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

                                   FORM 10-KSB

(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:  $12,880,474

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 I

ITEM 1.  DESCRIPTION OF BUSINESS.

BACKGROUND

         We were incorporated in the State of Nevada on December 11, 1985, under
the name  Nostromo  Construction  Corporation.  From  inception to June 1988, we
investigated  a mining  project.  After  determining  not to pursue  the  mining
project,  we were inactive until April 1998. On December 1, 1998, we changed our
name to Golden Hole, Inc. We filed a registration statement under the Securities
Exchange Act of 1934,  which  became  effective  July 29,  2000,  and then began
looking for a business opportunity.

         On January  28,  2002,  we acquired  all of the issued and  outstanding
capital  stock  of  International  Plastics  and  Equipment  Corp.  ("IPEC"),  a
Pennsylvania corporation, in exchange solely for approximately 95% of our common
stock in a reverse acquisition transaction.  Since all of our operations are now
conducted through our wholly-owned subsidiary, IPEC, we changed our name to IPEC
Holdings Inc. on April 9, 2002.

IPEC

         IPEC was founded as a Pennsylvania corporation in December 1994. During
the first year of its operations, IPEC was engaged principally in the design and
manufacturing and sale of capping  equipment for use by bottlers.  In 1996, IPEC
transitioned to becoming a manufacturer of  tamper-evident  caps. IPEC currently
manufactures 28mm and 38mm tamper evident plastic  closures.  These closures are
used in the bottling of non-carbonated beverages, including bottled water, milk,
fruit, and sport drinks. IPEC also designs and fabricates capping equipment.

         PRINCIPAL  PRODUCTS.  IPEC sells to two  primary  markets:  (1) bottled
water and juice market and (2) dairy market.  IPEC believes that it will benefit
from a shift  being  made from  metal  closures  and glass  bottling  to plastic
bottles and closures, which has resulted from the fact that plastics are cheaper
and offer greatly improved tamper protection.

         IPEC manufactures the following products:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
                                                                                                       PERCENTAGE OF
                                                                                                     SALES VOLUME FOR
     PRODUCT                                             USE                                            FISCAL 2002
---------------------------------------------------------------------------------------------------------------------
<S>                 <C>                                                                              <C>
28mm sport          Primarily  for water  bottling on  polyethylene  terephthalate  (PET)  bottles         9%
                    ranging in sizes from 8-ounce bottles to 1 and 2-liter bottles
---------------------------------------------------------------------------------------------------------------------
26.7mm sport        Primarily  for water  bottling  on PET bottles  ranging in sizes from  8-ounce     Included in
tri-lead            bottles to 1 and 2-liter bottles.                                                percentage for
                                                                                                       28mm sport
---------------------------------------------------------------------------------------------------------------------

                                       2

<PAGE>

<CAPTION>
---------------------------------------------------------------------------------------------------------------------
                                                                                                       PERCENTAGE OF
                                                                                                     SALES VOLUME FOR
     PRODUCT                                             USE                                            FISCAL 2002
---------------------------------------------------------------------------------------------------------------------
<S>                 <C>                                                                              <C>
28mm flat           Primarily  for water  bottling  on PET bottles  ranging in sizes from  8-ounce         22%
                    bottles to 1 and 2-liter bottles
---------------------------------------------------------------------------------------------------------------------
26.7mm flat         Primarily  for water  bottling  on PET bottles  ranging in sizes from  8-ounce     Included in
                    bottles to 1 and 2-liter bottles                                                 percentage for
                                                                                                        28mm flat
---------------------------------------------------------------------------------------------------------------------
38 mm snap          High density  polyethylene  (HDPE) and PET bottles ranging from 8-ounce single         30%
                    serve as well as gallon and half-gallon containers,  used in the water, juice,
                    and dairy sectors
---------------------------------------------------------------------------------------------------------------------
38mm twist & pull   HDPE and PET bottles  ranging from 8-ounce  single serve as well as gallon and         9%
                    half-gallon  containers,  used in the water, juice, and dairy sectors. This is
                    the "sport" version of the 38mm snap cap.
---------------------------------------------------------------------------------------------------------------------
38mm push pull      Made by special  request for a major  customer  who uses this cap on a product         4%
                    which is an 8-ounce  decanter style bottle,  this is a modified version of the
                    38mm twist & pull
---------------------------------------------------------------------------------------------------------------------
38mm snap screw     Used on HDPE  bottles  for  gallon  and  half-gallon  containers  in the dairy         24%
                    sector.  May also be used on a single-serve dairy container.
---------------------------------------------------------------------------------------------------------------------
38mm tail           Used on HDPE bottles for gallon and half-gallon containers in the dairy                2%
cap                 sector.  May also be used on a single-serve dairy container.
---------------------------------------------------------------------------------------------------------------------
</TABLE>

         MANUFACTURING  AND RAW MATERIALS.  The  manufacturing  process consists
principally  of the  high-speed  injection  molding  of a given cap using a mold
specifically  engineered for that design.  Resin,  which is in the form of small
pebble-sized pellets, is drawn to a particular injection-molding machine through
the use of a vacuum delivery  system.  The resin is melted and introduced  along
with any coloring agent to the machine for forming.

         To assure a consistent quality of product,  the manufacturing  floor is
maintained  to  clean  room  standards  whereby  heating,  ventilation  and  air
conditioning   equipment  is  designed  to  preserve  a  relatively   dust-free,
thermostatically-controlled  environment,  as well  as  provide  maintenance  of
required manufacturing temperatures on each machine.

         IPEC's  quality  assurance  procedures  involve an optical  sensing for
dimensional   conformity  to  specification  and  a  physical  sampling  of  the
production  taken  every  two  hours of  operation  to test for  aesthetics  and
functionality.  If a sample should fail the test,  the run would be  quarantined
with a follow-up  corrective  action taken to modify any deficiency  noted. IPEC
performs  the  optical  sensing  using an optical  scanning  device  designed to
measure product conformity to preset dimensional standards.

         The cap production  process may involve any one of four different types
of resins that are readily available on the open market from multiple suppliers.
In  addition,  various  coloring  agents  may be mixed  with the  resins to meet
customer coloring specifications. IPEC procures inventories of resin, as well as
packaging  materials,  on a "just in time  basis," with resin  inventory  levels
being  maintained on a 2-7 day usage basis and packaging  materials levels on an
approximate  7-day  level.  Resins are subject to periodic  price  fluctuations,
resulting from shortages in supply, changes in prices in petrochemical products,
and other factors.  IPEC's agreements with its customers include cost escalation
clauses to pass price  increases on to  customers  that could  otherwise  have a
material adverse impact on IPEC.

         SRI Quality  Registrars  independently  assessed and certified  IPEC as
operating a quality  management system conforming to ISO 9002. As of December 5,
2002, IPEC received upgraded  certification to the revised ISO 9001-2000 quality
standard.  The  International   Organization  for  Standardization  (ISO)  is  a
non-governmental   organization   established  in  1947,   which  has  published
international  standards to facilitate  the exchange of goods and services.  The
ISO 9000 family of  standards  represents  an  international  consensus  on good
management  practices  with  the  aim of  ensuring  that  the  organization  can
consistently  deliver the products that meet the client's quality


                                       3

<PAGE>

requirements. The standards give organizations guidelines on what constitutes an
effective quality management system and models  against  which  quality  systems
can be audited.

         DISTRIBUTION  METHODS.  IPEC has identified potential customers through
leads generated  internally,  and by reference from other customers,  suppliers,
and individuals  involved in the bottling and/or the caps and closures industry.
Once a serious lead is identified,  a member of senior management meets with the
potential customer.

         IPEC  has  also  used  brokers  and   manufacturers'   representatives.
Historically,  they have  accounted for 1% of all sales.  IPEC plans to increase
the number of brokers and  representative  organizations to accelerate leads and
sales generation.

         EQUIPMENT  DESIGN AND FABRICATION.  IPEC maintains a capping  equipment
design  and  fabrication  division  in its New  Castle  facility,  comprising  2
engineers and 5  technicians.  This  division  provides  technical  support when
converting customer equipment to accept IPEC products.

         COMPETITION.  IPEC  competes  on the  basis of price,  product  design,
product quality, customer service, and response time.

         In the water and juice market,  management  believes  that  large-scale
manufacturers,  such as Alcoa,  Crown  Cork & Seal,  and Owens  Illinois,  to be
IPEC's prime  competition,  with additional  competition from bottling companies
and other food and beverage  providers that elect to produce their own closures.
As   against   large-scale   manufacturers,   management   believes   that  IPEC
distinguishes  itself by providing  better  customer  service and response time,
while maintaining parity on price and quality.

         In the dairy  market,  IPEC's major  competitor  is Portola  Packaging,
Inc.,  a  multi-national  cap  producer,  with  annual  sales in  excess of $200
million. Management believes that IPEC competes favorably due to its proprietary
rights to variations  of the 38mm closure  being used in milk  packaging for the
gallon, half-gallon,  and single-serve containers, its customer service, product
quality, and competitive pricing.

         MAJOR CUSTOMERS.  IPEC's customers are located  primarily in the United
States.  Sales to customers in the United States  comprised 82%, 91%, and 87% in
fiscal  2002,  2001,  and  2000,  respectively.   Other  customers  are  located
principally  in Canada,  England,  Ireland,  the  Bahamas,  and the West Indies.
During  fiscal 2002,  sales to one customer  accounted  for 20% of net sales and
sales to two other  customers  each  amounted to 10% of net sales.  One customer
accounted for 28% of net sales in 2001 and one customer accounted for 16% of net
sales in 2000.

         RESEARCH AND  DEVELOPMENT.  IPEC has a program of ongoing  research and
development that has led to significant  product  innovations.  By designing its
own products,  IPEC can insure  exclusivity while avoiding  excessive  licensing
costs.  Research and development expenses are charged to operations as incurred.
IPEC  estimates  that it spent  approximately  $8,850,  $8,000,  and  $38,000 on
research  and   development   activities  in  fiscal  2002,   2001,   and  2000,
respectively, none of which was borne directly by customers.





                                       4

<PAGE>


         PATENTS, LICENSES AND TRADEMARKS.  IPEC owns the following patents:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
                                                                                    EXPIRATION
                          DESCRIPTION                               ISSUE DATE         DATE          PATENT NUMBER
-------------------------------------------------------------------------------------------------------------------
<S>                                                                 <C>              <C>                <C>
Tamper Evident Plastic Closure                                      01/31/1996       01/31/2013         5,487,481
-------------------------------------------------------------------------------------------------------------------
Tamper Evident Resealable Plastic Closure                           12/31/1996       12/31/2013         5,588,562
-------------------------------------------------------------------------------------------------------------------
Tamper Evident Push-Pull Closure with Pour Spout                    01/26/1999       07/24/2016         5,862,953
-------------------------------------------------------------------------------------------------------------------
Tamper Evident Closure with Push-Pull Pour Spout (Continuation      02/15/2000       09/11/2017         6,024,255
in part)
-------------------------------------------------------------------------------------------------------------------
Snap-On Screw Off Closure                                           05/09/2000       10/31/2017         6,059,134
-------------------------------------------------------------------------------------------------------------------
Tamper Evident Closure (Continuation in part)                       06/06/2000       10/09/2017         6,070,766
-------------------------------------------------------------------------------------------------------------------
Snap-On Tamper Evident Closure With Push-Pull Pour                  06/13/2000       11/15/2016         6,073,809
-------------------------------------------------------------------------------------------------------------------
Tamper Evident Closure (Continuation in part)                       06/13/2000       04/28/2018         6,073,810
-------------------------------------------------------------------------------------------------------------------
</TABLE>

         IPEC has an  additional 10 patent  submissions  pending for various new
designs, as well as improvements to existing closure designs. All patents listed
above are for rights protection in the United States.  However,  IPEC is also in
the process of applying for  international  patent  protection on several of its
patents.

         IPEC has also secured  licensing  arrangements  to produce other tamper
evident  caps not of its own design.  IPEC paid license fees of $70,000 in 2000,
$80,000 in 2001, and $0 in 2002.

         GOVERNMENT REGULATION. IPEC's products are subject to regulation by the
Food  and  Drug   Administration  and  other  agencies  with  jurisdiction  over
effectiveness of tamper-resistant devices and other closures for dairy and other
beverage  products.  A change in  government  regulation  could affect IPEC.  We
cannot assure you that federal,  state,  or local  authorities  will not develop
protocols  in  the  future  that  could  materially  increase  IPEC's  costs  of
manufacturing certain of its products.

         ENVIRONMENTAL  MATTERS.  Federal,  state, local and foreign governments
could enact laws or regulations  concerning  environmental matters that increase
the cost of producing,  or otherwise  adversely  affect the demand for,  plastic
products.  Management  of IPEC is aware  that  certain  local  governments  have
adopted  ordinances  prohibiting or  restricting  the use or disposal of certain
plastic products that are among the types of products  produced by IPEC. If such
prohibitions   or  restrictions   were  widely  adopted,   such  regulatory  and
environmental  measures or a decline in consumer preference for plastic products
due to  environmental  considerations  could have a material adverse effect upon
IPEC and us. In addition,  certain of IPEC's  operations are subject to Federal,
state,  local  and  foreign  environmental  laws  and  regulations  that  impose
limitations on the discharge of pollutants  into the air and water and establish
standards for the treatment, storage and disposal of solid and hazardous wastes.
While IPEC has not been required historically, and does not currently expect, to
make  significant  capital  expenditures  in order  to  comply  with  applicable
environmental  laws and regulations,  IPEC cannot predict with any certainty its
future  capital  expenditure   requirements   because  of  continually  changing
compliance standards and environmental technology.  IPEC does not have insurance
coverage for  environmental  liabilities and does not anticipate  obtaining such
coverage in the future.

         EMPLOYEES. As of February 28, 2003, IPEC had 94 employees, all of which
were full-time. None of the employees is represented by any labor unions.


ITEM 2.  DESCRIPTION OF PROPERTY.

         Headquarters  for the  Company  and  IPEC,  as well as  IPEC's  primary
manufacturing  facility are located at Northgate  Industrial  Park,  New Castle,
Pennsylvania. In December 1997, it added a second manufacturing facility located
at 572 Industrial Parkway,  Brewton,  Alabama. The total square footage of these
facilities is approximately 110,000 square feet. The facilities are mortgaged to
a bank.

         IPEC's existing  facilities are capable of manufacturing  approximately
3.3 billion closures across the entire product line. For the year ended December
31, 2002, approximately 1.1 billion closures were produced.

                                       5

<PAGE>

ITEM 3.  LEGAL PROCEEDINGS.

         We are not a party to any pending legal proceedings, other than routine
litigation deemed incidental to our business.


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

         None.



















                                       6

<PAGE>

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

MARKET INFORMATION

         Our common  stock has been quoted on the OTC  Bulletin  Board under the
symbol "IPEC" since July 5, 2002.  The  following  table sets forth the range of
high and low bid quotations  for each fiscal quarter since trading began.  These
quotations reflect  inter-dealer  prices without retail mark-up,  mark-down,  or
commissions and may not necessarily represent actual transactions.

         FISCAL QUARTER ENDING                      HIGH BID          LOW BID

         September 30, 2002....................     $   5.00         $   1.30
         December 31, 2002.....................     $   6.25         $   4.75

         On March 26,  2003,  the closing bid price for the common  stock on the
OTC Bulletin Board was $2.00.

HOLDERS

         As of February  21,  2003,  there were 63 record  holders of our common
stock.

DIVIDENDS

         Since our inception, no cash dividends have been declared on our common
stock.

EQUITY COMPENSATION PLANS

         As of December 31, 2002, our equity compensation plans were as follows:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------

                                NUMBER OF SECURITIES TO BE    WEIGHTED AVERAGE EXERCISE
                                  ISSUED UPON EXERCISE OF       PRICE OF OUTSTANDING         NUMBER OF SECURITIES
                                   OUTSTANDING OPTIONS,         OPTIONS, WARRANTS AND       REMAINING AVAILABLE FOR
        PLAN CATEGORY               WARRANTS AND RIGHTS                RIGHTS                   FUTURE ISSUANCE
-------------------------------------------------------------------------------------------------------------------
<S>                                       <C>                           <C>                         <C>
  Equity compensation plans               666,000                       $1.41                       331,291
 approved by security holders
-------------------------------------------------------------------------------------------------------------------

Equity compensation plans not              None                          N/A                         None
 approved by security holders
-------------------------------------------------------------------------------------------------------------------

         Total                            666,000                                                   331,291
-------------------------------------------------------------------------------------------------------------------
</TABLE>


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.


                                       7
<PAGE>

         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 $57,902 (0.4%). However, the gross profit margin increased
from  $2,744,400  (21.2%) in 2001 to  $3,604,829  (28.0%) in 2002.  Selling  and
general and administrative expenses increased as a percentage of sales (15.6% in
2002 as  compared  to 14.4% in  2001),  but the  increase  in  absolute  dollars
($145,041)  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 $715,388 (81.0%).  Non-operating  expenses  decreased by $187,126
(23.8%), resulting in substantially higher net income for 2002 ($844,879 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  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.

                                       8

<PAGE>

         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:

      YEAR    DESCRIPTION                                AMOUNT        TOTALS
      2003    Machinery and equipment                    200,000
              Molds                                      600,000
              Alabama warehouse expansion              1,400,000
                                                       ---------
                                                                     $2,200,000

      2004    Mahinery 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
                                                                     ===========


         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.


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

         On January 28, 2002, the directors of the Company approved the election
of Baier & Williams,  LLP to audit the financial  statements for the fiscal year
ended December 31, 2001. The Company's  board of directors  recommended  Baier &
Williams,  LLP because that firm is the existing certifying accountant for IPEC,
which is now the accounting  survivor due to the  acquisition  described  above.
During the two most  recent  fiscal  years and the  subsequent  interim  period,
neither  the Company nor anyone on its behalf  consulted  Baier & Williams,  LLP
regarding the  application of accounting  principles to a specific  completed or
contemplated transaction, or the type of audit opinion that might be rendered on
the Company's financial statements.

         Andersen Andersen & Strong,  L.L.C. had audited the Company's financial
statements  for the fiscal year ended  December 31, 2000. The report of Andersen
Andersen & Strong,  L.L.C.  did not contain an adverse  opinion or disclaimer of
opinion and was not  modified as to  uncertainty,  audit  scope,  or  accounting
principles.  During the two most recent fiscal years and the subsequent  interim
period,  there were no disagreements with Andersen Andersen & Strong,  L.L.C. on
any  matter  of  accounting   principles  or  practices,   financial   statement
disclosure,  or  auditing  scope or  procedure  which,  if not  resolved  to the
satisfaction of Andersen Andersen & Strong, L.L.C., would have caused it to make
reference  to the subject  matter of the  disagreement  in  connection  with its
report.


                                       9

<PAGE>
                                    PART III

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

Our executive officers and directors are:

  Joseph Giordano, Jr.               52       President and Director
  Charles J. Long, Jr.               41       Secretary, Treasurer and Director
  Frederick W. Wakelin, Jr.          60       Chief Financial Officer
  Joseph M. Giordano                 29       Director
  Mel Grata                          50       Director
  Donald L. Franty                   39       Director
  Terry L Massaro                    49       Director
  Joseph J. Prischak                 72       Director

         JOSEPH GIORDANO,  JR. Mr. Giordano has been the President of IPEC since
December  1994 and became the President and a director of our company in January
2002.  Mr.  Giordano  has also  been the Chief  Executive  Officer  of  Giordano
Construction  Company,  Inc.  ("Giordano  Construction")  since 1998 and was the
President of Giordano Construction from 1973 through 1998. Giordano Construction
provides general,  commercial,  industrial and  telecommunications  construction
services.  Since January 2000, Mr. Giordano has been a principal shareholder and
director   of   Everclear    Communications,    LLC   (Walton,    Kentucky),   a
telecommunication  construction services company.  Joseph Giordano,  Jr., is the
father of Joseph M. Giordano.

         CHARLES J. LONG,  JR. Mr.  Long has been the  corporate  Secretary  and
Treasurer of IPEC since 1994 and became the Secretary,  Treasurer and a director
of our company in January 2002.  Mr. Long has also been the President of E. Long
Holdings  (New Castle,  Pennsylvania)  since 1984. E. Long Holdings is a private
company that provides  paving  construction  services.  Since 1990, Mr. Long has
been the President of Hackers Inc.  (Volant,  Pennsylvania),  a private  company
that owns and manages a golf course facility.

         FREDERICK W. WAKELIN, JR. Mr. Wakelin has served as the Chief Financial
Officer of IPEC since January 2000 and became the Chief Financial Officer of our
company in January 2002. He is a graduate of the Wharton  School of Finance with
a Bachelor of Science  degree in Economics and a major in Finance.  He began his
career with the Ford Motor Company,  Dearborn  Michigan,  in 1964 as a financial
analyst.  From 1966 to 1980, he worked for Black & Decker  Corporation,  Towson,
Maryland, first as a financial analyst, then a divisional controller and finally
a  group  controller.  As a  group  controller,  he had  reporting  and  control
responsibilities  for divisions in the United States,  Mexico, and Canada.  From
1980 to 1983,  he served as a controller  for Dolphin  Publishing  Co.,  Madeira
Beach,  Florida, and from 1983 to 1985, he was a controller for BTU Engineering,
a manufacturer of processing  equipment for semi-conductor  chip  manufacturers,
located in  Billerica,  Massachusetts.  From 1985 to 1990,  Mr.  Wakelin was the
chief financial officer for Norbev, a beverage  manufacturing company located in
Salem, Massachusetts. He became the president of that company in 1990 and served
in that capacity until its sale in 1999.

         JOSEPH M.  GIORDANO.  Mr.  Giordano has been the President of Everclear
Communications,  LLC since  January  2000. He has been a director of our company
since  January  2002.  Since 1991 Mr.  Giordano  has been  employed  by Giordano
Construction.   Mr.   Giordano  was  a  Jobsite   Superintendent   for  Giordano
Construction  Company from 1991 to 1994.  From 1994 to 1998, Mr. Giordano served
as the Vice  President of  Operations  and since 1998 Mr.  Giordano has been the
President  of  Giordano  Construction.  Joseph M.  Giordano is the son of Joseph
Giordano, Jr.

         MEL GRATA.  Mr. Grata became a director in March 2003.  He has been the
owner of Mel Grata  Chevrolet in Hermitage,  Pennsylvania  since July 1985.  Mr.
Grata has been  active in his local  community,  serving  as a  director  of the
Shenango  Valley  Foundation  since July 1994,  a director  of  Shenango  Valley
Industrial  Development  Corp.  since 1984, and a founding member of Subscribers
Encouraging Economic Development. In addition, he has previously

                                       10
<PAGE>

served as a director of McDowell National Bank/Integra  Bank North in Hermitage,
Pennsylvania,  and as an advisory  board  member for the First  National Bank of
Pennsylvania from 1987 to 1991.

         DONALD L. FRANTY.  Mr.  Franty  became a director in March 2003.  Since
August,  2002,  he has  been an  officer  and  shareholder  in  Franty  Miller &
Associates, PC, located in McMurray,  Pennsylvania.  This is a full-service firm
of certified public accountants and management  consultants offering services in
the areas of auditing,  accounting, tax, and management consulting. From 1996 to
August 2002,  Mr. Franty had a tax and accounting  practice under  Franty-Good &
Co. He was with the Pittsburgh office of Parente Randolph,  a Wilkes-Barre based
regional  firm,  from 1989 to 1996. He began his career in public  accounting in
1985 with the local firm of Ryan  Damratoski & Company,  after having received a
bachelor's degree in accounting from West Virginia  University.  Mr. Franty is a
member of the American Institute of Certified Public  Accountants  ("AICPA") and
the Pennsylvania Institute of Certified Public Accountants ("PICPA"). He is also
involved in various civic activities in McMurray, Pennsylvania.

         TERRY L MASSARO.  Mr.  Massaro  became a director in March 2003.  He is
currently a partner with the  accounting  firm of Carbis Walker LLP, New Castle,
Pennsylvania,  and has been with the firm for over 25 years.  He has  focused on
building  expertise in the areas of manufacturing  and nonprofit  entities.  Mr.
Massaro  is the  quality  control  partner  of the firm and  captain  of  Carbis
Walker's  peer  review  team,  which is  utilized  by other firms as a mandatory
quality control tool to meet standards set by the AICPA. Additionally,  he is in
charge of the firm's report center where he is responsible for reviewing reports
for accuracy and adherence to guidelines  set by the AICPA.  He is currently the
alternate  coordinator  of  manufacturing  services and has served as the firm's
partner-in-charge  of the New Castle office.  Mr. Massaro received a bachelor of
arts degree in business  with a  concentration  in accounting  from  Westminster
College.  He is a member  of the  AICPA,  the  PICPA,  and the Ohio  Society  of
Certified Public Accountants.

         JOSEPH J. PRISCHAK. Mr. Prischak became a director in March 2003. He is
the chairman of the board of the Plastek Group of Erie, Pennsylvania,  a company
which he founded in 1971. Mr.  Prischak began his career at Erie Resistor in the
molding  department  and  then  moved  to the  tool  room  where  to took up his
apprenticeship.  He then worked for Penn Erie Manufacturing.  With two partners,
he founded  Triangle Tool Company in 1956 in Erie,  Pennsylvania.  He then moved
into the plastics field in 1971 with the founding of Plastek,  an  international
tool making and plastic  molding  company in the field of plastic  packaging for
consumer products. The Plastek Group now has over 2,000 employees.  In 1991, Mr.
Prischak was honored with the "Master  Entrepreneur of the Year" Award, which is
sponsored by Inc.  Magazine,  Merrill Lynch  Financial  Services,  and Ernst and
Young. He has served on the Hamot  Corporators  Board,  and currently  serves on
Penn  State  Behrend  Council  of  Fellows.  Since  December  1999 he has been a
director of Echocath,  Inc., a public company located in Princeton,  New Jersey,
which  develops,  manufactures  and markets medical  devices,  which enhance and
expand the use of ultrasound technology for medical applications and procedures.

CONFLICTS OF INTEREST

         Members of our management are associated with other firms involved in a
range  of  business  activities.  Consequently,  there  are  potential  inherent
conflicts of interest in their acting as officers and  directors of our company.
Insofar as the officers and directors are engaged in other business  activities,
we  anticipate  they will  devote  only a minor  amount  of time to those  other
business activities.

         Our  officers  and  directors  are  now and  may in the  future  become
shareholders,  officers or directors of other companies, which may be formed for
the  purpose of  engaging in  business  activities  similar to us.  Accordingly,
additional  direct conflicts of interest may arise in the future with respect to
such individuals acting on behalf of us or other entities. Moreover,  additional
conflicts of interest may arise with respect to opportunities  which come to the
attention of such  individuals in the  performance of their duties or otherwise.
Currently,  we do not have a right of first refusal  pertaining to opportunities
that come to their attention and may relate to our business operations.

         Our  officers  and  directors  are, so long as they are our officers or
directors, subject to the restriction that all opportunities contemplated by our
plan of operation  which come to their  attention,  either in the performance of
their


                                       11

<PAGE>

duties or in any other manner, will be considered  opportunities of, and be made
available  to us and the  companies  that they are  affiliated  with on an equal
basis. A breach of this  requirement will be a breach of the fiduciary duties of
the officer or  director.  If we or the  companies  with which the  officers and
directors are affiliated both desire to take advantage of an  opportunity,  then
said officers and directors  would abstain from  negotiating and voting upon the
opportunity.  However,  all directors may still  individually  take advantage of
opportunities  if we should decline to do so. Except as set forth above, we have
not  adopted  any  other  conflict  of  interest  policy  with  respect  to such
transactions.

         Donald  L.  Franty  and  Terry L.  Massaro  are  members  of our  audit
committee.  We do not have any standing nominating or compensation committees of
our board of directors.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Section  16(a) of the  Securities  Exchange  Act of 1934  requires  our
officers,  directors,  and  persons  who  beneficially  own more than 10% of our
common  stock to file  reports  of  securities  ownership  and  changes  in such
ownership  with  the  Securities  and  Exchange  Commission  ("SEC").  Officers,
directors  and greater  than 10%  beneficial  owners are also  required by rules
promulgated by the SEC to furnish us with copies of all Section 16(a) forms they
file.

         Based solely upon a review of the copies of such forms furnished to us,
or written representations that no Form 5 filings were required, we believe that
during the fiscal year ended December 31, 2002,  there was  compliance  with all
Section 16(a) filing  requirements  applicable  to our  officers,  directors and
greater than 10%  beneficial  owners except for a Form 4 required to be filed by
Charles J. Long,  Jr. by December 16, 2002. The report was filed on December 18,
2002.


ITEM 10. EXECUTIVE COMPENSATION.

         The following  table sets forth  information  the  remuneration  of our
chief  executive  officers and all  executive  officers that earned in excess of
$100,000 per annum during any part of our last three fiscal years:

<TABLE>
                           SUMMARY COMPENSATION TABLE
<CAPTION>
------------------------------------------------------------------------------------------------------------------
                                     ANNUAL COMPENSATION                  LONG TERM COMPENSATION
                             ---------------------------------------------------------------------------
                                                                            AWARDS             PAYOUTS
                                                                    ------------------------------------
                                                       OTHER        RESTRICTED   SECURITIES
    NAME AND                                           ANNUAL         STOCK      UNDERLYING     LTIP       ALL OTHER
    PRINCIPAL                                         COMPENSA-      AWARD(S)      OPTIONS/    PAYOUTS     COMPENSA-
    POSITION         YEAR    SALARY ($)   BONUS ($)    TION ($)        ($)        SARS (#)       ($)        TION ($)
---------------------------------------------------------------------------------------------------------------------
<S>                  <C>      <C>          <C>            <C>          <C>          <C>          <C>          <C>
Joseph Giordano,     2002     150,000      30,000         -0-          -0-          -0-          -0-          -0-
 Jr., President
       (1)
---------------------------------------------------------------------------------------------------------------------
Charles J. Long,     2002     150,000      30,000         -0-          -0-          -0-          -0-          -0-
 Jr., Secretary
  and Treasurer
---------------------------------------------------------------------------------------------------------------------
   Gregory F.        2001       -0-          -0-          -0-          -0-          -0-          -0-          -0-
   Martini (2)       2000       -0-          -0-          -0-          -0-          -0-          -0-          -0-
---------------------------------------------------------------------------------------------------------------------
 Robert Blakely      2000       -0-          -0-          -0-          -0-          -0-          -0-          -0-
       (3)           1999       -0-          -0-          -0-          -0-          -0-          -0-          -0-
---------------------------------------------------------------------------------------------------------------------
</TABLE>
---------------------
(1)    Mr. Giordano has been the President since January 28, 2002.
(2)    Mr. Martini was the President from February 15, 2000 to January 28, 2002.
(3)    Mr. Blakely was the President from May 1986 to February 15, 2000.

         We have not granted any stock options or stock  appreciation  rights to
the persons listed in the table above.

         We  reimburse  our  officers  and  directors  for  reasonable  expenses
incurred during the course of their performance.  Directors who are not officers
receive $500 per meeting.

                                       12

<PAGE>

STOCK OPTION PLANS

         On April 4, 2002,  our  shareholders  adopted a 2002 Stock  Option Plan
under  which a total of  995,000  shares  are  reserved  initially  for grant to
provide  incentive  compensation  to officers and key  employees.  The number of
shares available for grant adjusts quarterly, commencing on the first day of the
next fiscal quarter to a number equal to 10% of the number of shares outstanding
on last day of the fiscal quarter just completed.

         The board of directors  administers the Stock Option Plan.  Options may
be granted for up to 10 years at not less than the fair market value at the time
of grant,  except  that the term may not exceed five years and the price must be
110% of fair market value for any person who at the time of grant owns more than
10% of the total voting power of the Company. At the time of grant, the board of
directors  may specify the period or periods of time within which each Option or
portion  thereof will first become  exercisable or vest. The Plan will remain in
effect  until the board of  directors  terminates  it,  except that no incentive
stock option,  as defined in Section 422 of the Internal  Revenue  Code,  may be
granted after January 28, 2012.

         Options may be  exercised  by payment of the option  price (i) in cash,
(ii) by tender of shares of Company  common stock which have a fair market value
equal to the option price, or (iii) by such other  consideration as the board of
directors may approve at the time the option is granted.

         As of December 31, 2002,  options to purchase a total of 666,000 shares
of common stock have been granted under this Plan.


ITEM 11.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
           AND RELATED STOCKHOLDER MATTERS.

         The following table provides certain information as to the officers and
directors  individually  and as a group,  and the holders of more than 5% of the
Common Stock of the Company, as of March 3, 2003:

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
                                                     AMOUNT AND NATURE OF
   NAME AND ADDRESS OF BENEFICIAL OWNER (1)          BENEFICIAL  OWNERSHIP          PERCENT OF CLASS (2)
---------------------------------------------------------------------------------------------------------
<S>                                                        <C>                             <C>
Plymouth Partners, LP (3)                                  4,263,266                       42.7%
10826 Omaha Trace
Union, KY  41091
---------------------------------------------------------------------------------------------------------

Charles J. Long, Jr.                                       4,007,946                       40.2%
RD #4, Box 62-A
New Castle, PA 16101
---------------------------------------------------------------------------------------------------------

Frederick W. Wakelin, Jr.                                    23,043                         0.2%
3260 Hamlet Drive #3
Naples, FL 34105
---------------------------------------------------------------------------------------------------------

Joseph M. Giordano                                           19,000                         0.2%
10610 Laurin Court
Union, KY 41091
---------------------------------------------------------------------------------------------------------


                                       13
<PAGE>



<CAPTION>
---------------------------------------------------------------------------------------------------------
                                                     AMOUNT AND NATURE OF
   NAME AND ADDRESS OF BENEFICIAL OWNER (1)          BENEFICIAL  OWNERSHIP          PERCENT OF CLASS (2)
---------------------------------------------------------------------------------------------------------
<S>                                                        <C>                             <C>
Mel Grata                                                    14,000                         0.1%
2757 E. State Street
Hermitage, PA 16148
---------------------------------------------------------------------------------------------------------

Joseph Giordano, Jr.                                          3,000                         (4)
RD #1, Box 610
New Wilmington, PA 13142
---------------------------------------------------------------------------------------------------------

Donald L. Franty                                                0                            --
455 Valleybrook Road, Suite 200
McMurray, PA 15317
---------------------------------------------------------------------------------------------------------

Terry L. Massaro                                                0                            --
2599 Wilmington Road
New Castle, PA 16105
---------------------------------------------------------------------------------------------------------

Joseph J. Prischak                                              0                            --
2425 West 23rd Street
Erie, PA 16506
---------------------------------------------------------------------------------------------------------

All officers and directors as a group                      4,066,989                       40.8%
(8 persons)
---------------------------------------------------------------------------------------------------------
</TABLE>
------------------
(1)  To  our  knowledge,  except as set forth in the footnotes to this table and
     subject to applicable community property  laws,  each  person  named in the
     table  has sole  voting and  investment  power  with  respect to the shares
     set forth opposite such person's name.

(2)  This  table  is based on 9,972,912 shares of Common Stock outstanding as of
     March 3, 2003.

(3)  Intram  Investment  Corporation,  the general partner of Plymouth Partners,
     LP, is owned and controlled by Gregory F. Martini. Accordingly, Mr. Martini
     may be deemed to be the beneficial owner of these shares.

(4)  Less than 0.01%.

         Messrs.  Giordano,  Jr. and Long may be deemed to be  "parents"  of our
company  within the meaning of the rules and  regulations  of the Securities and
Exchange Commission.

CHANGES IN CONTROL

         There are no agreements known to management that may result in a change
of control of our company.


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         Other than as disclosed below, none of our present directors,  officers
or principal shareholders,  nor any family member of the foregoing,  nor, to the
best of our information and belief, any of our former directors, senior officers
or  principal  shareholders,  nor any family  member of such  former  directors,
officers or principal shareholders,  has or had any material interest, direct or
indirect,  in  any  transaction,  or  in  any  proposed  transaction  which  has
materially affected or will materially affect us.

         In January  2000,  IPEC sold  1,000,000  shares of preferred  stock for
$1,000,000  to Sherwood  LLC. On March 28, 2001,  IPEC entered into an agreement
with  Sherwood to  repurchase  the shares for  $1,000,000.  The  repurchase  was
completed in 2001. The repurchase agreement contained a provision for a one-time
additional  payment if IPEC's capital  structure should change as a result of an
infusion  of  additional  equity.  IPEC's  sale of common  stock in 2001did  not
trigger the one-time additional payment. In addition,  IPEC had an agreement for
Sherwood to provide consulting services for $75,000 annually. That agreement was
modified effective as of

                                       14

<PAGE>


January 1, 2001 to reduce the consulting fee to $50,000  annually.  In 2002, Mr.
Wakelin, one of the partners of Sherwood, became IPEC's chief financial officer.
At that time,  the  consulting  contract was modified to provide that so long as
one of the  partners  of  Sherwood  continues  to act on  behalf  of  IPEC  in a
financial role, no consulting payments would be made.  Approximately $60,400 and
$0 were paid under this consulting agreement in 2001 and 2002, respectively.

         IPEC fabricates certain products for Giordano Construction Co., Inc., a
company owned and controlled by Joseph Giordano,  Jr., and Giordano Construction
Co., Inc. provides building and construction  services for IPEC. During 2001 and
2002,  IPEC sold  $41,862 and $4,153 of products to Giordano  Construction  Co.,
Inc. There were no purchases of services from Giordano Construction Co., Inc. in
2001 or 2002.

         IPEC leases equipment from L&G Leasing, a limited partnership owned and
controlled  by Joseph  Giordano,  Jr. and Charles J. Long,  Jr.  During 2001 and
2002, IPEC paid $59,900 and $56,050 to L&G Leasing for its equipment leases.

         Joseph Giordano, Jr. and Charles J. Long, Jr., officers, directors, and
the former principal  shareholders of IPEC have loaned sums to IPEC from time to
time.  At December  31, 2001,  IPEC owed Mr.  Giordano  $700,000.  This loan was
repaid in 2002 and no amounts were owed at December 31, 2002.

         Joseph  Giordano,   Jr.  and  Charles  J.  Long,  Jr.  have  personally
guaranteed  all of the debt owed to Sky Bank,  formerly  First  Western Bank. At
December 31, 2001 and 2002, $7,087,145 and $7,148,522,  respectively,  were owed
under various long-term notes. In addition,  IPEC owed $2,260,000 and $2,550,000
at December 31, 2001 and 2002,  respectively,  under its line of credit with the
bank.  Messrs.  Giordano and Long agreed to subordinate  amounts owed to them by
IPEC to the bank's interest.

         We believe  that all of the  transactions  were made or entered into on
terms that were no less favorable to us than those that could have been obtained
from an unaffiliated third party.


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

--------------------------------------------------------------------------------
 REGULATION
 S-B NUMBER                              EXHIBIT
--------------------------------------------------------------------------------
    2.1       Share Exchange Agreement between Golden Hole, Inc. and Interna-
              tional Plastics and Equipment Corp. dated January 14, 2002 (1)
--------------------------------------------------------------------------------
    3.1       Articles of Incorporation, as amended (2)
--------------------------------------------------------------------------------
    3.2       Bylaws (2)
--------------------------------------------------------------------------------
    4.1       Description of Series A Convertible Preferred Stock (3)
--------------------------------------------------------------------------------
   10.1       December 23, 1998 Loan Documents with First Western Bank (3)
--------------------------------------------------------------------------------
   10.2       January 13, 2000 Loan Documents with First Western Bank (3)
--------------------------------------------------------------------------------
   10.3       January 11, 2001 Loan Documents with Sky Bank (3)
--------------------------------------------------------------------------------
   10.4       February 25, 2002 Loan Documents with Sky Bank (3)
--------------------------------------------------------------------------------
   10.5       Series A Convertible Preferred Stock Purchase Agreement dated
              January 1, 2000 (3)
--------------------------------------------------------------------------------
   10.6       Consulting Agreement dated January 1, 2000 with Sherwood LLC (3)
--------------------------------------------------------------------------------
   10.7       Payment and Severance Agreement and Guarantee dated January 2,
              2001 (3)
--------------------------------------------------------------------------------
   10.8       Consulting Agreement dated January 1, 2001 with Sherwood LLC (3)
--------------------------------------------------------------------------------

                                       15

<PAGE>

--------------------------------------------------------------------------------
 REGULATION
 S-B NUMBER                              EXHIBIT
--------------------------------------------------------------------------------
   16.1       Letter from Andersen Andersen & Strong, L.L.C. (1)
--------------------------------------------------------------------------------
   21.1       Subsidiaries of the registrant (3)
--------------------------------------------------------------------------------
   99.1       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
--------------------------------------------------------------------------------
   99.2       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
--------------------------------------------------------------------------------
-------------------

(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.
(2)  Incorporated by reference to the exhibits to the registrant's  registration
     statement on Form 10-SB,  file number 0-30721.
(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.

Reports on Form 8-K:  None.


ITEM 14. CONTROLS AND PROCEDURES.

Under the supervision and with the  participation  of our management,  including
our Chief  Executive  Officer  and Chief  Financial  Officer,  we  conducted  an
evaluation of the  effectiveness  of our  disclosure  controls and procedures as
defined in Rule 13a-14(c)  promulgated under the Securities Exchange Act of 1934
within 90 days of the filing date of this report. Based on their evaluation, our
Chief Executive  Officer and Chief Financial  Officer  concluded that the design
and operation of our disclosure controls and procedures were effective as of the
date of the evaluation.

There have been no significant changes (including corrective actions with regard
to significant  deficiencies or material weaknesses) in our internal controls or
in other factors that could  significantly  affect these controls  subsequent to
the date of the evaluation referenced in the preceding paragraph.









                                       16
<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:  March 31, 2003                 By:  /s/ JOSEPH GIORDANO, JR.
                                         ---------------------------------------
                                         Joseph Giordano, Jr., President

         In accordance  with the Exchange Act, this report has been signed below
by the following  persons on behalf of the  registrant and in the capacities and
on the dates indicated.

<TABLE>
<CAPTION>
                   SIGNATURE                                  TITLE                          DATE

<S>                                               <C>                                    <C>
                                                  President and Director
/s/ JOSEPH GIORDANO, JR.                          (Principal Executive Officer)          March  31, 2003
--------------------------------------------
Joseph Giordano, Jr.


/s/ CHARLES J. LONG, JR.                          Secretary, Treasurer and Director      March 31, 2003
--------------------------------------------
Charles J. Long, Jr.

                                                  Chief Financial Officer (Principal
/s/ FREDERICK W. WAKELIN, JR.                     Financial and Accounting Officer)      March 31, 2003
--------------------------------------------
Frederick W. Wakelin, Jr.


/s/ JOSEPH M. GIORDANO                            Director                               March 31, 2003
--------------------------------------------
Joseph M. Giordano


/s/ MEL GRATA                                     Director                               March 31, 2003
--------------------------------------------
Mel Grata


/s/ DONALD L. FRANTY                              Director                               March 31, 2003
--------------------------------------------
Donald L. Franty


/s/ TERRY L. MASSARO                              Director                               March 31, 2003
--------------------------------------------
Terry L. Massaro


/s/ JOSEPH J. PRISCHAK                            Director                               March 31, 2003
--------------------------------------------
Joseph J. Prischak

</TABLE>

                                       17
<PAGE>


                                 CERTIFICATIONS


I, Joseph Giordano, Jr., certify that:


1.      I have reviewed this annual report on Form 10-KSB of IPEC Holdings Inc.;

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

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

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

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

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

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

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


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

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

6.      The  registrant's  other certifying  officers  and I have  indicated  in
        this annual report  whether 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: March 31, 2003

                                         /s/ JOSEPH GIORDANO JR.
                                         ---------------------------------------
                                         Chief Executive Officer



                                       18
<PAGE>



                                 CERTIFICATIONS


I, Frederick W. Wakelin, Jr., certify that:

1.      I have reviewed this annual report on Form 10-KSB of IPEC Holdings Inc.;

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

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

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

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

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

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

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


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

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

6.      The  registrant's  other certifying  officers  and I have  indicated  in
        this annual report  whether 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: March 31, 2003


                                              /s/ FREDERICK W. WAKELIN, JR.
                                              ----------------------------------
                                              Chief Financial Officer


                                       19


                               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 - 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 - 23

</TABLE>


<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.


          /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







                                      F-2
<PAGE>


                               IPEC HOLDINGS, INC.
                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                          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>
                                                           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                                         148,000                  -
                                                     ------------------   ------------------

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                                  4,149,694            4,125,177
Retained Earnings (Deficit)                                   263,139             (581,740)
                                                     ------------------   ------------------
          Shareholders' Equity                              4,422,806            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



<TABLE>
<CAPTION>
                                                            Year Ended December 31,
                                                             2002              2001
                                                      -----------------   -----------------
<S>                                                   <C>                 <C>
Sales                                                  $   12,880,474      $   12,938,376
                                                      -----------------   -----------------

Operating expenses
   Cost of goods sold                                       9,275,645          10,193,976
   Selling                                                    773,531             789,487
   General and administrative                               1,233,204           1,072,207
                                                      -----------------   -----------------
      Operating expenses                                   11,282,380          12,055,670
                                                      -----------------   -----------------
Operating income                                            1,598,094             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                                           998,879              96,365
Income taxes                                                  154,000              17,000
                                                      -----------------   -----------------

Net income                                             $      844,879      $       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                                 $         0.09      $         0.01
                                                      =================   =================

Diluted Income Per Share                               $         0.08      $         0.01
                                                      =================   =================
</TABLE>



                 See accompanying notes to financial statements.


                                      F-5

<PAGE>

                               IPEC HOLDINGS, INC.
                            STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                        Year Ended December 31,
                                                                        2002               2001
                                                                  ----------------    ---------------
<S>                                                               <C>                 <C>
Cash Flows from Operating Activities
Net Income                                                        $       844,879     $       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                                                        148,000                -
    Common stock issued for services                                       25,000                -
    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                            (700,000)           350,000
parties
                                                                  ----------------    ---------------
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 AND 2001




<TABLE>
<CAPTION>

                                     Preferred      Common                                 Additional
                                       Shares       Shares       Preferred      Common       Paid In      Retained
                                    Outstanding   Outstanding      Stock         Stock       Capital      (Deficit)       Total
                                    -----------------------------------------------------------------------------------------------
<S>                                 <C>            <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   $ (661,105)   $ 3,178,318

Repurchase of Preferred Stock       (1,000,000)                  (1,000,000)                                           (1,000,000)
Sale of Common Stock                               1,193,906                      1,194     1,294,040                   1,295,244
Net Income                                                                                                  79,365         79,365
                                    -----------------------------------------------------------------------------------------------

Balance at December 31, 2001               -       9,489,796            -         9,490     4,125,177     (581,740)     3,552,927

Stock issued in connection with
  reverse merger                                     465,000                        465          (465)                        -
Issuance of Common Stock for
  services                                            18,116                         18        24,982                      25,000
Net Income                                                                                                 844,879        844,879
                                    -----------------------------------------------------------------------------------------------

Balance at December 31, 2002               -       9,972,912    $       -      $  9,973   $ 4,149,694   $  263,139    $ 4,422,806
                                    ===============================================================================================

</TABLE>




                 See accompanying notes to financial statements.




                                      F-7

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


NOTE 1.  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 2.


         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.


         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.


                                      F-8

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


         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.


         INTANGIBLE ASSETS

         Intangible Assets are comprised primarily of loan commitment fees that
         are being amortized on a straight-line basis over periods ranging from
         seven to fifteen years. No goodwill is reflected in the statement of
         financial position.


         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.


                                      F-9
<PAGE>

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

         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).

         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.


                                      F-10
<PAGE>
                               IPEC HOLDINGS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001


         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.


         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.


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

         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 / (loss) per share reflects the potential dilution
         that could occur from the exercise of stock options.


         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 2. 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.

         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.

                                      F-12
<PAGE>
                               IPEC HOLDINGS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001

         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 8 regarding income taxes.


NOTE 3. 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 4. 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.


NOTE 5.  LONG-TERM DEBT

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

                                      F-13

<PAGE>
                               IPEC HOLDINGS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001
<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 monthly,                                1,900,000
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>

         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 (ie., the ratio of total liabilities to tangible net worth
         with

                                      F-14

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


         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 6.  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 7 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 7.  COMMON STOCK

         The Company has a single class of Common Stock, par value $.001. See
         Note 2 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.

         If the Company had elected to recognize compensation expense based upon
         the fair value at the grant date for awards under these plans
         consistent with the methodology prescribed by SFAS 123, the Company's
         net income and basic income per share for the years ended December 31,
         2002 and 2001 would be as follows:


                                      F-17
<PAGE>
                               IPEC HOLDINGS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001

                                          December 31,      December 31,
                                              2002              2001
                                      -----------------------------------
           Net Income
             As Reported              $     844,879      $       79,365
             Proforma                 $     526,803      $       79,365

           Basic Income Per Share
             As Reported              $        0.09      $         0.01
             Proforma                 $        0.05      $         0.01


         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
         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.

         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 14).

         On December 31, 2001, IPEC sold 1,193,906 shares (restated for the
         effect of the share exchange described in Note 2) 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 2 regarding a business combination occurring in January 2002.


NOTE 8.  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.


                                      F-18
<PAGE>
                               IPEC HOLDINGS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001

         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                    141,500           -
            State and other income taxes
             Current provision                      6,000        17,000
             Deferred provision                     6,500           -
            Total                             $   154,000     $  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:


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

         Taxes at the statutory rate              $   287,259    $    26,984
         Increase (reduction) in taxes from:
         State and other income taxes,                 12,500         17,000
         Use of Net Operating Loss Carryforwards     (145,759)       (26,984)
                                                  ---------------------------

         Provision for income taxes               $   154,000    $    17,000
                                                  ===========================

         Presently, the Company has an unused federal tax net operating loss
         carryforward ("NOL") aggregating approximately $400,000 that expires
         beginning in 2010. Substantially all of this amount is attributable to
         the temporary differences between book and tax depreciation. All of the
         book NOL carryforward has been recognized. The Company intends to
         recognize the remaining tax NOL benefits when realized.

         See Note 2 regarding the Company's business combination pursuant to a
         merger agreement executed and closed in January 2002. The merger was a
         tax-free merger pursuant to Internal Revenue Code Section 368.
         Accordingly, in calendar year 2002, in connection with this merger, the
         Company's ultimate recognition of its NOL became subject to Internal
         Revenue Code Section 382.

                                      F-19
<PAGE>

         The general tax principle underlying Code Section 382 is that losses
         incurred by a corporation may be utilized by offsetting income it later
         generates, as long as its separate existence and the identity of its
         major shareholders are basically unchanged. However, significant
         limitations to the use of the Company's NOL may apply if there is an
         ownership change. The testing period is defined as the three-year
         period ending on the day of any shift involving a five- percent
         shareholder or the equity structure. The Company has computed the
         proforma effect of the ownership change associated with the merger to
         be less than five percent based on the following:

<TABLE>
<CAPTION>
                                                                     Post         Post        Percent
                                           Original    Original     Merger       Merger
                                            Shares     Percent      Shares      Percent        Change
                                            ------     -------      ------      -------        ------
<S>                                       <C>            <C>       <C>            <C>          <C>
         5% or More Shareholders          3,000,000      87.4%     8,295,892      83.2%        -4.2%
         Less than 5% Shareholders          431,745      12.6%     1,677,020      16.8%         4.2%
                                          -----------------------------------------------------------

         Total                            3,431,745     100.0%     9,972,912     100.0%         0.0%
                                          ===========================================================
</TABLE>

         Consequently, the Company does not believe its ultimate realization of
         its NOL carryforward has been impacted by the merger. However, in light
         of the transaction described in Note 14, the limitations imposed by
         Internal Revenue Code Section 382 could be triggered and there could be
         an impact on the ultimate realization of the Company's NOL carryforward
         tax benefits.


NOTE 9.  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:

                                      F-20

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

                                               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 has been charged against operations
         for depreciation and interest associated with capital leases in 2002
         and 2001, respectively.

         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 10. 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:


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

<TABLE>
<CAPTION>
                                                                                      2002             2001
                                                                                ---------------   ---------------
<S>                                                                             <C>               <C>
         Net income                                                             $      844,879    $      79,365
                                                                                ===============   ===============

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

         Basic earnings (loss) per share                                                 $0.09            $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                                               $0.08            $0.01
                                                                                ===============   ===============
</TABLE>

NOTE 11.  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 2, 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

                                      F-22
<PAGE>
                               IPEC HOLDINGS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001


         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 14.


NOTE 12.  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.


NOTE 13.  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 1).

         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 14. 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.

                                      F-23