger
candidate Viva Airlines.

Subsequent events to the forth quarter ending December 31, 2002, we entered into
a stock exchange agreement and plan of reorganization with Viva Airlines in
January 2003.

Sources of Liquidity

For the quarter ended December 31, 2002, we paid for operations through
substantial loan contributions by the President and CEO. We had Notes Payable to
shareholders of $174,528, had other notes payable of $608,925, and notes payable
convertible debt of $346,841 on December 31, 2002. We have a loan outstanding
against its inventory of $23,882 under a security agreement with Quantum
Corporate Funding Ltd. We provided guarantees of the repayment of loans. We did
not sell or issue any common stock to provide for services rendered, consulting
requirements and operating and investment activities during the quarter ended
December 31, 2002.

In comparison for the quarter ended December 30, 2001, we paid for operations by
raising $711,887 through debt borrowing after payment to short term debts. We
had Notes Payable to shareholders of $113,054, had Other Notes Payable of
$762,504 and notes payable convertible debt of $911,685 on December 31, 2001. We
had loans outstanding against our credit line of $0 under a security agreement
with Merchant Financial Corporation to borrow money secured by the receivable
evidenced by invoices of Harvey Westbury Corp. We have provided guarantees of
the repayment of loans. Merchant agreed to lend an amount equal to 75% of the
net value of all Harvey Westbury accounts. We issued common stock of $1,436,600
to provide for services rendered and consulting requirements.


ITEM 7. FINANCIAL STATEMENTS

                              THE AUXER GROUP, INC.

                                  CONSOLIDATED
                              FINANCIAL STATEMENTS

                                December 31, 2002



                              THE AUXER GROUP, INC.


                                     INDEX
                                     -----



                                                                    PAGE

INDEPENDENT AUDITORS' REPORT                                          F2

CONSOLIDATED BALANCE SHEETS                                           F3

CONSOLIDATED STATEMENTS OF OPERATIONS                                 F4

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY            F5

CONSOLIDATED STATEMENTS OF CASH FLOWS                              F6-F7

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                       F8-F26

<PAGE>


KEMPISTY & COMPANY
CERTIFIED PUBLIC ACCOUNTANTS, P.C.
================================================================================
15 MAIDEN LANE - SUITE 1003 - NEW YORK, NY 10038 -
TEL (212) 406-7272
FAX (212) 513-1930

                          INDEPENDENT AUDITORS' REPORT

Board of Directors
The Auxer Group, Inc.

We have audited the accompanying consolidated balance sheets of The Auxer Group,
Inc. as of December 31, 2002 and December 31, 2001 and the related statements of
operations, changes in stockholders' equity and cash flows for the years then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

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

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

The accompanying financial statements have been prepared assuming that The Auxer
Group, Inc. will continue as a going concern. As more fully described in Note 2,
the Company has incurred operating losses since inception and requires
additional capital to continue operations. These conditions raise substantial
doubt about the Company's ability to continue as a going concern. Management's
plans regarding these matters are described in Note 2. The financial statements
do not include any adjustments to reflect the possible effects on recoverability
and classification of assets or the amounts and classifications of liabilities
that may result from the possible inability of The Auxer Group, Inc. to continue
as a going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.


Kempisty & Company
Certified Public Accountants PC
New York, New York
April 4, 2003

                                       F2

<PAGE>

<TABLE>
<CAPTION>

                              THE AUXER GROUP, INC.
                           CONSOLIDATED BALANCE SHEETS

                                                                     December 31,         December 31,
                                                                         2002                 2001
                                                                         ----                 ----
                                     ASSETS

Current Assets
<S>                                                                 <C>                 <C>
     Cash                                                           $     10,222        $     27,616
     Accounts receivable, net                                             15,077             166,463
     Inventory (Note 4)                                                  158,447             479,928
     Prepaid expenses                                                     55,087                  --
                                                                    ------------        ------------
          Total Current Assets                                           238,833             674,007

Property plant and equipment, net of accumulated depreciation             20,397             474,360
Security deposit                                                           5,132              54,533
Other receivables, net                                                        --             183,900
                                                                    ------------        ------------
          Total Assets                                              $    264,362        $  1,386,800
                                                                    ============        ============

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
     Accounts payable and accrued expenses (Note 5)                 $    673,517        $    436,606
     Credit line (Note 6)                                                120,731                  --
     Taxes payable                                                       129,240               2,136
     Deferred sales                                                           --             373,174
     Notes payable  (Note 7)                                             908,838             758,886
     Notes payable-shareholders                                          174,528             113,054
                                                                    ------------        ------------
          Total Current Liabilities                                    2,006,854           1,683,856

Long term debt, less current maturities (Note 7)                           2,682             895,303
Common stock subject to rescission                                        61,250             509,000

Commitments and contingencies (Note 10)

Stockholders' Equity (Deficit) (Note 14)
    Common stock, 1,000,000,000 shares authorized at $.001
    par value; issued and outstanding 357,022,730 at December
    31, 2002, 138,117,072 at December 31, 2001                           357,023             138,117
Preferred stock 25,000,000 shares authorized at
    $.001 par value; 1,500,000 shares outstanding
    at December 31, 2002 and 2,750,000 at December 31, 2001                1,500               2,750
Additional paid-in capital                                            10,414,189           9,585,421
Accumulated deficit                                                  (12,579,136)        (11,427,647)
                                                                    ------------        ------------
          Stockholders' (Deficit)                                     (1,806,424)         (1,701,359)
                                                                    ------------        ------------
          Total Liabilities and Stockholders' (Deficit)             $    264,362        $  1,386,800
                                                                    ============        ============
</TABLE>

                        See Notes to Financial Statements
                                       F3

<PAGE>

<TABLE>
<CAPTION>
                              THE AUXER GROUP, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS


                                                                           For the Year Ended
                                                                              December 31,
                                                                      2002                    2001
                                                                      ----                    ----
<S>                                                             <C>                  <C>
Sales revenues                                                  $   1,418,199        $   2,714,018

Cost of sales                                                       1,123,761            2,622,727
                                                                -------------        -------------

Gross profit                                                          294,438               91,291

General and administrative expenses                                   859,761            3,174,644
Loss on impairment of fixed assets                                    299,159                   --
Depreciation and amortization                                         130,206              140,022
Interest expenses                                                     156,801              517,905
                                                                -------------        -------------
                                                                    1,445,927            3,832,571

    Loss from operations                                           (1,151,489)          (3,741,280)

Other income and expenses
    Interest income                                                        --                2,466
                                                                -------------        -------------

Net loss from continuing operations                                (1,151,489)          (3,738,814)

Gain (loss) from discontinued operations, net of taxes                     --              (64,183)
                                                                -------------        -------------

Net loss                                                        $  (1,151,489)       $  (3,802,997)
                                                                =============        =============

Gain (loss) per common share from discontinued operations       $        0.00        $        0.00
                                                                =============        =============

Net loss per common share                                       $       (0.01)       $       (0.03)
                                                                =============        =============

Weighted average shares outstanding                               209,549,409          125,279,032
                                                                =============        =============
</TABLE>

                       See Notes to Financial Statements.
                                       F4
<PAGE>

<TABLE>
<CAPTION>

                              THE AUXER GROUP, INC.
       CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY(DEFICIT)


                                  Common Stock                Preferred Stock           Capital in
                                  ($0.001 par value)          ($0.001 par value)         Excess of
                                     Shares        Amount       Shares       Amount      Par Value       Deficit         Total
                                     ------        ------       ------       ------      ---------       -------         -----

<S>                             <C>         <C>             <C>       <C>         <C>            <C>             <C>
Balance January 1, 2001         104,037,030 $   104,037     2,750,000 $    2,750  $   6,846,441  $   (7,624,650) $     (671,422)

Common stock and warrants
     issued for services          6,400,000       6,400             -          -        257,600                -        264,000

Conversion of warrants issued
     for services                21,000,000      21,000             -          -      1,225,875                -      1,246,875

Common stock issued for
     conversion of notes          6,680,042       6,680             -          -         12,158                -         18,838

Interest expense on issuance
     of convertible debt                  -           -             -          -        390,722                -        390,722

Net adjustment for common
    stock subject to rescission
    rights                                -           -             -          -        852,625                -        852,625

Loss for year ended
    December 31, 2001                     -           -             -          -              -       (3,802,997)    (3,802,997)
                              --------------  ----------  ------------  ---------   ------------   -------------  -------------

Balance December 31, 2001       138,117,072     138,117     2,750,000      2,750      9,585,421     (11,427,647)    (1,701,359)

Common stock issued for
     services                       300,000         300             -          -          7,200               -          7,500

Conversion of preferred stock    12,500,000      12,500    (1,250,000)    (1,250)       (11,250)              -              -

Common stock issued for
     conversion of notes         69,000,000      69,000             -          -         93,151               -        162,151

Common stock issued for
     lock up agreement           16,319,958      16,320             -          -         22,032               -         38,352

Common stock issued for
     conversion of notes        102,012,221     102,012             -          -        244,830               -        346,842
     interest                    18,773,479      18,774             -          -         45,055               -         63,829

Cancellation of stock option
     plan                                 -           -             -          -        (20,000)              -        (20,000)

Net adjustment for common
     stock subject to recission
     rights                               -           -             -          -        447,750               -        447,750

Loss for year ended
    December 31, 2002                     -           -             -          -              -      (1,151,489)    (1,151,489)
                              --------------  ----------  ------------  ---------   ------------   -------------  -------------

Balance December 31, 2002       357,022,730 $   357,023     1,500,000 $    1,500  $  10,414,189  $  (12,579,136)$   (1,806,424)
                              ==============  ==========  ============  =========   ============   =============  =============
</TABLE>


                       See Notes to Financial Statements.
                                       F5
<PAGE>

<TABLE>
<CAPTION>

                              THE AUXER GROUP, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                       For the Year Ended
                                                                         December 31,
                                                                             2002                    2001
                                                                             ----                    ----
Operating Activities
<S>                                                                  <C>                     <C>
   Net income or (loss) from continuing operations                   $        (1,151,489)    $        (3,802,997)
   Adjustments to reconcile net (loss) to net cash
      used by operating activities:
   Depreciation and amortization                                                 130,206                 140,022
   Common stock issued for services                                                7,500                 264,000
   Loss on impairment of fixed assets                                            299,159                       -
   Cancellation of stock option plan                                             (20,000)                      -
   Convertible loan interest                                                      63,829                 390,722
   Write off of discontinued operations                                                -                 759,274
   Loss on abandonment                                                                 -                  64,183
   Debt adjustment                                                               (80,000)                      -
   Changes in operating assets and liabilities:
   (Increase) decrease in accounts receivable                                    151,386               2,081,225
   (Increase) decrease in inventory                                              321,481                 746,842
   (Increase) decrease in prepaid expenses                                       (55,087)                 33,105
   (Increase) decrease in other receivables                                      183,900                (141,566)
   Increase (decrease) in accounts payable and accrued expenses                  128,682              (1,729,728)
   Increase (decrease) in taxes payable                                          127,104                  (2,136)
   Increase (decrease) in deferred sales                                        (373,174)               (473,179)
                                                                       ------------------      ------------------
   Net cash (used) by operating activities                                      (266,503)             (1,670,233)

Investing Activities
   Proceeds from sale of fixed assets                                                  -                  15,998
   Security deposit                                                                    -                  85,949
                                                                       ------------------      ------------------
   Net cash provided(used) by investing activities                                     -                 101,947

Financing Activities
   Borrowings/payments under line of credit agreement, net                       120,731                 (64,849)
   Proceeds from long-term debt                                                        -                 109,836
   Proceeds from short-term debt                                                  66,904                       -
   Payments on long-term debt                                                          -                  (3,178)
   Shareholder loan payable                                                       61,474                  25,195
   Sale of common stock                                                                -               1,246,875
                                                                       ------------------      ------------------
   Net cash provided by financing activities                                     249,109               1,313,879
                                                                       ------------------      ------------------
   Increase (decrease) in cash                                                   (17,394)               (254,407)
   Cash at beginning of period                                                    27,616                 282,023
                                                                       ------------------      ------------------
   Cash at end of period                                             $            10,222     $            27,616
                                                                       ==================      ==================
Supplemental Disclosures of Cash Flow Information:
  Cash paid during year for:
     Interest                                                        $                 -     $                 -
                                                                       ==================      ==================
     Income taxes (benefits)                                         $                 -     $                 -
                                                                       ==================      ==================
</TABLE>

                       See Notes to Financial Statements.
                                       F6

<PAGE>

<TABLE>
<CAPTION>

                              THE AUXER GROUP, INC.
                CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

                                                                            For the Year Ended
                                                                                 December 31,
                                                                        2002                      2001
                                                                        ----                      ----

Supplemental Disclosures of Cash Flow Information

  Non-cash investing and financing activities:

<S>                                                             <C>                     <C>
Common stock issued for services                                $             7,500     $           264,000

Common stock issued for conversion of notes                                 162,151                  18,838

Interest expense on issuance of convertible debt                                  -                 390,722

Net adjustment for common stock subject to recission rights                 447,750                 852,625

Common stock issued for lock up agreement                                    38,352                       -

Common stock issued for conversion of notes                                 346,842                       -

Common stock issued for interest expense                                     63,829                       -
</TABLE>





                       See Notes to Financial Statements.

                                       F7
<PAGE>

                              THE AUXER GROUP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2002



Note 1- ORGANIZATION OF COMPANY

a.   Creation of the Company

     Auxer Industries, Inc. (the "Company") was formed on June 20, 1920 under
     the laws of the State of Idaho as The Auxer Gold Mines. On May 2, 1995 the
     certificate of incorporation was amended to change the name of the Company
     to Auxer Industries, Inc.

     On August 11, 1997 the Company incorporated in the State of Delaware under
     the name The Auxer Group, Inc. In September 1997 the shareholders of the
     company voted to exchange their shares on a one to one basis for shares in
     the new company, The Auxer Group, Inc. which became effective January 1,
     1998.

b.   Description of the Company

     The Company is an investment holding company that is comprised of five
     subsidiaries: the Harvey Westbury Corporation, Hardyston Distributors,
     Inc., CT Industries, Auxer Telecom, Inc. and Universal Filtration
     Industries.

     On April 18, 1995, the Company acquired CT Industries, Inc. ("CT"), a New
     Jersey corporation based in West Paterson, New Jersey, CT is a distributor
     of various automotive products.

     On February 8, 1996, the Company acquired Universal Filtration Industries,
     Inc. ("Universal Filtration") a New York corporation. Based in West
     Paterson, New Jersey, Universal Filtration has developed the "Fiona Micro
     Screen Filter", a replacement upgrade to a component of machinery used by
     the dry cleaning industry.

     On October 25, 1996, the Company acquired Harvey Westbury Corp. ("Harvey
     Westbury"), a New York corporation. Based in West Paterson, New Jersey,
     Harvey Westbury is a manufacturer and wholesaler of various automotive,
     marine and aviation products.

     On April 22, 1999, the Company formed Hardyston Distributors, Inc., d/b/a
     The Mechanics Depot, a Nevada corporation. Based in northern New Jersey,
     Hardyston Distributors is an automotive parts distributor.

                                       F8

<PAGE>
                              THE AUXER GROUP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2002

Note 1- ORGANIZATION OF COMPANY (continued)

     On August 7, 2000, the Company formed Auxer Telecom Inc., a Delaware
     corporation. Auxer Telecom is a reseller of telecommunications access
     services with operations based in Los Angeles, CA.

     On August 7, 2000, the Company formed Clifton Telecard Inc., a Delaware
     corporation. Based in Northern New Jersey, Clifton Telecard is a wholesale
     distributor of prepaid phone cards. On May 16, 2001 the Company sold
     Clifton Telecard Inc.

     During 2001 the Company closed Auxer Telecom, Inc. and transferred its
     assets to Auxer, Inc., the parent company.


Note 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Basis of Financial Statement Presentation

     The accompanying financial statements have been prepared on a going concern
     basis, which contemplates the realization of assets and the satisfaction of
     liabilities in the normal course of business. The Company incurred net
     losses of $12,579,136 for the period from April 18, 1995 to December 31,
     2002. These factors indicate that the Company's continuation as a going
     concern is dependent upon its ability to obtain adequate financing.

     The Company will require substantial additional funds to finance its
     business activities on an ongoing basis and will have a continuing
     long-term need to obtain additional financing. The Company's future capital
     requirements will depend on numerous factors including, but not limited to,
     continued progress developing additional products, improved manufacturing
     efficiency, the building of inventory to meet fulfillment requirements for
     the Company's various automotive products and the completion of planned
     acquisitions. The Company plans to continue to engage in ongoing financing
     efforts.

     The consolidated financial statements presented consist of the Company and
     its wholly owned subsidiaries CT, Universal Filtration, Harvey Westbury,
     Hardyston Distributors Inc. and Auxer Telecom, Inc., all of which are under
     common control. Material inter-company transactions and balances have been
     eliminated in consolidation.


                                       F9


<PAGE>

                              THE AUXER GROUP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2002


Note 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

     Earnings (Loss) per share

     Basic earnings (loss) per share is based on the weighted effect of all
     common shares issued and outstanding, and is calculated by dividing net
     income by the weighted average shares outstanding during the period.
     Diluted earnings (loss) per share is calculated by dividing net income by
     the weighted average number of common shares used in the basic earnings per
     share calculation plus the number of common shares that would be issued
     assuming conversion of all potentially dilutive common shares outstanding.
     Dilutive earnings (loss) per share is not presented since diluted
     securities have an anti-dilutive effect.

     Receivables

     Allowances against receivables are calculated equal to the estimated
     collection losses that will be incurred in collection of all receivables
     and a reserve for returns and discounts traditionally taken. Estimated
     allowances are based on historical collection experience coupled with a
     review of the current status of the existing receivables, and amounted to
     $34,744 at December 31, 2002 and $26,505 at December 31, 2001.

     Property and Equipment

     Property and equipment is recorded at cost and is depreciated under the
     straight-line methods over the estimated useful lives of the related
     assets. Expenditures for major renewals and betterments that extend the
     useful lives of property and equipment are capitalized. Expenditures for
     maintenance and repairs are charged to expense as incurred. During the year
     2002, machinery and equipment was impaired and written down by $299,159.

<TABLE>
<CAPTION>

                                                                   December 31,            December 31,
     Equipment and leasehold consists of the following:                  2002                    2001
                                                                         ----                    ----
<S>                                                              <C>                     <C>
     Vehicles                                                    $            10,789     $            29,539
     Machinery and equipment                                                 348,121                 652,526
     Furniture and fixtures                                                   12,164                  21,748
     Leasehold improvements                                                        0                   2,121
                                                                   ------------------      ------------------
                                                                             371,074                 705,934
     Less: Accumulated depreciation and amortization                        (350,677)               (231,574)
                                                                   ------------------      ------------------
                                                                 $            20,397     $           474,360
                                                                   ==================      ==================
</TABLE>


                                     F10


<PAGE>

                              THE AUXER GROUP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2002

Note 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

     Revenue Recognition

     The Company acts as principal in its revenue generating transactions, takes
     title to its products, and has risks and rewards of ownership. The Company
     recognizes revenues as earned. Amounts billed in advance of the period in
     which service is rendered are recorded as a liability under "deferred
     revenue." The Company's revenue recognition policy is the same for each
     product and subsidiary.

     Research and Development Expenses

     Research and development costs are charged to operations when incurred.

     Use of Estimates

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

     Impairment of Long-Lived Assets

     In the event that facts and circumstances indicate that the carrying value
     of long lived assets, including associated intangibles may be impaired, an
     evaluation of recoverability is performed by comparing the estimated future
     undiscounted cash flows associated with the asset to the assets carrying
     amount to determine if a write down to market value or discounted cash
     flows is required.

     New Standard Adopted

     In August 2001, the FASB issued SFAS No. 144, "Accounting for the
     Impairment or Disposal of Long-Lived Assets." This standard supercedes SFAS
     No. 121, "Accounting for the Impairment of Long-Lived Assets and for
     Long-Lived Assets to Be Disposed Of." The standard retains the previously
     existing accounting requirements related to the recognition and measurement
     of the impairment of long-lived assets to be held and used while expanding
     the measurement requirements of long-lived assets to be disposed of by sale
     to include discontinued operations. It also expands on the previously
     existing reporting requirements for discontinued operations to include a
     component of an entity that either has been disposed of or is classified as
     held for sale. Auxer adopted SFAS No. 144 on January 1, 2002. As a result
     of the adoption of SFAS No. 144 the Company wrote down its
     telecommunications switches by $299,159.

                                      F11


<PAGE>

                              THE AUXER GROUP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2002

Note 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

     New Accounting Standards

     In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
     Retirement Obligations." This standard addressess financial accounting and
     reporting for obligations associated with the retirement of tangible
     long-lived assets and the associated asset retirement costs. Auxer is
     required to implement SFAS No. 143 on January 1, 2003. Auxer does not
     expect this standard to have a material impact on its consolidated
     financial position or results of operations.

     In April 2002, the FASB issued SFAS No. 145, which rescinds SFAS No. 4,
     "Reporting Gains and Losses from Extinguishment of Debt," SFAS No. 44,
     "Accounting for Intangible Assets of Motor Carriers" and SFAS No. 64,
     "Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements" and
     amends SFAS No.13, "Accounting for Leases." This statement updates,
     clarifies and simplifies existing accounting pronouncements. As a result of
     rescinding SFAS No. 4 and SFAS No. 64, the criteria in APB No. 30 will be
     used to classify gains and losses from extinguishment of debt. The
     provisions of SFAS No. 145 will be adopted by Auxer in 2003. Auxer does not
     expect the adoption of this standard to have a material impact on its
     consolidated financial position or results of operations.

     In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
     Associated with Exit or Disposal Activities." This standard nullifies
     Emerging Issues Task Force Issue No. 94-3, "Liability Recognition for
     Certain Employee Termination Benefits and Other Costs to Exit an Activity
     (including Certain Costs Incurred in a Restructuring)." This standard
     requires that a liability for a cost associated with an exit or disposal
     activity be recognized when the liability is incurred rather than the date
     of an entity's commitment to an exit plan. Auxer is required to implement
     SFAS No. 146 on January 1, 2003. Auxer does not expect this standard to
     have a material impact on its consolidated financial position or results of
     operations.

     In November 2002, the FASB issued Interpretation No. 45, "Guarantor's
     Accounting and Disclosure Requirements for Guarantees, Including Indirect
     Guarantees of Indebtedness of Others," which expands previously issued
     accounting guidance and disclosure requirements for certain guarantees. The
     interpretation requires an entity to recognize an initial liability for the
     fair value of an obligation assumed by issuing a guarantee. The provision
     for initial recognition and measurement of the liability will be applied on
     a prospective basis to guarantees issued or modified after December 31,
     2002. Auxer does not expect this interpretation to have a material impact
     on its consolidated financial position or results of operations.

                                      F12


<PAGE>

                              THE AUXER GROUP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2002

Note 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

     New Accounting Standards (continued)

     In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
     Compensation - Transition and Disclosure - an amendment of FASB Statement
     No. 123, " which provides optional transition guidance for those companies
     electing to voluntarily adopt the accounting provisions of SFAS No.123. In
     addition, the statement mandates certain new disclosures that are
     incremental to those required by SFAS No. 123. Auxer will continue to
     account for stock-based compensation in accordance with APB No. 25. As
     such, Auxer does not expect this standard to have a material impact on its
     consolidated financial position or results of operations. Auxer has adopted
     the disclosure-only provisions of SFAS No. 148 at December 31, 2002.

     In January 2003, the FASB issued Interpretation No. 46, "Consolidation of
     Variable Interest Entities, an Interpretation of ARB No. 51, " which
     requires all variable interest entities ("VIEs") to be consolidated by the
     primary beneficiary. The primary beneficiary is the entity that holds the
     majority of the beneficial interests in the VIE. In addition, the
     interpretation expands disclosure requirements for both variable interest
     entities that are consolidated as well as VIEs from which the entity is the
     holder of a significant amount of the beneficial interests, but not the
     majority. The disclosure requirements of this interpretation are effective
     for all financial statements issued after January 31, 2003. The
     consolidation requirements of this interpretation are effective for all
     periods beginning after June 15, 2003. Management is still assessing the
     impacts of this interpretation.

Note 3- ACQUISITIONS

     Acquisition of Telecommunications Switch Operations

     On August 24, 2000 the Company acquired two telecommunications excel
     switching platforms from Colbie Pacific Capital, an unrelated party, in
     exchange for a note payable in the amount of $558,000 (which includes
     imputed interest at 12% in the amount of $48,660). The Company placed these
     assets into its wholly-owned subsidiary, Auxer Telecom Inc., which started
     operations in December 2000. The note is currently in default. During 2001
     the Company closed down Auxer Telecom, Inc. and transferred its assets to
     Auxer, Inc. The Company has determined the asset was impaired in 2002 and
     it was wriiten down by $299,159.

                                      F13


<PAGE>

                              THE AUXER GROUP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2002

Note 3- ACQUISITIONS (continued)

     Acquisition of Wholesale Prepaid Phone Distribution Operation

     On September 22, 2000 the Company acquired the assets of Clifton Telecard
     Alliance Inc., ("CTA"), a New Jersey based telecommunications company, for
     a total purchase price of $964,000.

     The Company paid $500,000 to the shareholders of CTA at closing, issued 3
     million shares of common stock valued at $264,000, and issued a note
     payable to them for $200,000 due in 2001, which is more fully described in
     Note 7.

     The excess of the amount paid over the fair value of CTA's identifiable net
     assets was $846,939, which was reflected in the balance sheet as goodwill.

     On May 16, 2001 the Company sold Clifton Telecard Inc. The unamortized
     portion of goodwill of $762,245 was expensed and included in the loss from
     discontinued operations.

Note 4- INVENTORY

     Inventory consists of raw materials, work in process and finished goods and
     is valued at the lower of cost determined on the first-in, first-out method
     or market.

Note 5- ACCOUNTS PAYABLE AND ACCRUED EXPENSES

     Accounts payable and accrued expenses consist of the following at December
     31, 2002 and December 31, 2001:
<TABLE>
<CAPTION>

                                                                 2002                    2001
                                                                 ----                    ----
<S>                                                      <C>                     <C>
     Accounts payable on trade with other vendors        $           419,710     $           204,385
     Customer deposits                                                30,000                  28,000
     Accrued salaries                                                 11,641                  20,000
     Credit card payable                                              83,915                       -
     Accrued expenses                                                128,251                 184,221
                                                           ------------------      ------------------
                                                         $           673,517     $           436,606
                                                           ==================      ==================
</TABLE>

Note 6- CREDIT LINE
<TABLE>
<CAPTION>

                                                                      2002                    2001
                                                                      ----                    ----
<S>                                                           <C>                     <C>
     4.76% $25,000 PNC Bank loan, monthly payment $150        $            24,770     $                 -
     2% over prime $96,000, Fleet SBA loan, monthly payment
     2% of principal plus interest
                                                                           95,961                       -
                                                                ------------------      ------------------
                                                              $           120,731     $                 -
                                                                ==================      ==================
</TABLE>

                                      F14

<PAGE>

                              THE AUXER GROUP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2002


Note 7- DEBT

     Security Agreement

     The Company has entered into a security agreement with Merchant Financial
     Corp. ("Merchant") to borrow money secured by the receivables evidenced by
     invoices of Harvey Westbury Corp. and personal guarantees by certain
     officers. Merchant agreed to lend an amount equal to 75% of the net value
     of all Harvey Westbury's accounts receivable at an interest rate of prime
     plus 5%. In July 2002 this agreement was terminated and the unpaid balance
     at December 31, 2002 was $23,883.

     Notes payable

     The following is a summary of long and short-term debt at December 31:

<TABLE>
<CAPTION>

                                                                                                2002                    2001
                                                                                                ----                    ----
<S>                                                                                     <C>                     <C>
     Notes payable to Creative Capital, payable on demand plus
     interest at a rate of 8%.                                                          $                 -     $            80,000

     Notes payable to Merchant Financial Corp. (see above)                                           23,883                       -

     Notes payable to Colbie Pacific Capital, due August 1, 2001, payable in 10
     monthly principal and interest payments of $10,000 and one principal and
     interest payment of $458,000, secured by equipment. The note was reduced to
     $350,000 by Colbie if the Company paid the note by September 2002. The note
     is currently in default. (The note has been reinstated until a settlement
     can be agreed upon.)                                                                           535,523                 495,855

     Note payable RICOH, 60 month lease, monthly payments of $172                                     3,353                       -

     Note payable to shareholders, payable on demand with no interest                                     -                 180,900

     8% convertible debenture due January 2006                                                      346,842                 894,185

     11.5% installment note, collateralized by vehicle, payable in
     monthly installments of $188 with the final payment due May 2003                                 1,919                   3,249
                                                                                          ------------------      ------------------
                                                                                                    911,520               1,574,189
                  Less current maturities                                                          (908,838)               (758,886)
                                                                                          ------------------      ------------------
                       Long Term Debt                                                   $             2,682     $           815,303
                                                                                          ==================      ==================
</TABLE>

                                      F15
<PAGE>

                              THE AUXER GROUP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2002

Note 7- DEBT (continued)

     Notes payable (continued)

     In January 2001, the Company refinanced its note payable to certain
     shareholders in the amount of $551,685 sncommonostock. additional $360,000
     as part of an issuance of 8% convertible debentures, due on January 16,
     2006, totaling $911,685. The notes are convertible by the holders into
     shares of the Company's common stock at any time at a conversion price per
     share equal to sixty-five percent (65%) (the "Discount Multiplier") of the
     Market Price. The notes are redeemable at the option of the Company at 130%
     of the principle amount plus accrued interest. In December 2001 $18,838 of
     the principle amount of debentures was converted into the Company's common
     stock. In April 2002, in May 2002 and in December 2002, $162,151, $38,352
     and $346,842, respectively, of the principle amount of debenures was
     converted into 69,000,000, 16,319,958 and 102,012,221 shares of the
     Company's common stock respectively. In December 2002 $63,829 of interest
     was converted into 18,773,479 shares of the Company'

Note 8- INCOME TAXES

     The Company provides for the tax effects of transactions reported in the
     financial statement. The provision, if any, consists of taxes currently due
     plus deferred taxes related primarily to differences between the basis of
     assets and liabilities for financial and income tax reporting. The deferred
     tax assets and liabilities, if any, represent the future tax return
     consequences of those differences, which will either be taxable or
     deductible when the assets and liabilities are recovered or settled. As of
     December 31, 2002, the Company had no material current tax liability,
     deferred tax assets, or liabilities to impact on the Company's financial
     position because the deferred tax asset related to the Company's net
     operating loss carry forward was fully offset by a valuation allowance.

     The Company has net operating loss carry forwards for income tax purposes
     of approximately $12,000,000 at December 31, 2002, and $11,000,000 at
     December 31, 2001. These carry forward losses are available to offset
     future taxable income, if any, and expire starting in the year 2013. The
     Company's utilization of this carry forward against future taxable income
     may become subject to an annual limitation due to a cumulative change in
     ownership of the Company of more than 50 percent.

<TABLE>
<CAPTION>

                                                           December 31,
     Deferred tax asset:                          2002                    2001
                                                  ----                    ----
<S>                                       <C>                     <C>
     Net operating loss carry forward     $         4,054,000     $         3,740,000
     Valuation allowance                           (4,054,000)             (3,740,000)
                                            ------------------      ------------------
     Net deferred tax assets              $                 -     $                 -
                                            ==================      ==================
</TABLE>



                                      F16
<PAGE>

                              THE AUXER GROUP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2002

Note 8- INCOME TAXES (continued)

     The Company recognized no income tax benefit for the loss generated for the
     periods through December 31, 2002.

     SFAS No. 109 requires that a valuation allowance be provided if it is more
     likely than not that some portion or all of a deferred tax asset will not
     be realized. The Company's ability to realize the benefit of its deferred
     tax asset will depend on the generation of future taxable income. Because
     the Company has yet to recognize significant revenue from the sale of its
     products, it believes that a full valuation allowance should be provided.

Note 9- BUSINESS AND CREDIT CONCENTRATIONS

     The amount reported in the financial statements for cash, trade accounts
     receivable and investments approximates fair market value. Because the
     difference between cost and the lower of cost or market is immaterial, no
     adjustment has been recognized and investments are recorded at cost.

     Financial instruments that potentially subject the company to credit risk
     consist principally of trade receivables. Collateral is generally not
     required.

Note 10- COMMITMENTS AND CONTINGENCIES

     Leases

     The Company, in 2002, has entered into new lease agreements for office and
     warehouse space and equipment that expire at various times through 2004.
     Rental expense under the operating leases for 2002 was $172,638. Remaining
     commitments under operating leases are as follows:

     Year Ending December 31,
           2003                               $            44,107
           2004                                            33,667
                                                ------------------
                                              $            77,774
                                                ==================


                                      F17


<PAGE>

                              THE AUXER GROUP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2002



Note 11- SEGMENT INFORMATION

     Management Policy in Identifying Reportable Segments

     The Company's reportable business segments are strategic business units
     that offer distinctive products and services that are marketed through
     different channels. They are managed separately because of their unique
     technology, marketing, and distribution requirements.

     Types of Products and Services

     The Company is an investment holding company that is comprised of six
     subsidiaries: The Harvey Westbury Corp., Hardyston Distributors Inc., CT
     Industries, Auxer Telecom Inc., Clifton Telecard Inc. and Universal
     Filtration Industries, Inc. Harvey Westbury is a manufacturer and
     wholesaler of various automotive, marine and aviation products. Hardyston
     Distributors is a Northern New Jersey based automotive parts distributor.
     CT industries is a distributor of various automotive products. Auxer
     Telecom is a reseller of telecommunications access services. Clifton
     Telecard is a Northern New Jersey based wholesale distributor of prepaid
     phone cards. Universal filtration has in the past manufactured and
     distributed filters used by the dry cleaning industry and is currently
     inactive.

     Segment Profit or Loss

     The Company's accounting policies for segments are the same as those
     described in the summary of significant accounting policies. Management
     evaluates segment performance based on segment profit or loss before income
     taxes and nonrecurring gains and losses. Transfers between segments are
     accounted for at market value. Operating expenses, such as rent, utilities,
     payroll and insurance, are attached to a segment and identified and
     allocated accordingly. Substantially all of the general and administrative
     expenses incurred pertain to merger and acquisition expenditures, including
     legal, administrative and consulting fees, which are primarily allocated to
     the parent company.

     Major Customer Information

     In 2002, sales to one customer represented $36,000 of the Company's
     consolidated revenue. This customer is served by the automotive group's
     operating segment.

                                      F18


<PAGE>

                              THE AUXER GROUP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2002



Note 11- SEGMENT INFORMATION (continued)

    The Company's consolidated balance sheet consists of the following
    subsidiary components as of December 31, 2002:

<TABLE>
<CAPTION>

                                                          Automotive           Telecom          Intercompany          Auxer Group
                                         Parent              Group              Group           Eliminations         Consolidated
                                         ------              -----              -----           ------------         ------------
Balance Sheet
<S>                               <C>                 <C>                <C>                  <C>                  <C>
Current Assets                    $              163  $         238,670  $                -   $                 -  $       238,833
Fixed Assets (net)                                 -             20,397                   -                   -           20,397
Other Assets                               2,367,714              5,132                   -          (2,367,714)           5,132
                                    -----------------   ----------------   -----------------    ------------------   --------------
Total Assets                      $        2,367,877  $         264,199  $                -   $        (2,367,714) $       264,362
                                    =================   ================   =================    ==================   ==============

Liabilities and Stockholders' Deficit
Current Liabilities               $        1,173,629  $       1,567,376  $        1,533,503   $        (2,267,654) $     2,006,854
Long Term Liabilities                              -              2,682                   -                     -            2,682
Common Stock Subject to Rescission
                                              61,250                  -                   -                     -           61,250
Stockholders' Equity (Deficit)             1,132,998         (1,305,859)         (1,533,503)             (100,060)      (1,806,424)
                                    -----------------   ----------------   -----------------    ------------------   --------------

Total Liabilities and
Stockholders' Equity (Deficit)
                                  $        2,367,877  $         264,199  $                -   $        (2,367,714) $       264,362
                                    =================   ================   =================    ==================   ==============

The Company's consolidated statement of operations for the year ended
December 31, 2002:

Statement of Operations
Revenues                          $                -  $         613,970  $          804,229   $                 -  $     1,418,199
Costs of Goods Sold                                -            488,901             634,860                     -        1,123,761
                                    -----------------   ----------------   -----------------    ------------------   --------------
Gross Profit                                       -            125,069             169,369                     -          294,438
Operating Expenses                           776,402            272,866             396,659                     -        1,445,927
                                    -----------------   ----------------   -----------------    ------------------   --------------
Net (Loss)                        $         (776,402) $        (147,797) $         (227,290)$                   -  $    (1,151,489)
                                    =================   ================   =================    ==================   ==============
</TABLE>

                                      F19
<PAGE>

                              THE AUXER GROUP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2002

Note 11- SEGMENT INFORMATION (continued)

     The Company's consolidated balance sheet consists of the following
     subsidiary components as of December 31, 2001:

<TABLE>
<CAPTION>

                                                          Automotive           Telecom          Intercompany          Auxer Group
                                         Parent              Group              Group           Eliminations         Consolidated
                                         ------              -----              -----           ------------         ------------
Balance Sheet
<S>                               <C>                 <C>                <C>                  <C>               <C>
Current Assets                    $          392,277  $         397,943  $          264,598   $     (380,811)   $       674,007
Fixed Assets (net)                             8,285             44,469             421,606                -            474,360
Other Assets                               3,446,096              8,053              96,480       (3,312,196)           238,433
                                    -----------------   ----------------   -----------------    -------------     --------------
Total Assets                      $        3,846,658  $         450,465  $          782,684   $   (3,693,007)   $     1,386,800
                                    =================   ================   =================    =============     ==============

Liabilities and Stockholders' Deficit
Current Liabilities               $          591,616  $       2,128,585  $        2,557,940   $   (3,592,947)   $     1,685,194
Long Term Liabilities                        893,965                  -                   -                -            893,965
Common Stock Subject to Rescission                                                                                          -
                                             509,000                  -                   -                -            509,000
Stockholders' Equity (Deficit)             1,852,077         (1,678,120)         (1,775,256)        (100,060)        1,701,359)
                                    -----------------   ----------------   -----------------    -------------     --------------
Total Liabilities and
Stockholders' Equity (Deficit)    $        3,846,658  $         450,465  $          782,684   $   (3,693,007)   $     1,386,800
                                    =================   ================   =================  =============     ==============

The Company's consolidated statement of operations for the year ended
December 31, 2001:

Statement of Operations
Revenues                          $                -  $         977,011  $        1,805,346   $      (68,339)   $     2,714,018
Costs of Goods Sold                                -            811,707           1,879,359          (68,339)         2,622,727
                                    -----------------   ----------------   -----------------    -------------   --------------
Gross Profit                                       -            165,304             (74,013)               -             91,291
Operating Expenses                         2,458,491            437,492             936,588                -          3,832,571
                                    -----------------   ----------------   -----------------    -------------     --------------
Income (Loss) From Operations
                                          (2,458,491)          (272,188)         (1,010,601)               -         (3,741,280)
Other Income (Expense):
Interest Income                                1,029                  -               1,437                -              2,466
Loss on Abandonment                          (64,183)                 -                   -                -            (64,183)
                                    -----------------   ----------------   -----------------    -------------     --------------
Net Income (Loss)                 $       (2,521,645) $        (272,188) $       (1,009,164)  $            -    $    (3,802,997)
                                    =================   ================   =================    =============     ==============
</TABLE>


                                       F20

<PAGE>

                              THE AUXER GROUP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2002



Note 12- STOCK OPTION PLAN

     The Company has a Stock Option Plan (the "Plan") under which selected
     individuals may be granted options to purchase shares of the Company's
     authorized but unissued common stock. The maximum numbers of shares
     available for issuance under the Plan is twenty five million shares. As of
     December 31, 2002 the maximum number of shares available for future grants
     under the Plan is 25,000,000 shares. Under the Plan, the option exercise
     price may be more, equal to or less than the fair market value of the
     Company's common stock at the date of grant. Options currently expire no
     later than 5 years from the grant date and are 100% vested. Proceeds
     received by the Company from the exercise of stock options are credited to
     common stock and additional paid in capital. Additional information
     regarding the Plan's stock option activity is as follows:

<TABLE>
<CAPTION>

                                                                          Weighted
                                                  Number of                Average
                                                   Shares              Exercise Price
                                                   ------              --------------
     Outstanding at December 31, 2000                         -                       -
<S>                                                   <C>           <C>
     Granted                                          2,000,000     $              0.05
                                                ----------------      ------------------
     Outstanding at December 31, 2001                 2,000,000                    0.05
     Terminated                                      (2,000,000)                   0.05
                                                ----------------      ------------------
     Outstanding at December 31, 2002                         -     $                 -
                                                ================      ==================
</TABLE>

     The Company accounts for its plan under APB Option No. 25 ("Accounting for
     Stock Issued to Employees"). Accordingly, compensation expense is
     recognized in the Company's financial statements when the exercise price of
     the Company's employee stock options is less than the market price of the
     Company's common stock on the date of grant. During 2000 the Company
     recorded compensation cost of $20,000 related to the stock option plan, and
     reversed the cost.

     The pro forma net income impact under Financial Accounting Standards Board
     Statement No. 123 ("Accounting for Stock-Based Compensation") is not
     material.

     During 2001 the Company issued a non qualified option to purchase
     $1,000,000 worth of common shares at a 15% discount of the market price on
     the date of exercise, for consulting services performed in 2001. This
     option expires on March 8, 2011. During 2001 the consultant exercised
     $796,875 of the option for 15,000,000 common shares at a price of $0.053
     per share which was 15% below the market price of $0.0625 on the date of
     exercise. The amount remaining on the option at December 31, 2002 and 2001
     is $203,125. At December 31, 2002 the Company would have had to issue
     approximately 12,900,000 common shares if the option was exercised.


                                      F21


<PAGE>

                              THE AUXER GROUP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2002



Note 13- COMMON STOCK WARRANTS

     Common Stock Warrants

     During 2001 warrants to purchase 4,500,000 shares of common stock at
     various prices were granted to a consultant. The exercise price was equal
     to or greater than the market price of the stock on the date granted. All
     warrants expire December 31, 2002, if not exercised. At December 31, 2001
     the per share exercise prices of these warrants were as follows:

<TABLE>
<CAPTION>
                                                                          Exercise                 Year of
                    Year of Issue                  Shares                   Price                Expiration
                    -------------                  ------                   -----                ----------
<S>                     <C>                           <C>                         <C>               <C>
                        2001                          2,500,000                   0.075             2002
                        2001                          1,000,000                   0.100             2002
                        2001                          1,000,000                   0.150             2002
                                              ------------------
                                                      4,500,000
                                              ==================
</TABLE>

     The following is a summary of warrant transactions:
<TABLE>
<CAPTION>

                                                          December 31,            December 31,
                                                              2002                    2001
                                                              ----                    ----
<S>                                                            <C>                     <C>
     Outstanding at beginning of period                         4,500,000                       -
     Granted during the period                                          -               4,500,000
     Expired during the period                                 (4,500,000)                      -
                                                        ------------------      ------------------
          Outstanding and eligible for exercise                         -               4,500,000
                                                        ==================      ==================
</TABLE>

Note 14- STOCKHOLDERS' EQUITY

     During March 2001 the Company issued 6,000,000 common shares for consulting
     services valued at $450,000 or $0.075 per share.

     During March 2001 the Company issued 1,400,000 common shares for consulting
     services valued at $84,000 or $0.06 per share.

     During March 2001 a consultant exercised a stock option for 15,000,000
     common shares for $796,875.

     During April 2001 the Company issued 4,000,000 common shares to a
     consultant for services valued at $144,000 or $0.036 per share.

     During April 2001 the Company issued 1,000,000 common shares for legal
     services valued at $36,000 or $0.036 per share.


                                       F22
<PAGE>

                              THE AUXER GROUP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2002

Note 14- STOCKHOLDERS' EQUITY (continued)

     On December 27, 2001 the Company issued 6,680,042 shares of common stock in
     exchange for $18,838 of convertible notes payable.

     On April 11, 2002 the Company issued 69,000,000 shares of common stock at
     $0.0024 for the conversion of $162,151 notes payable.

     On April 25, 2002 the Company issued 300,000 shares of common stock at
     $0.025 for services valued at $7,500.

     On May 13, 2002 the Company issued 6,250,000 shares of common stock at
     $0.01 for the conversion of 625 shares of preferred stock valued at
     $62,500.

     On May 14, 2002 the Company issued 16,319,958 shares of common stock at
     $0.0024 for lock up agreement.

     On June 21, 2002 the Company issued 6,250,000 shares of common stock at
     $0.01 for the conversion of 625 shares of preferred stock valued at
     $62,500.

     On December 20, 2002 the Company issued 102,012,221 shares of common stock
     at $0.0034 for the conversion of $346,841.55 of convertible notes payable.

     On December 20, 2002 the Company issued 18,773,478 shares of common stock
     at $0.0034 for $63,829.83 of interest expense.

     The Company has a potential liability attributable to common stock
     rescission rights as follows:

                  Year Ending December 31,       Shares          Amount
                  ------------------------       ------          ------
                        2003                     3,446,079       $ 41,250

     Preferred Stock
     ---------------

     The Preferred Stock is convertible at any time, at the holder's option,
     into shares of the Company's common stock at a rate of ten shares of common
     stock for each share of preferred stock.

                                       F23
<PAGE>

                              THE AUXER GROUP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2002

Note 15- DISPOSAL OF SUBSIDIARY

     On May 16, 2001, the Company entered into a stock agreement to sell Clifton
     Telecard Inc., a wholly owned subsidiary. Accordingly, the operations of
     the distribution division as well as the loss on the sale have been
     reported separately as discontinued operations in the accompanying
     financial statements.

     Summarized results of operations for the subsidiary at December 31, 2001
     consist of the following:

           Net Sales                                      $         9,964,767
           Income from Discontinued Operations            $            72,533

     On March 18, 2002 Auxer Telecom Inc was disolved and merged into the Auxer
     Group, Inc.

Note 16- SUBSEQUENT EVENTS

     Common Stock
     ------------

     During March 2003 the Company issued 3,000,000 common shares for the
     payment of legal fees of approximately $30,000.


     VIVA Exchange Agreement
     -----------------------

     On January 8, 2003 the Company entered into an agreement to exchange
     246,000,000 shares of the Company's common stock for 100% ownership of VIVA
     Airlines, Inc, a Puerto Rico Corporation. In addition, the Company issued
     140,000 shares of common stock (valued at $4,480) and granted 660,000
     shares of common stock at $0.10 per share to certain employees of Viva
     Airlines, Inc. The Company sold 80% of Harvey Westbury to a former officer
     of the Company for $44,126.90 and the forgiveness of $110,401.29 of monies
     owed by the Company to this officer. The Company approved the forgiveness
     of $1,206,625 of loans made to Harvey Westbury Corp. The Company then
     approved the spin-off of the remaining 20% interest in Harvey Westbury to
     the Company's shareholders of record on January 9, 2003. Viva Airlines,
     Inc. has no assets and holds a letter of intent to acquire 49% of Queen Air
     and/or Aeronaves Queen, SA (a Dominican Republic air carrier) for U.S.
     $600,000.

     The following unaudited pro forma consolidated balance sheet reflects
     adjustments to Auxer's historical consolidated balance sheet at December
     31, 2002 to give effect to the acquisition of VIVA Airlines, Inc. and the
     sale and spin off of Harvey Westbury as if it occured on that date.

     The unaudited pro forma consolidated financial statements should be read in
     conjunction with the historical financial statements and related notes of
     Auxer Group, Inc.

                                       F24


<PAGE>

                              THE AUXER GROUP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2002


Note 16- SUBSEQUENT EVENTS (continued)

     Proforma Company's unaudited consolidated balance sheet as of December 31,
     2002:
<TABLE>
<CAPTION>
                                                      Less:             Add:
                                     Auxer Group      Harvey            VIVA                       Adjustments &         Proforma
                                    Consolidated      Westbury Corp.    Airlines Inc.               Eliminations       Auxer Group
                                    ------------      --------------    -------------               ------------       -----------
Balance Sheet                                                             unaudited                                     unaudited
<S>                              <C>                <C>               <C>                       <C>                  <C>
Current Assets                   $         238,833  $        238,670  $              -          $                -   $          163
Fixed Assets (net)                          20,397            20,397                 -                           -                -
Other Assets                                 5,132             5,132                 -   (2)             6,200,000        6,200,000
                                   ----------------   ---------------   ---------------           -----------------    -------------
Total Assets                     $         264,362  $        264,199  $              -          $        6,200,000   $    6,200,163
                                   ================   ===============   ===============           =================    =============

Liabilities and Stockholders' Equity
Current Liabilities              $       2,006,854  $      1,570,058  $              -          $         (104,528)$        332,268
Long Term Liabilities                        2,682                 -                 -                           -            2,682
Common Stock Subject to Rescission                                                                                                -
                                            61,250                 -                 -                           -           61,250
Common Stock                               357,023                 -           600,000  (2,4)             (354,000)         603,023
Stock subscription                               -                 -          (333,950)  (4)               333,950                -
Preferred stock                              1,500                 -                 -                           -            1,500
Paid-in-capital                         10,414,189                 -                 - (1,2,4)           6,365,451       16,779,640
Retained earnings                      (12,579,136)       (1,305,859)         (266,050)                    (29,841)     (11,569,168)
Stock dividend                                   -                 -                 -   (1)               (11,032)         (11,032)
                                   ----------------   ---------------   ---------------           -----------------    -------------
Stockholders' Equity (Deficit)          (1,806,424)       (1,305,859)                -                   6,304,528        5,803,963
                                   ----------------   ---------------   ---------------           -----------------    -------------
Total Liabilities and
Stockholders' Equity             $         264,362  $        264,199  $              -          $        6,200,000   $    6,200,163
                                   ================   ===============   ===============           =================    =============

Proforma Company's unaudited consolidated statement of operations for the
year ended December 31, 2002:

Statement of Operations
Revenues                         $       1,418,199  $        613,970  $              -          $                -   $      804,229
Costs of Goods Sold                      1,123,761           488,901                 -                           -          634,860
                                   ----------------   ---------------   ---------------           -----------------    -------------
Gross Profit                               294,438           125,069                 -                           -          169,369
Operating Expenses                       1,445,927           272,866           266,050  (3,4)                5,968        1,445,079
Sale of assets                                   -                 -                 -   (1)               (23,873)         (23,873)
                                   ----------------   ---------------   ---------------           -----------------    -------------
Net (Loss)                       $      (1,151,489) $       (147,797) $       (266,050)         $          (29,841)  $   (1,299,583)
                                   ================   ===============   ===============           =================    =============
</TABLE>

                                       F25
<PAGE>

                              THE AUXER GROUP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2002

Note 16- SUBSEQUENT EVENTS (continued)

     Proforma Company's consolidated balance sheet as of December 31, 2002:

<TABLE>
<CAPTION>
                                                     Less:               Add:
                                   Auxer Group       Harvey              VIVA                   Adjustments &        Proforma
                                   Consolidated      Westbury Corp.      Airlines Inc.          Eliminations       Auxer Group
Balance Sheet                                                              unaudited                                 unaudited
<S>                            <C>                 <C>                <C>                       <C>              <C>
Current Assets                 $          238,833  $         238,670  $                -        $            -   $         163
Fixed Assets (net)                         20,397             20,397                   -                     -               -
Other Assets                                5,132              5,132                   -                     -               -
                                 -----------------   ----------------   -----------------         -------------    ------------
Total Assets                   $          264,362  $         264,199  $                -        $            -   $         163
                                 =================   ================   =================         =============    ============

Liabilities & Stockholders' Equity
Current Liabilities            $        2,006,854  $       1,570,058  $                - (1,3)  $     (104,528)  $     332,268
Long Term Liabilities                       2,682                  -                   -                     -           2,682
Common Stock Subject to Rescission                                                                                           -
                                           61,250                  -                   -                     -          61,250
Common Stock                              357,023                  -             600,000 (1,4)        (354,000)        603,023
Stock subscription                              -                  -            (333,950) (4)          333,950               -
Preferred stock                             1,500                  -                   -                     -           1,500
Paid-in-capital                        10,414,189                  -                   -  (1)        4,643,451      15,057,640
Retained earnings                     (12,579,136)        (1,305,859)           (266,050)(4,5)      (4,457,841)    (15,997,168)
Stock dividend                                  -                  -                   -  (1)          (11,032)        (11,032)
                                 -----------------   ----------------   -----------------         -------------    ------------
Stockholders' Equity                   (1,806,424)        (1,305,859)                  -               154,528        (346,037)
                                 -----------------   ----------------   -----------------         -------------    ------------

Total Liabilities and
Stockholders' Equity           $          264,362  $         264,199  $                -        $       50,000   $      50,163
                                 =================   ================   =================         =============    ============

Proforma Company's consolidated statement of operations for the year ended
December 31, 2002:

Statement of Operations
Revenues                       $        1,418,199  $         613,970  $                -        $            -   $     804,229
Costs of Goods Sold                     1,123,761            488,901                   -                     -         634,860
                                 -----------------   ----------------   -----------------         -------------    ------------
Gross Profit                              294,438            125,069                   -                     -         169,369
Operating Expenses                      1,226,768            272,866             266,050  (3)           50,000       1,269,952
                                 -----------------   ----------------   -----------------         -------------    ------------
Income (Loss) From Operations
                                         (932,330)          (147,797)           (266,050)              (50,000)     (1,100,583)
Other Income (Expense):
Interest Income                                 -                  -                   -                     -               -
Sale of assets                                  -                  -                   -  (1)          (23,873)        (23,873)
Prior period adjustment                    80,000                  -                   -                     -          80,000
Loss on Impairment                       (299,159)                 -                   -  (5)       (4,433,968)     (4,733,127)
                                 -----------------   ----------------   -----------------         -------------    ------------
Net Income (Loss)              $       (1,151,489) $        (147,797) $         (266,050)       $   (4,507,841)  $  (5,777,583)
                                 =================   ================   =================         =============    ============
</TABLE>


                                      F25A
<PAGE>

                              THE AUXER GROUP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2002

Note 16- SUBSEQUENT EVENTS (continued)

     The following is a description of each of the pro forma adjustments:

     (1) Record the sale of 80% interest in Harvey Westbury to a former officer
     of the Company, forgiveness of debt to the former officer and the spin off
     of the remainder 20% interest as at January 1, 2002, thereby eliminating
     the assets, liabilities and operating loss for the year 2002.

     (2) The issuance of 246,000,000 shares of common stock for the acquisition
     of VIVA Airlines, Inc. as at January 1, 2002 and the operation of VIVA for
     the year 2002, valued at average market value of $0.025 per share at the
     date of closing or $6,150,000.

     (3) The accrual of $50,000 legal fees for VIVA Airlines, Inc. as at
     December 31, 2002.

     (4) Elimination of VIVA Airlines, Inc. investment. VIVA Airlines, Inc., a
     recently formed Puerto Rico Corporation is preparing to provide passenger
     service from the Dominican Republic to various United States destinations
     in the second quarter of 2003. The transition did not meet the criteria of
     a business combination as outlines in ETIF 98-3 "Determining Whether a
     Nonmonetary Transaction Involves Receipt of Productive Assets or of a
     Business" as, upon acquisition, the assets acquired did have a significant
     business outputs. Accordingly, all of the purchase price plus related
     expenses totaling $6.2 million was attributed to the charter foreign air
     transportation permit and was capitalized in the accompanying unaudited
     consolidated balance sheets.



                                       F26


<PAGE>

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

On March 19, 2002 we dismissed Kaloseih, Shackil & Meola, CPAs, P.C. as our
principal accountant and engaged Kempisty & Company, Certified Public
Accountants, P.C., as our principal independent accountants to audit our
financial statements for the year ended December 31, 2001.

The reports of Kaloseih, Shackil & Meola, CPAs, P.C. on our financial statements
for the years ended December 31, 2000 and December 31, 1999 did not contain an
adverse opinion or a disclaimer of opinion, and were not qualified or modified
as to uncertainty, audit scope or accounting principles.

The decision to change accountants was approved by our Board of Directors. Our
Board of Directors determined that our auditing needs could be handled by
Kempisty & Company, Certified Public Accountants, P.C., as efficiently and more
economically compared to the former accounting firm.

During the years ended December 31, 2000 and December 31, 1999 and through March
19, 2002, there were no disagreements with Kaloseih, Shackil & Meola, CPAs, P.C.
on any matter of accounting principles or practices, financial statement
disclosures or audit scope or procedure, which disagreements if not resolved to
the satisfaction of Kaloseih, Shackil & Meola, CPAs, P.C. would have caused them
to make reference in their reports on the financial statements for such periods.

                                       PART III

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

Our directors and officers as of December 31, 2002, are set forth below.

NAME                                        AGE           POSITION
----                                        ---           --------

Eugene Chiaramonte, Jr.                     56           Director, Treasurer
                                                         Secretary and
                                                         Chief Executive Officer

Ernest DeSaye, Jr.                          37           Manager, Harvey
                                                         Westbury

Eugene Chiaramonte Jr. has served as Director, President and Chief Executive
Officer of the Auxer Group since April 1995. He assumed the position of
Secretary and Treasurer in 1998. Mr. Chiaramonte was a founder and has
served as Director and Secretary of the Auxer Group's subsidiary, CT Industries
since June 1994. Additionally, he has served as Director and Secretary of the
Harvey Westbury Corp. since October 1996 and a co-founder, Director and
Secretary of Hardyston Distributors since April 1999, is a Director and
Secretary of Auxer Telecom Inc. since August 2000.

Ernest DeSaye has served as the Manager for Hardyston Distributors, doing
business as The Mechanics Depot, from April 1999 until the middle of 2001. At
such time, he became the manager of Harvey Westbury Corp. From 1991 to April
1999, Mr. DeSaye had operated as a sole proprietor distributing automotive parts
and accessories to the local automotive community. From 1981 to 1991,he was a
chief mechanic and co-owner at Vernon Transmission and Auto Repair.

Our directors and officers as of January 15, 2003, are set forth below. The
directors hold office for their respective term and until their successors are
duly elected and qualified. Vacancies in the existing Board are filled by a
majority vote of the remaining directors. The officers serve at the will of the
Board of Directors.


Name                    Age            Position

Robert J. Scott         54             President, Chief Executive
                                       Officer, Chief Financial Officer
                                       and Director

Rudy Dominguez                         President and Chief Operating
                                       Officer - Viva Airlines, Inc.

Oscar Hasan                            Vice President - Sales and
                                       Marketing - Viva Airlines, Inc.

Robert J. Scott has served as our Director, President, Chief Executive Officer
and Chief Financial officer since January 15, 2003. From 1997 until the present,
Mr. Scott has been the Chief Executive officer of Robert J. Scott, P.C., a
professional corporation practicing accounting. From May 2002 until January
2003, Mr. Scott was the Secretary and Treasurer of Renegade Venture Corporation.
He was responsible for all financial and accounting aspects of such business.
From May 2002 until January 2003, Mr. Scott was Chief Financial officer of
Hamilton Aerospace Technologies, Inc. He was responsible for all financial and
accounting aspects of such business. From July 1997 until April 2000, Mr. Scott
was the Executive Vice President and Chief Financial Officer of Tri-Financial
Group, Inc. He was responsible for all financial, accounting and administration
aspects of such business. In 1971, Mr. Scott received his Bachelor of Science
degree in Business Administration from Michigan Technological University.

Rudy Dominguez was recently appointed President and Chief Operating Officer of
our subsidiary, Viva Airlines, Inc. From 2000 until the present, Mr. Dominguez
was the President for Airframe Consultants, Inc. based in Miami, Florida. He was
responsible for the consulting of financial and technical analysis relating to
the purchase, lease and maintenance of heavy transport aircraft and aviation
related businesses. From 1998 until 2000, he was the Chief Operating Officer of
Commercial Jet, Inc. based in Miami, Florida. He was responsible for the
day-to-day operations of a major FAA licensed repair station based at Miami
International Airport. Mr. Dominguez received his Bachelor of Science degree in
legal studies from barry University, Miami, Florida.

Oscar Hasan was recently appointed Vice President - Sales and Marketing of our
subsidiary, Viva Airlines, Inc. From February 2003 until the present, Mr. Hasan
has been the managing partner of Solaris Holdings, LLC, based in Roswell,
Georgia. He is involved in the day-to-day management of this telecom company.
From July 199 until January 2003, Mr. Hasan was the Vice president of Sales and
marketing Partner of Venture Telecom based in Norcross, Georgia. He was
responsible for the design, negotiation and implementation of sales programs for
international markets. Mr. Hasan received his bachelor of Arts with a major in
marketing from Georgia State University in 1987.

CERTAIN LEGAL PROCEEDINGS

No director, nominee for director, or executive officer of the Company has
appeared as a party in any legal proceeding material to an evaluation of his
ability or integrity during the past five years.

Compliance with Section 16(a) of the Exchange Act
--------------------------------------------------

We have not filed a Form 5 for our fiscal year ended December 31, 2002.

ITEM 10. EXECUTIVE COMPENSATION

The following information relates to compensation received by our Chief
Executive Officer in 2002, and to our executive officers who were serving as of
December 31, 2002, whose salary and bonus during fiscal 2002 exceeded $100,000
or we determine that disclosure should be made.

Summary Compensation Table
<TABLE>
<CAPTION>
                                                                All
Name &                                            Other         Annual            Other
Principal Position      Year          Salary      Bonus         Compensation      Compensation
------------------      ----          -----       -----         ------------      ------------
<S>                     <C>         <C>           <C>           <C>               <C>
Eugene Chiaramonte      2002
                        2001        $136,000      $      0      $      0          $      0
                        2000         $78,000      $      0      $      0          $      0
Chief Executive
Officer (1)

Ernest DeSaye Jr.       2002
                        2001        $ 50,000      $      0      $      0          $      0
                        2000        $ 47,300      $      0      $      0          $      0
</TABLE>

Hardyston Operations

(1) Mr. Chiaramonte was granted options to purchase 7,500,000 shares under
Auxer's 2000 stock option plan on June 26, 2001 of the Auxer Group's common
stock.

The following table sets forth information with respect to the grant of options
to purchase shares of common stock during the fiscal year ended December 31,
2002, to each person named in the Summary Compensation Table.

                      Option/SAR Grants In The Last Fiscal Year

<TABLE>
<CAPTION>

                              NUMBER OF            % OF TOTAL
                              SECURITIES           OPTIONS/SARs
                              UNDERLYING           GRANTED TO         EXERCISE OR
                              OPTIONS/SARs         EMPLOYEES          BASE PRICE         EXPIRATION
NAME                          GRANTED (#)          IN FISCAL YEAR     ($/SH)             DATE
                              -----------          --------------      ------            ----------
<S>                         <C>                     <C>                  <C>           <C>
Eugene Chiaramonte, Jr.       100,000                5%                  $0.05          5-1-2005
                            7,500,000               39%                  $0.01         6-15-2006

Ernest DeSaye, Jr.            100,000                5%                  $0.05          5-1-2005
</TABLE>

The above options were cancelled effective with the execution of our agreement
with Viva Airlines, Inc. on January 15, 2003.

The following table sets forth information with respect to the exercise of
options to purchase shares of our common stock during the fiscal year ended
December 31, 2002, to each person named in the Summary Compensation Table and
the unexercised options held as of the end of 2001 fiscal year.

Aggregated Option/SAR Exercises In Last Fiscal Year And 2001 Fiscal Year End
Option/SAR Values

<TABLE>
<CAPTION>
                                                                                 NUMBER OF             VALUE OF
                                                                                 SECURITIES            UNEXERCISED
                                    SHARES               VALUE                   UNDERLYING            IN-THE-MONEY
                                    ACQUIRED             REALIZED                UNEXERCISED           OPTIONS/SARs AT
                                    ON         ($)                               OPTIONS/SARs AT       2000 FISCAL YEAR
                                                                                 2000 FISCAL           END ($)
                                    EXERCISE                                     YEAR END (#)          EXERCISEABLE/
                                   (#)                                           EXERCISABLE/          UNEXERCISABLE
NAME                                                                             UNEXERCISABLE

<S>                                    <C>                     <C>                       <C>            <C>
Eugene Chiaramonte, Jr.                0                       0                         NONE           0
Ernest DeSaye Jr.                      0                       0                         NONE           0
</TABLE>


Long-Term Incentive Plans-Awards In Last Fiscal Year

<TABLE>
<CAPTION>

                                NUMBER OF         PERFORMANCE OR           ESTIMATED FUTURE
                                SHARES,           OTHER PERIOD             PAYOUTS UNDER NON-
                                UNITS OR          UNTIL                    STOCK PRICE-BASED
                                OTHER RIGHTS      MATURATION OR            PLANS
NAME                                              PAYOUT                   THRESHOLD          TARGET
<S>                                     <C>                <C>                      <C>            <C>
Eugene Chiarmonte, Jr.                  0                  0                        0              0
Ernest DeSaye Jr.                       0                  0                        0              0
</TABLE>

Executive Employment Agreements:

There are presently no employment agreements in effect.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

                             Principal Shareholders

The following table sets forth information regarding the Auxer Group's common
and preferred stock beneficially owned on April 15, 2003, for (i) each
shareholder known by the Auxer Group to be the beneficial owner of 5% or more of
the Auxer Group's outstanding common and preferred stock, (ii) each of the Auxer
Group's executive officers and directors, and (iii) all executive officers and
directors as a group. In general, a person is deemed to be a "beneficial owner"
of a security if that person has or shares the power to vote or direct the
disposition of such security. A person is also a beneficial owner of any
security of which the person has the right to acquire beneficial ownership
within 60 days. At April 15, 2003, there are 671,211,566 shares of common stock
outstanding

Class of Security- Common Stock


                                         Number of Shares of
Name of Beneficial                       Common Stock           % of Beneficial
Identity of Group                        Beneficially Owned     Ownership
                                         ------------------     ---------

Robert J. Scott                          41,000,000             6.10%
954 Business Park Drive
Traverse City, Michigan 49686

Bash, LLC (1)                            41,000,000             6.10%
300 Delaware Avenue
Wilmington, Delaware 19899

Lazaro Canto                             41,000,000             6.10%
Bibul Street #15
Pasco del Parque
Rio Pedras, Puerto Rico

Enterprises D & D (2)                    41,000,000             6.10%
201 W. Park Drive
Miami, Florida 33172

Joan K. Jolitz                           41,000,000             6.10%
417 Barlow Street
Traverse City, Michigan 49686

UPO, LLP (3)                             41,000,000             6.10%
4166 Evelyn Street
Traverse City, Michigan 49686

All Executive Officers and Directors
as a Group (1 person)                    41,000,000             6.10%

(1) Brian A. Sullivan, our general legal counsel, is the beneficial owner of
Bash, LLC. (2) Is the beneficial owner of Enterprises D & D (3) Marilyn Riggs is
the administrator of the UPO, LLP.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

We presently utilize approximately 500 square feet of office space located at
954 Business Park Drive, Suite #2, Traverse City, MI 49686. We do not pay any
rent for this space. Our sole officer and director is the sole owner of a
professional corporation that pays $500 per month for this space.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

     (a) Exhibits. (i) Stock Exchange Agreement and Plan of Reorganization
between us and Viva Airlines, Inc. (to be filed by amendment).

(b) Reports on Form 8-K.
(i)              On March 19, 2002, we filed an 8-K to report the change in our
                 accountants. On May 29, 2002, we filed an amended 8-K regarding
                 the same issue.
(ii)             On April 10, 2002, we filed an 8-K to disclose the dissolution
                 of one of our subsidiaries, Auxer Telecom, Inc.

ITEM 14.  CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures
------------------------------------------------

Our principal executive officer and principal financial officer evaluated our
disclosure controls and procedures (as defined in rule 13a-14(c) and 15d-14(c)
under the Securities Exchange Act of 1934, as amended) as of a date within 90
days before the filing of this annual report (the Evaluation Date). Based on
that evaluation, our principal executive officer and principal financial officer
concluded that, as of the Evaluation Date, the disclosure controls and
procedures in place were adequate to ensure that information required to be
disclosed by us, including our consolidated subsidiaries, in reports that we
file or submit under the Exchange Act, is recorded, processed, summarized and
reported on a timely basis in accordance with applicable rules and regulations.
Although our principal executive officer and principal financial officer
believes our existing disclosure controls and procedures are adequate to enable
us to comply with our disclosure obligations, we intend to formalize and
document the procedures already in place and establish a disclosure committee.

Changes in internal controls
----------------------------

We have not made any significant changes to our internal controls subsequent to
the Evaluation Date. We have not identified any significant deficiencies or
material weaknesses or other factors that could significantly affect these
controls, and therefore, no corrective action was taken.


                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, there unto duly authorized.

                              THE AUXER GROUP, INC.

                              By:   /s/ Robert J. Scott
                                   -----------------------------
                                       Robert J. Scott
                                       Chief Executive Officer, President,
                                       Chief Financial Officer and Director

Dated: April 25, 2003


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


Name                           Title                              Date
----                           -----                              ----
/s/Robert J. Scott             Chief Executive Officer,           April 25, 2003
---------------------------    President, Chief Financial Officer
                               and Director


<PAGE>



                                  CERTIFICATION
                         OF PRINCIPAL EXECUTIVE OFFICER
                   AND PRINCIPAL FINANCIAL OFFICER PURSUANT TO
                             18 U.S.C. SECTION 1350,
                      AS ADOPTED PURSUANT TO SECTION 906 OF
                         THE SARBANES-OXLEY ACT OF 2002

I, Robert J. Scott, certify that:

1.   I have reviewed this amended annual report on Form 10-KSB/A1 of the Auxer
     Group, Inc.

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

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

4.   I am responsible for establishing and maintaining disclosure controls and
     procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
     registrant and have:

     (a)  designed such disclosure controls and procedures to ensure that
          material information relating to the a registrant is made known to me
          by others within those entities, particularly during the period in
          which this amended yearly report is being prepared;

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

     (c)  presented in this amended yearly report my conclusions about
          effectiveness of the disclosure controls and procedures based on my
          evaluation as of the Evaluation Date;

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

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

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

<PAGE>

6.   I have indicated in this amended yearly report whether there were
     significant changes in internal controls or in other factors that could
     significantly affect internal controls subsequent to the date of my most
     recent evaluation, including any corrective actions with regard to
     significant deficiencies and material weaknesses.

Dated: April 25, 2003

                                        /s/ Robert J. Scott
                                        --------------------------
                                        Robert J. Scott
                                        Principal Executive Officer,
                                        Principal Financial Officer