UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10-KSB/A

                                 AMENDMENT NO. 1


(Mark One)

[X]      ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE ACT
         OF 1934
         For the fiscal year ended December 31, 2002

[ ]      TRANSITION  REPORT  UNDER  SECTION  13 OR  15(d)  OF THE  SECURITIES
         EXCHANGE ACT OF 1934
         For the transition period from ____________  to _____________

                         Commission file number: 0-30721

                               IPEC HOLDINGS INC.
                 (Name of small business issuer in its charter)

            NEVADA                                            87-0621339
  (State or other jurisdiction                             (I.R.S. Employer
 of incorporation or organization)                       Identification No.)

    RD #3, BOX 7-A, NORTHGATE INDUSTRIAL PARK, NEW CASTLE, PENNSYLVANIA 16105
               (Address of principal executive offices) (Zip Code)

                    Issuer's telephone number: (800) 377-4732

       Securities registered under Section 12(b) of the Exchange Act: NONE

         Securities registered under Section 12(g) of the Exchange Act:

                         COMMON STOCK, $0.001 PAR VALUE
                                (Title of class)

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

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


State issuer's revenues for its most recent fiscal year:  $13,046,668


State the aggregate market value of the voting and non-voting common equity held
by non-affiliates  computed by reference to the price at which the common equity
was sold,  or the average bid and asked  price of such  common  equity,  as of a
specified date within the past 60 days: $3,285,314 AS OF MARCH 26, 2003

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest  practicable date:  9,972,912 SHARES OF COMMON STOCK AS
OF MARCH 3, 2003

Transitional Small Business Disclosure Format (Check one):    Yes ___; No_X_

<PAGE>


                           FORWARD LOOKING STATEMENTS

Under the "safe harbor" provisions of the Private  Securities  Litigation Reform
Act of  1995  (the  "PSLRA"),  we  caution  readers  regarding  forward  looking
statements  found in this report and in any other  statement  made by, or on our
behalf,  whether  or not in future  filings  with the  Securities  and  Exchange
Commission.  Forward-looking  statements  are statements not based on historical
information and which relate to future operations, strategies, financial results
or other  developments.  Forward looking  statements are necessarily  based upon
estimates and assumptions that are inherently  subject to significant  business,
economic and  competitive  uncertainties  and  contingencies,  many of which are
beyond our control and many of which, with respect to future business decisions,
are subject to change.  These  uncertainties and contingencies can affect actual
results and could cause actual results to differ materially from those expressed
in any forward  looking  statements  made by or on our behalf.  We disclaim  any
obligation to update forward-looking statements.



                                     PART II

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

OVERVIEW

         Effective January 28, 2002, an arrangement was completed between Golden
Hole and IPEC,  whereby the  shareholders  of IPEC exchanged all of their common
shares for 9,489,796 shares of Golden Hole common stock.

         Following  the  acquisition  the  former  shareholders  of IPEC  held a
majority of Golden Hole's total issued and outstanding  common shares;  IPEC was
thereby  deemed  to be the  acquiror.  Accordingly,  the  transaction  has  been
accounted for as a reverse takeover using the purchase method whereby the assets
and  liabilities  of Golden Hole have been  recorded at their fair market values
and operating  results have been included in the financial  statements  from the
effective date of purchase.  The fair value of the net assets  acquired is equal
to their book values.

RESULTS OF OPERATIONS

         IPEC  has  significantly  improved  its  performance  since  1999,  due
primarily to a comprehensive  process review and refinement in the third quarter
of 2000, which resulted in substantial  financial  savings from the efficiencies
gained.


         FISCAL YEARS ENDED  DECEMBER  31, 2002 AND 2001.  Sales for fiscal 2002
decreased slightly by $17,567 (0.1%). However, the gross profit margin increased
from  $2,744,400  (21.1%) in 2001 to  $3,604,829  (27.6%) in 2002.  Selling  and
general and administrative expenses increased as a percentage of sales (17.1% in
2002 as  compared  to 14.2% in  2001),  but the  increase  in  absolute  dollars
($372,241)  was  substantially  less than the increase in gross profit margin in
absolute  dollars  ($860,429).  As a result,  net operating income increased for
fiscal 2002 by $488,188 (55.3%).  Non-operating  expenses  decreased by $187,126
(23.8%), resulting in substantially higher net income for 2002 ($696,679 in 2002
as compared to $79,365 in 2001).


         FISCAL YEARS ENDED  DECEMBER  31, 2001 AND 2000.  Sales for fiscal 2001
increased by $611,162 (5%). The gross profit margin increased slightly, from 20%
in 2000 to 21% in 2001,  while selling and general and  administrative  expenses
increased as a percentage of sales (14% in 2001 as compared to 13% in 2000). Net
operating income decreased by $9,130. However,  non-operating expenses decreased
by $21,171  (3%),  resulting in slightly  higher net income for 2001 ($79,365 in
2001 as compared to $77,824 in 2000).

LIQUIDITY AND CAPITAL RESOURCES

         DECEMBER 31, 2002 AND 2001.  At December  31, 2002,  IPEC had a working
capital  deficiency of $1,383,276,  as compared to a deficiency of $2,274,022 at
December 31, 2001. The current portion of notes payable

                                        2
<PAGE>

decreased to  $1,416,436  at December 31, 2002 from  $2,990,727  at December 31,
2001,  as a  promissory  note in the amount of  $1,900,000  due July 1, 2002 was
refinanced in December  2002 for a period of three years with a balloon  payment
due at end of three years.

         Our  operations  provided cash of $1,773,570  for the 2002 fiscal year,
compared to $1,671,251  provided in the 2001 fiscal year.  In fiscal 2001,  IPEC
used $1,165,099  primarily for property,  plant,  and equipment,  as compared to
$2,229,958 in fiscal 2002.  Financing  activities,  principally the repayment of
amounts  due to  related  parties,  used cash of  $473,332  in fiscal  2002,  as
compared to $496,580 that was provided by financing activities in 2001. In 2001,
IPEC sold common stock for  $1,295,244  and borrowed  $808,447 from the bank and
$350,000 from related  parties.  It used  $1,000,000  to repurchase  outstanding
preferred  stock and paid down its line of credit by  $810,973.  At December 31,
2002,  the balance of the bank line of credit was  $2,550,000,  as compared to a
balance of $2,260,000 at December 31, 2001.

PLAN OF OPERATION

         IPEC's  primary  strategy is to increase its plastic  closure  sales by
aggressively  increasing its market share in the non-carbonated  beverage sector
of the caps and closures industry. Management has identified 4 areas of focus to
support this strategy:

         (i)      Continuing its commitment to research and development  leading
                  to new product innovations;
         (ii)     Emphasizing customer support and total product solutions;
         (iii)    Continuing to enhance low cost manufacturing capabilities; and
         (iv)     Expanding sales initiatives.

         Management  of  IPEC  believes  that  it  has  in  place  much  of  the
infrastructure  and manufacturing  capability  required to support growth to the
$25 million dollar revenue level by 2005. IPEC proposes to increase its capacity
in the next 3 years by 25% to 4.1 billion closures with the capital expenditures
listed below.

         Maintaining   IPEC's   manufacturing   readiness  requires  an  ongoing
financial  commitment  for tooling,  warehousing  and molds.  IPEC  proposes the
following capital expenditures through 2005:

<TABLE>
<CAPTION>
                  YEAR       DESCRIPTION                             AMOUNT         TOTALS
                  ----       -----------                             ------         ------
                  <S>        <C>                                     <C>            <C>
                  2003       Machinery and equipment                     200,000
                             Molds                                       600,000
                             Alabama warehouse expansion               1,400,000
                                                                       ---------
                                                                                    $2,200,000

                  2004       Machinery and equipment                     400,000
                             Molds                                       200,000
                                                                       ---------
                             Total 2004                                              $ 600,000

                  2005       Machinery and equipment                     400,000
                             Molds                                       200,000
                                                                       ---------
                             Total 2005                                                600,000
                                                                                    ----------
                             TOTAL                                                  $3,400,000
                                                                                    ==========
</TABLE>


         To provide the cash necessary to support this growth plan through 2005,
IPEC anticipates that it will generate cash flow of $1.2 million from operations
during the next three years.  Combined  with a planned  equity  offering of $1.9
million in 2003,  this will  enable IPEC to repay $3.1  million of current  debt
financing through 2005.


ITEM 7.  FINANCIAL STATEMENTS.

         See pages beginning with page F-1.




                                        3
<PAGE>


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

<TABLE>
<CAPTION>
------------------- --------------------------------------------------------------------------------------------------
    REGULATION
    S-B NUMBER                                                   EXHIBIT
------------------- --------------------------------------------------------------------------------------------------
<S>                 <C>
       2.1          Share Exchange Agreement between Golden Hole, Inc. and International Plastics and Equipment
                    Corp. dated January 14, 2002 (1)<F1>
------------------- --------------------------------------------------------------------------------------------------
       3.1          Articles of Incorporation, as amended (2)<F2>
------------------- --------------------------------------------------------------------------------------------------
       3.2          Bylaws (2)<F2>
------------------- --------------------------------------------------------------------------------------------------
       4.1          Description of Series A Convertible Preferred Stock (3)<F3>
------------------- --------------------------------------------------------------------------------------------------
       10.1         December 23, 1998 Loan Documents with First Western Bank (3)<F3>
------------------- --------------------------------------------------------------------------------------------------
       10.2         January 13, 2000 Loan Documents with First Western Bank (3)<F3>
------------------- --------------------------------------------------------------------------------------------------
       10.3         January 11, 2001 Loan Documents with Sky Bank (3)<F3>
------------------- --------------------------------------------------------------------------------------------------
       10.4         February 25, 2002 Loan Documents with Sky Bank (3)<F3>
------------------- --------------------------------------------------------------------------------------------------
       10.5         Series A Convertible Preferred Stock Purchase Agreement dated January 1, 2000 (3)<F3>
------------------- --------------------------------------------------------------------------------------------------
       10.6         Consulting Agreement dated January 1, 2000 with Sherwood LLC (3)<F3>
------------------- --------------------------------------------------------------------------------------------------
       10.7         Payment and Severance Agreement and Guarantee dated January 2, 2001 (3)<F3>
------------------- --------------------------------------------------------------------------------------------------
       10.8         Consulting Agreement dated January 1, 2001 with Sherwood LLC (3)<F3>
------------------- --------------------------------------------------------------------------------------------------
       16.1         Letter from Andersen Andersen & Strong, L.L.C. (1)<F1>
------------------- --------------------------------------------------------------------------------------------------
       21.1         Subsidiaries of the registrant (3)<F3>
------------------- --------------------------------------------------------------------------------------------------

       31.1         Rule 13a(14(a) Certification of Chief Executive Officer

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

       31.2         Rule 13a(14(a) Certification of Chief Financial Officer

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

       32.1         Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
                    Sarbanes-Oxley Act of 2002 of Chief Executive Officer

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

       32.2         Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
                    Sarbanes-Oxley Act of 2002 of Chief Financial Officer

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

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

<FN>
<F1>
(1)      Incorporated by reference to the exhibits to the  registrant's  current
         report on Form 8-K dated January 28, 2002, file number 0-30721.
<F2>
(2)      Incorporated   by  reference  to  the  exhibits  to  the   registrant's
         registration statement on Form 10-SB, file number 0-30721.
<F3>
(3)      Incorporated  by reference to the exhibits to the  registrant's  annual
         report on Form 10-KSB for the fiscal year ended December 31, 2001, file
         number 0-30721.
</FN>
</TABLE>

Reports on Form 8-K:  None.



                                        4
<PAGE>


                                   SIGNATURES

         In  accordance  with  Section  13 or 15(d)  of the  Exchange  Act,  the
registrant  caused  this  report to be signed on its behalf by the  undersigned,
thereunto duly authorized.

                                            IPEC HOLDINGS INC.



Date:  November 14, 2003                    By:      /S/ SHAWN C. FABRY
                                               -----------------------------
                                                     Shawn C. Fabry,
                                                     Chief Financial Officer

                                        5
<PAGE>


                               IPEC HOLDINGS, INC.
                              FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001


<TABLE>
                                TABLE OF CONTENTS


<CAPTION>

                                                                                                                   PAGE(S)
<S>                                                                                                               <C>

         Report Of Independent Accountant                                                                            F-2

         Balance Sheets - December 31, 2002 and 2001                                                              F-3 - F-4

         Statements Of Operations - Years Ended December 31, 2002 and 2001                                           F-5

         Statements Of Cash Flows - Years Ended December 31, 2002 and 2001                                           F-6

         Statement of Shareholders Equity - December 31, 2002 and 2001                                               F-7

         Notes To Financial Statements - December 31, 2002 and 2001                                               F-8 - F-23

</TABLE>

                                       F-1
<PAGE>



                                        1169 Pittsford - Victor Road, Suite 125
                                               Rochester, New York 14534
BAIER & WILLIAMS, LLP.                               (585) 385-0530
================================================================================
Certified Public Accountants o Business and Financial Advisory Services


         To the Board of Directors of IPEC Holdings, Inc.

                  In our opinion, the accompanying balance sheets and the
         related statements of operations, cash flows and shareholders' equity
         present fairly, in all material respects, the financial position of
         IPEC Holdings, Inc. ("Company") at December 31, 2002 and 2001, and the
         results of their operations, their cash flows and their shareholders
         equity for each of the years then ended, in conformity with accounting
         principles generally accepted in the United States of America. 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 audits. We conducted our audits of
         these statements in accordance with auditing standards generally
         accepted in the United States of America, which require that we plan
         and perform the audits 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, assessing the accounting
         principles used and significant estimates made by management, and
         evaluating the overall financial statement presentation. We believe
         that our audits provide a reasonable basis for the opinion expressed
         above.

                  As discussed in Notes 1 and 8, the Company has restated its
         financial statements to reflect the issuance of 200,000 common stock
         warrants in November 2002.



         /S/BAIER & WILLIAMS, LLP.
         Baier & Williams, LLP.
         Rochester, New York
         January 24, 2003, except for Note 14,
           for which the date is February 20, 2003
           and except for Notes 1, 8 and 9, for which
           the date is October 30, 2003



                                       F-2
<PAGE>




                               IPEC HOLDINGS, INC.
                                 BALANCE SHEETS



<TABLE>
<CAPTION>
                                                        As Restated
                                                        December 31,         December 31,
                                                            2002                 2001
                                                    --------------------  ------------------
<S>                                                 <C>                   <C>
                       Assets
Cash                                                $          84,661     $      1,014,381
Accounts Receivable, less reserves for                        937,168              858,485
   bad debts of $210,000 and $140,273
   in 2002 and 2001
Other Receivables                                              48,977              100,925
Inventory                                                   2,634,742            1,849,513
Prepaid Expenses                                                5,549               36,288
                                                    ------------------   ------------------
                    Current Assets                          3,711,097            3,859,592
                                                    ------------------   ------------------

Land                                                          119,374              110,036
Buildings and Equipment                                    17,122,861           14,005,019
Construction In Progress                                      406,307            1,273,512
Accumulated Depreciation                                   (6,196,300)          (4,720,668)
                                                    ------------------   ------------------
            Property, Plant & Equipment, Net               11,452,242           10,667,899
                                                    ------------------   ------------------

Patents, less accumulated amortization of                     299,395              320,771
   $78,702 and $55,791 in 2002 and 2001
Other Assets                                                    9,173                3,868
                                                    ------------------   ------------------
                Other Assets                                  308,568              324,639
                                                    ------------------   ------------------
                Total Assets                        $      15,471,907    $      14,852,130
                                                    ==================   ==================

</TABLE>

                 See accompanying notes to financial statements.

                                       F-3
<PAGE>

                               IPEC HOLDINGS, INC.
                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                        As Restated
                                                        December 31,         December 31,
                                                            2002                 2001
                                                     ------------------   -----------------
<S>                                                  <C>                  <C>
        Liabilities and Shareholders' Equity

Accounts Payable                                     $        800,753     $        778,662
Accrued Liabilities                                           109,281               73,085
Taxes Payable                                                  16,426               25,055
Accrued Interest                                               31,657                6,085
Notes Payable - Current Portion                             1,416,436            2,990,727
Bank Line Of Credit                                         2,550,000            2,260,000
Capital Lease Obligation - Current Portion                    169,820              147,889
                                                     -----------------   ------------------
                Current Liabilities                         5,094,373            6,281,503
                                                     -----------------   ------------------

Capital Lease Obligation                                       74,642              221,282
Notes Payable - Long Term                                   5,732,086            4,096,418
Amounts Due to Related Parties                                    -                700,000
                                                     -----------------   ------------------
               Long Term Liabilities                        5,806,728            5,017,700
                                                     -----------------   ------------------

Deferred Income Taxes                                          69,000                  -
                                                     -----------------   ------------------

Preferred Stock, no par value, 25,000,000 shares                  -                    -
    authorized, no shares issued
Common Stock, par value $0.001 per                              9,973                9,490
    share, 100,000,000 shares authorized,
    9,972,912 and 9,489,796 shares issued
    and outstanding at December 31, 2002
    and December 31, 2001, respectively
Additional Paid In Capital                                  4,376,894            4,125,177
Retained Earnings (Deficit)                                   114,939             (581,740)
                                                     -----------------   ------------------
               Shareholders' Equity                         4,501,806            3,552,927
                                                     -----------------   ------------------
Total Liabilities and Shareholders' Equity           $     15,471,907    $      14,852,130
                                                     =================   ==================
</TABLE>



                 See accompanying notes to financial statements.

                                       F-4
<PAGE>
                               IPEC HOLDINGS, INC.
                            STATEMENTS OF OPERATIONS


                                                   Year Ended December 31,
                                                  2002 As
                                                  Restated            2001
                                              ----------------  ----------------

Sales                                         $    13,046,668   $    13,029,101
                                              ----------------  ----------------

Operating expenses
   Cost of goods sold                               9,441,839        10,284,701
   Selling                                            773,531           789,487
   General and administrative                       1,460,404         1,072,207
                                              ----------------  ----------------
       Operating expenses                          11,675,774        12,146,395
                                              ----------------  ----------------
Operating income                                    1,370,894           882,706
                                              ----------------  ----------------

Non-operating expense (income)
   Interest expense                                   616,366           802,095
   Other income                                       (17,151)          (15,754)
                                              ----------------  ----------------
       Non-operating expenses, net                    599,215           786,341
                                              ----------------  ----------------

Income before taxes                                   771,679            96,365
Income taxes                                           75,000            17,000
                                              ----------------  ----------------

Net income                                    $       696,679   $        79,365
                                              ================  ================

Average Shares of Common Stock - Basic              9,934,356         8,387,729
                                              ================  ================

Average Shares of Common Stock - Diluted           10,142,946         8,880,037
                                              ================  ================

Basic Income Per Share                        $          0.07   $          0.01
                                              ================  ================

Diluted Income Per Share                      $          0.07   $          0.01
                                              ================  ================



              Includes reclassifications for comparative purposes.

                 See accompanying notes to financial statements.

                                       F-5
<PAGE>

                               IPEC HOLDINGS, INC.
                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                  Year Ended December 31,
                                                             2002 - As
                                                             Restated                2001
                                                         ------------------   -----------------
<S>                                                      <C>                  <C>
Cash Flows from Operating Activities
Net Income                                               $        696,679     $        79,365
Adjustments to reconcile net income to net cash
provided by operating activities
    Depreciation and amortization                               1,498,685           1,260,265
    Deferred Taxes                                                 69,000                 -
    Common stock issued for services                               25,000                 -
    Common stock warrants issued for services                     227,200                 -
    Capitalized interest                                          (37,000)            (36,500)
    Changes in Assets and Liabilities
      Accounts receivable                                         (78,683)             90,432
      Other receivables                                            51,948               7,110
      Inventory                                                  (785,229)            888,668
      Prepaid Expenses                                             30,739             (30,739)
      Other Assets                                                    -                   517
      Accounts payable                                             22,092            (541,842)
      Accrued liabilities                                          36,196             (58,080)
      Taxes payable                                                (8,629)             12,055
      Accrued interest                                             25,572                 -
                                                         -----------------    ----------------
Net cash provided by operating activities                       1,773,570           1,671,251
                                                         -----------------    ----------------

Cash Flows from Investing Activities
Purchases of property, plant and equpment                      (2,223,117)         (1,194,704)
Disposals of property, plant and equipment                            -                31,772
Investment in and development of patents                           (6,841)             (2,167)
                                                         -----------------    ----------------
Net cash used in investing activities                          (2,229,958)         (1,165,099)
                                                         -----------------    ----------------

Cash Flows from Financing Activities
Issuance of common stock                                              -             1,295,244
(Repurchase) of preferred stock                                       -            (1,000,000)
Borrowing on bank line of credit                                2,816,402           2,725,596
(Repayments) of bank line of credit                            (2,526,402)         (3,536,569)
(Reduction) of capital lease obligations                         (124,709)           (146,138)
Increase in notes payable                                          61,377             808,447
(Decrease) Increase in amounts due to related parties            (700,000)            350,000
                                                         -----------------    ----------------
Net cash provided by financing activities                        (473,332)            496,580
                                                         -----------------    ----------------

Net (Decrease) / Increase  in cash                               (929,720)          1,002,732
Cash - beginning of period                                      1,014,381              11,649
                                                         -----------------    ----------------
Cash - end of period                                     $         84,661     $     1,014,381
                                                         =================    ================

Cash paid for interest                                   $        590,794     $       802,095
                                                         =================    ================
Cash paid for income taxes                               $         14,629     $         4,945
                                                         =================    ================

</TABLE>


                 See accompanying notes to financial statements.

                                       F-6
<PAGE>


                               IPEC HOLDINGS, INC.
                        STATEMENT OF SHAREHOLDERS' EQUITY
          FOR THE YEARS ENDED DECEMBER 31, 2002 (AS RESTATED) AND 2001



<TABLE>
<CAPTION>
                                            Preferred        Common       Common                                   Additional
                                             Shares          Shares        Stock       Preferred       Common       Paid In
                                           Outstanding     Outstanding    Warrants       Stock          Stock       Capital
                                           --------------------------------------------------------------------------------------
<S>                                        <C>             <C>            <C>         <C>            <C>          <C>

Balance at January 1, 2001                  1,000,000       8,295,890                 $ 1,000,000    $   8,296    $  2,831,137

Repurchase of Preferred Stock              (1,000,000)                                 (1,000,000)
Sale of Common Stock                                        1,193,906                                    1,194       1,294,040
Net Income
                                          ---------------------------------------------------------------------------------------

Balance at December 31, 2001                      -         9,489,796                         -          9,490       4,125,177

Stock issued in connection with
  reverse merger                                              465,000                                      465            (465)
Issuance of Common Stock for services                          18,116                                       18          24,982
Issuance of Common Stock Warrants for
  services                                                                 200,000                                     227,200
Net Income
                                          ---------------------------------------------------------------------------------------

Balance at December 31, 2002-As Restated          -         9,972,912      200,000    $       -      $   9,973    $  4,376,894
                                          =======================================================================================




<CAPTION>

                                             Retained
                                             (Deficit)        Total
                                           ----------------------------
<S>                                        <C>            <C>
Balance at January 1, 2001                 $  (661,105)   $  3,178,318
                                                                   -
Repurchase of Preferred Stock                               (1,000,000)
Sale of Common Stock                                         1,295,244
Net Income                                      79,365          79,365
                                           ----------------------------

Balance at December 31, 2001                  (581,740)      3,552,927

Stock issued in connection with
  reverse merger                                                   -
Issuance of Common Stock for services                           25,000
Issuance of Common Stock Warrants for
  services                                                     227,200
Net Income                                     696,679         696,679
                                           ----------------------------

Balance at December 31, 2002-As Restated   $   114,939    $  4,501,806
                                           ============================

</TABLE>


                 See accompanying notes to financial statements.

                                       F-7
<PAGE>


                               IPEC HOLDINGS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001



NOTE 1.  RESTATEMENT OF FINANCIAL STATEMENTS



         The accompanying financial statements as of December 31, 2002 and for
         the year then ended have been restated from those previously issued to
         account for the issuance of 200,000 common stock warrants in November
         2002, net of tax effects. The restatement decreased the net income for
         the fourth quarter and year ended December 31, 2002 by $148,200 and the
         basic net income per share by $0.01.



NOTE 2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


         BUSINESS

         IPEC Holdings, Inc. ("Company") manufactures injection molded plastic
         closures used for packaging applications in dairy, fruit juice, bottled
         water, sport drinks, and other non-carbonated beverage products.

         The Company's manufacturing facilities are located in the United States
         of America in Pennsylvania and Alabama.

         The Company's customers are principally located in the United States of
         America and Canada.

         On January 14, 2002, the Company entered into a share exchange
         agreement to acquire the International Plastics & Equipment Corp. See
         Note 3.

         ESTIMATES

         The preparation of financial statements in conformity with generally
         accepted accounting principles requires management to make estimates
         and assumptions that affect the reported amounts of assets,
         liabilities, revenues, expenses and related footnote disclosures at the
         date of the financial statements. Actual results could differ from
         those estimates.

         CASH AND CASH EQUIVALENTS

         Cash consists of cash on hand and held in banks.


                                       F-8
<PAGE>

                               IPEC HOLDINGS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001


         INVENTORIES

         Inventories are valued at the lower of cost or market. Cost is
         determined by the first-in, first-out (FIFO) method for raw materials
         and work in process, and the annual weighted average cost method for
         finished goods.

         The Company provides a reserve for obsolescence, slow moving inventory,
         and in circumstances when the carrying cost of inventory temporarily
         exceeds market value.

         PROPERTY PLANT AND EQUIPMENT

         Property, plant and equipment are stated at cost. Expenditures for
         improvements are capitalized while costs for maintenance and repairs
         are expensed as incurred.

         The Company capitalized $37,000 and $36,500 of interest in connection
         with buildings and equipment under construction in calendar years 2002
         and 2001, respectively.

         The Company's evaluation of long-lived assets, including patents and
         other assets, for impairment has indicated no events or changes in
         circumstances that indicate that the carrying amount of an asset may
         not be recoverable; accordingly, no impairment losses have been
         recognized.

         Depreciation and amortization are computed by the straight-line method
         over the estimated useful lives of the assets as follows:

                                                         Depreciable Life
                     Asset                                    Years
         -------------------------------------       ----------------------
         Buildings                                             40
         Machinery and equipment                             5 - 10
         Office furniture and equipment                         7

         Depreciation on leased assets is included in depreciation expense.

         Depreciation charged to operations was approximately $1,475,800 and
         $1,295,800 for the years ended December 31, 2002 and 2001,
         respectively. Of those amounts, approximately $1,420,000 and 1,247,400,
         respectively, were included in cost of goods sold.

                                       F-9
<PAGE>

                               IPEC HOLDINGS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001


         INTANGIBLE ASSETS


         The Company's intangible assets include finite-lived patents that are
         amortized over the shorter of their legal or estimated useful lives.
         Amortization expense for these intangible assets was $21,900 and
         $28,300 for 2002 and 2001, respectively. The anticipated annual
         amortization expense for these intangible assets is $25,000 for 2003
         and $26,000 for each fiscal year 2004, 2005, 2006, 2007 and 2008.


         FAIR VALUE OF FINANCIAL INSTRUMENTS

         The carrying value of cash, receivables, and accounts payable
         approximate fair value based upon the liquidity and short-term nature
         of the items. The carrying value of notes payable approximates the fair
         value based upon borrowings at approximate market interest rates.

         INCOME TAXES

         The Company accounts for income taxes under the liability method which
         requires that deferred taxes be computed annually on an asset and
         liability basis and adjusted when new tax laws are enacted or new tax
         rates become effective.

         CONCENTRATION OF CREDIT RISK AND UNCERTAINTY

         Financial instruments which potentially subject the Company to
         concentrations of credit risk consist principally of cash and cash
         equivalents, and trade receivables. The Company's cash and cash
         equivalents are concentrated primarily in two banks in the United
         States. At times, such deposits could be in excess of insured limits.
         Management believes that the financial institutions that hold the
         Company's financial instruments are financially sound and, accordingly,
         minimal credit risk is believed to exist with respect to these
         financial instruments.

         The Company's products are principally sold to entities in the food and
         beverage industries, primarily in the United States and Canada. Ongoing
         credit evaluations of customers' financial condition are performed and
         collateral is generally not required. The Company maintains reserves
         for potential credit losses.

         The majority of the Company's products are molded from various plastic
         resins that comprise a significant portion of the Company's cost of
         sales. These resins are subject to periodic price fluctuations,
         resulting from shortages in supply, changes in prices in petrochemical
         products and other factors. The Company's agreements with its customers
         include adjustment clauses to pass price changes on to customers
         (generally, one-month following the change).

                                      F-10
<PAGE>

                               IPEC HOLDINGS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001


         During calendar year 2002, sales to one customer amounted to 20% of net
         sales and sales to two other customers each amounted to 10% of net
         sales. In calendar year 2001, one customer accounted for approximately
         28% of net sales.

         FOREIGN CURRENCY TRANSLATION

         The Company's has no foreign subsidiaries and uses the United States
         Dollar as its functional currency. Translation gains and losses result
         from changes in exchange rates between the functional currency and the
         currency in which the Company's customers denominate transactions.
         Translation gains and losses are not significant.

         SEASONALITY

         The Company's sales and earnings reflect a seasonal pattern as a result
         of greater sales volumes during the summer months. Approximately 41%
         and 67% of sales occurred between May and August in calendar years 2002
         and 2001, respectively.

         SEGMENT INFORMATION

         The Company's primary operations are in one segment - the manufacture
         of injection molded thermoplastic components used primarily as closures
         for containers in the non-carbonated beverage industry. All of the
         Company's operations are in the United States of America.

         REVENUE RECOGNITION

         Revenue is recognized on plastic molded products and equipment when the
         products and equipment are shipped to customers.

         SHIPPING AND HANDLING COSTS

         Amounts billed to customers for shipping and handling are recorded as
         revenue. Shipping and handling costs incurred by the Company are
         included in cost of sales.

         RESEARCH AND DEVELOPMENT EXPENDITURES

         Research and development expenditures are charged to operations as
         incurred.

         ADVERTISING

         The Company charges the cost of advertising to operations as incurred.
         Such costs were insignificant in 2002 and 2001, respectively.


                                      F-11
<PAGE>
                               IPEC HOLDINGS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001


         COMPREHENSIVE INCOME (LOSS)

         Comprehensive income (loss) is comprised of all changes in
         shareholders' equity during the period other than from transactions
         with shareholders. Comprehensive income (loss) is the same as reported
         net income (loss) in the statement of operations.

         EARNINGS PER SHARE

         Basic net income / (loss) per share is computed using the weighted
         average number of common shares outstanding during the period.


         Diluted net income per share reflects the potential dilution that could
         occur from the exercise of stock options. The deemed exercise of common
         stock warrants has not been included in the calculation since the
         effects are anti-dilutive.


         RECENT ACCOUNTING PRONOUNCEMENTS

         In calendar year 2002 the Company adopted the provisions of Statement
         of Financial Accounting Standards (SFAS) No. 143, "Accounting for Asset
         Retirement Obligations," SFAS No. 144, "Accounting for the Impairment
         or Disposal of Long-Lived Assets," and SFAS No. 145, "Rescission of
         FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13,
         and Technical Corrections." The implementation of these accounting
         pronouncements did not have a material effect on the Company's results
         of operations, financial position or cash flows.

         In December 2002 the Financial Accounting Standards Board (FASB) issued
         SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and
         Disclosure." SFAS No. 148 provides alternative methods of transition
         for a voluntary change to the fair value based method of accounting for
         stock-based employee compensation and amends the disclosure
         requirements of SFAS No. 123. The transition provisions of this
         Statement are effective for fiscal years ending after December 15,
         2002, and the disclosure requirements of the Statement are effective
         for interim periods beginning after December 15, 2002. The Company
         currently plans to continue to apply the intrinsic-value based method
         to account for stock options and will comply with the new disclosure
         requirements beginning in calendar year 2003.



NOTE 3. BUSINESS COMBINATION


         On January 28, 2002, the Company closed on a share exchange agreement
         that resulted in the acquisition of International Plastics & Equipment
         Corp ("IPEC"). In connection with this share exchange agreement, IPEC
         became a wholly owned subsidiary of the Company and issued 9,489,796
         shares of its common stock to the shareholders of the Company.

                                      F-12
<PAGE>

                               IPEC HOLDINGS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001

         Since, at the time of the share exchange, the Company had no net assets
         or operations, the transaction was accounted for in calendar year 2002
         as a reverse merger.

         In connection with this merger, the IPEC engaged Plymouth Partners, LP
         ("Plymouth") to facilitate the transaction with the Company. For their
         services, Plymouth was paid $150,000 in December 2001. This amount has
         been recognized as an expense in the calendar year 2001 financial
         statements.

         Also, see Note 9 regarding income taxes.



NOTE 4. INVENTORIES


         Inventories at December 31, 2002 and 2001 are comprised of the
         following:

                                              December 31,      December 31,
                                                  2002              2001
                                            --------------     ---------------
         Raw materials and packaging        $     314,090      $      247,798
         Work in process                          325,814             316,475
         Finished goods                         2,454,838           1,785,240
         Reserve for obsolescence and            (460,000)           (500,000)
           temporary decline in market
           value
                                            --------------     ---------------
         Total Inventories                  $   2,634,742      $    1,849,513
                                            ==============     ===============



         The portion of the reserve for obsolescence and temporary decline in
         market value related solely to obsolescence was $460,000 and $300,000
         in 2002 and 2001, respectively.



NOTE 5. LINE OF CREDIT


         On January 13, 2000, the Company entered into a variable interest rate
         borrowing with a bank, due on demand, with interest on the unpaid
         principal balance paid monthly. The maximum amount of the borrowing is
         $3.5 million and the borrowing is secured by inventory and all
         intangible assets. The current interest rate in effect is 4.5%.

         There was $2,550,000 and $2,260,000 outstanding under this agreement at
         December 31, 2002 and 2001, respectively.

                                      F-13
<PAGE>

                               IPEC HOLDINGS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001



NOTE 6.  LONG-TERM DEBT


         Long-Term Debt at December 31, 2002 and 2001 are comprised of the
         following:

<TABLE>
<CAPTION>
                                                                             2002                2001
                                                                       --------------      --------------
<S>                                                                    <C>                 <C>
         7.90% note due January 1, 2006, payable in monthly            $     676,019       $     865,652
         installments, secured by equipment

         7.90% note due January 1, 2006, payable in monthly                  443,297             570,272
         installments, secured by equipment

         7.90% note due May 1, 2006, payable in monthly                      492,991             616,214
         installments, secured by equipment

         7.50% variable interest rate note, due January 1, 2012,             886,922             952,887
         payable in monthly installments, secured by real property

         7.50% variable interest rate note, due July 1, 2005,              1,017,073           1,441,633
         payable in monthly installments, secured by molds

         7.75% note due January 15, 2005, payable in monthly                 541,218             740,487
         istallments, secured by a general assignment of all assets

         4.25% variable note due December 15, 2005, payable in             1,900,000                 -
         monthly installments of $19,792 with a final payment of
         approximately $1,414,200 at termination, secured by
         general business assets and cross collateralized with
         other notes payable

         9.50% promissory note, due July 1, 2002, interest paid                                1,900,000
         monthly, secured by general business assets and cross
         collateralized with other notes payable

         7.0% variable interest rate note, due August 15, 2017,            1,135,383                 -
         payable in monthly installments, secured by the
         Company's warehouse expansion

         6.29 - 6.98% notes, due October, 2005 - June, 2007,                  55,619                 -
         payable in monthly installments, secured by Company
         vehicles
                                                                       --------------      --------------

         Subtotal                                                          7,148,522           7,087,145
         Less - current portion of long-term debt                         (1,416,436)         (2,990,727)
                                                                       --------------      --------------

                                                                       $   5,732,086       $   4,096,418
                                                                       ==============      ==============

</TABLE>

                                      F-14
<PAGE>


         With the exception of the notes secured by Company vehicles, these
         notes are all payable to the same bank. In connection with these
         borrowings, the Company has agreed to certain covenants, including
         maintenance of a defined tangible net worth of not less than
         $1,000,000, maintenance of a defined leverage ratio not greater than
         3.5 to 1 (i.e., the ratio of total liabilities to tangible net worth
         with debt subordinated in favor of the bank deemed as equity), and
         maintenance of a debt service coverage ratio of 1.2 to 1.

         Payments on long-term debt in future years are as follows:

                         Calendar Year                 Debt Reduction
              -------------------------------------  --------------------
                              2003                           $ 1,416,436
                              2004                             1,526,177
                              2005                             2,465,817
                              2006                               201,213
                              2007                               158,481
                        2008 and Beyond                        1,380,398
                                                     --------------------
                      Total Debt Reduction                   $ 7,148,522
                                                     ====================


NOTE 7.  PREFERRED STOCK


         The Company has a single class of Preferred Stock with no par value.
         The Preferred Stock has no stated dividend. 1,000,000 shares are
         authorized.

         These shares were for sold for $1,000,000 in January 2000. The shares
         of stock were issued without registration in reliance on an exemption
         in federal securities laws that permit issuance of stock without
         registration of the securities.

         On March 28, 2001, the Company entered into an agreement with the
         holder of the preferred stock to repurchase the shares of stock for $1
         million to be paid in installments ranging from $100,000 to $250,000
         beginning in March of 2001 through September 30, 2001.

         The repurchase agreement includes a provision for a one-time additional
         payment to be made by the Company to the holder of the preferred stock
         should, before March 28, 2004, the Company's capital structure change
         as a result of an infusion of additional equity. The amount of the
         payment is $50,000 if the capital infusion reaches $2,000,000 and a
         prorata payment up to $150,000 for up to $4,000,000 of capital
         infusion. The sale of common stock in calendar year 2001 described in
         Note 8 did not obligate the Company to make this one-time additional
         payment.


                                      F-15
<PAGE>
                               IPEC HOLDINGS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001



NOTE 8.  COMMON STOCK


         The Company has a single class of Common Stock, par value $.001. See
         Note 3 for information regarding a business combination accounted for
         as a reverse merger.

         On March 1, 2002, the Company issued 18,116 shares of its common stock
         valued at $1.38 per share to a firm serving as its investment advisor.

         At a special shareholders meeting held April 4, 2002, the shareholders
         adopted Restated Articles of Incorporation (effecting the name change
         to IPEC Holdings, Inc.) and authorized additional capital stock
         consisting of 25,000,000 shares of Preferred Stock, $.001 par value per
         share.

         In April 2002, the Board of Directors approved the adoption of a
         non-qualified and incentive stock option plan (the "2002 Stock Option
         Plan" or "Plan").

         Under this Plan, the Company may grant options to employees, officers,
         consultants, or directors of the Company or its subsidiaries. The Plan
         will remain in effect until terminated, however, no options will be
         granted after the tenth anniversary of the plan's adoption by the
         Board. The aggregate number of shares under option may not exceed
         995,000 or ten percent of the outstanding shares of the Company,
         whichever is greater.

         On May 21, 2002, the Company granted 60,000 options with an exercise
         price of $1.38 per share to two employees of the Company. These options
         vest 40% immediately, an additional 40% on May 21, 2003 and an
         additional 20% on May 21, 2004. All of the options expire on May 21,
         2012.

         Information relating to these options is as follows:
                  Stock Options Outstanding:         60,000
                  Remaining Life:                    9 years, 5 months
                  Value of Stock:                    $1.38
                  Exercise Price:                    $1.38

         On July 1, 2002, the Company granted an additional 600,000 options with
         an exercise price of $1.38 per share to one of the two employees of the
         Company receiving options on May 21, 2002. These options vest 25%
         immediately, and an additional 25% per year for the next three years.
         All of the options expire on July 1, 2012.

                                      F-16
<PAGE>

                               IPEC HOLDINGS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001

         Information relating to these options is as follows:
                  Stock Options Outstanding:         600,000
                  Remaining Life:                    9 years, 6 months
                  Value of Stock:                    $1.38
                  Exercise Price:                    $1.38

         On December 13, 2002, the Company granted 6,000 options with an
         exercise price of $5.00 per share to six employees of the Company.
         These options vest immediately. All of the options expire on December
         13, 2012.

         Information relating to these options is as follows:
                  Stock Options Outstanding:         6,000
                  Remaining Life:                    10 years
                  Value of Stock:                    $5.00
                  Exercise Price:                    $5.00

         The Company has adopted only the disclosure provisions of Statement of
         Financial Accounting Standard ("SFAS") No. 123. It applies Accounting
         Principles Board ("APB") Opinion No. 25 and related interpretations in
         accounting for its plans and does not recognize compensation expense
         for its stock-based compensation plans other than for restricted stock
         and options issued to outside third parties.

         For purposes of computing the pro forma disclosures required by SFAS
         No. 123, the fair value of each option granted is estimated using the
         Black-Scholes option-pricing model with the following assumptions:
         dividend yield 0%; expected volatility of 20%; risk-free interest rate
         of 3.75%; and expected life of 10 years.

         The fair value of each option computed under this method is $0.55,
         $0.55, and $2.00 for the grants at May 21, 2002, July 1, 2002 and
         December 13, 2002, respectively.


         At December 31, 2002, the company has one stock-based employee
         compensation plan (described above). The company accounts for the plan
         under the recognition and measurement principles of APB Opinion No. 25,
         Accounting for Stock Issued to Employees, and related Interpretations.
         No stock-based employee compensation cost is reflected in net income,
         as all options granted under the plan had an exercise price equal to
         the market value of the underlying common stock on the date of grant.
         The following table illustrates the effect on net income and earnings
         per share if the company had applied the fair value recognition
         provisions of FASB Statement No. 123, Accounting for Stock-Based
         Compensation, to stock-based employee compensation.


                                      F-17
<PAGE>

                               IPEC HOLDINGS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001


<TABLE>
<CAPTION>
             ------------------------------------------------------- ---------------------------------
                                                                          Year Ended December 31
             ------------------------------------------------------- ---------------------------------
                                                                           2002             2001
                                                                           ----             ----
             ------------------------------------------------------- ----------------- ---------------
             <S>                                                     <C>               <C>

             Net income, as reported                                       $ 676,679         $79,365
             ------------------------------------------------------- ----------------- ---------------

             Deduct:  Total stock-based employee                            (341,361)              -
                 compensation expense determined under fair value
                 based method for all awards, net of related
                 tax effects
             ------------------------------------------------------- ----------------- ---------------

             Pro forma net income                                          $ 335,318        $ 79,365
             ------------------------------------------------------- ================= ===============

             ------------------------------------------------------- ----------------- ---------------
             Earnings per share:
             ------------------------------------------------------- ----------------- ---------------
                      Basic--as reported                                        $0.07           $0.01
             ------------------------------------------------------- ================= ===============
                      Basic--pro forma                                          $0.04           $0.01
             ------------------------------------------------------- ================= ===============

             ------------------------------------------------------- ----------------- ---------------
                      Diluted--as reported                                      $0.07           $0.01
             ------------------------------------------------------- ================= ===============
                      Diluted--pro forma                                        $0.04           $0.01
             ------------------------------------------------------- ================= ===============
</TABLE>



         On November 14, 2002, the Company issued 200,000 common stock warrants
         to its investment advisor for services received. Each warrant allows
         the purchase of one share of common stock for $5.00 and all of the
         warrants vest immediately. The aggregate fair value of these warrants
         was calculated to be $227,200 using the Black-Scholes option-pricing
         model with the following assumptions: market value of stock $5.00;
         dividend yield 0%; expected volatility of 20%; risk-free interest rate
         of 3.75%; and expected life of 4 years.



         The Black-Scholes option valuation model was developed for use in
         estimating the fair value of traded options that have no vesting
         restrictions and are fully transferable. The Company's stock options
         and warrants have characteristics significantly different from those of
         unrestricted traded options.



         The deemed exercise of the vested stock options has been included in
         the calculation of diluted earnings per share for year ended December
         31, 2002 based on the average market value per share during the period
         the option was outstanding and the option exercise price per share. The
         deemed exercise of common stock warrants has not been included in the
         calculation since the effects are anti-dilutive.



         Two individuals who are officers and directors of the Company own
         approximately 82% of the shares of the Company's common stock, in
         substantially equal amounts (however, see Note 15).


                                      F-18
<PAGE>

                               IPEC HOLDINGS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001


         On December 31, 2001, IPEC sold 1,193,906 shares (restated for the
         effect of the share exchange described in Note 3) of its common stock
         for aggregate cash proceeds of $1,295,235. The shares of stock were
         issued without registration in reliance on an exemptions in federal
         securities laws that permit issuance of stock without registration of
         the securities.


         See Note 3 regarding a business combination occurring in January 2002.




NOTE 9.  INCOME TAXES


         The Company accounts for income taxes under the liability method which
         requires that deferred taxes be computed annually on an asset and
         liability basis and adjusted when new tax laws are enacted or new tax
         rates become effective.

         Prior to calendar year 2002, the Company has had an unused tax net
         operating loss ("NOL") carryforward and no current or deferred income
         tax liability was recorded in the balance sheet. During the second
         quarter of calendar year 2002, the Company achieved a level of
         profitability such that the NOL (for financial reporting purposes) was
         likely to be eliminated in the current calendar year. Accordingly,
         beginning in the second quarter, the Company began recording income
         taxes based on the anticipated effective tax rate for the calendar
         year.

         The components of the provision for income taxes were as follows:


                                                Year ended     Year ended
                                               December 31,   December 31,
                                                   2002           2001
                                              -----------------------------


         Federal Income Taxes
         Current provision                    $       -       $        -
         Deferred provision                        62,500              -
         State and other income taxes
           Current provision                        6,000           17,000
           Deferred provision                       6,500              -
                                              -----------------------------
         Total                                $    75,000     $     17,000
                                              =============================



         The deferred tax liability arises principally because of differences
         between tax and book depreciation methods and useful lives.

         The differences between the provision for income taxes and income taxes
         computed using the U.S. federal income tax rate were as follows:

                                      F-19
<PAGE>
                               IPEC HOLDINGS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001


                                                Year ended       Year ended
                                               December 31,     December 31,
                                                   2002             2001
                                              ------------------------------


Taxes at the statutory rate                    $    236,871    $     26,984
Increase (reduction) in taxes from:
  State and other income taxes,                      12,500          17,000
  Use of Net Operating Loss Carryforwards          (174,371)        (26,984)
                                              ------------------------------

Provision for income taxes                     $     75,000    $     17,000
                                              =============================




NOTE 10.  LEASES


         OPERATING LEASES

         The Company leases certain manufacturing equipment under operating
         leases expiring at various dates through 2004. Management expects that
         in the normal course of business, leases will be renewed or replaced by
         other leases.

         Total lease expense amounted to $63,300 and $76,100 in 2002 and 2001.

         CAPITAL LEASES

         The Company leases a building and certain manufacturing and office
         equipment under capital leases expiring at various dates through 2007.

         The asset value and related liability for capital leases have been
         reflected in the statement of financial position as follows:


                                                      2002           2001
                                                 ------------   -------------
         Asset Value                             $   884,118    $    857,312
         Less - Accumulated Depreciation            (229,565)       (174,470)
                                                 ------------   -------------
              Net Book Value                     $   654,553    $    682,842
                                                 ============   =============

           Capital Lease Obligation              $   244,462    $    369,171
                                                 ============   =============

         Approximately $55,100 and $89,000 have been charged against operations
         for depreciation and interest associated with capital leases in 2002
         and 2001, respectively.


                                      F-20
<PAGE>
                               IPEC HOLDINGS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001


         FUTURE MINIMUM LEASE PAYMENTS

         Minimum lease payments required for future years are as follows:



                                           Operating      Capital
           Calendar Year                    Leases        Leases
         --------------------             -----------   -----------
               2003                           28,839       170,376
               2004                           26,762        83,427
               2005                           14,144         9,047
               2006                              -           8,628
               2007                              -           4,314
          2008 and Beyond                        -             -
                                          -----------   -----------
         Total Future Lease Payments      $   69,745    $  275,792
                                          ===========
           Less - Interest Portion                        (31,330)
                                                        ----------
          Capital Lease Obligation                      $  244,462
                                                        ===========



NOTE 11. EARNINGS PER SHARE


         Earnings per share have been computed in accordance with the provisions
         of SFAS No. 128. The following table sets forth the computation of
         basic and diluted earnings per share for the years ended December 31,
         2002 and 2001:

<TABLE>
<CAPTION>
                                                                                 2002              2001
                                                                            ---------------   ---------------
<S>                                                                         <C>               <C>

         Net income                                                            $  696,679      $     79,365

                                                                            ===============   ===============

         Weighted average shares outstanding for basic earnings per share       9,934,356         8,387,729
                                                                            ===============   ===============


         Basic earnings (loss) per share                                            $0.07             $0.01

                                                                            ===============   ===============

         Adjustment to weighted average shares outstanding for
           - deemed preferred stock conversions                                       -             492,308
           - exercise of vested stock options                                     208,590               -
                                                                            ---------------   ---------------
         Increase in weighted average shares outstanding                          208,590           492,308
                                                                            ===============   ===============


         Diluted earnings (loss) per share                                          $0.07             $0.01

                                                                            ===============   ===============

</TABLE>



                                      F-21
<PAGE>
                               IPEC HOLDINGS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001



NOTE 12.  RELATED PARTIES


         Related party transactions are primarily with the following entities,
         related to the Company by common ownership:

         o     Giordano Construction Co., Inc., for which the Company fabricates
               certain products and from which the Company obtains building and
               construction services.

         o     L&G Properties, from which the Company leases equipment.

         These related party transactions consist of the following:

<TABLE>
<CAPTION>
                                                                 2002            2001
                                                                 ----            ----
<S>                                                          <C>             <C>
         Transactions with Giordano Construction Co., Inc.
            Sales                                              $  4,153         $  41,862
                                                             ==========      ============
            Purchases                                               $ -               $ -
                                                             ==========      ============

         Transactions with L&G Leasing
            Leasing of Equipment                               $ 56,050         $  59,900
                                                             ==========      ============
</TABLE>


         The Company had $700,000 payable to one of its two principal
         stockholders as of December 31, 2001 and the balance outstanding was
         paid prior to the merger described in Note 3, above.


         The Company had an agreement with the former holder of its preferred
         shares (Sherwood LLC) for consulting services to be provided for
         $75,000 annually. This agreement was modified in calendar year 2001 to
         provide that so long as one of the partners of Sherwood LLC continues
         to act on behalf of the Company in a financial role, such payments will
         not be made. Beginning in calendar year 2002, one of the partners, who
         previously was providing financial consulting services, became the
         Company's chief financial officer. Approximately $60,400 was paid under
         this agreement in calendar year 2001.


         See Note 15.




NOTE 13.  EMPLOYEE BENEFIT PLANS


         The Company maintains a defined contribution plan (401K) covering
         substantially all employees. Under the Plan, employees' contributions
         are made on a tax-deferred basis and are partially matched by the
         Company. Total expense under the Plan for 2002 and 2001 was
         approximately $6,800 and $8,200, respectively.



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                               IPEC HOLDINGS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001



NOTE 14.  SEGMENT INFORMATION


         The Company's primary operations are in a single business segment and
         substantially all assets and operations are located in the United
         States of America (see Note 2).

         The Company's sales to customers in the United States comprised 82% and
         91% in 2002 and 2001, respectively. Other customers are located
         principally in Canada (which comprised 12% of sales in calendar year
         2002), England, Ireland the Bahamas and the West Indies. Segment
         revenue is determined based on the country where the sale originates;
         accordingly, all sales are deemed to be in the United States.



NOTE 15. SUBSEQUENT EVENTS


         On February 10, 2003, 4,124,998 shares of the Company's stock owned by
         one of the two principal shareholders and 138,268 shares owned by the
         principal shareholder's relatives were acquired by Plymouth Partners,
         LP. (Intram Investment Corporation is the general partner of Plymouth
         Partners, LP.) Plymouth Partners, LP issued interests in the limited
         partnership in exchange for shares acquired from these individuals.


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