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

                                   FORM 10-KSB

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

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002

                        Commission File Number 000-27847

                      **JACOBSON RESONANCE ENTERPRISES, INC.

                    NEVADA                            65-0684400**
       (State or other jurisdiction of              (IRS Employer
         incorporation or organization)          Identification Number)

         **8200 Jog Road, Suite 100, Boynton Beach, Florida       33437**
         (Address of principal executive offices)             (Zip Code)

         Company's telephone number, including area code: (561) 752-4141

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:  NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

                          COMMON STOCK, $.001 PAR VALUE

Check whether the Company (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 Company was required to file such
reports), and (2) has been subject to filing requirements for the past 90 days.
                                                                  Yes [X] No [ ]

Check if disclosure of delinquent filers pursuant to Item 405 of Regulation S-B
is not  contained herein, and will not be contained, to the best of the
Company'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.                                                               [ ]

The Company's revenues for fiscal year 2002 were $127,515.

                                       i

The aggregate market value of the voting and non-voting common equity held by
non-affiliates of the Company is $2,863,449 based on the closing price of $0.05
as of April 30, 2003.*

As of April 30, 2003, the Company had a total of 74,183,175 shares of common
stock outstanding.

*Affiliates for the purpose of this item refer to the officers, directors,
and/or persons or firms owning 5% or more of the Company's common stock, both of
record and beneficially.

                       DOCUMENTS INCORPORATED BY REFERENCE

The following documents are incorporated by reference:  None

                                       ii
**TABLE OF CONTENTS**
                                                                            Page

PART I.........................................................................5

         ITEM 1.  DESCRIPTION OF BUSINESS......................................5

         ITEM 2.  DESCRIPTION OF PROPERTY.....................................26

         ITEM 3.  LEGAL PROCEEDINGS...........................................26

         ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.........26

PART II.......................................................................27

         ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS....27

         ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION...32

         ITEM 7.  FINANCIAL STATEMENTS........................................37

         ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                  ACCOUNTING AND FINANCIAL DISCLOSURE.........................37

PART III......................................................................37

         ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
                  PERSONS: COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
                  ACT.........................................................37

         ITEM 10. EXECUTIVE COMPENSATION......................................40

         ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                  MANAGEMENT..................................................41

         ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..............45

         ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K............................46

                                       iii

                                  SPECIAL NOTE
                           FORWARD-LOOKING STATEMENTS

CERTAIN STATEMENTS CONTAINED IN THIS REPORT, INCLUDING, WITHOUT LIMITATION,
STATEMENTS CONTAINING THE WORDS "BELIEVES," "ANTICIPATES," "EXPECTS" AND WORDS
OF SIMILAR IMPORT CONSTITUTE "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH FORWARD-LOOKING
STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS AND UNCERTAINTIES.

THE COMPANY'S ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE ANTICIPATED IN
THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS, INCLUDING THE
SUCCESS AND SUBSEQUENT ACCEPTANCE OF NEW MEDICAL RESEARCH AND DEVELOPMENT; THE
REGULATORY FRAMEWORK OF THE HEALTH CARE INDUSTRY; THE COMPANY'S ABILITY TO
CREATE, SUSTAIN, MANAGE OR FORECAST ITS GROWTH; ITS ABILITY TO ATTRACT AND
RETAIN KEY PERSONNEL; ITS ABILITY TO PROTECT TECHNOLOGY; CHANGES IN ITS BUSINESS
STRATEGY OR DEVELOPMENT PLANS; COMPETITION; DEMOGRAPHIC CHANGES; BUSINESS
DISRUPTIONS; ADVERSE PUBLICITY; AND INTERNATIONAL, NATIONAL AND LOCAL GENERAL
ECONOMIC AND MARKET CONDITIONS.

                                       4
**PART I

ITEM 1.  DESCRIPTION OF BUSINESS

SUMMARY

Executive Offices**

         Our corporate offices are located at 8200 Jog Road, Suite 100, Boynton
Beach, Florida 33437. We can be reached by telephone at (561) 752-4141, by fax
transmission to (561) 752-3939 or via e-mail at jacobsonres@aol.com.

**Introductory**

         Jacobson Resonance Enterprises, Inc., (the "Company," "we" or "us"), is
a Nevada corporation incorporated on March 6, 1988 and was originally known as
Pioneer Services International, Ltd. On June 4, 1996, the Company acquired
Jacobson Resonance Machines, Inc., a closely held Florida corporation founded by
Dr. Jerry I. Jacobson, in exchange for 57,220,000 shares of the Company's common
stock, or a 92% equity interest at that time in the Company. On July 30, 1998,
we changed our name to Jacobson Resonance Enterprises, Inc.

         We are developing magnetic resonance technology ("Jacobson Resonance")
focusing initially on healthcare. Our patented Jacobson Resonance technology is
licensed from the Company's founder, Chairman of the Board, Chief Executive
Officer and Chief Science and Technology Officer, Dr. Jerry I. Jacobson.

         We are planning to use Jacobson Resonance for the reduction of chronic
and acute pain, generally commencing with arthritic conditions and currently
more specifically in Europe to palliate pain secondary to arthrosis of the knee

         Jacobson Resonance utilizes extremely weak physiologic (like those
found in the human heart, brain and other organs), low frequency magnetic fields
to beneficially alter biochemical systems. We plan to use joint venture and
licensing arrangements, as well as our own resources, to develop, manufacture,
distribute and market various applications of Jacobson Resonance.

**Our Operating Results**

Our operations have never been profitable, and it is expected that we will
continue to incur operating losses in the future. In 2002, we generated
revenues of $127,515 and incurred operating expenses of $1,426,352 and had a
net loss of $1,507,342. As of May 15, 2003, we had $5,000 of cash on hand to
fund operations. There is no assurance that we will continue to be able to be
able to fund our operations with investments by third parties or that we will
operate profitably in the future.

                                       5
**Products**

         We have developed five different clinical models of the Jacobson
Resonator for the alleviation of chronic and acute pain. These models include a
portable battery-powered model, an18-inch (expandable), 22-inch (expandable),
4-foot and 7-foot resonators; portable models are user friendly and function via
battery driven field production. These models are now, with the exception of the
portable model, being sold or leased in Canada and Spain for the following
therapeutic uses: magnetotherapy for osteomuscular pain (and soft tissue pain,
including connective tissue such as ligaments and tendons). Royalty and usage
revenues began arriving from Canada in September 2001. Revenues began arriving
from European and worldwide distribution during the last quarter of 2001. In
2002, we placed and sold 15 Jacobson Resonators in Europe. Royalty and usage
revenues from Canada in 2002 were $3,975, and revenues from European
distribution in 2002 were $93,000 Upon clearance from the U.S. Food and Drug
Administration ("FDA") these resonators would be marketed in the U.S. primarily
through distributors by sales, leasing and participation in clinics settings.

**Regulatory Clearances**

         We have received regulatory clearances, and are marketing our products,
in Europe and Canada. The clinical resonators require FDA clearance before they
can be commercially used in the United States of America. See "Government
Regulation." We have not yet received FDA clearance for the commercialization of
our clinical resonators in the United States of America. There is no assurance
that FDA clearance will be granted for any of our products at any time in the
future.
         Double blind, randomized and placebo controlled studies are planned to
continue  to add data from greater populations of subjects for submission of de
novo 510(K) applications to FDA for clearance for specific indications in pain
management.

         Full approval and clearance for manufacturing of all model resonators
(not including the portable model) have been received from Spain under the same
CE-Mark license. Commercialization (marketing and distribution throughout the
European Union) of magnetic resonance therapy utilizing 18" expandable Jacobson
Resonators is allowable under the CE-MARK for tri-compartmental arthrosis of the
knee. Cervical arthrosis studies have been accomplished, the data of which has
been submitted to Spanish Health Ministry for CE-marking consideration.

                                       6

         Extended studies involving other indications, e.g. lower back pain and
tendinitis of the elbow, are planned.  The objective is to ultimately obtain CE
marking for full body pain no matter the cause. There is no assurance that said
clearance will be granted.

         On November 27, 2000, we received notification of licensing rights from
the Therapeutic Products Section of the Canadian Ministry of Health (Health
Canada) for commercialization and use of Jacobson Resonators in Canada and in
other countries, which have reciprocity licenses and active trade agreements.
The license issued covers the reduction of pain from arthritic conditions.

         After FDA clearance, we plan to distribute the clinical models of the
Jacobson Resonators in the U.S. primarily through existing medical device
distributors, and distribute portable models as well.  Clinical operations in
other venues not requiring the afore-mentioned clearances are planned to
generate revenues, as well as penetration into the veterinary market which does
not require said regulatory clearances.

**RISK FACTORS***An investment in our common stock involves a significant degree of
risk. You should not invest in our common stock unless you can afford to lose
your entire investment. You should consider carefully the following risk factors
and other information in this prospectus before deciding to invest in our common
stock.***We have only a limited operating history and have not operated profitably since
commencement of operations.  We will be required to raise substantial amounts of
capital.**

         Our operations have never been profitable, and it is expected that we
will continue to incur operating losses in the future. In 2002, we generated
revenues of $127,515 and incurred operating expenses of $1,426,352 and had a net
loss of $1,507,342. As of May 15, 2003, we had $5,000 of cash on hand to
fund operations. There is no assurance that we will continue to be able to be
able to fund our operations with investments by third parties or that we will
operate profitably in the future.

         We will be required to raise substantial amounts of capital to continue
development and commercialization of our existing and proposed products, and
there is no assurance that we will be able to raise this additional required
capital.

**We have been the subject of a going concern opinion from our independent
auditors, which means that we may not be able to continue operations unless we
obtain additional funding.**

         Our independent auditors have added an explanatory paragraph to their
audit opinions, issued in connection with our financial statements, which states
that our ability to continue as a going concern is uncertain due to our
continued operating losses, the excess of our liabilities over our assets and
uncertain conditions we face in our day-to-day operations. Our financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.

                                       7
**We have a significant obligation as a result of settlement of a lawsuit against
Dr. Jerry I. Jacobson, our founder.**

         We have an obligation, pursuant to the settlement of a lawsuit filed by
two plaintiffs regarding ownership of certain patents now licensed to us by Dr.
Jerry I. Jacobson and the plantiffs, to pay the plaintiffs the sum of
$1,000,000, which obligation is currently due and payable. This obligation is
owed both by Dr. Jacobson and by us, and we intend to pay this amount to the
plaintiffs when we have available funds. Up to this point, the plaintiffs have
not attempted to enforce payment of this amount through the courts; however,
there is no assurance that they will not so pursue their legal remedies and
obtain a judgment against us, which at this point would force us to file for
bankruptcy. See "Legal Proceedings"

**Our future revenues are unpredictable.**

         As a  result  of  our limited operating history and the emerging nature
of the market in which we compete, we are unable to accurately forecast our
revenues. Revenues and operating results generally depend on regulatory
approvals, the volume of, timing of and ability to fulfill orders received, and
competitive conditions, which are difficult to forecast. We may be unable to
adjust spending in a timely manner to compensate for any unexpected revenue
shortfall. Accordingly, any significant shortfall in revenues in relation to our
planned expenditures would have an immediate adverse effect on our business,
prospects, financial condition and results of operations.

**There is no assurance that we will be able successfully to develop and
commercialize our  technology.**

         Commercialization of our technology will require regulatory clearances,
substantial additional capital and a successful commercial product.  There is no
assurance that we will be able to develop a successful commercial product.  If
we are not successful in so commercializing our product or products, and your
investment in the Company will be lost.

**Our products may not be eligible for insurance reimbursement.**

         At this time, our products are not eligible for insurance
reimbursement, although reimbursement for use of our products is being
considered by insurance companies in Europe and Canada.  Overall, we expect
reimbursement to be approved in Europe and Canada, and later in the United
States following FDA clearance.  However, if insurance reimbursement is not
available, sales and usage of our products would be adversely affected.

                                       8
**Even if we and our licensees are successful in developing our proposed
technology, there is no assurance that we and our licensees will be able to
market the technology commercially.**

         We are not experienced in marketing our type of proposed technology to
the intended market and, even assuming we successfully develop the product or
products targeted for this intended market, there is no assurance that this
market will accept these product or products. In this case, you could lose your
entire investment in the Company.

**We will need to raise substantial additional capital to complete development of
our technology and to commercialize the technology. There is no assurance that
we will be able to secure the additional capital investments required to
complete product development and commercialize the technology.**

         Substantial additional capital, which we estimate to be in the range of
$5 million to $10 million will be required to complete development (including
possible redesign and enhancement of existing products, for example, water
immersion products, which product enhancements would require separate FDA
clearance) and regulatory clearances of our proposed commercial products and to
bring those products to market. There is no assurance that, even if our initial
commercial products perform as intended, we will be successful in attracting
this amount of additional capital. If we are not successful in attracting this
additional capital, an investment in us may be lost.

**If our proposed products do not achieve market acceptance, we will not be able
to generate the revenue necessary to support our business.**

         Our proposed products represent a fundamentally new way of relief of
pain and therapy for certain types of injuries, diseases or other medical
conditions. If our proposed products fail to achieve market acceptance,
potential users will not purchase our products and we will not be able to
generate the revenue necessary to support our business.

**Our proposed products are subject to a lengthy and uncertain domestic regulatory
process. If we do not obtain and maintain the necessary domestic regulatory
approvals, we will not be able to market and sell these products in the United
States.**
         Our proposed products are subject to regulation in the United States by
the FDA. See "Government Regulation". The FDA regulates the research, testing,
manufacturing, safety, labeling, storage, record keeping, promotion,
distribution and production of medical devices in the United States. Our
products have not been approved by the FDA for any therapeutic procedures. We
have withdrawn our previously filed de novo 510(k), and double blind, randomized
and placebo controlled studies are planned to continue to add data from greater
populations of subjects for submission of de novo 510(k) applications to FDA for
clearance for specific indications in pain management. However, there is no
assurance that FDA clearance will be granted for any of our products at any time
in the future. If we fail to obtain FDA approval for the use of those products
requiring such approval, our business could be harmed and we would not be able
to market and sell those products in the United States.

                                       9

**Our proposed products are also subject to various foreign regulatory processes
and approval requirements. If we do not obtain and maintain the necessary
international regulatory approvals, we will not be able to market and sell these
proposed products in foreign countries.**

         To be able to market and sell our proposed products in other countries,
we must obtain regulatory approvals and comply with the regulations of those
countries. These regulations, including the requirements for approvals, and the
time required for regulatory review vary from country to country. Obtaining and
maintaining foreign regulatory approvals are expensive, and we cannot be certain
that we will receive regulatory approvals in any foreign country in which we
plan to market our products. If we fail to obtain regulatory approval in any
foreign country in which we plan to market one or more of our proposed products,
our ability to generate revenue would be harmed.

**If we are unable to protect and maintain the intellectual property contained in
our products from use by third parties, our ability to compete in the market
would be harmed.**

         Our commercial success will depend in part on obtaining patent and
other intellectual property protection for the technologies contained in our
products, and on successfully defending our patents and other intellectual
property against third party challenges. We have in excess of 20 patents issued
in the U.S. and around the world. We have not licensed for our use any other
person's patents.

         We could be required to incur substantial costs in obtaining and
maintaining patents and, if necessary, defending our proprietary rights. The
patent positions of medical device companies, including ours, could be highly
uncertain and involve complex and evolving legal and factual questions. We
cannot assure you that we will obtain the patent protection we seek, or that the
protection we do obtain will be found valid and enforceable if challenged. We
also cannot assure you that we will be able to develop additional patentable
proprietary technologies. If we fail to obtain adequate protection of our
intellectual property, or if any protection we obtain is reduced or eliminated,
others could use our intellectual property without compensating us, resulting in
harm to our business. We may also determine that it is in our best interests to
voluntarily challenge a third party's products or patents in litigation or
administrative proceedings, including patent interferences or reexaminations. In
addition, the laws of certain foreign countries do not protect intellectual
property rights to the same extent as do the laws of the United States.

**Others may assert that our products, if developed, infringe their intellectual
property rights, which may cause us to engage in costly disputes and, if we are
not successful in defending ourselves, could also cause us to pay substantial
damages and prohibit us from selling our proposed products.**

         In addition to the issued patents of which we are aware, other parties
may have filed, and in the future are likely to file, patent applications
covering diagnostic products that are similar or identical to ours. We cannot
assure you that any patents issuing from applications filed by a third party
will not cover our products or will not have priority over our patent
applications.

                                       10

         The medical device industry has been characterized by extensive
litigation and administrative proceedings regarding patents and other
intellectual property rights, and companies have employed such actions to gain a
competitive advantage. If third parties assert infringement or other
intellectual property claims against us, our technical and management personnel
will experience a significant diversion of time and effort and we will incur
large expenses defending ourselves. If third parties in any patent action are
successful, our patent portfolio may be damaged, we may have to pay substantial
damages, including treble damages, and we may be required to stop selling our
products or obtain a license which, if available at all, may require us to pay
substantial royalties. We cannot be certain that we will have the financial
resources or the substantive arguments to defend our patents from infringement
or claims of invalidity or unenforceability, or to defend against allegations of
infringement of third-party patents. Our recently settled litigation (see "Legal
Proceedings") involved the claim by the plaintiffs that they had an aggregate
one-third ownership interest in creation patents. We settled this case for a
cash payment (still owing) of $1,000,000, by transferring 12,000,000 shares of
our common stock from Dr. Jacobson's personal holdings, at the issuance of
warrants to purchase 3,000,000 shares of common stock. All alleged rights of the
plaintiffs in these patents were assigned to us in connection with this
settlement. However, Dr. Jacobson is the sole inventor of said patents, and was
the first inventor in the world to file patents utilizing pico Tesla range
magnetic fields for the therapeutic treatment of mammals.

**The rights and measures we rely on to protect the  intellectual  property
underlying our products may not be adequate to prevent third parties from using
our technology which could harm our ability to compete in the market.**

         In addition to patents, we plan to rely on a combination of trade
secret, copyright and trademark laws, nondisclosure agreements and other
contractual provisions and technical security measures to protect our
intellectual property rights. Nevertheless, these measures may not be adequate
to safeguard the technology underlying our products. If they do not protect our
rights adequately, third parties could use our technology, and our ability to
compete in the market would be reduced. In addition, employees, consultants and
others who participate in developing our products may breach their agreements
with us regarding our intellectual property, and we may not have adequate
remedies for the breach. We also may not be able to effectively protect our
intellectual property rights in some foreign countries. We also realize that our
trade secrets may become known through other means not currently foreseen by us.
Notwithstanding our efforts to protect our intellectual property, our
competitors may independently develop similar or alternative technologies or
products that rival our technology and products without infringing any of our
intellectual property rights, or may design around our proprietary technologies.
For further information on our intellectual property and the difficulties in
protecting it, see "Business -- Intellectual Property."

                                       11
**If our licensees' proposed manufacturing facilities do not meet federal or state
manufacturing standards, we may be required to temporarily cease all or part of
our manufacturing operations, which would result in product delivery delays and
lost revenue.**

         Our or our licensees manufacturing facilities would be subject to
periodic inspection by regulatory authorities and our operations would continue
to be regulated by the FDA for compliance with Good Manufacturing Practice
requirements. We would also be required to comply with the ISO 9000 series
standards in order to produce products for sale in Europe. If we fail to comply
with Good Manufacturing Practice requirements or ISO 9000 series standards, we
would be required to cease all or part of our operations until we complied with
these regulations. We cannot be certain that our facilities would be found to
comply with Good Manufacturing Practice requirements or the ISO 9000 series
standards in future audits by regulatory authorities.

**The use of our proposed products could result in product liability claims that
could be expensive, divert management's attention and harm our business.**

         Although our technology has been recognized as safe by the FDA, there
is no assurance that product liability claims would not be filed against us. If
we decide to enter the area of diagnostics, in which we do not now participate,
the analytical device industry has historically been litigious, and we would
face financial exposure to product liability claims if the use of our products
were alleged to result in a misdiagnosis or cause injury or death and a court
agreed with those allegations. There is also the possibility that defects in the
design or manufacture of our products might necessitate a product recall.
Although we plan to maintain product liability insurance, the coverage limits of
these policies may not be adequate to cover future claims. A product liability
claim, regardless of its merit or eventual outcome, could result in significant
legal defense costs. A product liability claim or any product recalls could also
harm our reputation or result in a decline in revenues.

**If we lose our key personnel or are unable to attract and retain additional
personnel, our ability to compete would be harmed.**

         We are highly dependent on the principal members of our management and
scientific staff, in particular Dr. Jerry I. Jacobson, our Chairman of the
Board, Chief Executive Officer and Chief Science & Technology Officer, and
Harvey Grossman, our President and Chief Operating Officer. In order to pursue
our product development, marketing and commercialization plans, we will need to
hire additional qualified personnel with expertise in research and development,
clinical testing, government regulation, manufacturing, sales and marketing, and
finance. Our product development plans depend in part on our ability to attract
and retain engineers with experience in mechanics, software and optics.
Attracting and retaining qualified personnel will be critical to our success,
and competition for qualified personnel is intense. We may not be able to
attract and retain personnel on acceptable terms given the competition for such
personnel among technology and healthcare companies, and universities. The loss
of any of these persons or our inability to attract and retain qualified
personnel could harm our business and our ability to compete.

                                       12
**We do not intend to pay dividends.**

         It is unlikely that we will pay any dividends in the foreseeable future
due to our anticipated substantial cash requirements for future operations. We
anticipate using any proceeds of investments in us and any earnings received
from operations, to complete the development and to obtain the requisite
regulatory approvals for our proposed products, for the marketing, development
and expansion of our proposed business, for operating capital and for corporate
development and expansion activities.

**Our common stock is regulated as a "penny stock" by the Securities and Exchange
Commission.**

         We are subject to additional regulation by the Securities and Exchange
Commission under its rules regulating broker-dealer practices in connection with
transactions in "penny stocks." This type of regulation may reduce the level of
trading activity or your ability to sell the common stock. Penny stocks
generally are equity securities with a price of less than $5.00 that are not
registered on certain national securities exchanges or quoted on the NASDAQ
system. The penny stock rules require a broker-dealer, prior to a transaction in
a regulated penny stock, to deliver a standardized risk disclosure document that
provides information about penny stocks and the nature and level of risks in the
penny stock market. The broker-dealer must also provide information concerning
his compensation for the penny stock purchase, current prices of the penny
stock, and a special written determination that the penny stock is a suitable
investment for the purchaser.

**Our founding stockholders control us and will continue to be able to elect our
entire board of directors.**

         Our principal stockholders presently hold  45% of the voting rights for
our Common Stock (including the voting rights of the preferred stock held by Dr.
Jacobson). Our stockholders do not have the right of cumulative voting for the
election of directors. Accordingly, it is reasonable to assume that the existing
stockholders will continue to be able to elect all of our directors and control
our corporate affairs.

                                       13
**The market for our common stock is poorly developed.  Purchasers of our
securities should anticipate a thin and volatile market. Investors that purchase
our common stock may not be able to sell their securities.**

         There are many days when our common stock does not trade at all in the
over-the-counter market. The spread between the quoted bid and ask prices is
usually great. The stock has never traded above $5, the price required to remove
certain trading requirements imposed on Bulletin Board "penny stocks." Until
these trading requirements are removed, many brokerage firms will not allow
their brokers to recommend our stock for purchase by their customers. Investors
that purchase our common stock may not be able to sell their securities.

**BUSINESS**

         We are planning to use Jacobson Resonance for the reduction of chronic
and acute pain, commencing with magnetic resonance therapy for the alleviation
of pain from arthrosis of the knee in Europe, and the alleviation of pain from
full body arthritis in Canada. Based on data developed by the National Chronic
Pain Outreach Association, an estimated 34 million people in the United States
of America suffer from chronic pain and approximately 50 million work-days are
lost annually because of chronic pain.

         We are also planning to enter the veterinary market in pain management
which does not require regulatory approval; establish clinical collaborations
outside the United States for human therapeutics, excepting Europe and Canada;
and license rights to market battery-powered portable devices for pain
management in open markets throughout the world excepting the United States.

         Jacobson Resonance utilizes extremely weak physiologic (like those
found in the human heart, brain and other organs), low frequency magnetic fields
to beneficially alter biochemical systems. We are currently negotiating, and
plan to continue to use joint venture and licensing arrangements, as well as our
own resources, to develop, manufacture, distribute and market various
applications of Jacobson Resonance.

**Products**

         We have developed five different clinical models of the Jacobson
Resonator for the alleviation of chronic and acute pain. These models include a
portable battery-powered model, an18-inch (expandable), 22-inch (expandable),
4-foot and 7-foot resonators; portable models are user friendly and function via
battery driven field production. These models are now, with the exception of the
portable model, being sold or leased in Canada and Spain for the following
therapeutic uses: magnetotherapy for a osteomuscular pain (and soft tissue pain,
including connective tissue such as ligaments and tendons). Upon clearance from
the U.S. Food and Drug Administration ("FDA") these resonators would be marketed
in the U.S. primarily through distributors by sales, leasing and participation
in clinics settings.

         A more detailed description of our products is as follow:

        o    The 18-inch and seven-foot resonators have been the standard-
             bearers for much of the in-vitro, in-vivo, animal and human
             clinical studies in the USA and abroad during the past five years.
             The 18" model has been used for the alleviation of pain from
             arthritis in Canada and for the alleviation of pain secondary to
             arthrosis of the knee in Europe.

                                       14

        o    The 22-inch expandable resonator  has been prototyped in
             Mississippi and is being manufactured in Spain.  This flexible
             delivery system is not only used for human limbs but can expand and
             be used for the shoulders, neck, hips, and other locations in
             humans and animals.

        o    The 4-foot model is being used in Canada, Spain and Mexico.  This
             system can be adjusted horizontally and parallel to the human body
             and focus the electromagnetic field on any specific area desired.

        o    The 7-foot resonator is also being used in coordination with other
             models to produce quicker and more thorough relief from pain.
             Because this resonator provides full body exposure, we plan to use
             this model for research on systemic disorders.

         Our largest clinical model is comprised of a pair of Helmholtz coils
that are seven feet in diameter and placed on a common axis three and a half
feet apart (to encompass a full human frame). Helmholtz coils are flat,
parallel, circular metal electrically conductive coils equal in diameter and
separated by a distance equal to the radius of each coil, connected in series to
create a magnetic force field of uniform strength in between the coils. The next
largest clinical model is comprised of a pair of Helmholtz coils that are four
feet in diameter (to treat patients who are lying down.). A third clinical model
is comprised of a pair of Helmholtz coils that are 22 inches in diameter and
placed on a common axis eleven inches apart, which can be expanded to 16 inches
or 20 inches. The fourth clinical model is comprised of a pair of Helmholtz
coils that are 18 inches in diameter and placed on a common axis nine inches
apart. The latter two models can encompass a human head, joint or portion of a
limb. Two prototypes , a variable spaced solenoid and a 10-foot resonator, are
being used in veterinary research in horses at Mississippi State University; two
other prototypes have beeen used in cardiovascular research in dogs at the
University of Oklahoma.

         The Company has entered into a license agreement with P.E.R., Inc.,
pursuant to which P.E.R. has been licensed to manufacture and sell
battery-powered, portable resonators worldwide, excepting in the United States.
We have received an initial payment of $25,000 on account of the $100,000
initial license fee pursuant to this agreement, and are entitled to a royalty
fee of $30 per unit sold, plus 10% of the gross profit of P.E.R., for all
portable units sold for under $500. For all portable units selling at $500 and
above, we receive a royalty of 15% of P.E.R.'s gross profit on those units,
payable on a quarterly basis; and for all add-on and replacement parts sold, we
receive a royalty of 15% of P.E.R.'s gross profit for those parts.

         All of these models are being used to alleviate pain. Upon FDA
clearance these resonators will be marketed in the U.S., consistent with the FDA
clearance, to treat chronic and acute pain sufferers.  See discussion under
"United States of America" immediately below.

                                       15
**Approval Status in Healthcare & Medical Therapeutics

Europe**

         On January 10, 2001, we received the CE-Mark by the Health Authorities
of the European Union in conjunction with the Spanish Health Ministry for
medical use, distribution, manufacturing, and sale of the 18-inch Jacobson
Resonators for the treatment tri-compartmental arthrosis pain of the knee
throughout the nation members of the European Union. This approval covers
tri-compartmental arthrosis of the knees. In addition, full approval and
clearance for manufacturing of two models of resonators have been received by
the Spanish Ministry of Health under the same CE-Mark license. Hospitals in
Spain are now treating and alleviating pain from hundreds of Spanish patients.
Clinical Studies have been recently completed in Spain for the treatment of
cervical-arthrosis with CE-Mark approval expected in 2003.

**Canada**

         On November 27, 2000, we received notification of licensing rights for
the reduction of pain from arthritic conditions from the Therapeutic Products
Section of the Canadian Ministry of Health (Health Canada) for commercialization
and use of Jacobson Resonators in Canada.

**United States of America**

         The clinical resonators require U.S. Food and Drug Administration (FDA)
clearance before they can be commercially used in the United States of America.
See "Government Regulation."  We have not yet received FDA clearance for the
commercialization of our clinical resonators in the United States of America.

         The results of the clinical studies previously submitted to the FDA
demonstrate (in accordance with the Spanish Health Ministry's clearance) that
the 18-inch Jacobson Resonator is safe and effective in the palliation of pain
secondary to tri-compartmental arthrosis of the knee, but more clinical data is
required by the FDA before clearance can be granted and commercialization
initiated in the United States.

         In connection with our prior application, FDA has determined that the
microgauss to nanogauss fields generated by the Jacobson Resonator are of
non-significant risk for osteoarthritis of the knee joint, which determination
permits us to conduct studies on human subjects while gathering data on safety
and effectiveness. (Microgauss down to nanogaus fields are extremely weak
magnetic fields; these fields are million times weaker than the earth's magnetic
field) We have entered into a consulting agreement to help guide the Company in
FDA regulatory compliance and reimbursement issues with Regulatory Insights,
Inc. This agreement covers clinical trial services, research and other services
including submission of premarket notification 510(k).

                                       16
**Insurance Reimbursement**

         Reimbursement for use of our products is being considered by insurance
companies in Europe and Canada. Overall, we expect reimbursement to be approved
in Europe and Canada, and later in the United States following FDA clearance.

**Technology Vision**

         We employ microgauss to nanogauss physiologic magnetic fields (fields
existing normally in the body) to renormalize structure and function of diseased
and and/or injured tissues.

         Our technology vision is to continue to design and develop various
magnetic resonance products for delivery of non-invasive, painless, efficacious
and safe treatments of diseased and/or injured tissues.

**Commercialization Initiatives In The Pain Treatment Market**

         Quantum Resonance Technologies, Inc. ("QRTI") in Mississippi builds the
prototypes of our resonators.  Benvenutti Electrical Apparatus & Repair, Inc.,
an electrical apparatus manufacturer in Gulfport, Mississippi, collaborates with
QRTI and manufactures our clinical resonators .  QRTI is supplying the delivery
systems for Canada.

         BioRes Medical, S.L., a Serrato Enterprises LLC company has contracted
for the manufacture of Jacobson Resonators in Europe. To date, the Company has
entered into the following agreements with Serrato Enterprises.

         Alfonso Serrato has led our European initiative. Mr. Serrato is a
director and a former executive officer of Medtronic, Inc., a New York Stock
Exchange company that is a leading manufacturer and distributor of medical
devices around the world. Mr. Serrato worked for Medtronic, Inc., in various
capacities, including Vice President of Worldwide Manufacturing and Vice
President of Pacing Operations, for nearly 18 years until 1996. In February
1999, we executed a ten-year license agreement with Serrato Enterprises for the
marketing and distribution of our chronic pain reduction products in continental
Europe, Latin America, Japan, Australia, New Zealand and the Middle East,
excluding Israel.

         In January 2000, we further executed a ten-year manufacturing agreement
with Serrato Enterprises-BioRes Medical, S.L., under which we will receive
manufacturing royalties based on type and production volume of resonators
manufactured by Serrato Enterprises. Through Serrato Enterprises, we sell or
lease Jacobson Resonators to these facilities and receive 16% of distribution
fees, payable quarterly, in addition to $1500 per unit manufacturing royalties
for the 4" and 7" models and $1200 for the 18" and 22" models and $2.00 for each
treatment session computer card sold. We began receiving revenues from European
initiatives in the last quarter of 2001.

                                       17

         The commercialization initiative in Canada is being spearheaded by Bio
Resonance Technology, Inc.  Currently  one treatment center, one in Winnipeg is
helping to decrease  pain for arthritic  patients.  Bio Resonance Technology
plans to open additional pain-treatment centers in major metropolitan areas in
Canada. We began to receive revenues from this initiative in August 2001.

         We have a 16% royalty for Jacobson Resonators sold in Canada, a flat
annual fee of $6000 for each 18" Resonator placed for usage or leased, of $6300
for each 22" Resonator so placed or leased and of $7000 for each 7" Resonator so
placed or leased, and per unit manufacturing royalties of $1500 on the 4" and 7"
Resonators and of $1200 for the 18" and 22" Resonators.

**Potential Non-Medical Applications Of Jacobson Resonance**

         In January 2000, we executed a licensing agreement with RealPure
Beverage Group, LLC, of Jackson, Mississippi, for the use of Jacobson Resonance
in multiple water and beverage products lines, including marketing and
distribution. In the year ended December 31, 2002, we had received $4,738 in
royalties from RealPure under this license agreement. Effective April 26, 2003,
we terminated the agreement with RealPure, due to their non-performance of their
royalty payment obligations, and we intend to seek other partners to assist us
in exploiting the resonated beverage market.

**Government Regulation****United States of America**

         In the United States of America, our five clinical Jacobson Resonators
for reduction of chronic pain and future clinical products, if any, are
extensively regulated as medical devices by the FDA. The FDA regulates the
clinical testing, manufacturing, labeling, distributing, and promoting of
medical devices. Prior to commercial sale in the United States, each of our
clinical products must undergo an extensive regulatory approval process
conducted by the FDA under the Food, Drug and Cosmetic Act (the "FDC Act").
Noncompliance with applicable requirements can result in failure to receive
regulatory clearance or approval of devices, total or partial suspension of
production, fines, injunctions, civil penalties, recall or seizure of products,
and criminal prosecution.

         Under the FDC Act, all medical devices are classified into three
classes: Class I, II or III. Classification identifies the level of regulatory
control that is necessary to assure the safety and effectiveness of a medical
device, as well as the marketing process (either pre-market notification under
510(k) or pre-market approval ("PMA")) the manufacturer must complete, unless
exempt, in order to obtain FDA clearance for marketing. In connection with the
clearance of a medical device, the FDA is required to make a finding as to
efficacy of the device.

                                       18

         Class I devices are subject to the least regulatory control because
they present minimal potential for harm to the user and are often simpler in
design than Class II or Class III devices. They are subject only to "general
controls," which require adherence to the requirements of (a) registration, (b)
medical device listing, (c) Good Manufacturing Practices, (d) labeling and (e)
pre-market notification. Class II devices are those for which general controls
alone are insufficient to assure safety and effectiveness, but for which
existing methods are available to provide such assurances, such as special
labeling requirements, mandatory performance standards and post-market
surveillance. Class III devices are subject to the most stringent regulatory
controls because insufficient information exists to assure safety and
effectiveness solely through general or special controls. They must satisfy the
PMA requirements.

         After consultation with the FDA and subject to demonstration of
effectiveness through human clinical trials, we believe that our clinical
Jacobson Resonators will be classified as Class II devices. As Class II devices,
the clinical Jacobson Resonators will not be subject to PMA as required of Class
III devices, but will be subject to general controls and special controls,
including pre-market notification under 510(k). A 510(k) is a pre-marketing
submission made to the FDA to demonstrate that the device to be marketed is as
safe and effective as, or "substantially equivalent" to, a legally marketed
device that is not subject to PMA. Applicants must compare their 510(k) device
to one or more similar devices currently on the U.S. market and make and support
their substantial equivalency claims. The legally marketed device(s) to which
equivalence is drawn is known as the "predicate" device(s). A device is deemed
substantially equivalent to a predicate device if (a) it has the same intended
use as the predicate device, and (b) either has the same technological
characteristics as the predicate device, or has different technological
characteristics that do not raise new questions of safety and effectiveness, and
(c) the sponsor demonstrates that the device is as safe and effective as the
legally marketed device.  A new category called the de novo 510(k) allows
somewhat more flexibility in the 510(k) category. We believe Jacobson Resonators
fit this category as they are novel, but also meet the criteria for the general
510(K) category in pain management.

         Investigational Device Exemptions ("IDE") allow manufacturers to ship
and use unapproved medical devices intended solely for investigational use
involving human subjects. The IDE regulation applies to most clinical studies in
the U.S. that are undertaken to gather safety and effectiveness data about a
medical device. There are two categories of devices covered by the IDE
regulation: (1) Significant Risk devices and (2) Non-Significant Risk ("NSR")
devices. Significant Risk devices require both FDA and Institutional Review
Board ("IRB") approval prior to initiation of a clinical study. NSR devices
require only IRB approval prior to initiation of a clinical study. Clinical
studies are often conducted to support pre-market notification or PMA. Thus, an
investigational device is one that has not been given 510(k) clearance or PMA
for marketing in the U.S. but is exempted from these requirements in order to
collect safety and effectiveness data. Investigational use also includes
clinical evaluation of certain modifications or new intended uses of legally
marketed devices. The FDA requires that all clinical evaluations of
investigational devices, unless exempt, have an approved IDE before the study is
initiated.

                                       19

         We have not yet received FDA clearance for the commercialization of our
clinical resonators in the United States. In 1997, we filed our submission with
the FDA seeking a determination that the 18-inch clinical Jacobson Resonator
qualified as an NSR device for the treatment of osteoarthritis pain of the knee.
On March 4, 1999, the FDA determined that our clinical study of the 18-inch
clinical Jacobson Resonator to demonstrate effectiveness was an NSR device study
because the resonator did not meet the definition of a Significant Risk device
under the applicable provision of the IDE. This determination in effect means
that the resonator meets the FDA requirements as to safety. In August, 2002, we
withdrew our 510(k) de novo application.

         Double blind, randomized and placebo controlled studies are planned to
continue to add data from greater populations of subjects for submission of de
novo (510)K applications to FDA for clearance for specific indications in pain
management. There is no assurance that FDA clearance will be granted at any time
in the future. More studies are required by the FDA to further substantiate
safety and effectiveness for clearance.

         We will be required to obtain FDA approval of a new pre-market
application or pre- market application supplement before making any change to
the Jacobson Resonators affecting the safety or effectiveness of the device
including, but not limited to, new indications for use of the device, changes in
the device's performance or design specifications and device modifications and
future generation products. New pre-market applications and pre-market
application supplements generally require submission of information needed to
support the proposed change and often require additional clinical data. We may
decide, or may have to, obtain PMA's and PMA supplements for its future products
or other uses. A PMA application must be supported by extensive data, including
pre-clinical and clinical trial data, to demonstrate the safety and
effectiveness of the device for the uses specified in the PMA application. We
cannot guarantee that any PMA application relating to the Jacobson Resonator
that is filed will be granted. If we obtain a PMA, it may be required to file
PMA supplements for new or expanded uses of the Jacobson Resonator and for any
material modifications to it. If a PMA supplement is not accepted by the FDA for
a new or expanded use or material modification of the Jacobson Resonator, we
must commence and complete the entire pre-market approval process with respect
to such use or modification. We cannot guarantee that any PMA supplement that we
file will be accepted.

         Any products manufactured or distributed by us pursuant to FDA
clearance or approval are subject to pervasive and continuous regulation by the
FDA, including record-keeping requirements, reports of adverse experience with
the use of the device, post-market surveillance, post- market registry, and
other actions as deemed necessary by the FDA. The FDA actively enforces
regulations prohibiting marketing of products for non-indicated uses. We and our
agents may promote products only for the products' approved indications. The
labeling and advertising of most FDA-regulated products, including the Jacobson
Resonators, are also subject to the jurisdiction of the Federal Trade
Commission, the Occupational Safety and Health Administration and other
governmental entities. We cannot guarantee that the FDA will not impose
regulations that could adversely affect our ability to market, sell, or be
reimbursed for the Jacobson Resonator. In addition, we cannot guarantee that we
will not become subject to FDA actions should physicians prescribe the Jacobson
Resonator for unapproved uses.

                                       20

         As a medical device manufacturer registered with the FDA whose products
are listed with the FDA, our products and facilities will be subject to
inspection on a routine basis by the FDA with regard to product designs,
manufacturing, testing, control, process validation and similar activities.
Future inspections could result in adverse findings and harm our ability to
manufacture and market our Jacobson Resonators, which in turn would
significantly adversely affect our business.

         The process of obtaining FDA and other required regulatory approvals is
lengthy, expensive and uncertain. Regulatory approvals may include regulatory
restrictions on the indicated uses for which a product may be marketed. We
cannot guarantee that the FDA will approve its current or future products in a
timely manner, if at all. If we experience delays or failure in obtaining such
approvals, or if previously granted approvals are rescinded, or if we fail to
comply with existing or future regulatory requirements, then our business,
financial condition, results of operations and cash flows will be materially and
adversely affected. Furthermore, even if such approvals are granted, we cannot
guarantee that we will be successful in commercializing or achieving market
acceptance of the Jacobson Resonators for the treatment of chronic pain or any
other applications. Our inability to commercialize successfully the Jacobson
Resonators will severely harm our business.

         We are also subject to numerous federal, state, and local laws relating
to such matters as safe working conditions, manufacturing practices,
environmental protection, fire- hazard control, and disposal of hazardous or
potentially hazardous substances. We cannot guarantee that we will not be
required to incur significant costs to comply with such laws and regulations in
the future, or that such laws or regulations will not have a material adverse
effect upon our business, financial conditions, results of operations, or cash
flows.

**Europe**

         In order to market and sell the Jacobson Resonator or any future
products in foreign markets, we must comply with foreign government regulations.
These laws differ substantially from country to country. In order to market and
sell the Jacobson Resonators in the European Union, the resonators must bear CE
Marking, which has been done effective January 10, 2001. The actual CE Marking
consists of the letters "CE" which a manufacturer affixes to its products for
access to the European market; the letters "CE" are an abbreviation of the
French phrase "Conformite Europeene." CE Marking on a medical device indicates
that a manufacturer has complied with all of the requirements of the Medical
Device Directive, which requires technical homologation of the device (proper
functioning of all components), safety and efficacy. Our CE Marking license is
2001-01-0303 CP.

                                       21

         The Essential Requirement requires every non-European medical device
manufacturer exporting to Europe to appoint an Authorized European Address, or
agent, to ensure that the responsibility for compliance with Medical Device
Reporting is delegated to a party who resides in Europe and is subject to
European law. The authorized European agent serves as an interface between a
manufacturer and governmental authorities and must verify whether the
manufacturer is in compliance with the European vigilance system, which covers
both post-market surveillance and adverse-incident reporting. The selection of
an authorized European agent by a manufacturer is significant because the agent
is required to have access to all confidential product documentation and master
files of the manufacturer. We have selected a Serrato Enterprises-BioResMedical,
S.L. company, controlled by Alfonso Serrato, a director of the Company, to
function as our authorized representative, manufacturer and licensee.

         The Medical Device Directive classifies all medical devices into one of
three classes, based upon a risk analysis which considers the design, method of
manufacturing and intended use of a medical device. Class I is comprised of the
least dangerous devices, and is subject to less restrictions than Class III,
which is comprised of the most dangerous devices. Between Classes I and III are
Class IIa and Class IIb. The Class of a medical device determines "Conformity
Assessment Procedure," or the procedure by which conformity with Essential
Requirements will be assessed. A procedural option for minimal risk devices
includes self-certification, where the manufacturer itself prepares a
"Declaration of Conformity" to the Essential Requirements and self-affixes the
CE Marking to the device. Higher risk devices, on the other hand, require that
the assessment be performed and certified for "quality assurance" in
collaboration with a recognized European "notified body." The clinical Jacobson
Resonators are considered Class IIb, which is a moderate risk classification. As
such, limited third-party assessment is required.

         Members of the European Union must accept CE Marking for marketing
medical devices without imposing further requirements related to product safety
and performance. However, National Competent Authorities, which are required to
enforce compliance with the requirements of the Medical Device Directive, can
restrict, prohibit, and recall devices with CE Marking if considered unsafe.
Such a decision must be confirmed by the European Commission to be valid. Member
countries may impose additional requirements as long as they do not violate the
Medical Device Directive or constitute technical barriers to trade.

         We cannot say with certainty that the European Union or any foreign
regulatory authority will grant CE Marking privileges to our future products in
a timely manner, if at all. If we experience delays or failure in obtaining such
approvals, or if previously granted approvals are rescinded, or if we fail to
comply with existing or future regulatory requirements, then our business,
financial condition, results of operations and cash flows will be materially and
adversely affected.

                                       22
**Research and Development**

         We have conducted numerous university studies of the effects of
Jacobson Resonance upon biological systems, both in vitro and in vivo, at The
Weill Medical College of Cornell University, Fairleigh Dickinson University, the
University of Oklahoma Health Sciences Center, Mississippi State University,
Texas A&M University, University of Memphis, University of Alcala and the
University of Delhi.

         During the years ended December 31, 2002 and 2001, we spent $50,595
and $256,449, respectively, on research and development activities.

**Intellectual Property**

         We are the exclusive licensee of Jacobson Resonance from Dr. Jacobson,
who is the sole inventor of all patents issued or pending. Dr. Jacobson is also
the majority owner of all relevant Jacobson Resonance intellectual property. We
have the exclusive rights to pursue whatever applications of Jacobson Resonance
that we want. In return, we are obligated to pay Dr. Jacobson, pursuant to his
employment agreement, a royalty on revenues, depending upon the application.

         We have 20 issued or approved, and additional patents pending in the
United States and worldwide. Dr. Jacobson had licensed these patents exclusively
to us. Dr. Jacobson's license agreements provide for a royalty equal to 3% of
gross revenues from our products utilizing Jacobson Resonance. In settlement of
the litigation referred to under "Legal Proceedings", the plaintiffs in that
case negotiated as a part of the settlement a royalty of one-third of Dr.
Jacobson's royalties on the patents licensed by Dr. Jacobson to us involving
Jacobson Resonance.

         Legal standards relating to the validity of patents covering medical
devices and biotechnological inventions and the scope of claims made under such
patents are still developing. For this reason, we cannot guarantee any of the
following:

         1.   that patent applications will result in the issuance of patents in
              foreign countries;

         2.   that any patents licensed to us will be free from challenge and
              that if challenged, they would be held to be valid; or

         3.   that any such patents will provide commercially significant
              protection to our technology, products, and processes.

                                       23

         We have not received any notices alleging, and are not aware of, any
infringement by us of any other entity's patents. However, because of the volume
of patents issued and patent applications filed relating to medical devices, we
cannot guarantee that current and potential competitors and other third parties
have not filed or will not file patent applications, or have not received or
will not receive patents, relating to materials or processes we use or propose
to use. Accordingly, we cannot guarantee that our products do not infringe any
patents or proprietary rights of third parties. Yet, it is clear that Dr.
Jacobson was the first inventor to file patents covering usage of pico Tesla
(microgauss to picogauss) range magnetic fields for medical therapeutics. The
filings date back to 1982.

         If another party claims subject matter identical to or overlapping with
subject matter Dr. Jacobson has claimed in a United States patent or patent
application, we may decide or be required to participate in interference
proceedings in the United States Patent and Trademark Office to determine
priority of invention. Loss of such an interference proceeding would deprive us
of patent protection sought or previously obtained by Dr. Jacobson.
Participating in such proceedings could result in substantial costs, regardless
of whether the eventual outcome is favorable.

         In addition to patent protection, we rely on trade secrets, proprietary
know-how, and confidentiality and assignment of invention agreements with our
consultants and medical advisors to protect our intellectual property. We cannot
say with certainty that any intellectual property that we have will provide us
with a competitive advantage or will not be challenged or circumvented by our
competitors. We cannot say with certainty that our confidentiality and
assignment of invention agreements will not be breached or that we would have
adequate remedies for any such breach. Finally, we cannot say with certainty
that our proprietary know-how and intellectual property will not become known or
be independently discovered by others.

         Litigation may be necessary to defend against claims of infringement,
to enforce patents and copyrights issued or licensed to us, or to protect trade
secrets. If we must litigate such issues, we may be forced to incur substantial
costs and to devote substantial resources and time. We furthermore cannot
guarantee that we would prevail in such litigation, should it arise. In
addition, if any relevant claims of third-party patents are upheld as valid and
enforceable, we could be prevented from selling our products or otherwise be
required to obtain licenses from the owners of such patents. We cannot guarantee
that such licenses would be available, or, even if available, would be on
acceptable terms to us. If we are forced to incur substantial costs in
litigation or fail to obtain a license, our business, financial condition,
results of operations, and cash flows may be materially and adversely affected.

**Competition**

         The development of electromedical and electrotherapeutic medical
devices that can emit a weak electromagnetic field in resonance with the human
body's electromagnetic field is in its infancy. To our knowledge, there are only
two groups of scientists in the world that are dealing with the pico Tesla
magnetic fields.

                                       24

         One group is at Democrition University of Thrace, Alexandroupolis,
Greece. They are primarily engaged in research, but some treatment is being
performed for epilepsy and Parkinson's Disease. The supervising professor is Dr.
Photios Anninos, the Director of Medical Physics for Democrition University, who
is also a member of our Scientific Advisory Board.

         The only other known party working on force-fields this weak is Dr.
Reuven Sandyk, a medical physician in Long Island, New York. Dr. Sandyk is a
neurologist and he has been treating patients with Parkinson's, Alzheimer's and
Multiple Sclerosis. To our knowledge, Dr. Sandyk has not secured an FDA
registration number for his resonator device and does not appear to be inclined
to go into commercial production with this apparatus. To our knowledge, his
resonator is merely an extension of his neurological practice.

         Both Dr. Sandyk and Dr. Anninos engage in exploratory research as an
extension of their respective practice or research. Dr. Anninos' focus is
primarily epilepsy. Both Dr. Sandyk and Dr. Anninos employ devices with multiple
small coils producing heterogeneous fields which, in our opinion, is not the
correct approach.

         Dr. Richard Markoll has established around the world about 150 clinics
focusing primarily on the treatment of osteoarthritis using magnetic force-
fields that are approximately one million to ten million times more powerful
than the force-fields emitted by the Jacobson Resonator. Dr. Markoll seems to be
content with limiting himself to this area. These clinics have been in operation
for many years.

         Finally, the Japanese company Nikken produces permanent magnets. These
are very strong magnets which emit force-fields that are millions and even
billions of times stronger than the force-fields emitted by the Jacobson
Resonator. These magnets claim to improve circulation or to treat pain. To our
knowledge, these claims have not been medically substantiated and the FDA has
never passed on the validity of these treatments. We do not regard these
permanent magnets as truly competitive products.

         In sum, the Jacobson Resonator faces potential competition from the
above sources, as well a number of other companies marketing electromagnetic
devices.  There is no assurance, of course, that we will not be subject to
competition from additional companies, including large medical device
manufacturers with substantially greater resources than us.

**Employees**

         We have  three full-time employees, two of whom are executive officers.
They are Dr. Jerry I. Jacobson  and Mr. Harvey Grossman. The Company also has
marketing and financial consultants. There are no collective bargaining
agreements and no employment contracts in force.

                                       25
**ITEM 2.  DESCRIPTION OF PROPERTY**

         We are currently leasing office space in Boynton Beach, Florida, on an
annual basis, under a lease expiring in March, 2005. The Boynton Beach office
has 4,300 square feet of space and a current annual rent of approximately
$73,000. The Boynton Beach office is our headquarters and research facility.

**ITEM 3.  LEGAL PROCEEDINGS**

         On March 9, 2001, the intellectual property six year dispute and
litigation between Dr. Jerry Jacobson, our Chairman of the Board and our largest
stockholder, and Messieurs Eric Hewko and Patrick Casey has concluded. The basis
for Messrs. Hewko and Casey's claim was an oral agreement in 1988, followed by a
written agreement in 1990, with Dr. Jacobson, pursuant to which the plaintiffs
paid for certain attorneys' fees for three U.S. and nine foreign patents, in
exchange for a 1/3 ownership in the intellectual property. Messrs. Hewko and
Casey had other obligations under these agreements that they did not perform.
Dr. Jacobson had no other relationships with Messrs. Hewko and Casey. An outside
settlement was reached on March 2, 2001. Dr. Jacobson had filed for personal
bankruptcy and on December 6, 2000, this case was dismissed. Under the terms of
the settlement agreement, Dr. Jacobson continued to retain controlling and
majority interest in the Company, and exclusive licensing rights on any pending,
issued or in progress patents are to go to us. However, under the terms of the
settlement, Messrs. Hewko and Casey are entitled to a 1/3 ownership interest in
any of Dr. Jacobson's patents involving Jacobson Resonance and the 1%
participation in royalties on those patents paid by us to Dr. Jacobson. In
addition, Dr. Jacobson was required to give an aggregate of 12 million shares
and agree to a payment of one million dollars to Messrs. Hewko and Casey; we
also issued to Messrs. Hewko and Casey in connection with this settlement
warrants expiring April 6, 2008 to purchase 3,000,000 shares of our common stock
at a price of $.30 per share. (The million dollars is both our responsibility
and responsibility of Dr. Jacobson. We also assumed responsibility for this
payment since, in this settlement, we obtained the exclusive license to all
intellectual property relating to Jacobson Resonance, whereas prior to the
settlement we did not have these rights.) Messrs. Hewko and Casey also assigned
any and all intellectual property rights of a patent (Therapeutic Treatment of
Mammals) in perpetuity to us for an aggregate of three million warrants issued
as payment consideration (value) of their one third ownership interest. Dr.
Jacobson received six million warrants under the same terms for his two-thirds
ownership interest. The warrants are exercisable at a price of $0.30 until April
6, 2008 at which time the warrants will expire if not exercised. The warrants
are subject to certain anti-dilution provisions which shall cause the warrants
to be adjusted. Such dilution events include merger, consolidation,
recapitalization, reorganization, reclassification, stock split or stock
dividend. As of the date hereof, none of these events have occurred so as to
cause an adjustment to the warrants issued pursuant to the Stock Warrant
Agreement. Additionally, we further received from Dr. Jacobson and Messrs. Hewko
and Casey an exclusive license in perpetuity any and all additional indications
and methodologies relating to the Jacobson Resonance patents worldwide,
including U.S. Patent 5,198,181 from Dr. Jacobson which relates to the use of
resonance technology to control Thermo Nuclear Fusion power has also been
granted to us. Dr. Jacobson's license agreements with us provide for a royalty
equal to 3% (net of the 1% royalty payable as described below) of gross revenues
from sales of our products utilizing Jacobson Resonance. In settlement of this
litigation, Messrs. Hewko and Casey negotiated as a part of the settlement a 1%
royalty of gross sales on all patents licensed by Dr. Jacobson to us involving
Jacobson Resonance.

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

         During the fourth quarter of the fiscal year covered by this report, no
matters were submitted to a vote of security holders through the solicitation of
proxies or otherwise.

                                       26
**PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS**

         Our Common Stock is traded on the OTC Bulletin Board(R) under the
Symbol "JRSEOB." The following table sets forth the range of the high and low
sales prices for the Common Stock on the OTC Bulletin Board(R) for each calendar
quarter of 2001 and 2000. The source of the following information is America
Online (AOL) quotation services. These prices reflect inter-dealer prices,
without retail markup, mark-down or commission and may not represent actual
transactions.

                  QUARTER ENDING            HIGH           LOW
                  -----------------       --------       -------
                  June 30, 2003           $   0.06       $  0.03
                  (through April 30)
                  March 31, 2003          $   0.07       $  0.01

                  December 31, 2002       $   0.05       $  0.02
                  September 30, 2002      $   0.07       $  0.04
                  June 30, 2002           $   0.26       $  0.05
                  March 31, 2002          $   0.31       $  0.18

                  December 31, 2001       $   0.62       $  0.16
                  September 30, 2001      $   0.97       $  0.37
                  June 30, 2001           $   2.06       $  0.59
                  March 31, 2001          $   3.62       $  1.37

         As of April 30, 2003, we had 811 shareholders of record.

         The Company has not declared or paid any dividends on its Common Stock.
The Company currently intends to retain future earnings to fund the development
and growth of its business, and therefore does not anticipate paying any cash
dividends in the foreseeable future. Any future determination to declare and pay
dividends will be made by the Board of Directors of the Company in light of the
Company's earnings, financial position, capital requirements, credit agreements
and such other factors as the Board of Directors deems relevant.

**Recent Sales of Unregistered Securities**

         The following provides information of all sales of outstanding stock
which were not registered  under the Securities Act of 1933 (the "Act").

-------------- ------------------------------ ------------- -------------- ------------------
Date           Title and Amount               Purchasers    Principal      Total Offering
                                                            Underwriter    Price/Underwriting
                                                                           Discounts
-------------- ------------------------------ ------------- -------------- ------------------
January, 1999  291,305 shares of common stock Private       NA             $        60,000/NA
               issued upon conversion of      Investors
               principal amount and accrued
               interest of $60,000
               convertible note due November
               30, 1999
-------------- ------------------------------ ------------- -------------- ------------------

                                       27

-------------- ------------------------------ ------------- -------------- ------------------
July through   $1,000,000 convertible         Private       NA             $     1,000,000/NA
November, 1999 subordinated debentures due    Investors
               June, 2004, were issued and
               converted into an aggregate of
               1,562,876 shares of common
               stock, together with 900,000
               shares of common stock issued
               upon the exercise of warrants
               at a price of $.001 per share
-------------- ------------------------------ ------------- -------------- ------------------
December, 1999 500,000 shares of common stock Private       NA             $       100,000/NA
                                              Investors
-------------- ------------------------------ ------------- -------------- ------------------
December, 1999 1,313,903 shares of common     Consultants   NA             Consulting services
               stock                                                       valued at $.35 to
                                                                           $.45 per share
-------------- ------------------------------ ------------- -------------- ------------------
April , 2000   Units consisting of            Private       NA             $1,017,618/NA
               1,670,867shares of common      Investors
               stock and options expiring
               December 31, 2004, to purchase
               1,242,117 shares of common
               stock, 307,693  $.85 per
               share, and 933,424 at $.90 per
               share
-------------- ------------------------------ ------------- -------------- ------------------
February, 2000 335,342 shares of common stock Consultants   NA             Consulting services
                                                                           valued at $118,000
-------------- ------------------------------ ------------- -------------- ------------------
February, 2000 40,000 shares of common stock  Private       NA             $16,000/NA
                                              Investor
-------------- ------------------------------ ------------- -------------- ------------------
May, 2000      100,000 shares of common stock Private       NA             $34,775
                                              Investor
-------------- ------------------------------ ------------- -------------- ------------------
August, 2000   199,032 Units, each Unit       Private       NA             $89,564
               comprising one share of common Investors
               stock, and one Class A Warrant
               to purchase one share of
               common stock at an exercise
               price of $.63 per share,
               expiring December 31, 2004
-------------- ------------------------------ ------------- -------------- ------------------
September,     165,232 shares of common stock Private       NA             $69,397/NA
2000                                          Investors
-------------- ------------------------------ ------------- -------------- ------------------
October, 2000  150,000 shares of common stock Private       NA             $20,000/NA
                                              Investor
-------------- ------------------------------ ------------- -------------- ------------------
January, 2001  210,112 shares of common stock Consulting    NA             $71,148/NA
                                              Firm
-------------- ------------------------------ ------------- -------------- ------------------

                                       28

-------------- ------------------------------ ------------- -------------- ------------------
March, 2001    598,032 shares of common stock Private       NA             $167,048/NA
                                              Investors
-------------- ------------------------------ ------------- -------------- ------------------
October, 2001  1,075,759 shares of common     Private       NA             $125,000/NA
               stock                          Investors
-------------- ------------------------------ ------------- -------------- ------------------
October, 2001  560,000 shares of common stock Consulting    NA             Consulting Services
                                              Firms                        valued at $120,243
-------------- ------------------------------ ------------- -------------- ------------------
October/       260,000 shares of common stock Note Holders  NA             Interest on Notes
November, 2001                                                             payable valued at
                                                                           $59,000; purchase of
                                                                           stock $2,600
-------------- ------------------------------ ------------- -------------- ------------------
November 2001  650,000 shares of common stock               NA             Fair value of
                                                                           research and
                                                                           development expenses
                                                                           - $149,500
-------------- ------------------------------ ------------- -------------- ------------------
December, 2001 $75,000 principal amount  6%   Private       NA             $ 75,000/ $13,000
               Convertible Debenture,         Investor                     paid as finder's and
               convertible into shares of                                  legal fees
               common stock, with warrants
               expiring December 31, 2004, to
               purchase 75,000 shares of
               common stock
-------------- ------------------------------ ------------- -------------- ------------------

-------------- ------------------------------ ------------- -------------- ------------------
2/01/02        128,948 shares of Common Stock Financial     NA             NA
                                              Consulting
                                              Firm/ exercise
                                              of options
                                              pursuant to
                                              cashless
                                              exercise
                                              provisions
-------------- ------------------------------ ------------- -------------- ------------------
2/4/02         $100,000 principal amount 6%   Private       NA             $100,000/
               convertible debenture,         Investor                     $10,000 and 78,000
               convertible into shares of                                  shares of common
               Common Stock, with warrants                                 stock paid as
               expiring February 2004 to                                   Finder's Fee
               purchase 100,000 shares of
               common stock
-------------- ------------------------------ ------------- -------------- ------------------

-------------- ------------------------------ ------------- -------------- ------------------
2/15/02 to     336,500 shares of Common Stock Tecinvest               NA         Shares valued at
5/15/02                                       Services,                          $.14 per share/NA
                                              Inc. Services
                                              in connection
                                              with Investment
                                              Agreement and
                                              related
                                              financing
                                              agreements
-------------- ------------------------------ ------------- -------------- ------------------

                                       29

-------------- ------------------------------ ------------- -------------- ------------------
2/20/02        283,333 shares of Common Stock Private       NA             Shares valued at
               Options to purchase 280,000    Investor                     $.15 per share/NA
               shares of Common Stock at $.18
               per share for a period of 18
               months
-------------- ------------------------------ ------------- -------------- ------------------
3/08/02        625,000 shares of Common Stock Private       NA             Shares valued at
               were purchased at $.16 per     Investor                     $.16 per share/NA
               share, with options to purchase
               625,000 shares at $.40 per
               share, and 135,000 shares issued
               for services
-------------- ------------------------------ ------------- -------------- ------------------
3/21/02        205,000 shares of Common Stock Agreement for NA             Shares valued at
                                              product                      $.35 per share/NA
                                              endorsements
-------------- ------------------------------ ------------- -------------- ------------------
3/21/02        250,000 shares of Common Stock Banking and   NA             Shares valued at
                                              Financial                    $71,751, or $.15
                                              Consulting Firm              per share/NA
-------------- ------------------------------ ------------- -------------- ------------------
5/06/02        200,000 shares of Common Stock Employee      NA             Shares valued at
                                              compensation                 $.125 per share/NA
-------------- ------------------------------ ------------- -------------- ------------------
5/22/02        300,000 shares of Common Stock Holder of     NA             Shares valued at
                                              Bridge Loan                  $.01 /NA
-------------- ------------------------------ ------------- -------------- ------------------
6/06/02        1,230,053 shares of Common     Director and  NA             Shares valued at
               Stock                          Officer reimbursement        $.65 per share/NA
                                              for research
                                              costs
-------------- ------------------------------ ------------- -------------- ------------------
8/12-14/2002   255,000 shares of Common Stock Issued as     NA             $.01 per share/NA
                                              interest on
                                              outstanding
                                              bridge loans
-------------- ------------------------------ ------------- -------------- ------------------
8/27/02        3,243,209 Shares of Common     Tecinvest     NA             $.031875/NA
               Stock                          Services, Inc.
                                              upon conversion
                                              of  $100,000
                                              principal
                                              amount of
                                              convertible
                                              debentures
-------------- ------------------------------ ------------- -------------- ------------------
8/27/2002      250,000 shares of Common Stock Private       NA             $.04/NA
               and two-year warrants to       Investor
               purchase 75,000 shares of common
               stock at an exercise price of
               $.25 per share
-------------- ------------------------------ ------------- -------------- ------------------

                                       30

-------------- ------------------------------ ------------- -------------- ------------------
8/27/2002      20,000 shares of Common Stock  Consultant    NA             Services valued at
                                                                           $3,750/NA
-------------- ------------------------------ ------------- -------------- ------------------
9/05/2002      2,445,383 shares of Common     Tecinvest     NA             $.031875/NA
               Stock                          Services,
                                              Inc. upon
                                              conversion of
                                              $75,000
                                              principal
                                              amount of
                                              convertible
                                              debentures
-------------- ------------------------------ ------------- -------------- ------------------

-------------- ------------------------------ ------------- -------------- ------------------
12/4/2002      198,200 shares of Common Stock Services      NA             $.01 /NA
                                              Rendered
-------------- ------------------------------ ------------- -------------- ------------------
12/04/2002     145,400 shares of Common Stock Private       NA             $.0275/NA
               and two-year warrants to       Investor
               purchase 100,000 shares of
               common stock at an exercise
               price of $.20 per share
-------------- ------------------------------ ------------- -------------- ------------------
12/04/2002     350,000 shares of Common Stock Private       NA             $.02/NA
               and two-year warrants to       Investor
               purchase 100,000 shares of
               common stock at an exercise
               price of $.20 per share
-------------- ------------------------------ ------------- -------------- ------------------
12/9/02        700,000 shares of Common Stock Private       NA             $.014285/NA
               and two-year warrants to       Investor
               purchase 200,000 shares of
               common stock at an exercise
               price of $.20 per share
-------------- ------------------------------ ------------- -------------- ------------------
12/16/02       400,000 shares of Common Stock Private       NA             $.015/NA
               and two-year warrants to       Investor
               purchase 175,000 shares of
               common stock at an exercise
               price of $.20 per share
-------------- ------------------------------ ------------- -------------- ------------------
12/18/2002     350,000 shares of Common Stock Private       NA             $.15/NA
(Purchased                                    Investor
2/2002)                                       Group
-------------- ------------------------------ ------------- -------------- ------------------
12/20/02       400,000 shares of Common Stock Private       NA             $.015/NA
               and two-year warrants to       Investor
               purchase 175,000 shares of
               common stock at an exercise
               price of $.20 per share
-------------- ------------------------------ ------------- -------------- ------------------
1/22/03        700,000 shares of Common Stock Private       NA             $.014285/NA
               and two-year warrants to       Investor
               purchase 200,000 shares of
               common stock at an exercise
               price of $.20 per share
-------------- ------------------------------ ------------- -------------- ------------------

                                       31

-------------- ------------------------------ ------------- -------------- ------------------
3/05/03        500,000 shares of Common Stock Private       NA             $.03/NA
               and two-year warrants to       Investor
               purchase 300,000 shares of
               common stock at an exercise
               price of $.20 per share
-------------- ------------------------------ ------------- -------------- ------------------

**Securities Authorized for Issuance under Equity Compensation Plans**

         The following table sets forth information with respect to our common
stock issued and available to be issued under outstanding options, warrants and
rights.

------------------------------- ---------------------------- ---------------------------- ----------------------------
                                (a)                          (b)                          (c)
------------------------------- ---------------------------- ---------------------------- ----------------------------
Plan category                   Number of securities to be   Weighted-average exercise    Number of securities
                                issued upon exercise of      price of outstanding         remaining available for
                                outstanding options,         options, warrants and        future issuance under
                                warrants and rights          rights                       equity compensation plans
                                                                                          (excluding securities
                                                                                          reflected in column (a))
------------------------------- ---------------------------- ---------------------------- ----------------------------
Equity compensation plans           15,010,000                  $     .26                        19,990,000
approved by security holders
------------------------------- ---------------------------- ---------------------------- ----------------------------
Equity compensation plans not
approved by security holders
------------------------------- ---------------------------- ---------------------------- ----------------------------
Total                               15,010,000                  $     .26                        19,990,000
------------------------------- ---------------------------- ---------------------------- ----------------------------

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

The following discussion of our financial condition and results of operations
should be read in conjunction with the financial statements and notes thereto
and the other financial information included elsewhere in this report.

Certain statements contained in this report, including, without limitation,
statements containing the words "believes," "anticipates," "expects" and words
of similar import constitute "forward looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks and uncertainties. Our actual results
may differ materially from those anticipated in these forward-looking statements
as a result of certain factors, including the success and subsequent acceptance
of new medical research and development; the regulatory framework of the health
care industry; our ability to create, sustain, manage or forecast our growth;
our ability to attract and retain key personnel; our ability to protect
technology; changes in our business strategy or development plans; competition;
demographic changes; business disruptions; adverse publicity; and international,
national and local general economic and market conditions.

                                       32

We have received some royalty revenues from Real Pure Beverage Group, LLC, Bio
Resonance Technology, Inc., Canada, and Serrato Enterprises-BioRes Medical,
S.L., primarily beginning during the third and fourth quarters of 2001. We have
incurred losses of approximately $1,507,000 for the twelve months ended
December 31, 2002. Of that amount, approximately $213,000 represents the
non-cash expense resulting from the issuance of common stock and options to
purchase common stock to third parties for services rendered and interest.

2002 compared to 2001

The net loss decreased from approximately $1,813,000 in 2001 to approximately
$1,507,000 for the twelve months ended December 31, 2002.

The items of significant increase or decrease in the twelve months ended
December 31, 2002 over the comparable period of the prior year were a decrease
in general and administrative expense from approximately $1,594,000 in 2001 to
approximately $1,293,000 for the twelve months ended December 31, 2002, and an
increase in interest expense from approximately $138,000 in 2001 to
approximately $274,000 for the twelve months ended December 31, 2002.

During the latter part of 2001 we began to receive royalties based on agreements
we had completed. In 2002, we received approximately $4,700 in royalties from
beverage sales of resonated water compared to $29,000 in 2001.

We on occasion placed resonators and equipment parts for research and development
and testing purposes. The profit in 2002 on such sales was approximately
$65,000.

During 2002 interest expense was approximately $274,000 compared to
interest expense of approximately $138,000 for the twelve months ended
December 31, 2001. This was due to increased borrowings and the conversion of
convertible debt which required the unamortized balance of the beneficial
conversion feature to be charged to operations upon conversion.

                                       33

We continue to incur costs for research and development including costs for
clinical trials. These costs decreased from approximately $256,000 in 2001 to
approximately $50,000 for the twelve months ended December 31, 2002,
primarily to accommodate the European Market.

General and administrative expenses decreased by approximately $358,000 from
2001 to 2002. Professional fees increased by $45,000 relating to transactional
costs of accounting. Compensation decreased by approximately $37,000.

During the year ended December 31, 2002, as a result of an impairment review,
the Company recorded an impairment loss of approximately $83,000 to reduce the
value of long-lived assets to estimated fair value.

**Critical Accounting Policies**

Our discussion and analysis of our financial condition are based upon our
financial statements, which have been prepared in accordance with accounting
principles generally accepted in the United States of America. The preparation
of these financial statements requires us to make estimates and judgments that
affect the reported amount of assets, liabilities, revenues and expenses and
related disclosure of contingent liabilities. On an ongoing basis, we evaluate
our estimates, including those related to revenues, deferred income taxes and
long-lived assets. We based our estimates on our historical experience,
knowledge of current conditions and our beliefs of what could occur in the
future considering available information. Actual results may differ from these
estimates under different assumptions or conditions. The Company believes the
following critical accounting policies affect its more significant judgments and
estimates used in the preparation of its financial statements.

**Revenue Recognition**

The company recognizes revenue in accordance with SEC Staff Accounting Bulletin
No. 101, Revenue Recognition in Financial Statements, as amended by SAB 101A and
101B (collectively SAB 101). SAB 101 requires that four basic criteria must be
met before revenue can be recognized: (1) persuasive evidence of an arrangement
exists; (2) delivery has occurred or services rendered; (3) the fee is fixed and
determinable; and (4) collectibility is reasonably assured. Under the provisions
of SAB 101, royalties are recognized when earned and revenues from sale of
resonance equipment are recorded when the equipment is shipped.

                                       34
**Taxes**

The Company records a valuation allowance to reduce its deferred tax assets to
an amount that is more likely than not to be realized. While the Company
considers historical levels of income, expectations and risks associated with
estimates of future taxable income and ongoing prudent and feasible tax planning
strategies in assessing the need for the valuation allowanace, in the event the
Company determines that it would be able to realize deferred tax assets in the
future in excess of the net recorded amount, an adjustment to the deferred tax
asset would increase income in the period and that such determination was made.
Likewise, should the Company determine that it would not be able to realize all
or part of the net deferred tax asset in the future, an adjustment to the
deferred tax asset would be charged to income in the period such determination
was made. The Company has recorded valuation allowances against its entire
deferred tax assets of approximately $2,739,000 at December 31, 2002. The
valuation allowances relate primarily to the net operating loss carry forward
deferred tax asset where the tax benefit of such asset is not assured.

**Impairment of Long-lived Assets**

         The Company asseses the impairment in value to its long-lived assets
whenever events or circumstances indicate that their carrying value may not be
recoverable. Factors considered important which could trigger impairment review
include the following: significant negative industry trends, significant
underutilization of the assets, and significant changes in how the Company uses
its assets or plans for their use.

         If the Company determines that the future undiscounted cash flows
related to these assets will not be significant to recover their carrying value,
then the Company will reduce the carrying value of these assets down to the
Company's estimate of their fair market value and will continue depreciating or
amortizing them over their remaining useful lives. Accordingly, the statement of
operations reflects an impairment loss of $83,000 for the year ended December
31, 2002.

**Plan of Operation**

We have received approval and a CE-Mark issuance from the European Union, thus
allowing distribution and commercialization of our medical resonators. Marketing
and distribution plans through AMEVISA, SARL and BIORES MEDICAL, S.L. (a Serrato
Enterprises company). are currently on schedule. We have also received approval
by Health Canada licensing authorities for commercialization and distribution of
medical resonators and said license now covers "reduction of pain of arthritic
conditions". Bio Resonance Technology, Inc., now operates a pain center in
Winnipeg.

Currently, Serrato Enterprises LLC developing additional distribution and
marketing plans to cover the other European Union countries in 2003 and 2004.

                                       35

We have not yet received FDA clearance for the commercialization of our clinical
resonators in the United States. In 1997, we filed our submission with the FDA
seeking a determination that the 18-inch clinical Jacobson Resonator qualified
as an NSR device for the treatment of osteoarthritis pain of the knee. On March
4, 1999, the FDA determined that our clinical study of the 18-inch clinical
Jacobson Resonator to demonstrate effectiveness was an NSR device study because
the resonator did not meet the definition of a Significant Risk device under the
applicable provision of the IDE. This determination in effect means that the
resonator meets the FDA requirements as to safety. In August, 2002, we withdrew
our 510(k) de novo application.

Double blind, randomized and placebo controlled studies are planned to continue
to add data from greater populations of subjects for submission of de novo
(510)K applications to FDA for clearance for specific indications in pain
management.

Management's focus will also be on product applications that do not require
regulatory approval via joint ventures, licensing, technology transfer and like
transactions. Other possible sources of revenue or capital for the Company
include veterinary medicine, the resonated beverage businesses and offshore
clinics.

The Company has entered into a license agreement with P.E.R., Inc., pursuant to
which P.E.R. has been licensed to manufacture and sell battery-powered, portable
resonators worldwide, excepting in the United States. We have received an
initial payment of $25,000 on account of the $100,000 initial license fee
pursuant to this agreement, and are entitled to a royalty fee of $30 per unit
sold, plus 10% of the gross profit of P.E.R., for all portable units sold for
under $500. For all portable units selling at $500 and above, we receive a
royalty of 15% of P.E.R.'s gross profit on those units, payable on a quarterly
basis; and for all add-on and replacement parts sold, we receive a royalty of
15% of P.E.R.'s gross profit for those parts.

**Liquidity and Capital Resources as of December 31, 2002**

Through December 31, 2002, we received approximately $177,000, from the sale
of securities and $125,000 from the proceeds of several notes payable. Given
our current liquidity position, we are required to seek additional funds through
either debt or equity financing. Our year-end financial statements include an
explanatory paragraph about our ability to continue as a going concern.

         In April 2001, we entered into a consulting agreement with Regulatory
Insight, Inc., of Lakewood, Colorado for healthcare consulting services.

         Note 5 of the financial statements refers to the fact that we received
$250,000 from the proceeds of several promissory notes which have 60 days terms
and pay interest at 5% per annum. Note 5 reflects that we are in default.
Management and the parties mutually understood that the 60 days term would not
be met prior to execution of the notes. Although management agrees that the
payment is late, management maintains the default is only technical since the
contemplated late penalty provision entitles us to a roll over extension
provision and entitles the holders to receive options to purchase shares of our
common stock. Both parties have agreed upon entering this note that the roll
over provision would be used.

                                       36
**ITEM 7.  FINANCIAL STATEMENTS**

         Financial Statements contained in this report reflect no change from
the preceding year in any accounting principles or practices or in the method of
application of those principles or practices.

                       **JACOBSON RESONANCE ENTERPRISES, INC

                          INDEX TO FINANCIAL STATEMENTS**

                                                                            PAGE

Accountants' Report                                                          F-1

Financial Statements:
  Balance Sheet as of December 31, 2002                                      F-2

  Statement of Operations for the years ended
   Ended December 31, 2002 and 2001.                                         F-3

  Statement of Stockholders' Deficiency
   for the years ended December 31, 2002 and 2001                      F-4 - F-5

  Statement of Cash Flows for the years ended
   Ended December 31, 2002 and 2001                                    F-6 - F-7

  Notes to Financial Statements                                       F-8 - F-23

**INDEPENDENT AUDITORS' REPORT**

To the Board of Directors and Stockholders of
Jacobson Resonance Enterprises, Inc.

We have audited the accompanying balance sheet of Jacobson Resonance
Enterprises, Inc (the "Company") as of December 31, 2002, and the related
statements of operations, stockholders' deficiency and cash flows for the years
ended December 31, 2002 and 2001. 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, such financial statements referred to above present fairly, in
all material respects, the financial position of Jacobson Resonance Enterprises,
Inc at December 31, 2002, and the results of its operations and its cash flows
for the years ended December 31, 2002 and 2001 in conformity with generally
accepted accounting principles generally accepted in the United States of
America.

The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 1 to the financial
statements, the Company has suffered recurring losses, has insufficient revenue
from operations to support its revenue, has a working capital deficit and a
stockholders' deficiency, which raise substantial doubt about its ability to
continue as a going concern. The Company needs to obtain additional financing to
fund its operations and achieve a level of sales adequate to support its cost
structure. Management's plan in regard to these matters is also described in
Note 1. The accompanying financial statements do not include any adjustments
that might result from the outcome of these uncertainties should the Company be
unable to continue as a going concern.

/s/ Wiener, Goodman & Company, P.C.
    WIENER, GOODMAN & COMPANY, P.C.
    Certified Public Accountants
    Eatontown, New Jersey

May 7, 2003

                                      F-1

**JACOBSON RESONANCE ENTERPRISES, INC
                                  BALANCE SHEET**

                                                              December 31,
                                                                 2002
                                                             -------------

                                    **ASSETS**
Current Assets:
 Cash                                                        $       4,177
 Loan receivable - related party                                    12,000
 Prepaid expenses                                                   39,390
                                                             -------------
   Total Current Assets                                             55,567

Property, plant and equipment - net                                 14,302

Other assets:
 Deferred financing costs - net                                      1,993
 Deposits                                                            1,395
                                                             -------------
   Total Other Assets                                                3,388
                                                             -------------
TOTAL ASSETS                                                  $     73,257
                                                             =============

                    **LIABILITIES AND STOCKHOLDERS' DEFICIENCY**

Current Liabilities:
   Notes payable                                              $    225,000
   Accounts payable and accrued expenses                           627,589
   Litigation settlement payable                                   995,000
   Deposits on common stock to be issued                            29,500
   Due to related party                                             82,851
   Due to officer/shareholder                                      164,550
                                                             -------------
      Total Current Liabilities                                  2,124,490

Long -Term Debt:
   Debentures payable, face value of $25,000
      (Net of beneficial conversion feature
       and costs of $6,875)                                         18,125
                                                             -------------
      Total Liabilities                                          2,142,615
                                                             -------------
Commitments and Contingencies

Stockholders' Deficiency:
   Preferred stock $.001 par value - authorized
      5,000,000 shares;  outstanding 30,000 shares
                                                                        30
   Common stock $.001 par value - authorized
      300,000,000 shares; outstanding 69,675,657 shares             69,676
   Additional paid in capital                                   10,342,587
   Deficit                                                     (12,480,251)
                                                             -------------
                                                                (2,067,958)

Common stock in treasury, at cost (600,000 shares)
                                                                      (600)
Subscriptions receivable                                              (800)
                                                             -------------
      Total Stockholders' Deficiency                            (2,069,358)
                                                             -------------
      Total Liabilities and Stockholders' Deficiency         $      73,257
                                                             =============

                       See notes to finanical statements

                                      F-2

**JACOBSON RESONANCE ENTERPRISES, INC.
                            STATEMENTS OF OPERATIONS**

                                                Years Ended December 31,
                                               2002             2001
                                          ---------------  ---------------

Revenue                                   $      127,515   $        80,564
                                          ---------------  ---------------
Costs and expenses:
 General and administrative                     1,292,757        1,594,025
 Research and development                          50,595          256,449
 Financing costs                                   92,352               -
 Impairment loss                                   83,000               -
                                          ---------------  ---------------
    Total Operating Expenses                    1,462,352        1,850,474
                                          ---------------  ---------------
 Loss from operations                          (1,298,837)      (1,769,910)

Other income (expense):
 Interest income                                       -             8,262
 Interest expense                                (273,805)        (138,256)
 Gain of sales of equipment                        65,300           86,833
    equipment                             ---------------  ---------------
    Total other (expense)                        (208,505)         (43,161)
                                          ---------------  ---------------
Net loss                                  $    (1,507,342)  $   (1,813,071)
                                          ===============   ==============
Loss per common share - basic             $         (0.03)  $        (0.03)
                                          ===============   ==============
Loss per common share - diluted           $         (0.03)  $        (0.03)
                                          ===============   ==============
Weighted average number of
 common shares outstanding - basic
 and diluted                                   64,275,811       56,021,715
                                          ===============   ==============

                       See notes to finanical statements

                                      F-3

**JACOBSON RESONANCE ENTERPRISES, INC.
                      STATEMENT OF STOCKHOLDERS' DEFICIENCY**

                    Common Stock            Preferred Stock
                ---------------------    ---------------------   Additional
                Number of     Value of    Number of   Value of     Paid-in                 Subscription   Treasury
                  Shares      Shares        Shares     Shares       Capital      Deficit    Receivable      Stock       Total
                ----------- -----------  ----------- -----------  -----------  -----------  -----------  -----------  -----------

Balance,
January 1, 2001  54,815,336 $    54,815       30,000 $        30  $ 8,427,840  $(9,159,838) $   (44,074) $      (600) $  (721,827)

Issuance of
common stock
for services
rendered (issued
at $.17 to $.35
per share)        1,420,112       1,420           -           -       339,471           -            -            -       340,891

Issuance of
common stock
from private
placements sale
to investors
(issued at $.11
to $.42 per
share)            1,673,791       1,674           -           -       290,374           -            -            -       292,048

Fair value
of options
issued to
consultants
(issued at $.19
to $.50 per share)       -           -            -                   249,750                                             249,750

Warrants issued
for offering
costs (issued at
$.25 per share)                                                        75,250           -            -            -        75,250

Issuance of
common stock
for interest
on notes payable
(issued at $.24
per share)          260,000         260           -           -        61,442           -            -            -        61,702

Beneficial
conversion
feature on
convertible
debentures               -           -            -           -        25,000           -            -            -        25,000

Net loss                 -           -            -           -            -    (1,813,071)          -            -    (1,813,071)
                ----------- -----------  ----------- -----------  -----------  -----------  -----------  -----------  -----------

Balance,
December 31,
2001             58,169,239      58,169       30,000          30    9,469,127  (10,972,909)     (44,074)        (600)  (1,490,257)

                       See notes to finanical statements

                                      F-4

**JACOBSON RESONANCE ENTERPRISES, INC.
                      STATEMENT OF STOCKHOLDERS' DEFICIENCY**

(continued)

                    Common Stock            Preferred Stock
                ---------------------    ---------------------   Additional
                Number of     Value of    Number of   Value of     Paid-in                 Subscription   Treasury
                  Shares      Shares        Shares     Shares       Capital      Deficit    Receivable      Stock       Total
                ----------- -----------  ----------- -----------  -----------  -----------  -----------  -----------  -----------

Issuance of
common stock
for services
rendered (issued
at $.03 to $.35
per share)        2,353,645       2,353           -           -       210,371           -            -            -       212,724

Issuance of
common stock
for financing
costs (issued
at $.14 per
share)              336,500         337           -           -        46,773           -            -            -        47,110

Issuance of
common stock
to satisfy
liabilities
(issued at $.31
per share)          205,000         205           -           -        70,943           -            -            -        71,148

Issuance of
common stock
from private
placement (issued
at $.02 to $.16
per share)        2,238,733       2,239           -           -       184,688           -            -            -       186,927

Issuance of
common stock
upon exercise
of options          128,948         129           -           -           610           -            -            -           739

Issuance of
common stock
for interest on     555,000         555           -           -       116,090           -            -            -       116,645

Fair value of
options issued for
equity financing
(issued at $.18
to $.40 per share)       -           -            -           -        45,242           -            -            -        45,242

Beneficial
conversion
feature on
convertible debentures   -           -            -           -        41,250           -            -            -        41,250

Issuance of common
stock upon
conversion of
debentures        5,688,592       5,689           -           -       157,493           -            -            -       163,182

Subscription
receivable - bridge      -           -            -           -            -            -          (800)          -          (800)

Net loss                                                                        (1,507,342)                            (1,507,342)
                ----------- -----------  ----------- -----------  -----------  -----------  -----------  -----------  -----------

Balance,
December 31,
2002             69,675,657 $    69,676       30,000 $        30  $10,342,587 $(12,480,251) $      (800) $      (600) $(2,069,358)
                =========== ===========  =========== ===========  ===========  ===========  ===========  ===========  ===========

                       See notes to finanical statements

                                      F-5

**JACOBSON RESONANCE ENTERPRISES, INC.
                             STATEMENT OF CASH FLOWS**

                                                  Years Ended December 31,
                                                    2002         2001
                                                ------------  ------------
Cash flows from operating activities:
    Net loss                                    $ (1,507,342) $ (1,711,605)
    Adjustments to reconcile net loss to
    net cash flows used in operating:
    Depreciation                                      30,556        39,789
    Impairment loss                                   83,000            -
    Gain on sale of equipment                        (65,300)
    Bad debt write off                                91,452            -
    Non-cash/Non-employee stock-based compensation   212,724       340,891
    Non-cash interest expense                        237,601        60,193
    Other non-cash items                             120,492       325,000
    Disposition of property and
    equipment                                             -         31,238
Changes in operating assets and
    liabilities
    Accounts receivable                                   -         21,688
    Accrued interest receivable                        4,786        (4,786)
    Prepaid expenses and other                         5,938       (12,469)
    Accounts payable and accrued expenses            324,936       228,125
    Due to related party                              82,851            -
    Litigation settlement payable                         -         (5,000)
                                                ------------  ------------
Net Cash Used in Operating Activities               (520,651)     (686,936)
                                                ------------  ------------
Cash Flows from Investing Activities
    Purchases of property and equipment               (8,700)      (10,055)
     roceeds from sale of equipment                   74,500            -
                                                ------------  ------------
Net Cash Provided by (Used In) Financing
     Activities                                       65,800       (10,055)
                                                ------------  ------------

                       See notes to finanical statements

                                      F-6

**JACOBSON RESONANCE ENTERPRISES, INC.
                             STATEMENT OF CASH FLOWS**

                                                 Years Ended December 31,
                                                    2002          2001
                                                ------------  ------------
Cash flow from financing activities:
 Proceeds from notes payable                              -        250,000
 Payment of note payable                             (25,000)           -
 Proceeds from issuance of debentures                125,000        75,000
 Financing costs                                     (12,518)      (12,500)
 Deferred offering costs                                  -        (75,250)
 Proceeds from exercise of stock options                 739            -
 Proceeds from common stock to be issued              29,500        15,720
 Proceeds from issuance of common
   stock                                             176,757       225,251
 Proceeds from officer/stockholder                   164,550            -
                                                 ------------  ------------
Net Cash Provided by Financing Activities            459,028       478,221
                                                 ------------  ------------
Net Increase (decrease) in Cash and
 Cash Equivalents                                      4,177      (218,770)
Cash and Cash Equivalents-Beginning
    of Year                                                -       218,770
                                                 ------------  ------------
Cash and Equivalents-End of of Year              $     4,177   $        -
                                                 ============  ============

Noncash Investing and Financing Activities

Issuance of common stock paid in advance         $     56,775  $    69,397
                                                 ============  ============
Issuance of common stock in settlement of
 liabilities                                     $     71,148  $        -
                                                 ============  ============
Conversion of debentures into common
  stock                                          $    163,182  $        -
                                                 ============  ============

                       See notes to finanical statements

                                      F-7

**JACOBSON RESONANCE ENTERPRISES, INC
                          NOTES TO FINANCIAL STATEMENTS

1.   DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**ORGANIZATION

The Company is a bio-tech and bio-medical enterprise involved in the development
of resonance and electro-magnetic equipment, processes and applications.
Applications for the use of resonance technology in the medical, veterinary
medicine, food, agricultural, recreational, pharmaceutical, and environmental
industries are currently being pursued.

During 2002, the Company received approval and a CE-Mark issuance from the
European Union, thus allowing distribution and commercialization of its medical
resonators. The Company also received approval by Health Canada licensing
authorities for commercialization and distribution of medical resonators and the
license has been expanded not only to cover all medical resonator models but
also licensing clearance by Health Canada covering arthritic pain of the whole
body instead of being limited to localized arthritic pain. The Company received
royalties from its foreign licensees and commenced sales of its resonator
models. The Company therefore is no longer considered a development stage
enterprise.

BASIS OF PRESENTATION

The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As reflected in the financial statements, the
Company has incurred losses of $1,507,342 and $1,813,071 for the years ended
December 31, 2002 and $12,480,251 since its inception in 1996 and as of December
31, 2002 and 2001 has a working capital deficit of approximately $2 million. The
Company has had limited revenue during these years. There is no assurance that
the Company will not encounter substantial expenses related to financing the
marketing efforts or that the Company's products will be commercially
acceptable. The Company will be required to expand its management and
administrative capabilities in order to manage its growth as well as to respond
to competitive conditions. The Company needs to achieve a level of sales
adequate to support its cost structure and will require additional equity
financing and/or debt financing to fund its operations. Such funds may not be
available on terms acceptable to the Company. These factors indicate that the
Company may not be able to continue as a going concern.

Based on the Company's current plans of licensing the distribution of its
portable resonators in Canada, distribution of its medical resonators in Europe,
establishing clinics outside the United States and raise needed cash, the
Company believes it will have sufficient cash to fund its operations through
fiscal 2003. The financial statements do not include any adjustments relating to
the recoverability and classification of recorded assets from the outcome of
this uncertainty.

                                      F-8

**JACOBSON RESONANCE ENTERPRISES, INC
                          NOTES TO FINANCIAL STATEMENTS**REVENUE RECOGNITION

Revenues from royalties and licenses are recognized when they are earned.
Revenue from sale of resonance equipment is recorded when the equipment is
shipped to customers and title has passed.

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America 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 revenue and expenses during
the reporting period. Actual results could differ from those estimates.

LOSS PER COMMON SHARE

Basic and diluted loss per common share is computed by dividing net loss by the
weighted average number of common shares outstanding during the year. Potential
common shares are excluded from the loss per share calculation, because the
effect would be antidilutive. Potential common shares relate to the convertible
debt, stock options, warrants, and convertible preferred. The number of
potential common shares outstanding were 60,423,356 and 64,784,617 as of
December 31, 2002 and 2001, respectively.

DEFERRED OFFERING COSTS

Deferred offering costs are the costs that have been incurred in connection with
the expected issuance of common stock which will take place during a future
period. Deferred costs of $75,250 were incurred in 2001 and have been expensed
in 2002 after the termination of the offering in 2002.

DEFERRED FINANCING COSTS

Deferred financing costs are the costs associated with the issuance of the 6%
debentures and are being amortized over the term of the debentures.

EVALUATION OF LONG-LIVED ASSETS

Long-lived assets are assessed for recoverability on an on-going basis. In
evaluating the fair value and future benefits of long-lived assets, their
carrying value would be reduced by the excess, if any, of the long-lived assets
over management's estimate of the anticipated undiscounted future net cash
flows of the related long-lived asset. At December 31, 2002, management recorded
an impairment charge of approximately $83,000.

DEPRECIATION AND AMORTIZATION

Property and equipment are stated at cost. Depreciation is provided for by the
straight-line method over the estimated useful lives of the related assets.

RESEARCH AND DEVELOPMENT

Research and development costs are charged to operations when incurred and are
included in operating expenses.

CONCENTRATION OF CREDIT RISK

Financial instruments which potentially subject the Company to concentrations of
credit risk are primarily cash. The Company invests its excess cash in high
quality short-term liquid money market instruments with major financial
institutions and carrying value approximates market value. The Company maintains
cash in bank accounts which, at times, may exceed federally insured limits.

STOCK BASED COMPENSATION

The Company accounts for equity-based compensation issued to employees in
accordance with Accounting Principles Board ("ABP") Opinion No. 25 "Accounting
for Stock Issued to Employees". ABP No. 25 requires the use of the intrinsic
value method, which measures compensation cost as the excess, if any, of the
quoted marked price of the stock at the measurement date over the amount an
employee must pay to acquire the stock. The Company makes disclosures of pro
forma net earnings and earnings per share as if the fair-value-based method of
accounting had been applied as required by SFAS No. 123 "Accounting for
Stock-Based Compensation-Transition and Disclosure".

FAIR VALUE OF FINANCIAL INSTRUMENTS

For financial instruments including cash, accounts payable, accrued expenses,
and convertible debt, it was assumed that the carrying amount approximated fair
value because of the short maturities of such instruments.

                                      F-9

**JACOBSON RESONANCE ENTERPRISES, INC
                          NOTES TO FINANCIAL STATEMENTS**PATENTS

The Company has charged operations for costs representing legal expenses
associated with the application to obtain certain patents awarded to the
Company's principal stockholder. The Company has a licensing agreement for the
use of the patents.

INCOME TAXES

The Company accounts for income taxes using an asset and liability approach
under which deferred taxes are recognized by applying enacted tax rates
applicable to future years to the differences between financial statement
carrying amounts and the tax basis of reported assets and liabilities. The
principal item giving rise to deferred taxes are future tax benefits of certain
net operating loss carryforwards.

NEW FINANCIAL ACCOUNTING STANDARDS

In August 2001, the FASB issued SFAS No. 143 "Accounting for Asset Retirement
Obligations". SFAS No. 143 addresses financial accounting and reporting for
obligations and costs associated with the retirement of tangible long-lived
assets. The Company is required to implement SFAS No. 143 on January 1, 2003.
Management believes the effect of implementing this pronouncement will not have
a material impact on the Company's results of operations or financial position.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets", effective for fiscal years beginning after
December 15, 2001. Under SFAS No. 144 assets held for sale will be included in
discontinued operations if the operations and cash flows will be or have been
eliminated from the ongoing operations of the entity and the entity will not
have any significant continuing involvement in the operations of the component.
The Company adopted SFAS No. 144 on January 1, 2002. The adoption of SFAS No.
144 did not have a material impact on the Company's results of operations or
financial position.

In April 2002, the FASB issued SFAS No. 145 "Rescission of FASB Statements No.
4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections".
This statement eliminates the automatic classification of gain or loss on
extinguishment of debt as an extraordinary item of income and requires that such
gain or loss be evaluated for extraordinary classification under the criteria of
Accounting Principles Board No. 30 "Reporting Results of Operations". This
statement also requires sales-leaseback accounting for certain lease
modifications that have economic effects that are similar to sales-leaseback
transactions, and makes various other technical corrections to existing
pronouncements. This statement will be effective for the Company for the year
ending December 31, 2003. Management believes that adopting this statement will
not have a material effect on the Company's results of operations or financial
position.

                                       F-10

**JACOBSON RESONANCE ENTERPRISES, INC
                          NOTES TO FINANCIAL STATEMENTS**

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities." This Statement requires recording costs
associated with exit or disposal activities at their fair values when a
liability has been incurred. Under previous guidance, certain exit costs were
accrued upon management's commitment to an exit plan. Adoption of this Statement
is required with the beginning of fiscal year 2003. The Company has not yet
completed the evaluation of the impact of adopting this Statement.

In January 2003, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation-Transition and Disclosure, an amendment of FASB Statement No. 123"
SFAS No. 148 provides alternative methods of transition for voluntary change to
the fair value based method of accounting for stock-based employee compensation.
It also requires disclosure in both annual and interim financial statements
about the method of accounting for stock-based employee compensation and the
effect of the method used on reported results. SFAS No. 148 is effective for
annual and interim periods beginning after December 15, 2002. Management is
currently evaluating the impact of adopting the fair value based method of
accounting for stock-based employee compensation and will implement the
provision of the statement during the first quarter ending March 31, 2003.

In November 2002, the FASB issued FASB Interpretation No. 45 (FIN 45),
Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others, and interpretation of FASB
Statements No. 5, 57, and 107 and Rescission of FASB Interpretation No. 34. FIN
45 clarifies the requirements of FASB Statement No. 5, Accounting for
Contingencies, relating to the guarantor's accounting for, and disclosure of,
the issuance of certain types of guarantees. This interpretation clarifies that
a guarantor is required to recognize at the inception of certain types of
guarantees, a liability for the fair value of the obligation undertaken in
issuing the guarantee. The initial recognition and initial measurement
provisions of this Interpretation are applicable on a prospective basis to
guarantees issued or modified after December 31, 2002, irrespective of the
guarantor's fiscal yea r end. The disclosure requirements in this interpretation
are effect for financial statements of interim or annual periods ending after
December 15, 2002. The Company is assessing the impact of the adoption of this
interpretation will have on the results of operations or financial position and
will implement the provision of the statement during the first quarter ending
March 31, 2003.

                                      F-11

**JACOBSON RESONANCE ENTERPRISES, INC
                          NOTES TO FINANCIAL STATEMENTS**

In January 2003, the Financial Accounting Standards Board issued Interpretation
No.46, "Consolidation of Variable Interest Entities," which addresses
consolidation by business enterprises of variable interest entities. In general,
a variable interest entity is a corporation, partnership, trust, or any other
legal structure used for business purposes that either (a) does not have equity
investors with voting rights or (b) has equity investors that do not provide
sufficient financial resources for the entity to support its activities. A
variable interest entity often holds financial assets, including loans or
receivables, real estate or other property. A variable interest entity may be
essentially passive or it may engage in research and development or other
activities on behalf of another company.

The objective of Interpretation No.46 is not to restrict the use of variable
interest entities but to improve financial reporting by companies involved with
variable interest entities. Until now, a company generally has included another
entity in its consolidated financial statements only if it controlled the entity
through voting interests. Interpretation No.46 changes that by requiring a
variable interest entity to be consolidated by a company if that company is
subject to a majority of the risk of loss from the variable interest entity's
activities or entitled to receive a majority of the entity's residual returns or
both. The consolidation requirements of Interpretation No. 46 apply immediately
to variable interest entities created after January 31, 2003. The consolidation
requirements apply to older entities in the first fiscal year or interim period
beginning after June 15, 2003. Certain of the disclosure requirements apply in
all financial statements issued after January 31, 2003, regardless of when the
variable interest entity was established. The Company does not have any variable
interests and, accordingly, adoption is not expected to have a material effect
on the Company.

**2.   PROPERTY AND EQUIPMENT**

Property and equipment at December 31, 2002, at cost consists of:

                                    December 31, 2002

Furniture and fixtures                   $ 37,689
Less: accumulated depreciation            (23,387)
                                         --------
                                         $ 14,302
                                         ========

Depreciation expense for the years ended December 31, 2002 and 2001 amounted to
$30,556 and $39,789, respectively.

                                      F-12

**JACOBSON RESONANCE ENTERPRISES, INC
                          NOTES TO FINANCIAL STATEMENTS****3.   SUBSCRIPTION RECEIVABLE**

The Company has a note receivable in the amount of $44,874 for the outstanding
balance due for a subscription receivable that has been treated as a reduction
of stockholders' deficiency. At December 31, 2002, the Company wrote off to bad
debt expense $44,074 as uncollectible.

**4. NOTES PAYABLE**

In the second and third quarters of 2001, the Company received $250,000 from the
proceeds of several promissory notes. Each of these notes were for a term of 60
days and bear interest at a rate of 5% per annum. In February 2002, $25,000 of
these notes were repaid. At December 31, 2002, the Company was in default on the
balance of these notes.

Under the terms of the notes, in the event of default, the note holder has the
option to purchase 10,000 shares of the Company's common stock for $100 for each
$25,000 of outstanding debt. Additionally, the notes state that the note holders
can continue to purchase common stock in the Company at a rate of 5,000 shares
of common stock for $50 for each $25,000 of outstanding debt for each 30 day
period until the notes are paid in full.

As of December 31, 2002 the Company had received $8,150 for 815,000 of common
stock. The Company issued 260,000 shares in 2001 and 555,000 shares in 2002 to
satisfy the defaults.

The Company recorded interest expense of $116,645 in 2002 and $61,702 in 2001
for the difference between the fair market value of the Company's common stock
and the exercise price of $.01 per common share for any shares that the note
holders have a right to receive.

The fair value of the notes payable approximates the carrying amount due to the
short-term nature of the instruments.

                                      F-13

**JACOBSON RESONANCE ENTERPRISES, INC
                          NOTES TO FINANCIAL STATEMENTS****5.   CONVERTIBLE DEBENTURES**

The Company entered into an agreement with Tecinvest Services, Inc.
("Tecinvest") for the issuance of an aggregate of $250,000 of the Company's 6%
convertible debentures due December 18, 2004. $75,000 was issued on December 18,
2001, $100,000 was issued in January 2002 and $75,000 will be issued on the date
the Company's registration statement is declared effective by the Securities and
Exchange Commission. The convertible debentures are convertible at the lesser of
(i) one hundred ten percent (110%) of the average closing bid price of the
Company's common stock for the five trading days immediately preceding the
closing date for the particular debenture, or (ii) 75% of the average of the six
lowest closing bid prices during the 20 days prior to conversion.

In connection with the $175,000 of convertible debentures issued by the Company
in December 2001 and January 2002, the Company incurred costs of $22,500. The
Company also recorded a beneficial conversion feature of $58,000 in connection
with these convertible debentures. The beneficial conversion feature is
accounted for as a discount to the debenture and is allocated to additional
paid-in capital. The discount is to be amortized to interest expense through the
December 18, 2004. Additionally, the Company issued 256,500 shares of common
stock as additional interest in 2002. The Company recorded the fair market value
of these shares of $58,895 and reduced the carrying value of the convertible
debentures by the unamortized amount of the discount and the beneficial
conversion feature. For the year ended December 31, 2001 the Company amortized
$1,071 to interest expense.

On August 12, 2002, all of the outstanding debentures, $175,000, were converted
into 5,688,592 shares of common stock pursuant to the terms of the agreement.
All unamortized deferred financing costs of $11,818 have been charged to
paid-in-capital and discounts for the beneficial conversion feature and stock
issuance costs have been charged to operations at the date of conversion. For
the year ended December 31, 2002 the Company recorded $126,506 as interest
expense in connection with these debentures.

In September 2002, the Company issued $25,000 in convertible debentures (as part
of a funding agreement with Techinvest) due September 3, 2005. In connection
with the debentures aggregating $25,000, the Company incurred costs of $2,518.
The Company also recorded a beneficial conversion feature of $8,250 in
connection with this convertible debenture. The beneficial conversion feature is
accounted for as a discount to the debenture and is allocated to additional paid
in capital. The discount is to be amortized to interest expense through the
maturity date of the debt. The Company recorded $1,900 of interest expense for
the year ended December 31, 2002.

The fair value of the debentures approximates the face, based on rates and terms
available to the Company for similar debt.

                                      F-14

**JACOBSON RESONANCE ENTERPRISES, INC
                          NOTES TO FINANCIAL STATEMENTS**

The Company also entered into an agreement with Tecinvest to acquire up to
10,000,000 common shares for an aggregate amount of up to $3,000,000. In 2002,
the Company issued 80,000 shares (valued at $29,170) to an attorney for legal
services related to this agreement which was charged to general and
administrative expenses in the Company's statement of operations for the year
ended December 31, 2002. The Company also granted 500,000 warrants to Tecinvest
in 2001 to acquire the Company's common stock. The warrants are exercisable at
110% of the average closing bid for the third trading day immediately preceding
the execution date. During 2002 the Company and Tecinvest terminated the
offering.

The fair value of the 500,000 warrants amount to $75,250 and was included in
deferred offering costs on the Company's balance sheet at December 31, 2001.
During 2002 the deferred offering costs has been charged to operations due to
the termination of the offering and is included in general and administrative
expenses in the accompanying statement of operations.

**6.   DUE TO RELATED PARTY**

The Company receives royalties from an entity owned by a Director. . For the
years ending December 31, 2002 and 2001 the Company received royalties from the
related party of approximately $93,000 and $17,000, which represented 73% and
21% of revenues, respectively. As of December 31, 2002, the Company owed the
related party $82,851.

**7.   DUE FROM OFFICER/STOCKHOLDER**

The majority shareholder and officer of the Company (Dr. Jacobson) was involved
in litigation which resulted in a settlement which required Dr. Jacobson to
contribute to the Company the licensing rights to patents owned by this officer
and the plaintiffs. The Company received the licensing rights during 2000, and
ascribed no value to the licensing rights.

The settlement in 2000 required Dr. Jacobson to transfer 12,000,000 shares of
common stock of the Company owned by him to the plaintiffs. As part of the
settlement, the plaintiffs gave the Company licensing rights to purchase various
patents. The Company issued to the plaintiffs warrants to purchase 3,000,000
share of common stock at $.30 per share (valued at $290,000, which was included
in operations in 2000). The warrants are exercisable through April 2008.

Dr. Jacobson and the Company negotiated the settlement and Dr. Jacobson was
issued warrants by the Company to purchase 6,000,000 shares of the Company's
common stock at $.30 per share (valued at $580,000, which was included in
operations in 2000). The warrants are exercisable through April 2008.

                                      F-15

**JACOBSON RESONANCE ENTERPRISES, INC
                          NOTES TO FINANCIAL STATEMENTS**

In connection with this settlement and based upon approval of the Company's
Board of Directors and the Agreed Order Dismissing Case and Providing Relief
from the Automatic Stay (Dr. Jacobson's personal bankruptcy) both Dr. Jacobson
and the Company agreed to pay the plaintiffs the sum of $1,000,000 by July 15,
2001 (as amended). Accordingly, the Company who was not previously a party to
this litigation accrued and charged operations $1,000,000 during the year ended
December 31, 2000. The balance due at December 31, 2002, is $995,000 and is
payable on demand.

During 2000, the Company loaned $200,000 to this officer. The loan bears
interest at the prime rate (4% as of December 31, 2002). The loan and interest
accrued on the loan was due on May 13, 2002. The officer had declared personal
bankruptcy which the court dismissed and, accordingly at December 31, 2001 the
Company had recorded an allowance for doubtful accounts for the entire balance.

During 2000, another officer received a loan of $50,000 from the Company. The
Company advanced the officer an additional $9,000 during 2002. This loan bears
interest at the rate of 6.5% per annum. The original loan was due September 10,
2000 and was extended to January 6, 2002. The Company terminated the officer's
employment in 2002 and wrote-off approximately $47,000 in 2002 to operations
which is included in general and administrative expenses in the accompanying
statement of operations. The balance of $12,000 was repaid by the former officer
in January 2003.

**8.   INCOME TAXES**

At December 31, 2002, the Company has net operating loss carryforwards of
approximately $12,048,000 for financial reporting purposes and $8,057,000 for
tax purposes, which expire in various years through 2021. The difference between
financial and tax purposes results from temporary differences caused by
capitalization of start-up expenditures as required by Internal Revenue Code
Section 195.

The utilization of the net loss carryforwards may be limited as a result of
cumulative changes in the Company's stock ownership.

Deferred income taxes reflect the impact of net operating loss carryforwards. In
recognition of the uncertainty regarding the ultimate amount of income tax
benefits to be derived from the Company's net operating loss carryforwards, the
Company has recorded a valuation allowance for the entire amount of the deferred
tax asset. The deferred income tax asset is comprised of the following at
December 31, 2002:

                                      F-16

**JACOBSON RESONANCE ENTERPRISES, INC
                          NOTES TO FINANCIAL STATEMENTS**

Gross deferred tax asset resulting from
  net operating loss carryforwards          $ 2,739,000
Valuation allowance                          (2,739,000)
                                            -----------
Net deferred income tax asset               $        -
                                            ===========

The reconciliation of the effective income tax rate to the federal statutory
rate is as follows:

     December 31,                       2002        2001

Federal income tax rate               (34.0)%     (34.0)%

Valuation allowance on net
 operating loss carryforward            34.0%      34.0%
                                      -------     ------
Effective income tax rate                  -%         -%
                                      =======     ======

**9.   STOCK OPTION PLAN/STOCKHOLDERS' DEFICIENCY**

In November 1998, the Company's board of directors approved the 1998 Stock
Option Plan (the "Plan"). The Plan authorizes the granting of both incentive
stock options and nonstatutory stock options up to a total of 10,000,000 shares.
The Company's board of directors also approved the 2001 Stock Option Plan. The
provisions under this plan are similar to the 1998 Plan except that the 2001
Plan authorizes the granting of both incentive stock options and nonstatutory
stock options up to a total of 25,000,000 shares. The option price for
nonstatutory stock options may be less than, equal to, or greater than the
market price on the date the option is granted, whereas for incentive stock
options, the price will be a least 100% of the fair market value. Compensation
expense, representing the difference between the exercise price and the fair
market price at date of grant, is recognized over the vesting or service period.
For all the periods presented all of options were granted at an exercise price
equal to the fair market value of the Company's common stock at the date of
grant. The Board of Directors granted 19,291,000 options to eligible persons
under these plans. The right to exercise the options vests annually as follows:

        (1)   The right to exercise the option and to acquire 50% of the shares
              of stock underlying the options vests at the date granted.

        (2)   The right to exercise the option and acquire 30% of the shares of
              stock underlying the options vests one year after the date it is
              granted.

        (3)   The right to exercise the option and acquire 10% of the shares of
              stock underlying the options vests two years after the date it is
              granted.
                                      F-17

**JACOBSON RESONANCE ENTERPRISES, INC
                          NOTES TO FINANCIAL STATEMENTS**

        (4)   The right to exercise the option and acquire 10% of the shares of
              stock underlying the options vests three years after the date it
              is granted.

A summary of the status of the Company's options under the Plans as of December
31, 2002 and 2001, and changes during the years then ended, is presented below:

                                      2002                             2001
                         -------------------------------- -------------------------------
                                             Weighted-                       Weighted-
                                              Average                         Average
                                             Exercise                        Exercise
                              Shares           Price           Shares          Price
                         -------------------------------- -------------------------------
Options outstanding,
  beginning of year         19,151,000       $   0.29        1,763,500        $   0.61
Options exercised                   -        $     -                -         $     -
Options granted              6,200,000       $   0.18       17,387,500        $   0.26
Options cancelled          (10,341,000)      $   0.25               -         $     -
                         -------------------------------- -------------------------------
Options outstanding,
  end of year               15,010,000       $   0.26       19,151,000        $   0.29
                         ================================ ===============================
Options price
  range at end
  of year                $.18 to $1.26                   $.22 to $1.26
Options price
  range for
  exercised
  shares                            -                               -
Options available
  for grant at end
  of year                   13,990,000                      15,709,000

Weighted-
  average fair
  value of options
  granted during
  the year                  $    0.04                        $   0.21

The Black-Scholes option pricing model was developed for use in estimating the
fair value of traded options which have no vesting restrictions and are fully
transferable. In addition, option pricing models require the input of highly
subjective assumptions including the expected stock price volatility. Because
the Company's employee stock options have characteristics significantly
different from those of traded options and because changes in the subjective
input assumptions can materially affect the fair value of its employee stock
options.

                                      F-18

**JACOBSON RESONANCE ENTERPRISES, INC
                          NOTES TO FINANCIAL STATEMENTS**

Had compensation expense for the Company's stock option plans and the warrants
issued to the shareholders/officers been determined based on the fair value of
the options at the grant dates, consistent with SFAS No. 123 the Company's net
loss and net loss per share amounts would have been as follows:

December 31,                 2002              2001

Net loss:
    As reported         $(1,507,342)      $(1,813,071)
    Proforma             (1,755,416)       (5,249,215)

Basic and diluted loss
per share:
    As reported             $ (0.03)          $ (0.03)
    Proforma                $ (0.03)          $ (0.09)

The fair value for these options was estimated at the date of grant using a
Black-Scholes option pricing model with the following weighted-average
assumptions for the years ended December 31, 2002 and 2001, respectively,
risk-free interest rates of 5.0 - 6.0% and 6.0%, dividend yields of 0% and 0%,
volatility factors of the expected market price of the Company's common stock of
87.38% - 183.97% and 142.85%, and an expected life of the options of five years.

                                      F-19

**JACOBSON RESONANCE ENTERPRISES, INC
                          NOTES TO FINANCIAL STATEMENTS**

The following is a summary of changes in outstanding warrants and of options
(not included under the Plan) issued in connection with debt offerings and other
services during the period ended December 31, 2002 and December 31, 2001.

                                      2002                            2001
                         ----------------------------------------------------------------
                                             Weighted-                      Weighted-
                                              Average                        Average
                                             Exercise                        Exercise
                              Shares           Price          Shares          Price
                         ----------------------------------------------------------------
Warrants outstanding,
  beginning of year         13,195,649       $   0.39      10,840,117       $   0.38

Warrants exercised            (350,000)      $   0.19              -        $
Warrants granted             1,755,000       $   0.27       2,355,532       $   0.42
Warrants cancelled                  -        $     -               -        $     -
                         ----------------------------------------------------------------
Warrants outstanding,
  end of year               14,600,649       $   0.38      13,195,649       $   0.39
                         ================================================================

Warrants price range at
end of year             $.18 to $ 1.28                 $.19 to  $1.28

Warrants price range
for exercised shares             $ .19                          $  -

Weighted-average fair
value of warrants granted
granted during the year          $ 0.03                         $0.14

The following table summarizes information about fixed stock options under the
Plan outstanding at December 31, 2002.

                                                 Weighted-
                            Number Out-           Average        Weighted            Number           Weighted-
       Range of             standing at          Remaining        Average        Exercisable at        Average
       Exercise             December 31,        Contractual      Exercise         December 31,        Exercise
        Prices                  2002               Life            Price              2002              Price
------------------------ -------------------  ---------------- --------------  -------------------  --------------
     $.18 to $.24             7,800,000               4.5          $ 0.19            4,601,500          $ 0.22
         $0.25                4,325,000               4.0          $ 0.25            3,460,000          $ 0.25
     $.27 to $.38             1,445,000               2.5          $ 0.31            1,199,500          $ 0.31
         $0.42                  250,000               3.5          $ 0.42              225,000          $ 0.42
         $0.50                  865,000               2.5          $ 0.50              412,000          $ 0.50
         $1.26                  325,000               2.5          $ 1.26              325,000          $ 1.28
                              ----------                                            ----------
                             15,010,000                                             10,223,000
                              ==========                                            ==========

During 2001, the Company issued 1,420,112 shares of common stock for services of
$340,891 (valued at $.17 to $.35 per share) which is included in general and
administrative expenses in the Company's statement of operations for the year
ended December 31, 2002.

During 2001, the Company issued 1,673,791 shares of common stock pursuant to two
private placements and sales to private investors at prices of $.11 to $.42 per
share for an aggregate of $292,048. Under the terms of the first private
placement, investors received one Class A warrant (a total of 198,032 warrants)
which is exercisable at $.63 per common share for a four year period through
December 31, 2004 and contingently one Class B warrant which will be issued when
and if the Class A warrants are exercised before December 31, 2001, which are
exercisable at $.84 per common share for five year period extending through
December 31, 2005 for each share of common stock purchased. The warrants were
not exercised as of that date.

During 2001, the Company issued warrants to purchase 1,855,532 shares of common
stock at an exercise price of $.19 to $.35 per share (valued at $249,750) and
included in general and administrative expenses in the Company's statement of
operations for the year ended December 31, 2001. The warrants are exercisable
for a period of 24 to 48 months from the date of issuance.

During 2001, the Company granted options to purchase 17,387,500 shares of common
stock to officers and directors at an exercise price of $.24 to $.30 per share.

In October and November 2001, the Company issued 260,000 shares of common stock
to satisfy defaults on notes payable. The Company recorded interest expense of
$61,702 during the year ended December 31, 2001 in connection with this
transaction. See Note 4.

During 2002, the Company issued 2,353,645 shares of common stock for services of
$212,724 (valued at $.03 - $.35 per share), which is included in general and
administrative expenses in the Company's statement of operations for the year
ended December 31, 2002.

                                      F-20

**JACOBSON RESONANCE ENTERPRISES, INC
                          NOTES TO FINANCIAL STATEMENTS**

Pursuant to continuing agreement for product endorsements on March 21, 2002 the
Company issued 205,000 shares of common stock in satisfaction of $71,148 (valued
at $.35 per share) of accrued liabilities at December 31, 2001.

During 2002, the Company entered into private sales of 3,688,753 shares of
common stock at $.0275 - $.16 share, an aggregate of $245,500. The Company
issued 1,550,000 of these shares in 2003 and included $29,500 of the proceeds as
common stock to be issued on the Company's balance sheet at December 31, 2002.
In connection with the private sales, the Company issued warrants to purchase
1,755,000 shares of common stock of the Company at $.18 - $.40 per share (valued
at $45,242), which is included in the Company's statement of operations for the
year ended December 31, 2002. The warrants are exercisable for a period of 18 -
24 months from the date of issuance.

The Company was required to issue 30,000 shares of common stock due at December
31, 2001 pursuant to provisions of a bridge loan. An additional 525,000 shares
of common stock were issued in 2002 relating to 2002 transactions. The Company
recorded $116,645 of interest expense in 2002 in connection with the
transactions. See Note 4.

In connection with the Tecinvest funding the Company issued 336,500 shares of
common stock (valued at $47,110) for services relating to 2001 and 2002 funding
transactions. The fair value of the shares of common stock issued for 2001 and
2002 fundings are being amortized over the period the debt is outstanding. The
Company expensed the entire $47,110 in the Company's statement of operations for
the year ended December 31, 2002 as the debentures for $175,000 were converted
into common stock during 2002 and the investment agreement relating to the
services was terminated during 2002. See Note 5.

During August 2002, $175,000 of debentures were converted into 5,688,592 shares
of common stock. See Note 5.

During 2002, pursuant to a consulting agreement,  a warrant holder exercised the
cashless exercise provision of options to acquire 350,000 shares of common stock
which resulted in the holder receiving 128,948 shares of common stock.

On March 15, 2002 and December 16, 2002, the Company granted options to purchase
6,200,000  shares of common stock to officers and  directors.  These options are
exercisable at $.18 to $.24 per share.

On April 17, 2002 the Board of Directors cancelled 8,595,000 options to purchase
common stock that were granted to directors  and officers  during the year ended
December 31, 2001.

                                      F-21

**JACOBSON RESONANCE ENTERPRISES, INC
                          NOTES TO FINANCIAL STATEMENTS**

Of the total warrants outstanding at December 31, 2002 5,600,649, expire on
various dates from 2003 through 2006 and 9,000,000 expire in 2008.

**10.   COMMITMENTS AND CONTINGENCIES**

The Company is currently leasing office space under a non-cancelable operating
lease in Boyton Beach, Florida at the rate of $6,100 per month through March
2005. Rent expense for the years ended December 31, 2002 and 2001 amounted to
$88,323 and $96,246 respectively.

The approximate minimum lease payments are as follows:

Year ending December 31,

        2003             $ 77,000
        2004               80,000
        2005               21,000
                         --------
                         $178,000
                         ========

                                      F-22

**JACOBSON RESONANCE ENTERPRISES, INC
                          NOTES TO FINANCIAL STATEMENTS****11.   SUBSEQUENT EVENTS**

In the first quarter of 2003, the Company issued 1,200,000 shares of its common
stock as follows:

        a.   700,000 shares of common stock pursuant to a private placement. The
             Company received $10,000 on January 22, 2003. In connection with
             the transaction the Company issued warrants to purchase 200,000
             shares of the Company's common stock at $.20 per share expiring
             January 27, 2005.
        b.   500,000  shares of common stock pursuant to a private placement. The
             Company received $15,000 on March 5, 2003 in connection with the
             transaction the Company issued warrants to purchase 300,000 shares
             of the Company's common stock at $.20 per share expiring March 5,
             2005.

The above warrants will be valued $.02 per share and will be accounted for as
issuance costs and charges to paid-in capital in the amount of $11,560.

                                      F-23

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

         On April 10, 2003, the Company's Board of Directors approved the
appointment on April 8, 2003 of Wiener, Goodman & Company, P.C. ("WGC") as the
Company's independent auditors for the fiscal year ending December 31, 2002, and
dismissed Goldstein Golub Kessler LLP ("GGK"), which had audited the Company's
financial statements for the last three fiscal years ended December 31, 2001,
2000 and 1999, respectively.

         The Company's Board of Directors believes that the appointment of WGC
to audit the Company's consolidated financial statements for the fiscal year
ended December 31, 2002, and thereafter is in the best interests of the Company
and its shareholders at this point in the development of the Company's business.

         None of GGK's reports on the Company's financial statements for any of
the Company's past three fiscal years contained an adverse opinion or disclaimer
of opinion, or was qualified or modified as to uncertainty, audit scope, or
accounting principles, except for a modification as to an uncertainty about the
Company's ability to continue as a going concern. During the Company's two most
recent fiscal years and any subsequent interim period preceding the dismissal of
GGK, there were no disagreements with GGK on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedure,
which disagreement(s), if not resolved to the satisfaction of GGK, would have
caused it to make a reference to the subject matter of the disagreement(s) in
connection with its report.

                                    PART III

**ITEM 9.   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS:
          COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT****Executive Officers and Directors**

         The following table sets forth the names and ages of the Directors and
Executive Officers of the Company, as well as the positions held by such
persons:

      Name                        Age                 Position (1)

Dr. Jerry I. Jacobson (2)         57            Chairman of the Board,
Chief Executive Officer                         and Chief Science Officer

                                       37

Alfonso Serrato                   58            Director

Harvey Grossman                   56            President, Chief Operating
                                                Officer and Secretary

Debra M. Jacobson (2)             51            Director

Sidney Paul Martin                51            Director

Michael P. Steigman               58            Director

___________________

(1)      All Directors and Officers are elected for terms of one year and until
         their successors have been elected and qualified. Vacancies in the
         existing Board are filled by majority vote of the remaining Directors.
         Board members are serving without compensation. Officers serve at the
         pleasure of the Board.

(2)      Dr. Jerry I. Jacobson and Debra M. Jacobson are husband and wife.

         DR. JERRY I. JACOBSON acted as the Chairman, President and Chief
Executive Officer of the Company since June 1996 and of its privately-held
predecessor since March 1995. In June, 2001, coincident with the appointment of
Alfonso Serrato as Chief Executive Officer, Dr. Jacobson was elected Chief
Science and Technology Officer. In August, 2002, Dr. Jacobson reassumed the
title of Chief Executive Officer. Dr. Jacobson holds a Bachelor of Arts degree
in Philosophy from Brooklyn College of the City University of New York and
D.D.S. and D.M.D. degrees from Temple University. He served as captain and
emergency oral surgeon at Fort Rucker, Alabama, as active service in the Army
during the Vietnam conflict. He has also received extensive training in physics
after auditing 30 courses at different universities in the New York City and
Philadelphia metropolitan areas. Dr. Jacobson was an active dentist and oral
surgeon in the New York City area from 1972 to the early 1980's, and was
involved in dental research in this period. Dr. Jacobson has also been a student
of Albert Einstein's work throughout his life. Since his discovery of the
equation of Jacobson Resonance relating to medicine and energy, Dr. Jacobson has
focused his research and technology, denoted as Jacobson Resonance, on medical
therapy for more than twenty years. His publishing credits include more than 80
articles, more than 40 abstracts, three book chapters and two books. He holds
six issued and one pending United States patents, for which there are currently
patents issued or pending in numerous foreign countries. Dr. Jacobson was made a
professor and awarded a PhD in medicine in 2002 by Bundelkhand University,
Jhansi, India.

                                       38

         ALFONSO SERRATO has been a Director of the Company since June 1998, and
acted as our Chief Executive Officer from June 2001 through August, 2002. Mr.
Serrato worked for Medtronic, Inc., a New York Stock Exchange company that is a
leading manufacturer and distributor of medical devices around the world, from
1978 until 1996 in various capacities. His positions included Vice President of
Worldwide Manufacturing and Vice President of Pacing Operations. He is the
controlling person of Serrato Enterprises, L.L.C., a licensee of the Company and
the entity that is spearheading the Company's European initiatives.

         HARVEY GROSSMAN was appointed as Vice President in May 2001, and in
December, 2002 was elected President, Chief Operating Officer and Secretary.  He
has been an associate and friend of Dr. Jerry Jacobson for the past 13 years
and, prior to his joining us, he acted as a consultant to various companies in
the communications and media areas.  His responsibilities include
communications, education, media and public relations.  He also fulfills a
supervisory role in the training and operations of treatment centers and clinics
worldwide.  He has been a public speaker and executive consultant in the
for-profit and not-for-profit arenas for the past twenty-five years.  From
1990-1994 he was the Executive Director of the American Committee for the
Weizmann Institute of Science in Palm Beach County, Florida and previous to
that was the Campaign Director for the South Palm Beach County Jewish
Federation. Mr. Grossman lived in Israel from 1968 to1976 where he worked as a
Clinical Psychologist and Social Worker.

         DEBRA M. JACOBSON acted as a Director, the Treasurer and the Secretary
of the Company since August 1996 and Senior Vice President of the Company since
September 1999. Since August, 2002, she has acted only as a Director of the
Company. She has been married to Dr. Jacobson and served as his private
secretary for approximately 25 years. Previously, Ms. Jacobson worked as a
flight attendant for Eastern Airlines and as a secretary. She is a graduate of
Katherine Gibbs Secretarial School in New York, New York.

         SIDNEY PAUL MARTIN has been a Director of the Company since January 8,
2001. Mr. Martin is a agri-business entrepreneur with multiple farms and
interests in timber, land and cattle. A former educator, he holds Bachelor's and
Master's degrees from Mississippi State University. Mr. Martin is a registered
securities dealer and has been associated with Calton & Associates, Inc., a
registered broker dealer, for the last six years.

         MICHAEL P. STEIGMAN has served as a director since November 28, 2001,
and since 1999 has been the Controller and Assistant Treasurer for The Nevada
Water Company, Las Vegas, Nevada. Mr. Steigman resides in Las Vegas. Prior to
1999, Mr. Steigman served as the Controller for Mexicana Food and Spirits, a
tequila importing company, and Select Products, a china, glass and silver
marketing company, both located in Las Vegas. Prior to 1995, Mr. Steigman, was
the General Manager for Embassy Suites Hotel Group, Pittsburgh, Pennsylvania,
and held various executive positions in The Marriott Corporation. Mr. Steigman
has chaired and participated as a member on numerous convention and hospitality
based boards of directors, including the Greater Miami Hotel and Motel
Association, the Greater Pittsburgh Convention and Visitors Bureau, and the
Bloomington Minnesota Convention and Visitors Bureau and Chamber of Commerce
Boards. Additionally, Mr. Steigman has served as a board member for The
Children's Miracle Network.

         Each officer listed devotes full time to our business.

                                       39
**ITEM 10.  EXECUTIVE COMPENSATION****Executive Compensation**

         The following table sets forth certain information regarding the annual
compensation for services in all capacities to us for the years ended  December
31, 2002 and 2001:

                           Summary Compensation Table
                   ------------------------------------------
                                                                      Long-Term Compensation
          Annual  Compensation                                    Awards                 Payouts
---------------------------------------------       ---------------------------------------------
(a)            (b)      (c)     (d)      (e)       (f)         (g)       (h)       (i)
Name                                    Other   Restricted  Securities
and                                     Annual    Stock     Underlying  LTIP     All Other
Principal     Year    Salary   Bonus     Comp.   Awards(1)   Options/             Payouts
Comp.
Position      (1)       ($)    ($)       ($)       ($)        SARs(#)    ($)        ($)
 ------      ------   ------  ------   ------    ------      ------     ------    ------

Dr. Jerry I.
Jacobson      2002     -0-                                  2,000,000/0
Chairman (2)

              2001     -0-                                    150,000/0

Alfonso       2002     -0-                                    750,000/0
Serrato
              2001     -0-                                  5,125,000/0

(1)   Fiscal  years  ended  December  31,  2002  and  2001.

(2)   Dr. Jacobson, the Company's Chief Executive Officer up to December 31,
      2002, did not receive any cash compensation from the Company. However, Dr.
      Jacobson and each of the other directors and executive officers of the
      Company have received various stock issuances and stock option grants from
      the Company. During 2000, we advanced $200,000 to Dr. Jacobson to cover
      expenses for the Hewko and Casey litigation (See "Legal Proceedings"). The
      terms of the advance were for Dr. Jacobson to repay the advance when it
      was financially possible for him to do so; $50,000 of the advance was
      utilized to pay Dr. Jacobson's bankruptcy attorney in connection with his
      bankruptcy filing and the termination of the bankruptcy proceeding.  Our
      determination to make this advance was to keep Messrs. Hewko and Casey
      from involvement with us and to expedite our receipt of the exclusive
      license in the litigation settlement to all Jacobson Resonance patents.

                                       40
**1998 and 2001 Stock Option Plans**

         Under the 1998 Stock Option Plan (the "1998 Option Plan"), 10,000,000
shares, and under our 2001 Stock Option Plan (the "2001 Option Plan"), approved
by our stockholders on November 28, 2001, 25,000,000 shares, of our common stock
are reserved for the grant of options which are intended to qualify as Incentive
Stock Options ("ISOs") under Section 422 of the Internal Revenue Code of 1986
(the "Code"), which are not ("Non-ISOs") intended to qualify as Incentive Stock
Options thereunder, or which are Reload Options ("Reload Options"), where the
holder of the Option pays the exercise price for the original Option with shares
of stock already owned by that holder and the holder receives a Reload Option (a
new option to purchase shares of stock equal in number to the tendered shares).

         The 1998 Option Plan and the 2001 Option Plan (the "Plans") are
administered by a committee (the "Committee") which is appointed by the Board of
Directors from those of its members who are "non-employees" of the Company as
defined in Rule 16b-3 under the Securities Exchange Act of 1934 (the "Exchange
Act"). Following the November 28, 2001, Special Meeting of Stockholders, our
Board of Directors appointed Messrs. Sidney Paul Martin and Michael P. Steigman
as members of the Committee to administer the Plans. Subject to the provisions
of the 1998 Option Plan, the Board of Directors, or the Committee, if one is
appointed, has full authority to determine the persons to be granted options
under the Plan and the number and purchase price of the shares represented by
each option, the time or times at which the options may be exercised, and the
terms and provisions of each option, which need not be uniform for all options.

         Key employees of the Company or its subsidiaries, as determined by the
Board or Committee, and non-employee directors of the Company or its
subsidiaries are eligible to receive awards under the Plans. If any option
expires or is terminated prior to its exercise in full and prior to the
termination of either of the Plans, the shares subject to such unexercised
option shall again be available for the grant of new options under the
particular Plan. Further, any shares used as full or partial payment by an
optionee upon exercise of an option under one of the Plans may subsequently be
used by the Company to satisfy other options granted under the Plan, subject to
limitations on the total number of shares authorized to be issued under the
Plan. The Plans provides that the purchase price per share may not be less than
100% of the fair market value of the Common Stock at the time of grant.

         Options granted under the Plans may be exercised only during the
continuance of the Participant's employment with the Company or one of its
subsidiaries.

                                       41

         The following table shows grants of options to our officers and
directors in our last fiscal year.

**Option/SAR Grants in Last Fiscal Year**

Individual Grants
----------------------------------------------------------------------------------------------------------------------------------------
(a)                          (b)             (c)               (d)              (e)
                           Number  of        % of
                           Securities       Total
                           Under-          Options/
                           Lying             SAR's
                           Options/       Granted to        Exercise
                           SAR's           Employees         or Base
                           Granted         in Fiscal         Price            Expiration
   Name                    (#)               Year            ($/Sh)             Date
-------------              ------------    ------------    ------------    ------------
Dr. Jerry I. Jacobson      2,000,000/0                        $.018          12/16/07

Alfonso Serrato              750,000/0                        $.018          12/16/07

Harvey Grossman            1,500,000/0                        $.018          12/16/07

Sidney Paul Martin         1,400,000/0                        $.018          12/16/07

Michael Steigman             400,000/0                        $.018          12/16/07

(1)   Percentages apply to all options granted to Dr. Jacobson and Mr. Serrato
      shown in table. The options are exercisable as to 50% of the shares
      covered by each option immediately upon grant of the option; become
      exercisable as to an additional thirty percent one year following the date
      of grant; and become exercisable as to an additional ten percent on each
      of the  two and three year anniversaries of the date of grant.

(2)

         The following table summarizes the number and value of unexercised
options held by our Chairman and Chief Executive Officer as of December 31,
2002.  The options shown below do not include options held by Debra M. Jacobson,
the wife of Dr. Jerry I. Jacobson.

**FISCAL YEAR-END OPTION VALUES**
----------------------------------------------------------------------------------------------------------------------
                                                                       Number of Securities     Value of Unexercised
                                                                       Underlying Unexercised   in-the-Money Option/
                                                                       Options/SARS At          SARs at Fiscal
                                                                       Fiscal Year-End (#)      Year-End ($)
                                                                       Exercisable/             Exercisable/
                          Shares Acquired on                           Unexercisable            Unexercisable
Name                      Exercise (#)           Value Realized ($)
------------------------- ---------------------- --------------------- ------------------------ ----------------------
Dr. Jerry I. Jacobson     NA                     NA                    3,170,000/0              NA
                                                                       2,091,000/1,079,000

         The above value has been calculated based on closing price of the
common stock as quoted on the OTC Bulletin Board on December 31, 2003.

                                       42

         No officer or Director exercised any options in the fiscal year ended
December 31, 2002.

**Compensation of Directors**

The members of our Board of Directors are reimbursed for actual expenses
incurred in attending Board meetings.

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

         The following table sets forth, as of April 30, 2003, the beneficial
ownership of the common stock of the Company by each person beneficially owning
more than 5% of such securities, by each of the directors and executive officers
of the Company, and by the directors and executive officers of the Company as a
group.
                                                      Number          Percentage
**Beneficial Owner**

Officers, Directors and 5% Beneficial Owners
Dr. Jerry I. Jacobson (3)                           43,987,646          39.18%
Alfonso Serrato (4)                                  7,897,548           9.97%
Debra M. Jacobson (5)                                2,692,200           3.58%
Sidney Paul Martin (6)                               1,253,000           1.66%
Michael P. Steigman                                    210,000              *
Harvey Grossman (9)                                  1,267,500           1.68%
Eric and Vanessa Hewko (7)                           7,500,000          10.11%
761 Doris Road South
North Palm Beach, FL 33408
Hewko/Casey Investments (7)                          7,500,000          10.11%
515 N Flagler Drive, 19th Floor
West Palm Beach, FL 33401
All Directors and Officers as a Group               57,285,894          47.40%
(6 persons)

Tecinvest Services, Inc. (8)                         7,540,939           9.99%
____________________
*Less than 1%.

                                       43

(1)      The address of each director or executive officers in the table is c/o
         Jacobson Resonance Enterprises, Inc., 8200 Jog Road, Suite 100, Boynton
         Beach, FL 33437.

(2)      For all entries in the table other than the one for Dr. Jerry I.
         Jacobson, the figures represent beneficial ownership of shares of the
         Company's common stock.

(3)      Includes 30,000,000 shares of common stock issuable upon conversion of
         30,000 shares of our Series A Convertible Preferred Stock held by Dr.
         Jacobson. Each share of the Series A Convertible Preferred Stock is
         entitled to 1,000 votes on all matters submitted to a vote of the
         Company's shareholders. The Series A Convertible Preferred Stock is not
         entitled to any dividends and has a liquidation preference equal to its
         par value, which is a total of $30.00. At the option of Dr. Jacobson,
         up to one-third of the outstanding shares of the Series A Convertible
         Preferred Stock can be converted into shares of the Company's common
         stock beginning in May of the years 2001 and 2002. The conversion ratio
         is 1,000 shares of common stock for each share of preferred stock. This
         figure includes 5,896,646 shares of common stock owned of record by Dr.
         Jacobson. The number of shares shown does not include 700,000 shares
         which are owned by Dr. Jacobson's children (Jacqueline Jacobson-
         250,000;Faith Jacobson-250,000;Maria Jacobson-100,000; and Solomon
         Jacobson-100,000, the latter being the only one of the children that at
         this date is not a minor), 1,691,700 shares owned by Debra M. Jacobson,
         Dr. Jacobson';s wife, nor 1,000,000 shares owned of record by the
         Perspectivism Foundation, of which Dr. Jacobson is the founder and a
         director. Dr. Jacobson disclaims any beneficial interest in the shares
         owned by his children, his wife or the Perspectivism Foundation. In
         addition, Dr. Jacobson received 6,000,000 warrants expiring April 2008,
         with an exercise price of $.30 per share (the "Warrants") for
         assignment of his two-thirds interest in a patent relating to
         Therapeutic Treatment of Mammals; the Warrants are reflected in the
         above table. The Warrants are subject to adjustment in the event of
         merger, consolidation, recapitalization, reorganization, stock split or
         stock dividend. No such event has occurred since the issuance of the
         Warrants. Dr. Jacobson's ownership shown in this table includes
         2,091,000 shares issuable pursuant to presently exercisable options.
         Dr. Jacobson has been issued options to purchase an aggregate of
         3,170,000 shares of our common stock issued under our Stock Option
         Plans, at per share exercise prices ranging from $.20 to $.018,
         expiring at various dates from October 31, 2003 to December 16, 2007.

(4)      This figures includes 2,900,548 shares owned of record by Mr. Serrato
         and 4,997,000 shares subject to presently exercisable options granted
         to Mr. Serrato. Mr. Serrato holds options to purchase 6,325,000 shares
         of our common stock issued under our Stock Option Plans, at per share
         exercise prices ranging from $.018 to $1.26, expiring from November 12,
         2003 to December 16, 2007, of which options to purchase 4,997,000
         shares are presently exercisable. These figures also exclude 28,571
         shares owned of record by Mr. Serrato's wife and options issued under
         Stock Option Plans to purchase 200,000 shares of our common stock. Mr.
         Serrato disclaims any beneficial interest in those shares held directly
         by his wife or underlying the options held by her.

                                       44

(5)      This figure includes 1,691,700 shares owned of record by Mrs. Jacobson
         and 1,000,500 shares subject to presently exercisable options granted
         to Ms. Jacobson. Ms. Jacobson holds options to purchase an aggregate of
         1,070,000 shares of common stock issued under our Stock Option Plans,
         at per share exercise prices ranging from $.22 to $1.26 per share,
         expiring from October 31, 2003 to January 2, 2006, 1,000,500 of which
         are presently exercisable. Ms. Jacobson's ownership shown does not
         include beneficial ownership of shares of the Company's common stock by
         Dr. Jerry I. Jacobson, the husband of Ms. Jacobson, as to which shares
         Ms. Jacobson disclaims any beneficial interest. This figure also
         excludes 1,000,000 shares owned of record by the Perspectivism
         Foundation, to which Ms. Jacobson donated the shares and of which Ms.
         Jacobson is a director. Ms. Jacobson disclaims any beneficial interest
         in those shares.

(6)      Mr. Martin owns 92,000 shares of common stock directly, and his wife,
         Nanda Martin owns 10,000 shares directly.  Mr. Martin holds options to
         purchase 1,907,000 shares of our common stock granted under our Stock
         Option Plans, at exercise prices ranging from $.018 to $1.26 per share,
         expiring at various dates from August 12, 2004, to December 16, 2007,
         of which options to purchase 1,131,000 shares are presently
         exercisable. Mr. Martin holds warrants, expiring December 31, 2004, to
         purchase 20,000 shares of common stock at an exercise price of $.63 per
         share.

(7)      Eric and Vanessa Hewko and Hewko/Casey Investments also own an
         aggregate of 3,000,000 Warrants for a one-third interest in a patent
         relating to Therapeutic Treatment of Mammals. The Warrants must be
         adjusted in the event of merger, consolidation, recapitalization,
         reorganization, stock split or stock dividend. Such events have not
         occurred since the issuance of the Warrants.

(8)      Tecinvest Services, Inc. owns 6,313,592 shares of our common stock
         directly, and holds $25,000 principal amount of our convertible
         debentures, convertible at the lesser of (i) one hundred ten percent
         (110%) of the average closing bid price for the five (5) trading days
         immediately preceding the Closing Date or (ii) seventy-five percent
         (75%) of the average of the six (6) lowest closing bid prices during
         the twenty (20) trading days prior to conversion. Based on the bid
         prices for our common stock in April, 2003, the principal and accrued
         interest on that convertible debenture would be convertible into
         1,216,667 shares of our common stock. Tecinvest also holds warrants to
         purchase an aggregate of 1,325,000 shares of our common stock, which
         warrants were issued in connection with a proposed equity line to be
         provided by Tecinvest and convertible debentures purchased by
         Tecinvest. Under the terms of the agreements concerning the equity line
         with Tecinvest and the convertible debentures and warrants issued to
         Tecinvest, Tecinvest, no shares shall be issuable to Tecinvest pursuant
         to conversion of any such convertible debenture or exercise of any such
         warrant that would result in Tecinvest's owning a number of shares of
         our common stock in excess of Tecinvest's ownership limit of 9.99% of
         our outstanding common stock.

(9)      Includes 1,267,500 shares comprising the exercisable portion of options
         to purchase an aggregate of 2,125,000 shares under our Stock Option
         Plans. Mr. Grossman was awarded five year options under these Plans as
         follows: 25,000 shares at a per share exercise price of $.30 on April
         2, 2001; 300,000 shares at a per share exercise price of $.25 on July
         2, 2001; 150,000 shares at a per share exercise price of $.24 on
         November 29, 2001; and 1,500,000 shares at a per share exercise price
         of $.018 on December 16, 2007.

**ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Related Party Transactions**

         We are the exclusive licensee of Jacobson Resonance from Dr. Jacobson,
who is the majority owner of all patents issued or filed. Dr. Jacobson is also
the majority owner of all relevant Jacobson Resonance intellectual property. We
have extended the exclusive rights to pursue whatever applications of Jacobson
Resonance that we want through 2007. In return, we are obligated to pay Dr.
Jacobson a 3% royalty on revenues, depending upon the application. During 2000,
we advanced $200,000 to Dr. Jacobson to cover expenses for the Hewko and Casey
litigation (See "Legal Proceedings"). The terms of the advance were for Dr.
Jacobson to repay the advance when it was financially possible for him to do so;
$50,000 of the advance was utilized to pay Dr. Jacobson's bankruptcy attorney in
connection with his bankruptcy filing and the termination of the bankruptcy
proceeding.

         To date, we have entered into two agreements with Serrato Enterprises
L.L.C. ("Serrato Enterprises"), an entity controlled by Alfonso Serrato, a
director of the Company. In February 1999, we executed a ten-year license
agreement with Serrato Enterprises for the marketing and distribution of our
chronic pain reduction products in continental Europe, Latin America, Japan,
Australia, New Zealand and the Middle East, excluding Israel. In January 2000,
we further executed a ten-year manufacturing agreement with Serrato
Enterprises-BioRes Medical, S.L., under which we will receive manufacturing
royalties based on type and production volume of resonators manufactured by
Serrato Enterprises. Through Serrato Enterprises, we sell or lease Jacobson
Resonators to these facilities and receive 16% of distribution fees, payable
quarterly, in addition to $1500 per unit manufacturing royalties for the 4' and
7' models and $1200 for the 18" and 22" models and $2.00 for each treatment
session computer card sold.

         Mr. Serrato in November 1998 made a $60,000 one-year loan to us with
interest at 7% per annum. He had the option at any time to convert the loan and
any accrued interest into shares of our common stock at $0.21 per share, which
approximated the fair market value of our common stock at the time the loan was
made. In March 1999, he converted the loan and accrued interest into 291,305
shares of our common stock.

                                       45

         The Company is the exclusive licensee of Jacobson Resonance from Dr.
Jacobson, who is the majority owner of all patents issued or filed. Dr. Jacobson
is also the majority owner of all relevant Jacobson Resonance intellectual
property. The Company has extended the exclusive rights to pursue whatever
applications of Jacobson Resonance that it wants through 2007. In return, the
Company is obligated to pay Dr. Jacobson a 3% royalty on revenues.

         See "Option/SAR Grants in Last Fiscal Year" and "Security Ownership of
Certain Beneficial Owners and Management" above for terms of options to purchase
shares of our common stock granted to Dr. Jerry I. Jacobson, our Chairman and
Chief Executive Officer, Harvey Grossman, our President, and our directors
Alfonso Serrato, Sidney Paul Martin, and Michael Steigman.

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

(a)      Exhibits:  See Exhibit Index.

(b)      Reports on Form 8-K: The Company did not file any Current Reports on
         Form 8-K during the fiscal quarter ended December 31, 2002.

**ITEM 14. Controls and Procedures**

Within the 90 days prior to the filing date of this Form 10-KSB, the Company
carried out an evaluation, under the supervision and with the participation of
the Company's management, including the Company's Chief Executive Officer and
Chief Financial and Accounting Officer, of the effectiveness of the design and
operation of the Company's disclosure controls and procedures as defined in Rule
13a-14 of the Securities Exchange Act of 1934. Based upon that evaluation, the
Chief Executive Officer and Principal Financial and Accounting Officer concluded
that the Company's disclosure controls and procedures are effective in timely
alerting them to material information relating to the Company (including its
consolidated subsidiaries) required to be included in this Annual Report on Form
10-KSB. There have been no significant changes in the Company's internal
controls or in other factors which could significantly affect internal controls
subsequent to the date the Company carried out its evaluation.

                                       46
**EXHIBIT INDEX**

Exhibit
Number         Description of Exhibit
-------------- -----------------------------------------------------------------
3.1            Articles of Incorporation, as amended*
3.2            By-Laws, as amended*
4.1            Specimen Common Stock Certificate*
4.2            Specimen Series A Convertible Preferred Stock Certificater*
4.3            Specimen 1998 Warrant Agreement*
4.4            Specimen 1998 Placement Agent Warrant Agreement*
4.5            Jacobson Resonance Enterprises, Inc. 1998 Stock Option Plan, as
               amended****
4.6            Jacobson Resonance Enterprises, Inc. 2001 Stock Option Plan****
4.7            Specimen 2% Convertible Debenture*
4.8            Investment Agreement, dated December 18, 2001, between the
               Company and Tecinvest Services, Inc.*****
4.9            Commitment Warrant issued to Tecinvest, dated December 18,
               2001*****
4.10           Registration Rights Agreement, December 18, 2001, between the
               Company and Tecinvest Services, Inc.*****
4.11           Escrow Agreement, dated December 18, 2001, by and among the
               Company, Tecinvest Services, Inc. and Joseph B. LaRocco*****
4.12           Convertible Debenture issued December 18, 2001, to Tecinvest
               Services, Inc.*****
4.13           Convertible Debenture Warrant issued December 18, 2001, to
               Tecinvest Services, Inc.*****
4.14           Registration Rights Agreement for the Tecinvest Services, Inc.
               Convertible Debentures and Convertible Debenture Warrants,
               between the Company and Tecinvest Services, Inc.*****
4.15           Subscription Agreement for the Tecinvest Services, Inc.
               Convertible Debentures, dated December 18, 2001, between the
               Company and Tecinvest Services, Inc.*****
4.16           Convertible Debenture issued September 3, 2002, to Tecinvest
               Services, Inc. (filed herewith)
10.1           Patent License Agreement Dated October 6, 1999, Between Dr. Jerry
               I. Jacobson and the Company*
10.2           License Agreement Dated February 23, 1999, Between the Company
               and Serrato Enterprises L.L.C.*
10.3           1998 Stock Option Plan*
10.4           License Agreement Dated October 15, 1999, Between the Company and
               Serrato Enterprises L.L.C.**
10.5           Distribution Agreement Dated December 29, 1999, Between the
               Company and Akron Bio-Medical Corporation**
10.6           License Agreement Dated December 29, 1999, Between the Company
               and ABM Manufacturing, Inc.**
10.7           License Agreement Dated December 31, 1999, Between the Company
               and REALPURE Beverage Group, LLC**
10.8           License Agreement Dated August 27, 2000, Between the Company and
               Enviro Wood Fibre Block & Brick, Inc.***
10.9           License Agreement, dated April 4, 2003, between the Company and
               P.E.R., Inc. (filed herewith) List of Subsidiaries*
99.1           Certification of Dr. Jerry I. Jacobson Pursuant to Section 906 of
               the Sarbanes-Oxley Act of 2002 (filed herewith)

*        Filed as Exhibits to the Company's Form 10-SB, filed on October 27, 1999.
**       Filed as Exhibits to the Company's Form 10K-SB, filed on April 24, 2000.
***      Filed as Exhibits to the Company's Form 10K-SB, filed on April 17, 2001
****     Filed as Exhibits to the Company's Form S-8, filed January 11, 2002
*****    Filed as Exhibits to the Company's Form SB-2, filed February 4, 2002

                                       47
**SIGNATURES**

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

Date: May 15, 2003                      JACOBSON RESONANCE ENTERPRISES, INC.
                                                    (Registrant)

                                        By:  /s/  Jerry I. Jacobson
                                           -------------------------------------
                                                  Jerry I. Jacobson,
                                                  Chief Executive Officer

         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 date indicated.

                                      Signature                          Position

Date Signed: May 15 , 2003       /s/ Dr. Jerry I. Jacobson        Dr. Jerry I. Jacobson, Chairman
                                                                  of the Board of Directors and
                                                                  Chief Executive Officer (Chief
                                                                  Executive and Financial Officer)

Date Signed: May 15 , 2003       /s/ Alfonso Serrato              Alfonso Serrato, Director

Date Signed: May , 2003                                           Debra Jacobson, Director

Date Signed: May 15, 2003       /s/ Paul Martin                   Sidney Paul Martin, Director

Date Signed: May 15, 2003       /s/ Michael Steigman              Michael P. Steigman, Director

                                       48
**CERTIFICATION**

I, Jerry I. Jacobson, certify that:

1.   I have reviewed this annual report on Form 10-KSB of Jacobson Resonance
     Enterprises, Inc.;

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

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

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

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

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

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

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

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

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

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

DATE: May 15, 2003          /s/  Jerry I. Jacobson
                              -----------------------------------------
                                 Jerry I. Jacobson, Chief Executive Officer
                                 and Principal Financial Officer

                                       49
**Exhibit Index**

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

   4.16             Convertible Debenture issued September 3, 2002, to Tecinvest
                    Services, Inc.
   10.9             License Agreement, dated April 4, 2003, between the Company
                    and P.E.R., Inc.
   99.1             Certification of Dr. Jerry I. Jacobson Pursuant to Section
                    906 of the Sarbanes-Oxley Act of 2002
```