<PAGE>

                    U.S. SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549
                                  FORM 10-KSB

     (MarkOne)
     [X]  ANNUAL REPORT PURSUANT SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
          ACT OF 1934. For the fiscal year ended December 31, 1999.

     [_]  TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934. For the transition period from _______ to ______

                        Commission file number 0-21384
                                               -------

                          KAIRE HOLDINGS INCORPORATED
                 ---------------------------------------------
                 (Name of small business issuer in its charter)

         Delaware                                      13-3367421
-------------------------------                    -----------------------
(State or other jurisdiction of            (I.R.S. Employer Identification No.)
incorporation or organization)

7348 Bellaire Ave, N. Hollywood , California                91605
(Address of principal executive offices)                   (Zip Code)

Registrant's Telephone number, including area code: (818) 255-4996
                                                    --------------

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

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

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
Regulation S-B is not contained herein, and will not 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. ____

The issuer had revenues of $259,545 for the fiscal year ended December 31, 1999.

The aggregate market value of the voting stock held by non-affiliates on
December 31, 1999 was approximately $538,558 based on the average of the bid and
asked prices of the issuer's common stock in the over-the-counter market on such
date as reported by the OTC Bulletin Board. As of December 31, 1999, 77,197,226
shares of the issuer's Common Stock were outstanding.

                      DOCUMENTS INCORPORATED BY REFERENCE

The Company's report on Form S-8 dated October 15, 1999: Part II
The Company's report on Form 8-K dated April 8, 1999: Items 6 and 7
The Company's report on Form S-8 dated March 19, 1999: Part II

Transitional Small Business Disclosure Format Yes ____  No  X
                                                           ---

                                      -1-
<PAGE>

                                    PART I

ITEM 1.   Description of Business

General Business Development

     The Company, which was formerly known as Interactive Medical Technologies
Ltd., was incorporated in Delaware in 1986. The Company provides non-radioactive
diagnostic products and laboratory analysis services to private and government
research facilities, academic centers, and hospitals engaged in studying the
effects of experimental drugs and/or surgical procedures have on regional blood
flow. The Company's products and services are sold through the Company's E-Z
Trac division.

     In 1999 the Company formed YesRx.com., which is an Internet drugstore that
is focused on pharmaceuticals, health, wellness and beauty products. The site
targets Internet shoppers and in particular, the senior citizen. In addition to
the Business to Consumer strategy, the company is in the process of implementing
a tightly focused Business to Business/Agency plan to fulfill orders to various
targeted groups through an advocate or enterprise that acts as a central
distributor. YesRx focuses on chronic care as opposed to emergency needs. The
company does not provide urgent care medications but works with the patient who
has regular medication needs and multiple refills. This provides operational
feasibility and recurring revenue streams. It is management's intent to spin off
YesRx.com into a separate company, contingent on funding.

     In 1993, the Company acquired Venus Management, Incorporated, ("VMI") which
was incorporated in New York on August 1, 1989. VMI's principle assets at the
time were two MRI systems, one which was leased to an MRI service provider
operating in New York and the second unit which was not operational. The non-
operational unit was returned to the finance company upon which VMI received a
release of claims agreement. Concerning the leased system, on or about March 1,
1995, VMI entered into a transfer of interest agreement with Siemens Credit
Corp., Medical Funding of America ("MFA") and Tri-county whereby Kaire gave its
corporate guaranty for all of Venus' obligations under this agreement. MFA
defaulted on the loan and on April 2, 1997 Siemens Credit Corporation filed a
civil action against Kaire for the accelerated amount due plus costs.
Subsequently, a Transfer of Interest Agreement was drawn up between Venus
Management, Siemens Credit Corporation and Medical Management, Inc. (NYSE symbol
CMI) whereby CMI would take over the lease and at the same time the legal action
was put on hold. (see legal Proceedings).

     In December 1997 the Company entered into an agreement (the "Agreement") to
acquire 80% of Kaire International, Inc. ("KII"), a network marketing firm based
in Longmont, Colorado, with 1997 annual sales of approximately $31,000,000. In
exchange for KII's Common Stock, the Agreement called for the Company to invest
an initial $1,000,000 plus Company Common Stock, and to subsequently provide
additional capital totaling $2,000,000 by the latter of February 15, 1998 or the
completion of KII's year-end audit. The Company was unable to raise the funds
reducing the Company ownership in KII to 24%. A write down of $2,632,003 in the
KII investment was reflected in the Company's 1997 financial statements.

     On December 10, 1998, Natural Health Trends Corp., ("NHTC") (NASDAQ: Symbol
NHTCC), announced it had signed an agreement as of November 24, 1998 to purchase
certain assets of KII for a combination of Series E and Series F Preferred
stock, Acquisition Warrants and a percentage of NHTC's net income for a period
of five years. It is not known what effect the NHTC agreement will have on Kaire
Holding's investment in KII, thus due to the uncertainty in Kaire Holding's
ability to recover its investment

                                      -2-
<PAGE>

in KII, its investment in KII was written off for the year ending December 1997.

     On February 19, 1998, Kaire Holdings, Incorporated changed its name from
Interactive Medical Technologies, Ltd., changed its NASDAQ OTC BBS symbol to
"KAHI" and reverse split its Common Stock at a ratio of seventy-five (75) to one
(1).

Business of Kaire Holdings Incorporated

     The Company markets three products, two of which are designed for animal
blood flow studies, the E-Z Trac Ultraspheres and the NuFlow fluorescent
microspheres. The third product is a service the Company provides for its
clients which counts NuFlow fluorescent microspheres used in the blood flow
studies and measures regional blood flow under laboratory conditions.

     The E-Z Trac Ultraspheres are microspheres designed for small research
studies measuring regional blood flow. The NuFlow fluorescent microspheres are
designed to measure regional blood flow for both small or large regional blood
flow research studies using E-Z Trac's Investigative Partner Service ("IPS") to
analyze the studies samples. The Company markets microsphere products to
pharmaceutical companies, universities, hospitals and other academic centers
engaged in regional blood flow studies of experimental drugs or surgical
procedures.

E-Z Trac Ultrasphere Microspheres

     The E-Z Trac Ultrasphere colored microspheres are the Company's original
product developed for regional blood flow studies. The raw materials necessary
for the production of the colored microspheres are available from numerous
sources. The microspheres are non-radioactive polystyrene spheres ranging from 3
to 200 microns in size. The Company treats and labels the microspheres in its
laboratory based upon a proprietary trade secret process. Eight non-radioactive
colored dyes are attached to the microspheres, giving them distinctive colors
when viewed and counted using a light microscope. The patented process also
involves a technology for separating the Ultrasphere from tissue and blood. The
Company also sells the reagents that are used in this patented process. The
Company's non-radioactive technique, has proven to be at least as accurate as
the radioactive microspheres technique, and eliminates the need and additional
cost required to dispose of radioactive waste. Other strengths offered by the
Ultraspheres are that they are stable over time and include eight different
colors that can be visualized simultaneously.

     Ultrasphere sales are made by the Company both directly to customers and
through two distributors in the U.S. and Japan. The distributors are Triton
Technology and Primetec respectively. Customers include Bowman Gray School of
Medicine, New York, Texas A&M, Cornell and Columbia Universities, Rhode Island
Hospital, Hospital du Sacre Coeur de Montreal, University of New South Wales and
others.

Investigative Partner Services (IPS) with NuFlow Fluorescent Microspheres

     In connection with the development of NuFlow fluorescent microspheres, the
Company established Investigator Partners Service ("IPS"). This service combines
a national reference service with an automated laboratory analysis that includes
counting the microspheres used in the blood flow studies. Here the Company
offers a fast accurate method of measuring regional blood flow under laboratory
conditions. The NuFlow fluorescent microspheres are counted using a customized
Becton-Dickenson flow cytometer and the Company's own proprietary software.
Besides achieving accurate results with this process, the Company has the
capacity of analyzing approximately 800 samples per week.

                                      -3-
<PAGE>

     IPS typically receives its business from customers within the U.S.
Depending on the order, the Company usually supplies its customer with a product
kit that contains the necessary supplies, i.e. microspheres, test tubes, and
instructions. Upon receiving the kit, the customer would run their experiment,
placing the resulting tissue samples derived from the experiment into the tubes
supplied from the kit and forward the kit to IPS for analysis. IPS typically
returns the analysis results in seven to ten days. IPS sales are made both
directly and through a distributor. The distributor is Triton Technology.
Customers include SmithKline Beecham Pharmaceutical, Alliance Pharmaceutical,
Case Western Reserve University and others. Further information can be found in
Kaire Holdings above referenced website.

YesRx.com

     YesRx.com. is an Internet drugstore that is focused on pharmaceuticals,
health, wellness and beauty products. The site targets Internet shoppers and in
particular, the senior citizen. In addition to the Business to Consumer
strategy, the company is in the process of implementing a tightly focused
Business to Business/Agency plan to fulfill orders to various targeted groups
through an advocate or enterprise that acts as a central distributor. YesRx
focuses on chronic care as opposed to emergency needs. The company does not
provide urgent care medications but works with the patient who has regular
medication needs and multiple refills.

Research & Development

     In 1999 and 1998 there were no funds allocated for new research and
development projects.

Product Liability Insurance

     Although the Company believes its products are safe, it may be subject to
product liability claims from persons injured through the use of the Company's
marketed products or services. The Company carries no direct product liability
insurance, relying instead on the coverage maintained by its distributors and
manufacturing sources from which it obtains product. There is no assurance that
this insurance will adequately cover any liability claims brought against the
Company. There also can be no assurance that the Company will be able to obtain
its own liability insurance (should it seek to do so) on economically feasible
terms. The Company's failure to maintain its own liability insurance could
materially adversely affect its ability to sell its products in the future.
Although no product liability claims have been brought against the Company to
date, if there were any such claims brought against the Company, the cost of
defending against such claims and any damages paid by the Company in connection
with such claims could have a materially adverse impact upon the company,
including its financial position, results of operations and cashflows.

Status of New Products or Services

     On February 18, 2000, announced a strategic relationship with Stason
Pharmaceuticals, Inc., the United States affiliate of Taiwan based Standard
Chemical and Pharmaceutical Co. Limited. Stason operates a facility in Irvine,
California that contains research and development laborities as well as
facilities for testing product stability and filling. Stason is an FDA-approved
manufacturer of pharmaceutical drugs plus manufactures about 60 vitamins and
wellness supplements. Stason can provide YesRx.com with a lower cost source of
product plus fulfillment efficiencies can also be obtained via Stason's
distribution facilities.

     The Company is currently finalizing an agreement to acquire an organization
that is involved in

                                      -4-
<PAGE>

business to business/agency sales. The company distributes pharmaceutical and
health products with a unique packaging system to senior assisted living and
retirement centers. The patient can then pick up their prescription at the
center. The Company believes that there is a significant opportunity to expand
this concept to other specialized markets that have chronic drug fulfillment
needs. As a result, the business-to-business strategy can be quickly implemented
to allow the patient to come to the YesRx.com site for front-end information and
ordering needs. YesRx can then become the conduit for preparation, fulfillment,
order tracking, and customer service. Packaging and delivery can be locally
fulfilled.

Competition

     The Company and its subsidiaries operate in a highly competitive technology
environment. The Company competes primarily on the basis of product uniqueness
by establishing a point of difference usually based on technological content,
quality, service and reliability.

     Although the Company believes that its microspheres are unique in
application and performance, there is no assurance that a highly competitive
market with more powerful competitors will not emerge if competitors are able to
develop microspheres substantially similar to, or better than those of the
Company. Although the Company knows of only two other competitors at this time
using non-radioactive microspheres for measuring animal blood flow, the Company
does compete directly against companies producing radioactive microspheres.

     Competitive pressure facing YesRx.com is significant in its industry. The
ability to fill a prescription, buy wellness products and satisfy beauty care is
found at many Internet sites, traditional drugstores, broad based discount
stores and department stores. Fulfillment can be direct, through the mail or
package delivery. However, the market is expanding due to population aging
demographics and the rapid growth of the Internet. YesRx competes by targeting
specific market segments (senior care as an example), offering competitive
prices and excellent customer service. While YesRx will conduct advertising and
promotion as part of its marketing efforts, the company believes that massive
advertising expenditures will not be effective in reaching the target markets.
Select advertising, consumer advocates and customer service will be keys to
success.

Patents, Licenses and Trademarks

     Prior to 1998, the Company held a United States patent for the use of
colored microspheres in measuring blood flow in laboratory animals as well as
for methods of separating the microspheres from blood and body flow in
laboratory animals as well as for methods of separating the microspheres from
blood and body tissue and determining the number of microspheres in tissue
without separation which expires in 2003. Similar patents were held by the
Company for Canada, Australia and Israel.

     Also prior to 1998, the Company also held a United States patent for the
preparation and application of contrast microspheres in the detection of
pulmonary emboli and certain other conditions. This patent expires in 2004.

     The Company took a one time charge of $206,922 to write down Patents for
the year ending December 1997. The 1997 write down adjusts for the patents that
are either no longer being used or have not been maintained with the U.S. Patent
Office. The Company has discontinued maintaining the remaining patents and took
a charge of $44,691 to write down these patents for the year ending December
1998.

                                      -5-
<PAGE>

Royalty Agreements

     The company is required to pay certain inventors royalties equal to 6% of
the Company's sales of microspheres.

Government Regulations

     All pharmaceutical and medical diagnostic equipment manufacturers are
subject to extensive regulation by the federal government, principally through
the United States Food and Drug Administration ("FDA"). For the marketing of the
Company's colored microspheres for animal blood flow research, the FDA does not
require the Company to prove its safety and efficacy.

     The Company's products are not subject to material environmental regulation
at this time. While the Company's current scope of microsphere operations is
relatively limited and all of the product is used without wastage, issues of
environmental compliance could arise in the future if increased manufacturing of
the microspheres were to require disposal of hazardous chemicals.

     YesRx.com is subject to extensive and complex federal, state and local
regulations. Many of the laws and regulations are specific to pharmacies, the
dispensation of medications and the sale of over-the-counter drugs. In addition,
YesRx.com must adhere to licensing requirements for pharmacies and pharmacists.
An example of how regulation affects YesRx.com is the Omnibus Budget
Reconciliation Act of 1990 and related sate and local regulations wherein
pharmacists are required to offer counseling to their customers about
medication, dosage, delivery systems, common side effects, adverse effects or
interactions and therapeutic contraindications, proper storage, prescription
refills and other information.

     While regulation creates complexity in the business model, the playing
field is level relative to other competitors who must adhere to similar
standards.

     Recently, Federal, State and local agencies have taken an interest in web
sites that are purportedly prescribing medications `online' and who do not go
through the extensive validation process that occurs with YesRx.com. This
situation could be expanded into closer scrutiny for all online pharmacy
operations. While YesRx.com only fills prescriptions that can be validated from
licensed medical sources, there is a possibility that online pharmacies may face
additional regulatory scrutiny and control.

     The confidentiality of patient/customer information is also subject to
regulation. As a matter of policy, YesRx.com does not sell, lease or transmit
customer data to a third party unless required by law to do so. Recently, a
study by the California Healthcare Foundation found that this was not the case
with some health related Internet sites that the study examined.

Employees

     As of December 31, 1999 the Company had four full time employees.

                                      -6-
<PAGE>

ITEM 2.  Description of Property

     Kaire Holdings Inc. corporate offices, YesRx.Com and E-Z Trac Investigative
Partner Services operations are conducted in a leased facility located in North
Hollywood, California. The facility is approximately 1,986 square feet at $1,600
per month. The lease expires in May 2001.

ITEM 3.  Legal Proceedings

Federal Trade Commission Proceeding - Settled

     The Seattle Regional Office of the Federal Trade Commission had advised the
Company that it believed the Company's fat sequesterant product, which was
marketed by KCD, a former licensee, under the name "SeQuester," had been
improperly represented in advertising claims, and that the sequesterant product,
when previously marketed by the Company under the name "Lipitrol", also was
improperly represented in advertising claims. (Note, this product is no longer
marketed by Kaire Holdings). On June 16, 1996 the FTC filed a complaint be filed
against the licensee, the Company and certain individuals in connection with the
foregoing. Subsequently the Company and the FTC agreed upon a proposed
settlement in which the Company would consent to a permanent injunction
prohibiting it from making misrepresentations relating to weight loss or weight
reduction products or services, or with respect to tests or studies relating to
such programs or services. In addition, the Company would pay consumer redress
to the FTC in an aggregate amount of $35,000 over a period of twelve months. The
Company's Board of Directors voted to accept the proposal in March 1996, which
was formally approved by the FTC in June 1997. Final payment was made to the FTC
on April 16, 1998.

Siemens Credit Corporation  - MRI Equipment Assigned to Third Party

     On or about February 19, 1992, Medical Funding of America ("MFA") leased to
Tri-County a Siemens Mobile Magneton Impact MRI System with a Van. On or about
June 24, 1992 Siemens and MFA entered into a loan and security agreement in the
amount of $2,019,496, which was, paid directly to Siemens Medical Systems, Inc.
On or about March 1, 1995 Siemens, MFA, Tri-County and Venus Management (an
Interactive Medical Technologies (Kaire Holdings) subsidiary ("Kaire")) entered
into a transfer of interest agreement whereby Kaire gave its corporate guaranty
of all of Venus' obligations under this agreement. Venus and MFA defaulted on
the loan and on April 2, 1997 Siemens Credit Corporation filed a civil action
for the accelerated amount due plus costs. This action is still pending. On or
about October 9, 1997, a Transfer of Interest Agreement was drawn up between
Venus Management, Siemens Credit Corporation and Medical Management, Inc.
("CMI") (NYSE: symbol CMI) whereby CMI would take over the lease. CMI took
possession of the MRI. All parties executed the agreement except Siemens who
continued to negotiate with CMI in an attempt to get CMI to pay all of the
arrearages owed Siemens. At present CMI and Siemens are still negotiating over
the terms of the agreement. It is the opinion of the Company's management that
its obligations under this agreement have been assigned and that Siemens will
not pursue this matter any further.

     Except as otherwise specifically indicated above, management believes that
the Company doesn't have any material liability for any lawsuits, settlements,
judgments or fees of defense counsel which have not been paid or accrued as of
December 31, 1998. However, there can be no assurance that the Company will
prevail in any of the above proceedings. Also the Company may be required to
continue to defend itself resulting in substantial additional expense. In the
event the Company is unable to pay the defense costs

                                      -7-
<PAGE>

associated with the foregoing an unfavorable settlement or judgment could be
awarded against the Company which could have a material adverse effect upon the
Company.

ITEM 4.  Submission of Matters to a Vote of Securities Holders

     On or about October 1, 1997, a proposal to increase the number of
authorized shares to 400,000,000 for the purpose to provide for the merger with
Kaire International, Inc. was voted upon and authorized by a majority of Kaire
Holdings, Inc. shareholders.

     On or about January 30, 1998, a proposal to 1) reverse split the Company's
common stock up to and not to exceed a reverse ratio of seventy-five to one, 2)
amend the Company's Articles of Incorporation changing the Company name to Kaire
Holdings Incorporated and 3) changing the Company's NASDAQ symbol to KHI was
voted and authorized by a majority of Kaire Holdings, Inc. shareholders. These
changes became effective on February 19, 1998.



                                      -8-
<PAGE>

                                    PART II

ITEM 5.  Market for Common Equity and Related Shareholder Matters

     The Company's Common Stock is quoted on the over - the - counter market and
quoted on the National Association of Securities Dealers Electronic Bulletin
Board ("OTC Bulletin Board") under the symbol "KAHI". It was previously traded
under the ticker symbol "NONI" until February 19, 1998, and before July 23, 1997
it was traded under the ticker symbol "ITAM". The high and low bid prices for
the Common Stock, as reported by the National Quotation Bureau, Inc., are
indicated for the periods described below. Such prices are inter-dealer prices
without retail markups, markdowns or commissions, and may not necessarily
represent actual transactions.

                     1998                     Low     High
                     ----                    -----    -----
                     (Post reverse split)
                     First Quarter           $0.53    $1.09
                     Second Quarter           0.56     0.56
                     Third Quarter            0.03     0.02
                     Fourth Quarter           0.02     0.02

                     1998                     Low      High
                     ----                    ------   ------
                     First Quarter           $0.016   $0.055
                     Second Quarter            0.03     0.16
                     Third Quarter            0.081    0.136
                     Fourth Quarter           0.058     0.14

To date, the Company has not declared or paid dividends on its Common Stock.

     As of December 31, 1999, there were approximately    shareholders of record
of the company's Common Stock.

     During the fiscal year ended December 31, 1999, to raise capital, the
Company issued securities using the exceptions available under the Securities
Act of 1933 including unregistered sales made pursuant to Section 4(2) of the
Securities Act of 1933 and pursuant to Regulation S, as follows:

     The Company issued 34,393,524 shares of common stock for conversion of
$1,367,402 of notes payable and $5,104 of interest incurred on these notes.

     The Company issued 817,610 shares of common stock for services valued at
$65,000. And the Company issued 335,000 shares of common stock for professional
fees valued at $19,500.

     The Company issued 7,678,708 share of common stock for conversion of debt
valued at $170,448.

     The Company issued 18,510,000 shares of common stock for options exercised
valued $880,500.

                                      -9-
<PAGE>

     The Company issued 1,275,000  shares of common stock for other compensation
valued at $63,750.

ITEM 6.  Management's Discussion and Analysis of Financial Condition and Results
of Operations

General

     The Company is engaged in the business of developing, manufacturing and
marketing diagnostic imaging products and services relating to blood flow
research in animals and the research and development of propriety diagnostic
imaging products and procedures for human applications that use existing imaging
equipment such as x-ray, CAT scan, MRI and ultra sound. The Company markets
three products, two of which are designed for animal blood flow studies, the E-Z
Trac Ultraspheres and the NuFlow fluorescent microspheres. The third product is
a service the Company provides for its clients which counts NuFlow fluorescent
microspheres used in the blood flow studies and measures regional blood flow
under laboratory conditions.

     The E-Z Trac Ultraspheres are microspheres designed for small research
studies measuring regional blood flow. The NuFlow fluorescent microspheres are
designed to measure regional blood flow for both small or large regional blood
flow research studies using E-Z Trac's Investigative Partner Service ("IPS") to
analyze the studies samples. The Company markets microsphere products to
pharmaceutical companies, universities, hospitals and other academic centers
engaged in regional blood flow studies o experimental drugs or surgical
procedures.

     In 1999 the Company formed YesRx.com., which is an Internet drugstore that
is focused on pharmaceuticals, health, wellness and beauty products. The site
targets Internet shoppers and in particular, the senior citizen. In addition to
the Business to Consumer strategy, the company is in the process of implementing
a tightly focused Business to Business/Agency plan to fulfill orders to various
targeted groups through an advocate or enterprise that acts as a central
distributor. YesRx focuses on chronic care as opposed to emergency needs. The
company does not provide urgent care medications but works with the patient who
has regular medication needs and multiple refills. This provides operational
feasibility and recurring revenue streams. It is management's intent to spin off
YesRx.com into a separate company, contingent on funding.

     In December 1997 the Company entered into an agreement (the "Agreement") to
acquire 80% of Kaire International, Inc. ("KII"), a network marketing firm based
in Longmont, Colorado, with 1997 annual sales of approximately $31,000,000. In
exchange for KII's Common Stock, the Agreement called for the Company to invest
an initial $1,000,000 plus Company Common Stock, and to subsequently provide
additional capital totaling $2,000,000 by the latter of February 15, 1998 or the
completion of KII's year-end audit. The Company was unable to raise the funds
reducing the Company ownership in KII to 24%. A write down of $2,632,003 in the
KII investment was reflected in the Company's 1997 financial statements

     On February 19, 1998, Kaire Holdings, Incorporated changed its name from
Interactive Medical Technologies, Ltd., changed its NASDAQ OTC BBS symbol to
"KAHI" and reverse split its Common Stock at a ratio of one (1) to seventy-five
(75).

                                      -10-
<PAGE>

Results of Operations

     The following table sets forth the Company's revenue and expense items for
the years ended December 31, 1999 and 1998.

<TABLE>
<CAPTION>

                                                FOR THE YEARS ENDED DECEMBER 31,
                                                       1999         1998
                                                   -----------   -----------
<S>                                            <C>               <C>
     Product and Services                          $  259,545    $   370,338
     Lease rentals                                          -              -
                                                   ----------    -----------
     Total Revenue                                    259,545        370,338
Cost of Revenues                                       89,245        156,075
                                                   ----------    -----------
Gross Profit                                          170,300        214,263
Operating Expenses
     Research and Development                             153              0
     Selling, general and Administrative            1,014,143        981,605
                                                   ----------    -----------
     Total Operating Expenses                       1,014,296        981,605
                                                   ----------    -----------
     Loss From Operations                            (843,996)      (767,342)

Other Income (Expense)
     Interest Expense                                 (82,250)      (226,985)
     Interest Income                                                     159
     Other Income                                     354,479          4,851
     Non-Cash Miscellaneous Income                     27,326
     Below Market Conversion
     Write-down on patents                                           (44,691)
     Write-down of Accounts payable                    75,504
                                                   ----------    -----------
     Total Other Income (Expense)                    (375,059)      (266,666)

     Loss before provision of income taxes           (468,937)    (1,034,001)
     Provision for Income taxes                         3,600          3,600
                                                   ----------    -----------
     Net Loss                                      $( 472,537)   $(1,037,608)
</TABLE>

Comparison of years ended December 31, 1999 and 1998:

     Net revenue for the year ended December 31, 1999 was $259,545, a decrease
of $110,793 or 30% from the year ended December 31, 1998. The decrease in net
revenues was due to a decrease in projects by our customers which required the
lab's products and services.

     Gross profit for the year ended December 31, 1999 was $170,300, a decrease
of $43,963 or 20.5% compared to the same period in 1998. This decrease in gross
profit was attributable to the decrease in sales.

     Selling, general and administrative expense ("SG&A") Increased to
$1,014,143 from $981,605 for 1999 from 1998, amounting to a increase of $32,538
or 3.3% from the same period last year.

     Interest expense was $82,250 or the year ended December 31, 1999, which
represents a decrease of $144,735 or 63.7% from the same period last year. The
December 31, 1999 interest expense decrease is primarily a result of the
conversion the notes throughout 1999.

                                      -11-
<PAGE>

     Other income of $354,479 resulted from writing off certain older
liabilities for which the company is no longer liable.

     No provision was made for Federal income tax since the Company has incurred
significant net operating losses from inception.

Liquidity and Capital Losses

     The Company's revenues have been insufficient to cover acquisition costs,
cost of revenues and operating expenses. Therefore, the Company has been
dependent on private placements of common stock securities, bank debt, loans
from private investors and the exercise of common stock warrants in order to
sustain operations. In addition, there can be no assurances that private or
other capital will continue to be available, or that revenues will increase to
meet the Company's cash needs, or that a sufficient amount of the Company's
common stock or other securities can or will be sold or that any common stock
purchase options/warrants will be exercised to fund the operating needs of the
Company.

     On December 31, 1999 the Company had assets of $160,00 compared to $185,572
on December 31, 1998. The Company had a total stockholders' deficit of $586,426
on December 31, 1999 compared to a deficit of $2,610,593 on December 31, 1998, a
decrease of $2,024,167. This decrease for the year ended December 31, 1999 was
the result 1) issuance of stock for note conversions and related interest
expense totaling $1,319,754, 2) stock and stock options issued for services
totaling $805,500 3) issuance of stock for the conversion of debt totaling
$170,448 and 4) other stock issued for totaling $201,002 off set by the 1999 net
loss of $472,537.

     As of December 31, 1999 the Company's working capital position increased
$2,040,202 from a negative $2,626,628 at December 31, 1998 to a negative
$586,426 at December 31, 1999, primarily as a result a decrease in accounts
payable and accrued expenses of $890,639, an increase in cash of $124,337, and a
decrease in accounts receivable of $25,928.

     In order to meet its current operating needs, the Company has cut all its
operations except for the products and services sold through its E-Z division.
Going forward, the company's plan of operation is to expand its efforts on the
sale of its colored microspheres and related laboratory and diagnostic services,
as well as launch related health products through an internet e-commerce site
the Company is developing. concentrate its efforts on the sale of its colored
microspheres and related laboratory and diagnostic services.

Outlook

     The Company has developed a new strategic plan that is expected to expand
the Company's presence and provide its customers with the ability to transact
business in a secure and informed environment via an internet e-commerce site.
In 1999 the Company formed YesRx.com., which is an Internet drugstore that is
focused on pharmaceuticals, health, wellness and beauty products, with
additional projects being considered for the year 2000.

     The Company's e-commerce facility will allow the Company to receive
individual customer orders through its commercial site which will alert the
designated manufacturer and fulfillment center to process the order.

     The e-commerce business provides several operational advantages for
the Company including no

                                      -12-
<PAGE>

inventory cost or related capital expenditures, no need for warehousing,
shipping, large support staffs and the various related costs.

Year 2000 Issue

     The Company experience no disruption in business to customers or vendors or
had a material adverse effect on the company's business, financial condition or
results of operations related to the year 2000.

ITEM 7.   Financial Statements

                                                                         Page
                                                                         ----
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
  As of and for the Year Ended December 31, 1999                        F - 1

     Consolidated Balance Sheet                                         F - 2

     Consolidated Statements of Operations                              F - 3

     Consolidated Statements of Stockholders'  Deficit                  F - 4

     Consolidated Statements of Cash Flows                              F - 5

     Notes to Consolidated Financial Statements                         F - 7

ITEM 8.   Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

     A Change in accountants was previously reported on Form 8-K dated April 9,
1999. There were no disagreements with the Company's prior accountants over
accounting or reporting matters.

                                      -13-
<PAGE>

                                   PART III

ITEM 9.  Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act

     The Company's current officers and directors consist of the following
persons:

<TABLE>
<CAPTION>
     Name                    Age     Office                                 Since
     ----                    ---     ------                                 -----
     <S>                     <C>     <C>                                    <C>
     Steven R. Westlund       54     Chairman of the Board &                 1995
                                     Chief Financial Officer

     Owen M. Naccarato        50     Chief Financial Officer, Secretary &
                                     Director                                1997
</TABLE>

     Steven Westlund has been the Chief Executive Officer and a director of the
Company since May 1995 and was elected Chairman of the Board in December 1995.
Mr. Westlund was Chairman of the Board and Chief Executive Officer of Vitafort
International Corporation from May 1993 through May 1995. Vitafort manufactured
and sold fat free foods. From January 1991 to May 1993, Mr. Westlund was Chief
Executive Officer of Lorenz/Germaine Incorporated and concurrently from January
1991 to June 1992 he acted as Chairman and Chief Executive Officer of Auto
Giant. Mr. Westlund specializes in corporate restructuring and market
development.

     Owen Naccarato Joined the Company in July 1997 as Chief Financial Officer
and Secretary on a one- year renewable contract and was elected to the board of
directors in January 1998. Mr. Naccarato has held various operating positions,
most recently as Chief Financial Officer for Bikers Dream, Inc. a NASDAQ traded
motorcycle assembler and parts distributor and divisional vice
president/controller for Baxter Healthcare, Inc., a NYSE traded health care
manufacturer and distributor. Mr. Naccarato is a licensed attorney and is a
member of the California State Bar Association. He is also a Certified Public
Accountant.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

     Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than 10% of a
registered class of the Company's equity securities to file with the Securities
and Exchange Commission initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Officers,
directors and greater than 10% shareholders are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file.

     To the Company's knowledge, based solely on its review of the copies of
such reports furnished to the company and written representations that no other
reports were required during the fiscal year ended December 31, 1999, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than 10% beneficial owners were complied with.

                                      -14-
<PAGE>

ITEM 10.  Executive Compensation

     The following table sets forth certain summary information regarding
compensation paid by the Company for services rendered during the fiscal years
ended December 31, 1999 and 1998, respectively, to the Company's Chief Executive
Officer, President and Chief Financial Officer during such period.

                           Summary Compensation Table

   Position         December 31      Salary     Bonus   Compensation      (#)
---------------     -----------     -------     -----   ------------   ---------
Steven Westland        1999         $     0
Chairman & CEO         1998         $45,000                    -
                       1997         $49,154                 96,346       200,000

Mark L. Baurn          1999         $50,000                $     0     2,000,000


Owne Naccarato         1999         $32,000                    -
                       1998         $48,000                $     0             0
                       1997         $24,000                $


                         Aggregated Option Exercises in
               Fiscal Year Ended December 31, 1999 and Option Values

<TABLE>
<CAPTION>
                                                                                    Value of
                                                Number of Shares                  Unexercised
                     Shares                  Underlying Unexercised               In The Money
                    Acquired     Value        Options at 12/31/99             Options at 12/31/99 (1)
     Name           Exercise   Realized   Exercisable     Unexerisable    Exercisable       Unexercisable
---------------     --------   --------   -----------     ------------    -----------       -------------
 <S>                <C>        <C>        <C>             <C>             <C>               <C>
Steven Westland        0          -           200,000          0              0                  0

Peter Benz             0          -           200,000          0              0                  0

John Osborne           0          -            16,667          0              0                  0

Michael Grecko         0          -            13,333          0              0                  0

William Shell          0          -            10,000          0              0                  0
</TABLE>

(1)  The value of the Company's Common Stock for purposes of the calculation was
based upon the average of the bid and asked prices for the common Stock as
reported by the OTC Bulletin Board, minus the exercise price. Since the above
average as of 12/31/98 is less than $0.03 and the exercise price is $3.75, the
significantly higher exercise price would qualify the options as not in the
money.

                                      -15-
<PAGE>

     The company entered into a five-year employment agreement with Steven
Westlund as Chief Executive Officer of the Company as of May 15, 1997. The
Company will compensate Mr. Westlund fifteen thousand ($15,000) dollars per
month for the months May 15, 1997 through May 15, 1998, then twenty thousand
($20,000) dollars per month for the months May 15, 1998 through May 15, 1999,
then increasing by fifteen percent (15%) per year for the remainder of this
Employment Agreement. Mr. Westlund also received a five-year option to purchase
two hundred thousand (200,000 post-reverse split) shares of the company's common
stock at the price of $3.75 (post-reverse split price) per share. Also included
in this Agreement is a provision to compensate the employee for his efforts if
the employer is either acquires, is acquired or merges with another entity in an
amount equal to two and one half (2.5%) percent of the total value of such
transaction.

     The company entered into a one-year employment agreement with Mark L. Baum
as President of the Company as of August 9, 1999. The Company will compensate
Mr. Baum eight thousand ($8,000) dollars per month for the months August15, 1999
through November 15, 1999, then twelve thousand ($12,000) dollars per month for
the months December 15, 1999 through February, 2000, then increasing by fifteen
percent (15%) per year for the remainder of this Employment Agreement. Mr. Baum
also received a one-year option to purchase two million (2,000,000 post-reverse
split) shares of the company's common stock at the price of $.04 (post-reverse
split price) per share. Also included in this Agreement is a provision to
compensate the employee for his efforts if the employer is either acquires, is
acquired or merges with another entity in an amount equal to two and one half
(2.5%) percent of the total value of such transaction.

     Mr. Westlund and Mr. Benz were paid partial compensation in 1997 with the
remainder being accrued. In calendar year 1998, Mr. Westlund and Mr. Benz have
not received any compensation as of August 31, 1998. Mr. Westlund and Nr. Benz
were paid all accrued wages in 1999.

     In May 1993, the Company's shareholders approved the adoption of Stock
Option Plans pursuant to which options covering a total up to 1,500,000 shares
of the Company's Common Stock may be granted to the Company's officers,
directors, employees and other such persons providing services to the company.
No shares have been granted under such plan.

     The Company offers disability insurance to all its employees and health
insurance to certain employees. The Company has adopted no retirement, pension,
profit sharing or other similar programs.

ITEM 11.  Security Ownership of Certain Beneficial Owners and Management

     The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of December 31, 1999 based on
information available to the Company by (I) each person who is known by the
Company to own more than 5% of the outstanding Common Stock based upon reports
filed by such persons within the Securities and Exchange Commission; (ii) each
of the Company's directors; (iii) each of the Named Executive Officers; and (iv)
all officers and directors of the Company as a group.

Name and Address of                   Number of Shares
  Beneficial Owner                  Beneficially Owned (1)   Percentage
-------------------                 ------------------       ----------

Steven Westlund                                200,000 (2)         0.26%
2139 Pontius Ave.

                                      -16-
<PAGE>

Los Angeles, CA 90025

Peter Benz                                    2,125,000 (2)         02.8%
2139 Pontius Ave.
Los Angeles, CA 90025

John Osborne                                     16,667 (2)            0%
2139 Pontius Ave.
Los Angeles, CA 90025

Michael Grecko                                   22,299 (3)            0%
2139 Pontius Ave.
Los Angeles, CA 90025

William Shell                                    15,573 (4)            0%
2139 Pontius Ave.
Los Angeles, CA 90025

Directors and Officers as a Group
Group (two persons)                           2,846,206 (5)         03.7%

(1)  Included for purposes of this calculation are shares of Common Stock
     outstanding as of December 31, 1999.

(2)  Amounts are options that are currently exercisable.

(3)  Includes 13,333 options that are currently exercisable

(4)  Includes 10,000 options that are currently exercisable

(5)  All 466,667 options are currently exercisable.

ITEM 12.  Certain Relationships and Related Transaction

     There were no transactions during the last two years, or proposed
transactions, to which the small business issuer was or is to be a party, in
which any executive officer or director, or any nominee for election as a
director, or any individual with security ownership of certain beneficial owners
and management and any member of the immediate family of the aforementioned, had
or is to have a direct or indirect material interest.

ITEM 13.  Exhibits, List and Reports in Form 8-K

     (a) Exhibits

     3.   Articles of Incorporation and bylaws of the Company, as amended. (1)
     4.1  Form of Warrant Agreement between the Company and Jersey Stock
          Transfer and Trust Company, including the Form of Warrant (as
          modified). (4)
     4.2  Form of Stock Purchase Warrant (issued with promissory note). (2)
     10.1 License Agreement between F.A.T. Co. Research, Inc. and Dynamic
          Products, Inc. (1)

                                      -17-
<PAGE>

     10.2  Agreements between F.A.T. Co. Research, Inc. and Dr. Shell and Jackie
           See for Development and Exploitation of Patented Invention. (1)
     10.3  Consulting Agreements between See/Shell and Drs.  Dr. Shell and
           Jackie See. (1)
     10.4  Original Equipment Manufacturing Agreement between Olympus
           Corporation and E-Z Trac, Inc. (3)
     10.5  Distribution Agreement between E-Z Trac Inc., and Triton Technology,
           Inc. (3)
     10.6  Employment Agreement between the Company and William Peizer, Jr.
           dated December 24, 1992. (4)
     10.7  Agreement between William Peizer, Jr. and Clark M. Holcomb dated
           February 1, 1993. (4)
     10.8  Exchange of Stock Agreement and Plan of Reorganization among the
           Company, Venus   Management, Inc. and the stockholders of Venus
           Management, Inc. (4)
     10.9  Co-Management Agreements dated June 30, 1993 between Venus
           Management, Inc. and Medical Funding of America, Inc. (4)
     10.10 Agreement dated June 30, 1993 between Venus Management, Inc. and
           Medical Funding of America, Inc. (4)
     10.11 Letter dated August 20, 1993 between the Company and Lewis, D'Amato,
           Brisbois & Bisgaard re Debt Conversion Agreement. (4)
     10.12 Letter agreement dated March 13, 1993 between the Company and Clark
           M. Holcomb; Sale of Stock Agreement, dated November 1, 1992 by and
           between the Company and Clark M. Holcomb; and related Promissory Note
           from Clark M. Holcomb to the Company. (4)
     10.13 Agreement concerning MRI System, dated as of February 10, 1994 by and
           between Siemens Credit Corporation, Venus Management, Inc., the
           Company, Medical Funding of America, Inc. and Tri-County Mobile MRI,
           L.P. and related Transfer of Interest Agreement, Corporate Guaranty
           by the Company, Amendment to Promissory Note of Medical Funding of
           America, Inc. payable to Siemens Credit Corporation and Agreement
           concerning Lease Payment between Venus Management, Inc. and Tri-
           County Mobile MRI, L.P. (4)
     10.14 Agreement dated August 27, 1992 by and between Dr. William Shell and
           Clark M. Holcomb related to shares of the Company's Common Stock
           owned by Dr. Shell. (4)
     10.15 Agreement dated September 23, 1993 by and between Ladenburg, Thalmann
           Co., Inc. and the Company. (4)
     10.16 Consulting Agreement for Financial Public Relations dated as of
           February 25, 1994 by and between the Company and Robert Bienstock and
           Richard Washor. (4)
     10.17 License Agreement, dated March 23, 1994 by and between Effective
           Health, Inc. and KCD Incorporated. (4)
     10.18 Professional Services Agreement, dated April 15, 1994 by and between
           RAI Finanz, and the Company. (4)
     10.19 Consulting Agreement and Stock Plan dated as of August 25, 1994 by
           and between the Company and Hy Ochberg. (4)
     10.20 Memorandum of Understanding dated as of August 16,1994 by and between
           the Company and Raifinanz (USA), Inc. (4)
     10.21 Resonex Equipment Lease as of June 30, 1993 between Venus Management
           Company and Medical Funding of America. (4)
     10.22 Becton Dickenson Supply Agreement dated November 2, 1994.
     10.23 Form 12b-25 dated March 30,1995.
     10.24 2/nd/ & Final Revised Proposal to Acquire Pastels International,
           Incorporated (6)
     10.25 Revised Proposed Acquisition of Nutra Quest, Incorporated (6)
     10.26 Number skipped
     10.27 The 1998 Stock Compensation Plan (7)
     10.28 The Amendment to the 1998 Stock Compensation Plan (8)
     22.1  Subsidiaries of the Company & See/Shell Biotechnology, Inc. (1)

                                      -18-
<PAGE>

     22.2 Subsidiaries of the Company & E-Z Trac, Inc.-Articles of
          Incorporation, Amendments and By- Laws. (1)
     22.3 Subsidiaries of the Company & Effective Health, Inc.-Articles of
          Incorporation, Amendments and By-Laws. (1)
     22.4 Subsidiaries of the Company & Venus Management, Inc. Certificate of
          Incorporation, Amendments and By-Laws. (Included in Exhibit 10.9.)
     25.  Subsidiaries of the Company. (4)
     27.  Financial Data Schedule (included only in EDGAR filing).

     ___________________________________________________________________________

          (1)  Previously filed as an exhibit to the Company's registration
               statement on Form S-18, file number 33-17548-NY, as amended on
               August 7, 1990, and incorporated herein by reference.
          (2)  Previously filed as an exhibit to the Company's registration
               statement on Form S-18, file number 33-17548-NY, as amended on
               February 12, 1991, and incorporated herein by reference.
          (3)  Previously filed as an exhibit to the Company's registration
               statement on Form S-1 8, file number 33-17548-NY, as amended on
               June 24, 1991, and incorporated herein by reference.
          (4)  Previously filed as an exhibit to the Company's Registration
               Statement on Form SB-2, file number 33-51684-NY, as amended on
               September 19, 1994, and incorporated herein by reference.
          (5)  Previously filed as an exhibit to the Company's Form 10-QSB filed
               for the quarterly period ended September 30, 1996.
          (6)  Previously filed as an exhibit to the Company's Form 10-KSB filed
               for the period ended December 31, 1996.
          (7)  Incorporated by reference to the Company's Form S-8 dated January
               9, 1998 and filed with the Commission on January 9, 1998.
          (8)  Incorporated by reference to the Company's Form S-8 dated March
               25, 1998 and filed with the Commission on March 25, 1998.
          (9)  Incorporated by reference to the Company's Form S-8 dated April
               4, 1999 and filed with the Commission on March 19, 1999.
          (10) Incorporated by reference to the Company's Form S-8 dated October
               15, 1999 and filed with the Commission on October 15, 1999.
          (11) Incorporated by reference to the Company's Form S-8 dated
               February 11, 2000 and filed with the Commission on February 11,
               2000.

     (b)  Reports on Form 8-K:

     The company filed the following reports on Form 8-K during the quarters
ended December 31, 1999 and March 31, 2000:

     1.   Form 8-K dated February 19, 1998 reporting a change in the Company's
independent account, a name change, a seventy - five to one reverse common stock
split, and the signing of an agreement to purchase thirty - five percent in a
Singapore company and its Mainland China multi level marketing subsidiary.

     2.   Form 8-K dated April 8, 1999 reporting a change in the Company's
independent account and the resignation of Peter Benz as the Company's President
and Board member.

                                      -19-
<PAGE>

     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.

                         Kaire Holdings Incorporated

                         By: /s/ Steven R. Westlund
                             ----------------------
                             Steven R. Westlund Chief Executive Officer

                         Dated: April 14, 2000

     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.

/s/ Steven R. Westlund                                          April 14, 2000
----------------------------------------------
Steven R. Westlund Chief Executive Officer and
Director

/s/ Owen M. Naccarato                                           April 14, 2000
---------------------------------------------
Owen M. Naccarato Chief Financial Officer and
Director

                                      -20-
<PAGE>

                           KAIRE HOLDING INCORPORATED
                                AND SUBSIDIARIES

                              Financial Statements

                           December 31, 1999 and 1998

Report of Independent Certified Public Accountants                         1

Consolidated Balance Sheets                                                2

Consolidated Statements of Operations                                      3

Consolidated Statements of Stockholders' Deficit                           4

Consolidated Statements of Cash Flows                                  5 - 6

Notes to Consolidated Financial Statements                            7 - 21
<PAGE>

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors and Stockholders
Kaire Holdings Incorporated

We have audited the accompanying consolidated balance sheet of Kaire Holdings
Incorporated and subsidiaries as of December 31, 1999, and the related
consolidated statements of operations, stockholders' deficit, and cash flows for
the year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Kaire Holdings
Incorporated and subsidiaries as of December 31, 1999, and the consolidated
results of their operations and their consolidated cash flows for the year then
ended in conformity with generally accepted accounting principles.

Berg & Company LLP
March 17, 2000
<PAGE>

                          KAIRE HOLDINGS INCORPORATED
                               AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                          December 31, 1999 and 1998

<TABLE>
<CAPTION>
                                    ASSETS
                                                                          1999                 1998
                                                                      ------------        ------------
<S>                                                                   <C>                 <C>
Current assets
  Cash and cash equivalents                                           $    130,668         $     6,331
  Accounts receivable, net of allowance
     for doubtful accounts of $1,000                                        29,332              55,260
  Inventory                                                                   -                 70,042
  Deposits                                                                    -                  9,500
  Other asset                                                                 -                 28,404
                                                                      ------------        ------------

     Total current assets                                                  160,000             169,537
                                                                      ------------        ------------
Noncurrent assets

  Furniture and equipment                                                  891,473             891,473
  Less: Accumulated depreciation                                          (891,473)           (875,438)
                                                                      ------------        ------------

     Total noncurrent assets                                                  -                 16,035
                                                                      ------------        ------------

        Total assets                                                  $    160,000        $    185,572
                                                                      ============        ============

                         LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities

  Notes payable                                                       $     25,000        $     25,000
  Accounts payable and accrued expense                                     640,426           1,531,065
  Convertible notes payable and debentures                                  81,000           1,240,100
                                                                      ------------        ------------

     Total current liabilities                                             746,426           2,796,165

        Total liabilities                                                  746,426           2,796,165
                                                                      ------------        ------------
Stockholders' deficit
  Common stock, $0.001 par value
     400,000,000 shares authorized; 77,197,226 and
     15,387,384 shares issued and outstanding, respectively                 77,197              15,387
  Additional paid in capital                                            30,521,658          28,086,764
  Accumulated deficit                                                  (31,185,281)        (30,712,744)
                                                                      ------------        ------------

        Total stockholders' deficit                                       (586,426)         (2,610,593)
                                                                      ------------        ------------

           Total liabilities and stockholders' deficit                $    160,000        $    185,572
                                                                      ============        ============
</TABLE>



          See Accountants' Report and Notes to Financial Statements.

                                     -F3-
<PAGE>

                          KAIRE HOLDINGS INCORPORATED
                               AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                          December 31, 1999 and 1998

<TABLE>
<CAPTION>
                                                                     1999                1998
                                                                 ------------        ------------
<S>                                                              <C>                 <C>
Revenues                                                         $    259,545        $    370,338

Cost of goods sold                                                     89,245             156,075
                                                                 ------------        ------------

Gross Profit                                                          170,300             214,263
                                                                 ------------        ------------
Operating expenses
     Research and development                                             153                -
     Selling, general, and administrative expenses                  1,014,143             981,605
                                                                 ------------        ------------

          Total operating expenses                                  1,014,296             981,605
                                                                 ------------        ------------

Loss from operations                                                 (843,996)           (767,342)
                                                                 ------------        ------------
Other income (expense)
     Interest expense                                                 (82,250)           (226,985)
     Other income (expense)                                           354,479                 159
     Loss provision on MRI equipment                                     -                  4,851
     Non-cash miscellaneous income                                     27,326
     Write-down of patents                                                                (44,691)
     Write-down of accounts payable                                    75,504
                                                                 ------------        ------------

          Total other (income) expenses                               375,059            (266,666)
                                                                 ------------        ------------

Loss before provision for income taxes                               (468,937)         (1,034,008)

Provision for income taxes                                              3,600               3,600
                                                                 ------------        ------------

Net loss                                                         $   (472,537)       $ (1,037,608)
                                                                 ============        ============

Basic loss per share                                             $      (0.01)       $      (0.13)
                                                                 ============        ============

Diluted loss per share                                           $      (0.01)       $      (0.13)
                                                                 ============        ============

Weighted-average shares outstanding - basic                        36,251,628           7,929,788
                                                                 ============        ============

Weighted-average shares outstanding - diluted                      36,736,986           7,929,788
                                                                 ============        ============
</TABLE>



          See Accountants' Report and Notes to Financial Statements.

                                     -F4-
<PAGE>

                          KAIRE HOLDINGS INCORPORATED
                               AND SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
                FOR THE YEARS ENDED December 31, 1999 and 1998

<TABLE>
<CAPTION>
                                                                  Additional
                                           Common Stock             Paid-In      Accumulated
                                   -------------------------
                                      Shares         Amount         Capital        Deficit          Total
                                   -----------    -----------    ------------   -------------   ------------
<S>                                <C>            <C>            <C>            <C>             <C>
Balance, December 31, 1997           2,832,401    $     2,832    $ 25,756,993   $ (29,675,136)  $ (3,915,311)
Issued for conversion
   of notes payable                 10,773,292         10,773         936,061                        946,834
Issued for convertible
   note interest                       333,310            333          48,647                         48,980
Issued for professional
   services                            461,437            461         721,297                        721,758
Issued for services                    356,791            357         220,425                        220,782
Issued for conversion
   of debt                             293,000            293         141,973                        142,266

Sale of stocks                         337,153            337          43,215                         43,552

Beneficial Conversion                                                 218,154                        218,154

Net loss                                                                           (1,037,608)    (1,037,608)
                                   -----------    -----------    ------------   -------------   ------------

Balance, December 31, 1888          15,387,384         15,387      28,086,764     (30,712,744)    (2,610,593)
                                   -----------    -----------    ------------   -------------   ------------

Issued for conversion
   of notes payable                 32,866,250         32,866       1,281,784                      1,314,650
Issued for convertible
   note interest                       208,482            208           4,896                          5,104
Issued for professional
   services                            335,000            335          19,165                         19,500
Issued for services                    817,610            818          64,182                         65,000
Issued for conversion
   of debt                           7,678,708          7,679         162,769                        170,448

Issued for options exercised        17,310,000         17,310         788,190                        805,500

Issued for other compensation        1,275,000          1,275          62,475                         63,750

Beneficial Conversion                1,318,792          1,319          51,433                         52,752

Net loss                                                                             (472,537)      (472,537)
                                   -----------    -----------    ------------   -------------   ------------

Balance, December 31, 1999          77,197,226    $    77,197    $ 30,521,658   $ (31,185,281)  $   (586,426)
                                   ===========    ===========    ============   =============   ============
</TABLE>



          See Accountants' Report and Notes to Financial Statements.

                                     -F5-
<PAGE>

                         KAIRE HOLDINGS INCORPORATED
                               AND SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                       FOR THE YEARS ENDED DECEMBER 31,

<TABLE>
<CAPTION>
                                                                      1999          1998
                                                                  ------------  -------------
<S>                                                               <C>           <C>
Cash flows from operating activities
 Net loss                                                         $  (472,537)  $ (1,037,608)
 Adjustments to reconcile net loss to net cash
   used in operating activities
     Depreciation expense                                              16,035         42,160
     Deposits                                                           9,500           --
     Common stock issued in services                                   65,000        220,782
     Common stock issued for professional services                     19,500        721,758
     Common stock issued for interest on notes                          5,104         48,980
     Common stock issued for conversion of debt                       170,448        142,266
     Common stock for conversion of notes payable                   1,314,650        946,834
     Common stock issued for options exercised                        805,500           --
     Common stock issued for other compensation                        63,750           --
     Charge related to beneficial conversion feature of
       convertible notes payable/debentures                            52,752        218,154
     Write-down and valuation provision related to investment
       in Kaire International, Inc.                                                   44,691
     Non cash other expenses (income)                                 (34,087)          --

   (Increase) decrease in
     Accounts receivable                                               32,689         (7,828)
     Prepaid expenses and other assets                                   --           44,334
     Inventory                                                         98,446         43,208
   Increase (decrease) in
     Accounts payable and accrued expenses                           (863,313)      (740,880)
                                                                  -----------   ------------

        Net cash provided by operating activities                   1,283,437        686,851
                                                                  -----------   ------------

Cash flows from investing activities

        Net cash used in investing activities                            --             --
                                                                  -----------   ------------

Cash flows from financing activities
     Payments on notes payable                                    (1,159,100)      (760,000)
     Proceeds from the issuance of common stock and from the
        exercise of options/warrants                                                43,552
                                                                  -----------   ------------

        Net cash used in financing activities                      (1,159,100)      (716,448)
                                                                  -----------   ------------

        Net increase (decrease) in cash and cash equivalents          124,337        (29,597)

Cash and cash equivalents, beginning of year                            6,331         35,928
                                                                  -----------   ------------

Cash and cash equivalents, end of year                            $   130,668   $      6,331
                                                                  ===========   ============
</TABLE>


           See Accountants' Report and Notes to Financial Statements

                                     -F6-
<PAGE>

                         KAIRE HOLDINGS INCORPORATED
                               AND SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                       FOR THE YEARS ENDED DECEMBER 31,

Supplemental disclosures of cash flow information

     Interest paid                                         $13,912   $ 2,751
                                                           -------   -------

     Income taxes                                          $ 1,600   $ 1,200
                                                           -------   -------

Supplemental schedule of non-cash investing and financing activities During the
year ended December 31, 1999, the Company entered into the following non-cash
transactions:

     Issued 34,393,524 shares of common stock for conversion of $1,367,402 of
     notes payable, and $5,104 of accrued interest.

     Issued 817,610 shares of common stock for services valued at $65,000.

     Issued 335,000 shares of common stock for professional fees valued at
     $19,500.

     Issued 7,678,708 shares of common stock for conversion of debt valued at
     $170,448.

     Issued 17,310,000 shares of common stock for options exercised valued at
     $805,500.

     Issued 1,275,000 shares of common stock for other compensation valued at
     $63,750.

        See Accountants' Report and Notes to Financial Statements

                                     -F7-
<PAGE>

                           KAIRE HOLDINGS INCORPORATED
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1999


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Organization and Line of Business
     ---------------------------------

     Kaire Holdings Incorporated ("Kaire"), a Delaware corporation, was
     incorporated on June 2, 1986. Effective February 3, 1998, Kaire changed its
     name to Kaire Holdings Incorporated from Interactive Medical Technologies,
     Ltd. in connection with its investment in Kaire International, Inc.
     ("KII"). The principal activity of Kaire is the sale of colored
     microspheres to pharmaceutical companies, universities, hospitals, and
     other academic centers engaged in blood flow and pharmaceutical research.
     In connection with these sales, Kaire also provides a national reference
     and laboratory analysis service through its subsidiary, E-Z TRAC, Inc.

     In 1999 the Company formed YesRx.com., which is an Internet drugstore that
     is focused on pharmaceuticals, health, wellness and beauty products. The
     site targets Internet shoppers and in particular, the senior citizen. YesRx
     focuses on chronic care as opposed to emergency needs and works mainly with
     the patient who has regular medication needs and multiple refills.

     Principles of Consolidation
     ---------------------------

     The consolidated financial statements include the accounts of Kaire and its
     wholly-owned subsidiaries (collectively the "Company"). The Company's
     subsidiaries include See/Shell Biotechnology, Inc., E-Z TRAC, Inc., Venus
     Management, Inc., and EFFECTIVE Health, Inc. Except for E-Z TRAC, Inc.,
     these subsidiaries have no operations.

     Estimates
     ---------

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

     Cash and Cash Equivalents
     -------------------------

     For purpose of the statements of cash flows, cash equivalents include
     amounts invested in a money market account with a financial institution.
     The Company considers all highly liquid investments with an original
     maturity of three months or less to be cash equivalents. Cash equivalents
     are carried at cost, which approximates market.

                                      -F8-
<PAGE>

                           KAIRE HOLDINGS INCORPORATED
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1999


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Revenue Recognition
     -------------------

     The Company recognizes revenue at the time the product is shipped to the
     customer or services are rendered. Outbound shipping and handling charges
     are included in net sales. A significant portion of the Company's sales is
     within the United States. International sales are minimal.

     Net Loss Per Share
     ------------------

     Income (loss) per common share is computed on the weighted average number
     of common or common and common equivalent shares outstanding during each
     year. Basic EPS is computed as net income (loss) applicable to common
     stockholders divided by the weighted average number of common shares
     outstanding for the period. Diluted EPS reflects the potential dilution
     that could occur from common shares issuable through stock options,
     warrants and other convertible securities when the effect would be
     dilutive. The Board of Directors approved a 1 for 75 revenue stock split of
     its common stock in 1998. The accompanying financial statements have been
     restated to give effect of the split.

     Inventory
     ---------

     Inventory consists entirely of health care products and is stated at
     the lower of cost or market.

     Furniture and Equipment
     -----------------------

     Furniture and equipment are recorded at cost less accumulated depreciation
     and amortization. Depreciation and amortization are provided using the
     straight-line method over estimated useful lives of three to five years.
     Amortization of leasehold improvements is computed using the straight-line
     method over the lesser of the asset life or the life of the respective
     lease.

     Maintenance and minor replacements are charged to expense as incurred.
     Gains and losses on disposals are included in the results of operations.

     Research and Development
     ------------------------

     Research and development expenses consist principally of payroll and
     related expenses for development of the contrast microspheres. All research
     and development costs are expensed as incurred.

                                      -F9-
<PAGE>

                           KAIRE HOLDINGS INCORPORATED
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1999


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Income Taxes
     ------------

     The Company utilizes SFAS No. 109, "Accounting for Income Taxes," which
     requires the recognition of deferred tax assets and liabilities for the
     expected future tax consequences of events that have been included in the
     financial statements or tax returns. Under this method, deferred income
     taxes are recognized for the tax consequences in future years of
     differences between the tax bases of assets and liabilities and their
     financial reporting amounts at each period end based on enacted tax laws
     and statutory tax rates applicable to the periods in which the differences
     are expected to affect taxable income. Valuation allowances are
     established, when necessary, to reduce deferred tax assets to the amount
     expected to be realized. The provision for income taxes represents the tax
     payable for the period and the change during the period in deferred tax
     assets and liabilities.

     Fair Value of Financial Instruments
     -----------------------------------

     The Company measures its financial assets and liabilities in accordance
     with generally accepted accounting principles. For certain of the Company's
     financial instruments, including cash and cash equivalents and accounts
     payable and accrued liabilities, the carrying amounts approximate fair
     value due to their short maturities. The amounts shown for notes payable
     also approximate fair value because current interest rates offered to the
     Company for debt of similar maturities are substantially the same.

     Stock Split
     -----------

     During 1998, the Company effected a 1-for-75 reverse stock split of its
     common stock. All share and per share data have been retroactively restated
     to reflect this stock split.

     Stock Options
     -------------

     SFAS No. 123, "Accounting for Stock-Based Compensation," establishes and
     encourages the use of the fair value based method of accounting for stock-
     based compensation arrangements under which compensation cost is determined
     using the fair value of stock-based compensation determined as of the date
     of grant and is recognized over the periods in which the related services
     are rendered. The statement also permits companies to elect to continue
     using the current implicit value accounting method specified in Accounting
     Principles Bulletin ("APB") Opinion No. 25, "Accounting for Stock Issued to
     Employees," to account for stock-based compensation.

                                     -F10-
<PAGE>

                           KAIRE HOLDINGS INCORPORATED
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1999


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Stock Options (Continued)
     -------------------------

     The Company has elected to use the implicit value based method and has
     disclosed the pro forma effect of using the fair value based method to
     account for its stock-based compensation.

     Comprehensive Income (Loss):
     ----------------------------

     In June 1997, the Financial Accounting Standards Board issued Statement of
     Financial Accounting Standards No. 130, "Reporting Comprehensive Income"
     (SFAS 130), which is effective for financial statements for periods
     beginning after December 15, 1997. This pronouncement establishes standards
     for reporting and display of comprehensive income (loss) and its components
     in a full set of general-purpose financial statements. The Company,
     however, does not have any components of comprehensive income (loss) as
     defined by SFAS 130 and therefore, for the years ended December 31, 1999
     and 1998, comprehensive loss is equivalent to the Company's net loss.

     Other Accounting Pronouncements
     -------------------------------

     In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
     Instruments and Hedging Activities. SFAS No. 133 requires that an
     enterprise recognize all derivatives as either assets or liabilities in the
     statement of financial position and measure those instruments at fair
     value. The Company does not believe that the adoption of the provisions of
     SFAS No. 133 will have a material impact on its financial position or
     results of operations.

     The FASB issued SFAS No. 131 on "Disclosures about Segments of an
     Enterprise and Related Information" effective in 1998. The Company
     evaluated SFAS No. 131 and determined that the Company operates in only one
     segment.


NOTE 2 - GOING CONCERN

     The accompanying financial statements have been prepared in conformity with
     generally accepted accounting principles, which contemplate continuation of
     the Company as a going concern. However, the Company has experienced net
     losses of $472,537 and $1,037,608 for the years ended December 31, 1999 and
     1998, respectively. This factor raises doubt about the Company's ability to
     continue as a going concern. In view of the matters described above,
     recoverability of a major portion of the recorded asset amounts

                                     -F11-
<PAGE>

                           KAIRE HOLDINGS INCORPORATED
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1999


NOTE 2 - GOING CONCERN (Continued)

     shown in the accompanying balance sheet is dependent upon the Company's
     ability to generate sufficient sales volume to cover its operating
     expenses. The financial statements do not include any adjustments relating
     to the recoverability and classification of recorded asset amounts, or
     amounts and classification of liabilities that might be necessary should
     the Company be unable to continue in existence.

     In 1999, the Company took significant steps toward reducing losses and
     improving cash flow from operations, including assignment of its Santa
     Monica property lease, significant reduction of its workforce, and
     consolidation of all California operations to its North Hollywood facility.

     Management has previously relied on equity financing sources and debt
     offerings to fund operations. The Company's reliance on equity and debt
     financing will continue, and the Company will continue to seek to enter
     into strategic acquisitions.

NOTE 3 - INVESTMENT IN KAIRE INTERNATIONAL, INC.

     The Company's ownership in KII, Inc., a multi-level marketing company, has
     been decreased from 80% to approximately 24% (1,073,196 shares), which
     occurred in 1999. Based on the Company's temporary controlling interest in
     KII, the Company accounted for its investment in KII using the equity
     method.

NOTE 4 - FURNITURE AND EQUIPMENT

     Furniture and equipment at December 31, 1999 and 1998 consisted of the
     following:

<TABLE>
<CAPTION>
                                                                                 1999                 1998
                                                                        ----------------     ----------------
          <S>                                                           <C>                  <C>
          Furniture and equipment                                       $        460,076     $        460,076
          Leasehold improvements                                                 431,397              431,397
                                                                            ------------     ----------------
                                                                                 891,473              891,473
          Less accumulated depreciation and amortization                         891,473              875,438
                                                                        ----------------     ----------------
               Total                                                    $              -     $         16,035
                                                                        ================     ================
</TABLE>

     Depreciation and amortization expense for the years ended December 31,
     1999 and 1998 was $16,035 and $42,159, respectively.

                                     -F12-
<PAGE>

                           KAIRE HOLDINGS INCORPORATED
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1999


NOTE 5 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

     Accounts payable and accrued expenses at December 31, 1999 and 1998
     consisted of the following:

<TABLE>
<CAPTION>
                                                                                 1999                  1998
                                                                           ------------------    ------------------
              <S>                                                          <C>                    <C>
              Accounts payable                                             $         126,200      $        356,855
              Accrued professional and related fees                                  108,091               237,339
              Accrued compensation and related payroll taxes                           2,928               225,703
              Accrued interest payable                                               221,631               132,597
              Other accrued expenses                                                 181,576               578,571
                                                                           ------------------    ------------------
                         Total                                             $          640,426     $       1,531,065
                                                                           ==================    ==================
</TABLE>

NOTE 6 - CONVERTIBLE NOTES PAYABLE AND DEBENTURES

     During October through December 1997, the Company issued 8% convertible
     debentures due three years from the date of issuance. The debentures are
     convertible beginning with the 41st day after issuance and at a conversion
     price equal to 70% of the average closing bid price of the Company's common
     stock during the last five days prior to the conversion date. In connection
     with the issuance of these debentures, the Company recorded additional
     interest amounting to $364,000 related to the beneficial conversion feature
     of the debentures. The note holders have certain registration rights. At
     December 31, 1999, convertible debentures outstanding aggregated to $0.

     During January through May 1997, the Company issued convertible notes
     aggregating to $479,655, which are due in, the same months in 2000. The
     notes have a stated interest rate of 10% per annum, which interest is
     payable semi-annually. The notes are convertible at $9.38 per share, which
     approximated the average trading price of the Company's common stock. At
     December 31, 1999, $56,000 of these notes was outstanding.

     The notes are callable by the Company after six months from the date of
     issuance at a premium of 103% of face value on or before December 31, 1998,
     102% of face value on or before December 31, 1998, and 101% of face value
     if called on or December 31, 1999. Upon closure of the offering, the
     Company is to maintain a $100,000 sinking fund until such time as it
     realizes positive cash flow from operations of $10,000 per month for three
     consecutive months. As of December 31, 1999, no sinking fund had yet been
     established. As of December 31, 1999, notes aggregating to $25,000 were
     outstanding.

     All convertible notes mature during the year ended December 31, 2000.

                                     -F13-
<PAGE>

                           KAIRE HOLDINGS INCORPORATED
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1999


NOTE 7 - INCOME TAXES

     Significant components of the provision for taxes based on income for the
     years ended December 31 are as follows:

<TABLE>
<CAPTION>
                                                                            1999                  1998
                                                                     ------------------    ------------------
               <S>                                                   <C>                   <C>
               Current
                   Federal                                           $                -    $                -
                   State                                                          3,600                 3,600
                                                                     ------------------    ------------------

                                                                                  3,600                 3,600
                                                                     ------------------    ------------------
              Deferred
                   Federal                                                            -                     -
                   State                                                              -                     -
                                                                     ------------------    ------------------

                             Provision for income taxes              $            3,600    $            3,600
                                                                     ==================    ==================
</TABLE>

     A reconciliation of the provision for income tax expense with the expected
     income tax computed by applying the federal statutory income tax rate to
     income before provision for (benefit from) income taxes for the years ended
     December 31 is as follows:

<TABLE>
<CAPTION>
                                                                                    1999                1998
                                                                               ----------------    ----------------
        <S>                                                                    <C>                 <C>
        Income tax provisions (benefit) computed
                at federal statutory rate                                                34.0%              (34.0%)

        State taxes, net of federal benefit                                              (0.1)               (0.1)

        Increase in the valuation allowance                                             (34.0)               34.0
                                                                               ----------------    ----------------

                        Total                                                            (0.1)%              (0.1)%
                                                                               ================    ================
</TABLE>

                                     -F14-
<PAGE>

                           KAIRE HOLDINGS INCORPORATED
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1999


NOTE 7 - INCOME TAXES (continued)

     Significant components of the Company's deferred tax assets and
     liabilities for income taxes consist of the following:

<TABLE>
<CAPTION>
                                                                         1999                       1998
                                                                 ---------------------    ----------------------
      <S>                                                        <C>                       <C>
      Deferred tax asset
               Net operating loss carryforwards                  $           4,091,145     $            6,009,043
               Impairment of assets                                          2,032,518                  2,032,518
               Options/warrants                                              2,101,337                  1,103,734
               Other                                                                 -                    102,729
                                                                 ----------------------    ----------------------

                                                                             8,225,000                  9,248,024
      Valuation allowance                                                   (8,225,000)                (9,248,024)
                                                                 ----------------------    ----------------------

                                                                                     -                          -
      Deferred tax liability

               State income taxes                                                    -                          -
                                                                 ----------------------    ----------------------

               Net deferred tax asset                            $                   -     $                    -
                                                                 ======================    ======================
</TABLE>

     At December 31, 1999, the Company has available approximately $12,000,000
     and $5,00,000 in net operating loss carryforwards available to offset
     future federal and state income taxes, respectively, which expire through
     2014 and 2004, respectively.

     Tax rules impose limitations on the use of net operating losses following
     certain changes in ownership. Such a change occurred in 1999, which will
     limit the utilization of the net operating losses in subsequent years.

NOTE 8 - COMMITMENTS AND CONTINGENCIES

     Litigation
     ----------

     In February 1992, Medical Funding of America ("MFA") leased to Tri-County a
     Siemens Mobile Magneton Impact MRI System with a Van. On or about June 24,
     1992, Siemens and MFA entered into a loan and security agreement in the
     amount of $2,019,496, which was paid directly to Siemens Medical Systems,
     Inc. On or about March 1, 1995, Siemens, MFA, Tri-County, and Venus
     Management (an Interactive Medical Technologies (Kaire Holdings) subsidiary
     ("Kaire") entered into a transfer of interest agreement whereby Kaire gave
     its corporate guaranty of all of Venus' obligations under this agreement.
     Venus and MFA defaulted on the loan, and on April 2, 1997, Siemens Credit
     Corporation filed a civil action for the accelerated amount due plus costs.
     This action is still pending. On or about October 9, 1997, a Transfer of
     Interest Agreement was drawn up between Venus Management, Siemens Credit

                                     -F15-
<PAGE>

                           KAIRE HOLDINGS INCORPORATED
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1999


NOTE 8 - COMMITMENTS AND CONTINGENCIES (Continued)

     Litigation (continued)
     ----------------------

     Corporation, and Medical Management, Inc. ("CMI," NYSE symbol CMI) whereby
     CMI would take over the lease. CMI took possession of the MRI. All parties
     executed the agreement, except Siemens, who continued to negotiate with CMI
     in an attempt to get CMI to pay all of the arrearages owed Siemens. At
     present CMI and Siemens are still negotiating over the terms of the
     agreement. It is the opinion of the Company's management that its
     obligations under this agreement have been assigned and that Siemens will
     not pursue this matter any further.

     Except as otherwise specifically indicated above, management believes that
     the Company doesn't have any material liability for any lawsuits,
     settlements, judgments, or fees of defense counsel which have not been paid
     or accrued as of December 31, 1999. However, there can be no assurance that
     the Company will prevail in any of the above proceedings. In addition, the
     Company may be required to continue to defend itself resulting in
     substantial additional expense. In the event the Company is unable to pay
     the defense costs associated with the foregoing, an unfavorable settlement
     or judgment could be awarded against the Company, which could have a
     material adverse effect upon the Company.

     Guarantee of Lease Payments
     ---------------------------

     The Company's magnetic resonance imaging ("MRI") system (the "Unit")
     currently is installed in a mobile van at an operating site in Jefferson
     Valley, New York and has been in use since September 1992. It is leased to
     Tri-County Mobile MRI, L.P. ("Tri-County"), whose general partner is
     Diagnostics Resource Funding.

     This lease provides for monthly payments of $37,926 to Venus Management,
     Inc. ("VMI") through August 1999 and $68,589 in September 1999 (with such
     payments being guaranteed by Medical Funding of America, Inc. ("MFA")), and
     VMI is required to make monthly installment payments (which include
     interest at 10.5% per annum on the unpaid principal balance) for the Unit
     to a third party finance company of $32,360 through August 1999 and $68,589
     in September 1999. This lease provides for a purchase option at the
     expiration of the initial term of such lease equal to the then fair market
     value of the Unit.

     Tri-County was delinquent in making certain of its lease payments to VMI
     under the terms of the lease agreement concerning the Unit, and MFA failed
     to make these payments to VMI under its guarantee of Tri-County's payments
     to VMI. Accordingly, VMI had not made certain payments due to the third-
     party finance company for the Unit. As a result, the third-party finance
     company issued a notice of default to the Company. Tri-County is currently
     in discussions with the third-party finance company

                                     -F16-
<PAGE>

                           KAIRE HOLDINGS INCORPORATED
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1999


NOTE 8 - COMMITMENTS AND CONTINGENCIES (Continued)

     Guarantee of Lease Payments (continued)
     ---------------------------------------

     to restructure the obligation, to assume the debt, and to take title to the
     Unit. It is expected that the third-party finance company will accept the
     restructure, and the Company will release its title to the equipment in
     exchange for the third-party finance company releasing the Company from its
     debt obligation. Accordingly, the Company has provided $63,450 in 1998 to
     write off the Company's net investment in this equipment, including the
     lease receivable offset by the remaining debt and interest payable.

     However, if the parties are unable to resolve this matter, it is likely
     that the third-party finance company will institute an action against the
     Company, VMI, and Tri-County for the balance due, plus other costs and
     relief.

     On or about October 9, 1997, a Transfer of Interest Agreement was drawn up
     between Venus Management, Siemens Credit Corporation, and Medical
     Management, Inc. ("CMI," NYSE symbol CMI) whereby CMI would take over the
     lease. CMI took possession of the MRI. All parties executed the agreement,
     except Siemens, who continued to negotiate with CMI in an attempt to get
     CMI to pay all of the arrearages owed Siemens. At present CMI and Siemens
     are still negotiating over the terms of the agreement. It is the opinion of
     the Company's management that its obligations under this agreement have
     been assigned and that Siemens will not pursue this matter any further.
     Accordingly, the equipment and related note payable have been removed from
     the Company's balance sheet, which resulted in an immaterial change to
     operations. At December 31, 1999, the Company's guarantee totaled
     approximately $1,200,000.

     Office Lease
     ------------

     The Company leases a facility for its corporate office under non-cancelable
     operating lease agreements that expire in May 2001. Future minimum lease
     payments under these non- cancelable operating leases are as follows:

                                    Year Ending

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

                                    2000             $    21,600
                                    2001                   9,000
                                                     -----------
                                    Total            $    30,600
                                                     ===========

     Rent expense for the years ended December 31, 1999 and 1998 was $57,611
     and $90,144 respectively.

                                     -F17-
<PAGE>

                           KAIRE HOLDINGS INCORPORATED
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1999


NOTE 8 - COMMITMENTS AND CONTINGENCIES (Continued)

     Employment and Consulting Agreements
     ------------------------------------

     The Company has an employment agreement with it executive officer that
     expires in June 2002. This is renewable thereafter for additional three-
     year terms. The agreement may be terminated by either party with a written
     notice six months prior to the expiration date of the initial term or any
     renewal term. The agreement provides for a monthly base salary with
     specified increases during the passage of time. A five-year option to
     purchase 200,000 shares of the Company's common stock at the price of $3.75
     per share has been granted to the executive officer. Any compensation
     accrued but not paid, may be paid to the officer in cash or in the form of
     common stock valued at $3.75 per share. In addition, interest will be paid
     on accrued compensation at a rate of 8% per year. The officer received
     3,000,000 shares of the company's stock during 1999 with a market value of
     $60,000 as partial payment of these liabilities. A former officer received
     4,000,000 shares of the company's stock during 1999 with a market value of
     $80,000 as payment of similar liabilities.

     The Company also has an employment agreement with its Chief Financial
     Officer, which expired in June 1998. The agreement is renewable thereafter
     automatically for twelve-month periods, unless written notice is received
     by the employee ninety days prior to the expiration date. The agreement
     provides for a monthly base salary along with 600,000 shares of the
     Company's common stock for each twelve-month period.

     The Company has an employment agreement with its President, expired on
     February 15, 2000. The agreement provides for a monthly base salary along
     with 2,000,000 shares of the Company's common stock for each twelve-month
     period. The Company shall give the President 45 days written notice prior
     to the effective date of his termination after February 2000.

     The Company has various consulting agreements that provide for issuance of
     the Company's common stock and/or stock options/stock purchase warrants in
     exchange for services rendered by the consultants. These agreements relate
     primarily to raising of capital and professional services rendered in
     connection with the Company's acquisition efforts.

                                     -F18-
<PAGE>

                           KAIRE HOLDINGS INCORPORATED
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1999


NOTE 9 - STOCKHOLDERS' DEFICIT

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

     Company issued common stock to related parties, noted as follows:

     The former President of the Company received 4,000,000 shares of common
     stock as repayment of prior amounts personally due him. In addition, this
     former officer of the Corporation received 13,443,750 shares in the form of
     converted market value options granted for consulting services at $.05 per
     share and shares issued for debt restructuring.

     The Company's Chief Executive Officer received 3,000,000 shares of common
     stock as repayment of prior amounts personally due him.

     The new President of the Company exercised market value options and
     acquired 1,250,000 shares of the Company's common stock at $.04 per share.

     The Chief Financial Officer of the Company received 1,200,000 shares of
     stock as compensation for services rendered during 1998 and 1999.

     The Company has adopted only the disclosure provisions of SFAS No. 123. It
     applies 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. If the Company had elected to recognize compensation
     expense based upon the fair value at the grant date for awards under this
     plan consistent with the methodology prescribed by SFAS No. 123, the
     Company's net loss and loss per share would be reduced to the pro forma
     amounts indicated below for the years ended December 31:

                                                       1999          1998
                                                    -----------  ------------
     Net loss
            As reported                             $ (472,537)  $  (905,608)
            Pro forma                               $ (488,522)  $  (905,608)
     Basic and diluted loss per common share
            As reported                             $    (0.01)  $     (0.13)
            Pro forma                               $    (0.01)  $     (0.13)

     Options are granted at prices are equal to the current fair value of the
     Company's common stock at the date of grant. The vesting period is usually
     related to the length of employment or consulting contract period.

                                     -F19-
<PAGE>

                           KAIRE HOLDINGS INCORPORATED
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1999


NOTE 9 - STOCKHOLDERS' DEFICIT (continued)

     The fair value of these options was estimated at the date of grant using
     the Black-Scholes option-pricing model with the following weighted-average
     assumptions for the year ended December 31, 1999: dividend yield of 0%;
     expected volatility of 100%; risk-free interest rate of 5.5%; and expected
     life of 1 to 1.5 years.

     The Black-Scholes option valuation model was developed for use in
     estimating the fair value of traded options, which have no vesting
     restrictions and are fully transferable. In addition, option valuation
     models require the input of highly subjective assumptions including the
     expected stock price volatility. Because the Company's employee stock
     options have characteristics significantly different from those of traded
     options, and because changes in the subjective input assumptions can
     materially affect the fair value estimate, in management's opinion, the
     existing models do not necessarily provide a reliable single measure of the
     fair value of its stock options. . In 1998, the market share price has
     decreased to levels significantly below the per share option/warrant
     exercise price. Accordingly, the value of the options granted during 1998
     is deemed to be deminimus.

     The weighted-average fair value of options granted during the years ended
     December 31, 1999 was $0.08, and the weighted-average fair value of options
     granted during the year ended December 31, 1998 was deminimus.

     The following table summarizes information with respect to options
     outstanding and exercisable at December 31, 1999:

<TABLE>
<CAPTION>
                                  Options Outstanding                        Options Exercisable
                       -------------------------------------------------   -------------------------------
                                                        Weighted
                                      Weighted          Average                              Weighted
                                      Average         Remaining                              Average
          Exercise       Number       Exercise        Contractual            Number          Exercise
           Prices      Of Shares        Price             Life             Of Shares           Price
           ------      ---------        -----             ----             ---------           -----
    <S>                <C>           <C>            <C>                    <C>              <C>
     $ 0.01 to $0.05     600,000         $0.05               1.00            600,000             $0.05
     $ 0.06 to $0.10     155,000         $0.10               1.00            155,000             $0.10
     $ 3.75 to $22.50    450,667         $4.73               3.10            450,667             $4.73
                       ---------      -----------    ---------------      -------------    --------------
                       1,205,667         $1.80               1.75          1,205,667             $1.80
</TABLE>

                                     -F20-
<PAGE>

                           KAIRE HOLDINGS INCORPORATED
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1999


NOTE 9 - STOCKHOLDERS' DEFICIT (Continued)

     The following summarizes the Company's stock option and warrants
activity:

<TABLE>
<CAPTION>
                                                               Warrants                      Weighted
                                                                  And                         Average
                                                             Stock Options                   Exercise
                                                              Outstanding                      Price
                                                         ----------------------         --------------------
         <S>                                             <C>                            <C>
          Outstanding, December 31, 1997 (restated)                    725,185           $            26.25
                   Granted                                             695,000           $             0.60
                   Expired/Cancelled                                  (14,493)           $            62.25
                                                         ----------------------         --------------------

          Outstanding, December 31,1998                              1,405,692           $             9.30
                  Granted                                           18,720,000           $             0.05
                  Exercised                                       (17,460,000)           $             0.05
                  Expired/Cancelled                                  (687,692)           $             3.15
                                                         ----------------------         --------------------

          Outstanding December 31, 1999                              1,978,000           $             6.74
                                                         ======================         ====================

          Exercisable, December 31, 1999                             1,978,000           $             6.74
                                                         ======================         ====================
</TABLE>

         During 1998, the trading price of the company's common stock fell below
         the $.001 par value of stock. During this period, the conversion of
         convertible notes payable to common stock resulted in common stock
         being issued at less than par value. In 1998, $492,430 was charged to
         paid-in-capital for these transactions.

         The Company has 772,333 and 831,692 warrants outstanding as of December
         31, 1999 and 1998, respectively. The exercise prices for the warrants
         range from $0.60 to $45.

NOTE 10 - SUBSEQUENT EVENTS

         The Company entered into a letter of intent with Stason U.S.
         Pharmaceuticals, Inc. (Stason). Under the agreement, Stason will
         receive a 17% interest in a wholly owned subsidiary, YesRx, Inc., which
         was incorporated March 27, 2000. In exchange, Stason will provide
         YesRx, Inc., $175,000 in working capital and provide a distribution
         facility for the Internet prescription and non-prescription operations
         of the new company. In addition, Stason and Kaire will merge their
         laboratory operations into a new company in which Stason will hold 75%
         of the common stock of the newly formed Company. The form of this
         merger has not been determined. Kaire Holdings intends to pursue
         further Internet related activities.

                                     -F21-
<PAGE>

                           KAIRE HOLDINGS INCORPORATED
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1999


NOTE 10 - SUBSEQUENT EVENTS (continued)

         On February 1, 2000, the Company issued options to consultants for the
         purchase of 4,950,000 shares of common stock at $0.15 per share. All
         these shares were exercised by the option holders.

         During March 2000, the Company signed a letter of intent to acquire
         Classic Care Pharmacy, a Los Angeles based business-to-business
         pharmacy. The final terms are still being negotiated.

         The Company entered into a consulting agreement with an individual to
         provide services related to the Kaire's drug fulfillment operations.
         The consultant received an option to acquire 1,250,000 shares of
         Kaire's common stock at $.05 per share and is to receive an option to
         acquire an additional 400,000 shares of common stock at $.05 per share
         if certain revenue goals are reached.

                                     -F22-