<PAGE>

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                  FORM 10 - KSB

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

                 ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001

                            Commission File No. 22135

                       ELECTRONIC TRANSMISSION CORPORATION

                 (Name of Small Business Issuer in Its Charter)


                  Delaware                                75-2578619
(State or other jurisdiction incorporation)    (IRS Employer Identification No.

     15400 Knoll Trail Drive, Suite 330,                    75248
              Dallas, Texas                               (ZIP Code)


                                 (972) 980-0900
                           (Issuer's telephone number)

              15301 Spectrum Drive, Suite 501, Addison, Texas 75001
(Former name, former address and former fiscal year if changed from last report)


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


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

                     Common Stock, $.001 par value per share

                                (Title of Class)

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

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

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

State the issuer's revenues for its most recent fiscal year ended on
December 31, 2001: $2,419,479

State the number of shares outstanding of the issuers common equity as of
March 28, 2002: 15,454,103

State the aggregate market value of the voting common and non-voting common
equity held by non-affiliates of the issuer, computed by reference to the
average bid and asked prices of such common stock on March 28, 2002, was $0.19
and $0.41 respectively. The aggregate bid price was $2,936,280. The aggregate
ask price was $6,336,182.


                   Documents Incorporated By Reference - None

               TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT - NO

<PAGE>
Forward-Looking Statements.

     Electronic Transmission Corporation (the "Company" ). Certain statements in
this Form 10-KSB are "forward-looking statements" made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements involve a number of risk and uncertainties. All
statements regarding the Company's expected future financial position, results
of operations, cash flows, liquidity, financing plans, business strategy,
budgets, projected costs and capital expenditures, competitive position, growth
opportunities, plans and objectives of management for future operations and
words such as "anticipate," "believe," "plan," "estimate," "expect," "intend,"
"may," and other similar expressions are forward-looking statements. Such
forward-looking statement are inherently uncertain, and stockholders must
recognize that actual results may differ materially from the Company's
expectations as a result of a variety of factors, including without limitation,
those discussed below.

     Factors which may cause the Company's actual results in future periods to
differ materially from forecast results include, but are not limited to:

     The Company's inability to access capital markets given the Company's size
     and current financial condition.

     The Company's senior management may be required to dedicate an excessive
     amount of time and effort dealing with the Company's financial condition
     and litigation with less time focusing directly on the operations of its
     business.

     Liabilities and other claims asserted against the Company.

     The loss of any significant customer, including but not limited to the
     Wal-Mart contract.

     The Company's ability to generate sufficient cash from operations to meet
its obligations.

     The Company is generally not required to, and does not undertake to, update
or revise its forward-looking statements.

ITEM 1. DESCRIPTION OF BUSINESS.

Organization

     Electronic Transmission Corporation became a Delaware corporation (the
"Company") in 1997 and is the successor to Solo Petroleum Ltd., a Canadian
corporation incorporated in 1986, and was inactive during 1992-1995.

     All references to the Company in this Annual Report on Form 10-KSB include
the Company's predecessors, unless otherwise indicated.

General

     The Company is in the business of providing process and systems solutions,
for medical claims, to the non-provider sector of the health care industry.
Process solutions are automated through a broad range of application and data
base information systems. Information systems include software solutions
developed by the Company and are proprietary in nature. The Company believes
that its software and process solutions provide state-of-the-art methodology and
technology to its customers. In order to provide the process solutions, the
Company contracts with health care payors, self-insured companies and other
payors, such as third party administrators ("TPAs"), for automation and
electronic data interchange ("EDI") services relating to medical claims. The
Company also contracts with various managed care organizations and PPO's to act
as database manager and to perform repricing services.

     The Company's revenues are generated by different methods. The Company is
paid a set price for scanning and automating each health care provider claim.
Additionally, the Company is paid a fee for its database management and
repricing services offered to PPO's.

                                       2

<PAGE>

Acquisition & Divestiture

     In September, 1998, the Company entered into a letter of intent with Health
Plan Initiatives, Inc. ("HPI"), a Texas corporation, for the Company to acquire
HPI. The letter of intent was supplemented with an amendment dated October 5,
1998. The acquisition was closed effective January 31, 1999, by the Company
issuing 3,538,306 shares of unregistered common stock in exchange for all of the
outstanding shares of HPI. The acquisition was accomplished through the merger
of the Company's wholly owned subsidiary ETC Acquisition Corporation with and
into HPI. Upon consummation of the merger with ETC Acquisition Corporation, HPI
became a wholly-owned subsidiary of the Company.

     HPI offered services similar to the Company. The primary business of HPI
was managed care access and health provider contracting with medical claims
repricing capabilities and other services related to the managed care sector of
health care delivery. Customers of HPI included health care payors, self-insured
companies, third party administrators, preferred provider organizations, and
health maintenance organizations.

     HPI was wholly-owned by Robert Fortier, who served as President of HPI
until the acquisition. Upon the signing of the October 5, 1998, amendment to the
letter of intent, Mr. Fortier also served as President and Chairman of the Board
of the Company until August 25, 2000 and September 7, 2000 when Mr. Fortier was
removed as Chairman and CEO respectively. As part of the HPI transaction, Mr.
Fortier received 3,538,306 shares of unregistered Company common stock, which at
the time was 42% of the outstanding common stock of the Company. The relative
value of HPI and number of shares as reflected in the October 5, 1998 amendment
to the letter of intent was determined by negotiations between the Company board
of directors and Robert Fortier.

     Mr. Fortier received certain registration rights associated with the
Company shares and he received an employment contract. Mr. Fortier's employment
contract was terminated for cause on September 7, 2000.

     In August of 1999 the Company sold HPI to A&G Financial Services which was
the largest client of HPI. The sale was for $394,000 in cash and the assumption
of $575,000 of debt. The Company believed at the time, that the cash and
assumption of debt by the purchaser was more important to the future success of
operations than the continuing operation of HPI. The Company made the decision
to focus its resources on recovering and returning to the core business of the
Company which is automation processing. The sale price was a result of arms
length negotiations between the Company and A&G. See Item 3 - Legal Proceedings.

Company Business

     The Company's principal business areas in 2001 included (i) claims
automation, (ii) managed care repricing, (iii) EDI services and (iv) automated
reimbursement indexing.

     Claims Automation Services. The Company provides automation services of
healthcare claims for (i) self-insured companies that administer their own
healthcare plans and pay their own medical claims, and (ii) TPAs that administer
healthcare plans and pay medical claims for self-insured companies. The
automation process reduces or eliminates the need for front end data entry of
claims detail for those entities who must pay claims from paper bills. In
addition, in this process paper is eliminated and the detail necessary to
adjudicate and pay the claim flows directly to the claim payment system without
human intervention. In 1998, several billion paper based medical claims were
processed in the United States. Prior to the payment of a claim, each paper
based claim passed through a minimum of two persons, resulting in more
transactions. The Company's proprietary systems and applications eliminate
duplication of some of the transactions. Through its scanning, optical character
recognition ("OCR") and data management technology, the Company eliminates the
multiple handling of paper and information associated with normal claims
processing. The Company's customers reduce data entry, data management and
warehousing costs by using the Company's products and thereby increase
productivity.

     Managed Care Repricing. The Company provides this service in two distinct
formats, In the first case, managed care repricing is a functionality contained
in the automation process for the payment of claims. While the claim detail is
passing through the ETC system during the conversion from paper to electronic
media, electronic repricing to the appropriate managed care fee schedule occurs.
In the second instance, the Company provides a "back office" repricing function
for managed care organizations (PPO's & HMO's) this allows the managed care
organization to lower its administrative costs, reduce personnel and enhance the
savings it offers to its clients. There are over 1800 preferred provider
organizations (PPO) and other managed care organizations in the United States.
Claims payors utilize multiple PPO's in the course of their daily activities.
The Company, through its repricing systems allows for application

                                       3

<PAGE>

of multiple fee schedules in either the single user or multiple user
environment. The Company has, either resident in its system or via electronic
link, the fee schedules of over 40 managed care organizations. Customers access
the fee scheduled through various methods, including the Internet, modem,
scanner, or compact disk. The Company's proprietary software identifies the
patient, payor and provider and then applies the appropriate fee schedule based
upon integrated data contained within its repricing system. The result of this
application is a seamless submission and transmittal of medical claim
transactions. The technology that allows the repricing system to deliver
automated repricing to the payor community is equally effective in providing
automation to the managed care organizations that use the fee schedules to
provide and deliver the discounted claims to the payors. These organizations,
the majority of which are PPO's, have found the same administrative difficulties
in repricing claims as the payors have had in paying claims. The use of the
repricing system for PPO's has introduced a whole new market to the Company.

     EDI Services: the Company provides for the capture of electronic claim data
from clearinghouses and providers directly for claim payors and managed care
organizations. Currently, less than 30% of medical claims are transmitted or
delivered electronically and with the advent of the data security and standards
that will be required by the Health Insurance Portability and Accountability Act
(HIPAA), the Company sees a significant opportunity because of its experience in
the area of data base management, data encryption and EDI data formatting.

Business Strategies

     General. The Company's current business strategy is to (i) continue to
increase cash flows by extensively marketing its products and services to the
non-provider sector of the health care industry, (ii) enhance existing client
relationships by offering a broader range of services, and (iii) become a
leading edge provider of EDI services and take advantage of the Internet
capabilities of the Company.

     Enhanced Marketing Effort. Although the Company has utilized direct
marketing efforts to solicit customers in the past, new customers have been
generated through referrals from a small number of existing clients. Since the
Company's areas of service have grown and been enhanced, the Company expects to
supplement its direct sales force in the future. The sales force will be
comprised of employees of the Company and outside sales personnel with whom the
Company will have entered into specific marketing agreements. The Company
believes that to be successful in the future, it will have to expand the range
of existing services, its distribution channels and its sales force. The Company
also intends to pursue strategic alliances with other health care claims systems
vendors.

     Professional Services. The Company currently provides system and process
review and design, installation and integration services to its customers. The
Company does not currently charge the customer for these services. As the
Company's services become more customized and are expanded, the Company believes
that it will be able to generate a revenue stream from this activity.

     Vendors. The Company has become a value added reseller ("VAR") for the
components of the imaging system.

System and Work Flow Enhancements

     The Company continually evaluates new imaging components including imaging
software capabilities. Additionally, the Company is continually enhancing its
proprietary software used in the provision of the services to its customers. The
Company seeks to make enhancements to existing service components in response to
recommendations made by its customers.

Sales and Marketing

     The Company actively markets is services to PPO's, group health insurance
companies, worker's compensation insurance companies, TPA's and self-insured
employers through the Company's direct and outside sales force. The Company
creates interest and demand for its products and services primarily through
telemarketing efforts, direct contact with potential customers and follow-up
marketing literature and information delivered through the Internet and designed
to specifically address customer needs. The Company also participates in managed
healthcare conventions and trade shows.

Customers

                                       4

<PAGE>

     The Company markets its processing services primarily to self-insured
companies, TPAs and other provider networks or other cost containment companies.
Wal-Mart accounted for 57% of total revenues of 2001.

Competition

     The non-provider sector of the health care industry is intensely
competitive and is characterized by companies that provide both electronic
automation and paper processing solutions. There are participants in the
industry that provide discount and repricing services in the market currently
served by the Company. The Company's competition in the market for electronic
claims processing, discount and repricing services is primarily concentrated in
Internet enabled business to business companies and certain software and
hardware manufactures through strategic alliances with sales and consulting
groups which have greater financial and technical resources and longer operating
histories than the Company.

     The Company competes on the basis of its specialized knowledge and
expertise in the managed healthcare services industry and on its ability to
deliver effective services to the customer with a high level of customer
satisfaction through a seamless single source at an affordable price. The
managed healthcare industry has experienced significant changes in recent years,
primarily as a result of rising healthcare costs and consolidations and mergers.
The Company will be required to respond to various competitive factors affecting
the healthcare industry, including new technologies that may be introduced;
general trends relating to demand for healthcare services; and potential
regulatory, economic and political factors.

     Management of the Company believes that the Company's competitors, while
each providing segments of the services offered by the Company, do not offer the
interconnected array of services provided by the Company. The Company believes
that it possesses a competitive advantage by offering its claims automation, and
repricing services in a format that connects payors, payees and service
providers. There can be no assurance that the Company will be able to compete
successfully in the future.

Intellectual Property, Proprietary Rights, and Licenses

     The Company regards certain features of its products and services as
proprietary and relies on a combination of contract, copyright, trade secret
laws and other measures to protect its proprietary information. As part of its
confidentiality procedures, the Company generally obtains nondisclosure
agreements from its employees and clients and limits access to and distribution
of its software, documentation, and other proprietary information. The Company
believes that trade secret and copyright protection are less significant than
factors such as the knowledge, ability, and experience of the Company's
employees and the timeliness and quality of the services they provide. The
Company has aggressively pursued suspected infringement of its proprietary
rights.

Regulatory Matters

     The Company is not subject to any direct federal or state government
regulation because of the nature of its business other than complaisance with
the Health Insurance Portability and Accountability Act (HIPAA). There can be no
assurance that federal or state authorities will not in the future impose
restrictions on its activities that might adversely effect the Company's
business. The Company believes that no impending regulations such as those that
will be promulgated under HIPAA will adversely effect operations or the ability
to serve customers in the future.

Employees

     As of March 15, 2002, the Company had 46 full-time employees and 37
part-time employees. None of the Company's employees is represented by a labor
union or subject to a collective bargaining agreement. The Company has never
experienced a work stoppage and believes that its employee relations are good.

ITEM 2. DESCRIPTION OF PROPERTY.

     The Company owns no real property. The Company's principal executive office
is located in a leased office facility in Dallas, Texas, which is adequate for
the Company's needs. The lease for the Company's offices expires November 30,
2006 and provides for monthly rental payments of $10,250 through November 30,
2003 and $ 12,300 for the period December 1, 2003 through November 30, 2006.

                                       5

<PAGE>

ITEM 3. LEGAL PROCEEDINGS.

     On September 11, 2000 the Company filed suit in the 96th Judicial District
Court of Tarrant County, Texas (Civil File No. 96-184499-00) against Robert
Fortier, a director and former President and CEO, alleging among other things,
that Mr. Fortier made misrepresentations regarding the financial condition and
business prospects of Health Plan Initiatives ("HPI"), a company he owned, when
the Registrant acquired that company effective January 31, 1999. The Company
sought a return of the approximate 3.7 million shares issued to Mr. Fortier as
consideration in that transaction and the recovery of compensation paid to Mr.
Fortier.

     On September 11, 2000 Mr. Fortier filed a suit against Scott Stewart, and
Tim Powell, Ken Andrew and the Company as nominal defendants, in the 95th
District Court, Dallas County, Texas, Cause No. 00-7127. The suit sought to
prevent alleged actions by the Defendants in impairing Mr. Fortier's rights as a
shareholder, not conducting business in accordance with the Company's bylaws and
damages against Mr. Stewart for interfering with the Company's obligations under
the agreement to purchase HPI. On October 18, 2000 this suit was abated and Mr.
Fortier filed, as a counter claim, his same allegations in the Tarrant County
suite brought by the Company.

     The claims by Mr. Fortier against Mssrs. Powell, Andrew and Stewart were
dismissed with prejudice during 2001. This litigation was resolved by a
compromise settlement agreement entered in February, 2002. The settlement
agreement provided for an initial payment to Mr. Fortier of $15,000 and an
additional payment of $60,000 if the litigation involving the Company and A&G
Financial Services, Inc. and Norman Payson, described below, is settled by April
1, 2002. Messrs. Andrew, Powell, Stewart and Bassett, all directors of the
Company, equally provided and agreed to provide, the funds for the settlement
and received the stock.

     A&G Financial Services, Inc. filed suit against the Company on June 14,
2001, cause number 01-4930 in the 193rd District Court in Dallas County, Texas.
The Company has filed a cross-action against A&G Financial Services, Inc and
third party against Norman Payson and Robert Fortier. The action arises from the
Company's sale of HPI to A&G Financial Services. A&G alleges that there were
material misrepresentations of assets and liabilities with regard to HPI. The
Company denies the allegations and is seeking the $120,000 balance of the
purchase price owed from A&G.

     On March 30, 2001 Munger Investments, Ltd, n/ka/ Adaptive Imaging
Solutions, Ltd. filed suit against the Company, cause no. 01-03424-D, in the
Dallas County Court at Law No. 4, based upon a claim for services provided the
Company. This matter was settled in March 2002, by the Company agreeing to make
payments totaling $50,000 by December 31,2002. The Company has accrued the
$50,000 in the balance sheet at December 31, 2001.

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

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

                                     PART II

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

     The Company's Common Stock began trading on The OTC Bulletin Board on April
4, 1997 under the symbol "ETSM". The following table sets forth the high and low
bid information, obtained daily from PCQuote.com, for the Common Stock as
reported on The OTC Bulletin Board. The table reflects inter-dealer prices,
without retail mark-up, mark-down or commission, and may not necessarily
represent actual transactions.

                                              High         Low
                                              ----         ---
       January 1 - March 31, 2000            $  0.81      $  0.34
       April 1 - June 30, 2000               $  0.53      $  0.31
       July 1 - September 30, 2000           $  0.44      $  0.15
       October 1 - December 31, 2000         $  0.30      $  0.13
       January 1, - March 31, 2001           $  0.37      $  0.10
       April 1,  - June 30, 2001             $  0.45      $  0.14
       July 1, - September 30, 2001          $  0.25      $  0.10
       October 1- December 31, 2001          $  0.25      $  0.17
       January 1,  - March 29, 2002          $  0.41      $  0.05

                                       6

<PAGE>

Holders: As of March 28, 2002, there were approximately 403 holders of record
for the Common Stock.

Recent Financings

     In March, 1999, Special Situations Private Equity Fund, L.P. was issued an
additional 438,713 shares of common stock and Special Situations Cayman Fund,
L.P. was issued an additional 213,038 shares of common stock in exchange for a
forbearance agreement and the termination of purchase rights for additional
shares owed under a Purchase Agreement dated December 12. 1997.

     In December, 1998, the Company arranged a $500,000 line of credit through
Compass Bank. The line of credit was obtained through the use of letters of
credit and a guarantee provided by two individuals. The Company, on January 6,
1999, issued 250,000 shares of common stock to the two individuals as
consideration for their guarantees. The line of credit was paid off and closed
in 1999.

     In January of 1999 the Company issued 3,538,306 shares of Common Stock as
part of the merger with Health Plan Initiatives, Inc.

     In October of 1999 the Company offered and sold 1,620,000 shares of Common
Stock to six accredited investors for $660,000.

     In January of 2000 the Company issued 120,000 shares of Common Stock to Mr.
Scott Stewart in consideration of services rendered as President of the Company.

     In May of 2001 the Company offered and sold 2,500,000 shares of Common
Stock to twenty one accredited investors for $250,000.

     During 2001, the Company issued 255,925 shares of Common Stock to the
directors of the Company in consideration of the services rendered as Directors.

     In each instance described above the Company relied on exemption from the
Securities Act of 1933 as provided by Regulation D, Rule 506 and Section 4(2).
No public solicitation of investors was made and the Company believes that all
purchasers are either accredited investors or sophisticated investors.

Dividend Policy

     The Company has not previously paid any cash dividends on its Common Stock
and does not anticipate or contemplate paying dividends on the Common Stock in
the foreseeable future. It is the present intention of management to utilize all
available funds for the development of the Company's business.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION & RESULT OF
        OPERATIONS.

     The following discussion should be read in conjunction with the Company's
Financial Statements and Notes thereto, included elsewhere herein. The
information below should not be construed to imply that the results discussed
herein will necessarily continue into the future or that any conclusion reached
herein will necessarily be indicative of actual operating results in the future.
Such discussion represents only the best present assessment of management of the
Company. Because of the Company's recent acquisitions and divestitures the
results of operations from period to period are not necessarily comparative.

Overview

     The Company's revenues are reported under medical claims automation,
managed care repricing.

Results of Operations of the Company

Year Ended December 31, 2001 Compared to December 31, 2000

     Revenues. Revenues from medical claims automation services totaled
$2,125,820 and $2,291,706 for the fiscal years ended


                                       7

<PAGE>

December 31, 2001 and 2000, respectively. Revenues from managed care repricing
services totaled $293,659 for the fiscal year ended December 31, 2001 compared
to $393,407 for 2000. The decrease in revenues is due to decreased activity of
existing clients.

     For the fiscal year ended December 31, 2001, fees paid by Wal-Mart for
automation and repricing services were approximately 57% of total revenues. In
fiscal 2000, Wal-Mart accounted for 54% of total revenues. It is projected that
this percentage will decrease in 2002 due to an increase in the Company's client
base.

     Cost of Revenues. Cost of revenues totaled $797,952 and $750,010 for the
fiscal years ended December 31, 2001 and 2000, respectively. The increase in
cost of revenues is primarily due to converting OCR processing from third party
outsourcing vendors to in-house processing. This conversion will benefit the
Company in the future as it will prevent the Company from becoming dependent on
outside vendors and assist in HIPAA compliance.

     Gross Profit. Gross profit for fiscal 2001 was $1,621,527 as compared to $
1,935,103 for fiscal 2000. The gross profit margin for fiscal 2001 was 67.0%
verses 72.1% for fiscal 2000. Gross profit decreased due to the initial cost of
converting OCR processing to in-house to meet the privacy and security
requirements of HIPAA.

     Other Expenses. Sales, general and administrative costs decreased to
$1,478,211 for the fiscal year ended December 31, 2001, compared to $ 2,050,561
for the fiscal year ended December 31, 2000. Decrease in sales, general and
administrative cost for the period ended December 31, 2001 is due to
management's continued monitoring and streamlining of operations. During the
fiscal years ended December 31, 2001 and 2000, the Company issued 393,925 shares
of Common Stock for services for a total expense of $130,736 and -0- shares of
Common Stock for services for a total expense of $-0-, respectively.

     Sales, general and administrative expenses consisted primarily of personnel
costs and benefits, rent, insurance, and professional fees. For the fiscal year
ended December 31, 2001 total personnel costs and benefit were $1,021,678, rent
cost was $113,440, insurance costs were $66,176 and professional fees $159,212.
For the fiscal year ended December 31, 2000 total personnel costs and benefits
were $1,362,248, rents were $132,398, insurance costs were $108,992 and
professional fees were $157,629. Professional fees were incurred due to year-end
audit, legal matters and computer consulting. Personal costs decreased due to
changes and reduction in executive officers and other personnel. Rents decreased
as the result of two months free rent associated with the new office lease.

     Net interest expense increased to $26,480 for the fiscal year ended
December 31, 2001 compared to $3,437 for the fiscal year ended December 31,
2000. This increase is the result of an increase in notes payable in 2001 and
the non receipt of note receivable payments.

     Net Loss. The Company reported a net loss of $112,458 for the fiscal year
ended December 31, 2001 as compared to a net loss of $326,310 for the fiscal
year ended December 31, 2000 or ($.01) and ($.03) basic earnings per share for
fiscal 2001 and fiscal 2000, respectively. The significant improvement in
reducing the net loss is the result of management's continued improvement in
operating efficiency and controlling cost.

Liquidity and Capital Resources.

     Since inception, the Company has financed its operations, working capital
needs and capital expenditures principally through private placements of equity
securities. Cash and cash equivalents at December 31, 2001 were $119,272.

     At March 28, 2002, the Company had 22 clients including self-insured
companies and medical provider networks. The Company expended considerable
effort and resources to develop its current work flow process. Additional
resources were devoted to (i) defining the exact services that were needed by
the market segment and (ii) developing, testing and ultimately implementing
these services. While expensive and time consuming, these activities serve as
the basis on which the business of the Company will operate. As the Company
expands its customer base, additional computer equipment and personnel will be
required and added. Such expansion will be funded by the revenues derived from
operations and other funding sources that the Company may find from time to
time.

     The Company is currently reviewing its cost structure and accessing a
possible reduction in the fixed cost portion of its infrastructure. The Company
intends to increase revenues by expanding its customer base and increasing
profitability. Additionally, the Company continues to enhance its productivity
through software improvements. The Company believes that the net proceeds from
anticipated working capital provided from improved operations, will satisfy its
cash requirements for the next 12 months.

                                       8

<PAGE>

ITEM 7. FINANCIAL STATEMENTS.

     The financial information required by this Item is found beginning at page
F-1.

                                    PART III

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

Directors and Executive Officers

     The following table sets forth the names and ages of the directors and
executive officers of the Company on December 31, 2001

                Name            Age           Position
         -----------------      ---        --------------------

         Timothy P. Powell       43        President - Director

         Ken Andrew              50        Director
         Scott Stewart           47        Director
         John J.Bassett          43        Director

    Timothy P. Powell was appointed President in August 1999 and had served as
Executive Vice President -- Data Services and as a director of the Company since
February 1995. From 1981 to February 1995, Mr. Powell served as a self-employed
computer consultant for individuals and corporations. Mr. Powell contracted
consulting projects with independent, governmental organizations and Fortune
1000 companies, and provided services in system design, implementation,
applications development and procurement specifications.

     Scott Stewart has served as Director since May of 1999. Mr. Stewart has
served as interim President of the Company from June through August of 1999 and
as the Company legal counsel. Mr. Stewart has been a partner in the law firm of
Horsley and Stewart for twenty years and is graduate of the Southern Methodist
University Law School.

     Ken Andrew has served on the Board since August of 1999 and since 1998 has
provided investment banking counseling to the Company. Mr. Andrew has been an
independent stockbroker in Fort Worth, Texas since 1978. .

     John J. Bassett has served on the Board since, September 27, 2000. Mr.
Bassett graduated from the University of South Alabama at Mobile, Alabama in
1980, with a BS degree in Marketing and Logistics. Mr. Bassett began his career
with Bay City Minerals, Inc. as a landman in 1979, working on a contract basis
for Shell, Texaco and Midroc Oil Company until 1983. From 1984 - 1988, as Vice
President of Bay City Minerals, Inc., Mr. Bassett supervised the leasing
activity of 30 landmen throughout Alabama and Mississippi. From May 1989 until
1999, Mr. Bassett held the position of Chairman, Chief Executive Officer and
President of Bay City Minerals, Inc. In May 1989, Mr. Bassett formed Bay City
Consolidated Partners, LP through the consolidation of seven partnerships
originally formed by Bay City Minerals, Inc. Mr. Bassett was the Chairman, Chief
Executive Officer and President of Bay City Consolidated Partners, LP until the
formation of Middle Bay Oil Company, Inc. in May 1989. He then became the
Chairman, Chief Executive Officer and President of Middle Bay Oil Company, Inc.
in May 1989 until the formation of Renaissance Petroleum in October, 1999 in
which Mr. Basssett is Owner/ Chief Executive Officer.

Director Compensation, Meetings and Committees of the Board of Directors

     The Company currently compensates outside directors at the rate of $2,000
per quarter, either in cash or in stock. Out of pocket


                                       9

<PAGE>

expenses are reimbursed by the Company. Each director currently holds office
until the next annual meeting of stockholders and until a successor has been
elected and qualified or until his earlier resignation or removal.

Section 16(a) Beneficial Ownership Reporting Compliance.

     Section 16(a) of the Securities Exchange Act, as amended (the "Exchange
Act"), requires directors, executive officers and persons who own more than ten
percent of a registered class of the Company's equity securities ("10%
holders"), to file with the Securities and Exchange Commission (the SEC) initial
reports of ownership and reports of changes in ownership of Common Stock and
other equity securities of the Company. Directors, officers and 10% holders are
required by SEC regulation to furnish the Company with copies of all of the
Section 16(a) reports they file.

     Based solely on a review of reports furnished to the Company or written
representations from directors and executive officers during the fiscal year
ended December 31, 2001, Scott Stewart did not file a Form 3 or 4 as follows:
Three instances in 1999 regarding four transactions, once in 2000 regarding one
transaction, and four instances in 2001 regarding five transactions.

ITEM 10. EXECUTIVE COMPENSATION.

     The following Summary Compensation Table sets forth, for the years
indicated, all cash compensation paid, distributed or accrued for services,
including salary and bonus amounts, rendered in all capacities to the listed
current and former executive officers of the Company. No other executive officer
of the Company, or any predecessor entity, received salary and bonus
compensation in excess of $100,000 in the referenced fiscal years, nor did any
executive officer receive perquisites or other personal benefits exceeding
either $50,000 of 10% of their total annual salary for the referenced periods.

                       SUMMARY COMPENSATION TABLE

                                     Annual     Restricted   Securities
          Name/Title       Year   Compensation     Stock     Underlying   Other
                                  Salary/Bonus    Awards    Options/SARs

     Timothy P. Powell,
     President (1) (2)     2001     $131,730        -0-       500,000      -0-
                           2000     $120,000        -0-         -0-        -0-
                           1999     $120,000        -0-         -0-        -0-


(1) Mr. Powell has deferred $6,270 of salary in 1999.
(2) Mr. Powell has 250,000 options which will vest in 2002 and 2003.



                     OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>


                            Number of Securities        Percent of Total
                            Underlying Options/        Options/SARs Granted to          Exercise of Base      Expiration
        Name/Title             SARs Granted           Employees in Fiscal 2001            Price ($/Sh)           Date
<S>                       <C>                      <C>                             <C>                       <C>
Timothy Powell/President         500,000                         100                          $0.15               2010

</TABLE>

                                       10

<PAGE>

                    AGGREGATED FISCAL YEAR-END OPTION VALUES
                         NUMBER OF SECURITIES UNDERLYING
<TABLE>
<CAPTION>
                                                                          Number of
                                                                          Securities              Value of
                                                                          Underlying             Unexercised
                                         Shares                           Unexercised            In-The-Money
                                       cquired on         Value         Options/SARs at         Options/SARs At
                     Name/Title       Exercise (#)      Realized        Fiscal Year-End         Fiscal Year-End
                                                                              (#)                    ($)
                                                                          Exercisable/            Exercisable/
                                                                         Unexercisable           Unexercisable
<S>                                 <C>               <C>            <C>                 <C>
                 Timothy Powell,
                 President                  -0-            -0-              791,667/-0-            $15,167

</TABLE>


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

     The following table provides certain information based on the outstanding
securities of the Company as of March 26, 2001 with respect to each director,
each beneficial owner of more than 5% of the Company Common Stock and all
corporate officers and directors of the Company as a group.

         Name and Address                Amount of Perc           Outstanding
       of Beneficial Owner (1)(2)      Beneficial Ownership       Common Stock

     Timothy P. Powell (1) (2)              1,822,494                11.8
     15400 Knoll Trail Dr, Suite 330
     Dallas, Texas 75248
     Scott Stewart (1)                      1,678,179                10.9
     4555 W. Lovers Lane
     Dallas, Texas 75209
     Ken Andrew (1) (3)                     1,913,174                12.4
     6124 Trail Lake
     Fort Worth, Texas 76133
     John J. Bassett (1)                    1,644,826                10.6
     1010 Lamar, Suite 510
     Houston, Texas 77002
     Dave Hannah                            2,301267                 14.9
     2079 W. Grayson Rd.
     Modesto, California 95358
     All executive officers and
      Directors as a group                  7,058,673                45.7
     (4 persons as to the Company)







(1) Director of the Company. (2) Represents options to purchase 116,667 shares
with an exercise price of $.04 per share, 500,000 shares with an exercise price
of $.15 per share, 125,000 shares with an exercise price of $.50 per share, and
50,000 shares with an exercise price of $1.00 per share. (3) Includes options to
purchase 300,000 shares with an exercise price of $.4375 per share.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     The Company is a party to an equipment lease and stock option agreement
(the "Lease Agreement"), dated October 1,1998, with Ironwood Leasing Ltd., a
Texas corporation ("Ironwood") Principals of Ironwood, including Dennis Barnes,
a former director of the Company (during 1996, 1997, & 1998), are also
stockholders of the Company. Under the terms of the Lease Agreement, the Company
leases certain scanning equipment necessary to scan paper claims and convert
them into electronically transmittable claims data information. Under the Lease
Agreement, the Company also granted to Ironwood the option to purchase 200,000
shares of Common Stock of the Company at an exercise price of $1.00 per share.
In a letter dated January 12, 2000, Ironwood Leasing Ltd. (Ironwood)

                                       11

<PAGE>

made demand for unpaid lease payments, which at the time amounted to $15,000 in
connection with the Lease. The Company negotiated a settlement of its dispute
with Ironwood.

     In October 1999 the Company entered into a Memorandum of Understanding with
a group made up of former and current Board members Dennis Barnes, Scott Stewart
and Ken Andrew which will pay the members a commission on certain enumerated
business for the period September 1, 1999 through August 31, 2002. As of March
29, 2001 $6,797 in commission has been paid. The Company, in 2001, negotiated a
release of $32,743 in accrued commissions and waiver of all subsequent
commissions in exchange for 910,500 shares of common stock of the Company based
upon an estimation of the present value of the estimated future commissions.

ITEM 13. EXHIBITS AND REPORTS ON FORM 10-K.

(a) Financial Statements and Exhibits Page

     1. Financial Statements. The following financial statements are submitted
        as part of this report:
            Independent Auditor's Report ..............................      F-2
            Consolidated Balance Sheets-December 31, 2000, and 1999 ...      F-3
            Consolidated Statements of Operations-Years Ended
                December 31, 2000 and 1999 ............................      F-4
            Consolidated Statements of Changes in Stockholders'
                Equity-Years Ended
                December 31, 2000 and 1999 ............................      F-5
            Consolidated Statements of Cash Flows-Years Ended
                December 31, 2000 and 1999 ............................      F-6
            Notes to Consolidated Financial Statements ................      F-7

     2. Exhibits

     Exhibit Number                                   Description of Exhibits

     2.1* Agreement on Plan of reorganization, dated January 31, 1999
          (incorporated by reference from Exhibit 2 to the Company's Form 8-K,
          dated February 10, 1997).

     2.2* Disposition of Asset - Purchase Agreement, dated August 12, 1999
          (incorporated by reference from Exhibit 2 to the Company's Form 8-K,
          dated August 27, 1999)

     2.3* Disposition of Asset - Security Agreement, dated August 12, 1999
          (incorporated by reference from Exhibit 2.1 to the Company's Form 8-K,
          dated August 27, 1999).

     2.4* Disposition of Asset - Guaranty Agreement, dated August 12, 1999
          (incorporated by reference from Exhibit 2.2 to the Company's Form 8-K,
          dated August 27, 1999).

     3.1* Articles of Incorporation of the Company, dated September 5, 1986
          (incorporated by reference from an Exhibit to the Company's
          Registration Statement on Form S-4, dated January 7, 1997).

     3.2* Amendment to the Articles of Incorporation of the Company, dated March
          26, 1996 (incorporated by reference from an exhibit to the Company's
          Registration Statement on Form S-4, dated January 7, 1997).

     3.3  Bylaws of the Company, as amended April 20, 2001.

     21.  Subsidiary of Registrant - ETC Administrative Services, Inc., a Texas
          Corporation.


    *  Previously Filed

                                       12


<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 or Section 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized on March 28, 2002.

    ELECTRONIC TRANSMISSION CORPORATION

    By: /s/ Timothy P. Powell
        --------------------------------------
        Timothy P. Powell, President,
        Chief Financial  Officer

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

/s/ Timothy P. Powell
------------------------------------
Timothy P. Powell, President,
Chief Financial Officer,
and Director
Date: March 28, 2002


/s/ Harry K. Altman
------------------------------------
Harry K. Altman, Corporate Secretary
Date: March 28,  2002


/s/ Michael J. Lovell
-------------------------------------
Michael J. Lovell, Controller
Date: March 28, 2002


/s/ Scott Stewart
-------------------------------------------
Scott Stewart, Director
Date: March 28, 2002


/s/ Ken Andrew
--------------------------------------------
Ken Andrew, Director
Date: March 28, 2002


/s/ John J. Bassett
-----------------------------------
John Bassett, Director
Date: March 28, 2002


                                       13


<PAGE>


                       ELECTRONIC TRANSMISSION CORPORATION
                                 AND SUBSIDIARY

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                            Page

Independent Auditors' Report ..........................................     F-2

Consolidated Balance Sheets at December 31, 2001 and 2000 .............     F-3

Consolidated Statements of Operations For the Years Ended
         December 31, 2001 and 2000 ...................................     F-4

Consolidated Statements of Changes in Stockholders' Equity
         For the Years Ended December 31, 2001 and 2000 ...............     F-5

Consolidated Statements of Cash Flows For the Years Ended
         December 31, 2001 and 2000 ...................................     F-6

Notes to Consolidated Financial Statements ............................     F-7


                                      F-1

<PAGE>

                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors
Electronic Transmission Corporation and Subsidiary:

We have audited the accompanying consolidated balance sheets of Electronic
Transmission Corporation and Subsidiary, a Delaware corporation, as of December
31, 2001 and 2000, and the related consolidated statements of operations, change
in stockholders' equity (deficit) and cash flows for the years then ended. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. 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 audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Electronic Transmission Corporation and Subsidiary as of December 31, 2001 and
2000, and the results of their operations and their cash flows for the years
then ended in conformity with accounting principles generally accepted in the
United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company's significant operating losses raise
substantial doubt about its ability to continue as a going concern. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

                                                           Jackson & Rhodes P.C.
Dallas, Texas
February 28, 2002

                                      F-2

<PAGE>

               ELECTRONIC TRANSMISSION CORPORATION AND SUBSIDIARY
                          CONSOLIDATED BALANCE SHEETS
                           December 31, 2001 and 2000
<TABLE>
<CAPTION>
                                                                                      2001          2000
                                                                                 -----------    -----------
<S>                                                                           <C>             <C>

                                     ASSETS

Current assets:
      Cash and cash equivalents                                                    $ 119,272       $ 87,987
      Accounts receivable, net of allowance for doubtful
               accounts of $10,202 and $8,388, respectively                          247,473        261,010
      Prepaid expenses                                                                89,826         54,955
                                                                                  -----------    -----------
          Total current assets                                                       456,571        403,952
                                                                                  -----------    -----------

Property and equipment, net                                                          211,756        138,819

Deposits                                                                               4,800          6,749
                                                                                  -----------    -----------
                                                                                   $ 673,127      $ 549,520
                                                                                  ===========    ===========

                  LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:
      Accounts payable and accrued liabilities (Note 6)                            $ 194,899      $ 382,036
      Current portion of long-term debt (Note 6)                                      93,235         43,402
      Current portion, capital lease obligations                                      65,048        124,315
      Net liabilities of discontinued operations (Note 4)                             47,841        254,635
                                                                                  -----------    -----------
          Total current liabilities                                                  401,023        804,388

Long-term capital lease obligations                                                    6,466         21,764
Long-term debt, less current portion (Note 6)                                        109,187         52,859
                                                                                  -----------    -----------
          Total liabilities                                                          516,676        879,011
                                                                                  -----------    -----------

Commitments and contingencies (Note 11)                                                    -              -

Stockholders' equity (deficit):
      Preferred stock, $1 par value, 2,000,000 shares
          authorized; no shares issued and outstanding                                     -              -
      Common stock, $.001 par value, 20,000000
          shares authorized; 15,454,103 and 11,349,678 shares
           issued and outstanding, respectively                                       15,455         11,351
      Additional paid-in-capital                                                   9,813,686      9,219,390
      Accumulated deficit                                                         (9,672,690)    (9,560,232)
                                                                                  -----------    -----------
          Total stockholders' equity (deficit)                                       156,451       (329,491)
                                                                                  -----------    -----------
                                                                                   $ 673,127      $ 549,520
                                                                                  ===========    ===========

</TABLE>

          See accompanying notes to consolidated financial statements.

                                       F-3

<PAGE>

               ELECTRONIC TRANSMISSION CORPORATION AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 For the Years Ended December 31, 2001 and 2000


                                                  2001             2000
                                              ------------     ------------

Service revenues                              $ 2,419,479      $ 2,685,113

Costs and expenses:
     Costs of revenues                            797,952          750,010
     Selling, general and administrative        1,478,211        2,050,561
     Stock for services rendered                  130,736                -
     Depreciation and amortization                 70,774          122,037
                                              ------------     ------------
         Total costs and expenses               2,477,673        2,922,608
                                              ------------     ------------

Loss from operations                              (58,194)        (237,495)

Other income (expense):
     Interest expense                             (26,480)          (3,437)
     Other income                                  62,105           32,901
     Legal settlements (Note 6)                   (89,889)        (118,279)
                                              ------------     ------------
         Total other income                       (54,264)         (88,815)
                                              ------------     ------------

Net loss                                      $  (112,458)     $  (326,310)
                                              ============     ============

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

Weighted average shares outstanding            13,543,128       11,345,178
                                              ============     ============

          See accompanying notes to consolidated financial statements.

                                      F-4

<PAGE>

               ELECTRONIC TRANSMISSION CORPORATION AND SUBSIDIARY
      CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
                 For the Years Ended December 31, 2001 and 2000

<TABLE>
<CAPTION>

                                                          Common Stock           Additional
                                                -----------------------------      Paid-In        Accumulated
                                                   Shares          Amount          Capital           Deficit         Total
                                                -------------   -------------    ------------     ------------     ----------
<S>                                             <C>             <C>           <C>              <C>              <C>
Balance at December 31, 1999                      11,336,178        $ 11,337     $ 9,215,503      $(9,233,922)     $  (7,082)
Issuance of shares for cash                           13,500              14           3,887                -          3,901
Net loss                                                   -               -               -         (326,310)      (326,310)
                                                -------------   -------------    ------------     ------------     ----------

Balance at December 31, 2000                      11,349,678          11,351       9,219,390       (9,560,232)      (329,491)
Issuance of shares for cash                        2,500,000           2,500         247,500                -        250,000
Conversion of debt                                 1,210,500           1,210         119,839                -        121,049
Issuance of shares for services                      265,925             266          42,030                -         42,296
Issuance of shares to employees
   for services                                      128,000             128          88,312                -         88,440
Revalution of options to nonemployees                      -               -          96,615                -         96,615
Net loss                                                   -               -               -         (112,458)      (112,458)
                                                -------------   -------------    ------------     ------------     ----------

Balance at December 31, 2001                      15,454,103        $ 15,455     $ 9,813,686      $(9,672,690)     $ 156,451
                                                =============   =============    ============     ============     ==========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      F-5

<PAGE>

               ELECTRONIC TRANSMISSION CORPORATION AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 For the Years Ended December 31, 2001 and 2000
<TABLE>
<CAPTION>

                                                                                  2001             2000
                                                                              -----------       ----------
<S>                                                                         <C>             <C>
Cash flows from operating activities:

Net loss                                                                      $ (112,458)      $ (326,310)
Adjustments to reconcile net loss to
  net cash provided by (used in) operating activities:
          Issuance of common stock and options                                   227,351                -
          Change in net liabilities of discontinued operations                   (30,879)          17,900
          Settlement of litigation expense                                             -          118,279
          Increase in allowance for notes receivable                                   -          113,745
          Loss on disposal of asset                                                2,971                -
          Depreciation and amortization                                           70,774          122,037
          Changes in operating assets and liabilities:
               Accounts receivable-trade                                          13,537           13,031
               Prepaid expenses                                                  (34,871)          (9,579)
               Deposits                                                            1,949                -
               Accounts payable and accrued expenses                             (84,995)         (86,144)
                                                                              -----------      -----------
                    Net cash provided by (used in) operating activities           53,379          (37,041)
                                                                              -----------      -----------

Cash flows from investing activities:

          Purchases of property and equipment                                   (140,846)          (9,965)
          Receipts on note receivable                                                  -           69,775
                                                                              -----------      -----------
                    Net cash provided by (used in) investing activities         (140,846)          59,810
                                                                              -----------      -----------

Cash flows from financing activities:

          Notes payable                                                          (69,754)         (77,737)
          Payments on capital leases                                             (61,494)         (11,011)
          Issuance of common stock for cash                                      250,000            3,901
                                                                              -----------      -----------
                    Net cash provided by (used in) financing activities          118,752          (84,847)
                                                                              -----------      -----------
Net increase (decrease) in cash                                                   31,285          (62,078)
Cash and equivalents, beginning of period                                         87,987          150,065
                                                                              -----------      -----------
Cash and equivalents, end of period                                           $  119,272       $    87,987
                                                                              ===========      ===========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      F-6

<PAGE>


               ELECTRONIC TRANSMISSION CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2001 and 2000



1.   Significant Accounting Policies

     Description of the Business

     Electronic Transmission Corporation ("ETC" or "Company"), a Delaware
     corporation, provides services to self-insured companies, third party
     administrators that pay claims for self-insured companies and other medical
     provider networks or cost containment companies providing services to
     self-insured companies. The Company's automation capabilities encompass the
     entire workflow process involved in processing and paying healthcare
     claims. Revenues are derived primarily from commerce within the United
     States.

     Consolidation

     The financial statements include the accounts of the Company and ETC
     Administrative Services, Inc., a Texas corporation and wholly owned
     subsidiary (see Note 4). All intercompany accounts and transactions have
     been eliminated.

     Revenue and Expense Recognition

     The Company recognizes revenue when services are performed. Expenses are
     recognized in the period in which incurred.

     Cash and Cash Equivalents

     For purposes of the statements of cash flows, the Company considers any
     short-term cash investments with an original maturity of three months or
     less to be a cash equivalent.

     Loss Per Share

     Basic loss per common share was calculated by dividing the Company's net
     loss by the weighted average common shares outstanding. Dilutive loss per
     common share is no presented since common stock equivalents would have had
     an anti-dilutive effect.

     Property and Equipment

     Certain claims processing and imaging equipment are furnished to customers
     for off-site use at the customer's facility. This equipment is recorded at
     adjusted cost basis as computer and office equipment on the Company's
     balance sheet.

                                      F-7

<PAGE>

               ELECTRONIC TRANSMISSION CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.   Significant Accounting Policies (Continued)

     Property and Equipment (Continued)

     Property and equipment are stated at cost. Cost of property renewals and
     betterments are capitalized; cost of property maintenance and repairs are
     charged against operations as incurred.

     Depreciation is computed using the straight-line method over the estimated
     useful lives of the individual assets as follows:

                Equipment                           3-7 years
                Furniture and fixtures                4 years
                Leasehold improvements                5 years

     Income Taxes

     ETC utilizes the asset and liability approach to financial accounting and
     reporting for income taxes. Deferred income tax assets and liabilities are
     computed annually for differences between the financial statement and tax
     basis of assets and liabilities that will result in taxable or deductible
     amounts in the future based on enacted tax laws and 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. Income tax expense is the tax
     payable or refundable for the period plus or minus the change during the
     period in deferred tax assets and liabilities.

     Fair Value of Financial Instruments

     The carrying value of cash, receivables and accounts payable approximates
     fair value due to the short maturity of these instruments. The carrying
     value of short and long-term debt approximates fair value based on
     discounting the projected cash flows using market rates available for
     similar maturities. None of the financial instruments are held for trading
     purposes.

     Use of Estimates and Assumptions

     Management uses estimates and assumptions in preparing its financial
     statements. Those estimates and assumptions affect the reported amounts of
     assets and liabilities, the disclosure of contingent assets and
     liabilities, and the reported amounts of revenues and expenses. Actual
     results could vary from the estimates that were used.

                                      F-8

<PAGE>

               ELECTRONIC TRANSMISSION CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



1.   Significant Accounting Policies (Continued)

     Stock-Based Compensation

     In October 1995, the Financial Accounting Standards Board ("FASB") issued
     SFAS 123, "Accounting for Stock-Based Compensation." SFAS 123 defines a
     fair value based method of accounting for an employee stock option or
     similar equity instrument and encourages all entities to adopt that method
     of accounting for all of their employee stock compensation plans. Under the
     fair value based method, compensation cost is measured at the grant date
     based on the value of the award. However, SFAS 123 also allows an entity to
     continue to measure compensation cost for those plans using the intrinsic
     value based method of accounting prescribed by APB Opinion No. 25,
     "Accounting for Stock Issued to Employees."

     Under the intrinsic value based method, compensation cost is the excess, if
     any, of the quoted market price of the stock at grant date or other
     measurement date over the amount an employee must pay to acquire the stock.
     Entities electing to remain with the accounting in Opinion 25 must make pro
     forma disclosures of net income and earnings per share as if the fair value
     based method of accounting had been applied. The Company has elected to
     measure compensation cost for options issued to employees under Opinion 25.
     Options issued to nonemployees are measured in accordance with SFAS 123.

2.   Going Concern and Continued Operations

     The financial statements have been prepared on the assumption that the
     Company will continue as a going concern. The financial statements do not
     include any adjustments to reflect the possible effects on the
     recoverability and classification of assets or classification of
     liabilities which may result from the inability of the Company to continue
     as a going concern. ETC sustained a net operating loss of $112,458 and
     $326,310 during the years ended December 31, 2001 and 2000, respectively.
     ETC's continued existence depends upon the success of management's efforts
     to raise sufficient new capital and increase its customer base.

     In March, 2002, the Company had 22 clients including self-insured companies
     and medical provider networks. The Company expended considerable effort and
     resources to develop its current work flow process. Additional resources
     were devoted to (i) defining the exact services that were needed by the
     market segment and (ii) developing, testing and ultimately implementing
     these services. While expensive and time consuming, these activities serve
     as the basis on which the business of the Company will operate. As the
     Company expands its customer base, additional computer equipment and
     personnel will be required and added. Such expansion will be funded by the
     revenues derived from operations and other funding sources that the Company
     may obtain from time to time. The Company is currently reviewing its cost
     structure and accessing a possible reduction

                                      F-9

<PAGE>

               ELECTRONIC TRANSMISSION CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


2.   Going Concern and Continued Operations (Continued)

     in the fixed cost portion of its infrastructure. The Company intends to
     increase revenues by expanding its customer base and increasing
     profitability. Additionally, the Company continues to enhance its
     productivity through software improvements. The Company believes that the
     net proceeds from anticipated working capital provided from improved
     operations, will satisfy its cash requirements for the next 12 months.

3.   Acquisition and Sale of HPI

     Effective January 31, 1999, the Company acquired 100% of the outstanding
     common shares of Health Plan Initiative, Inc. ("HPI"), a company which had
     been wholly owned by the Company's President, Robert Fortier. HPI offers
     services similar to the Company. As a result of the transaction, Mr.
     Fortier received 3,538,306 shares of Company common stock, which was 42% of
     the outstanding stock of the Company. An additional 651,751 shares valued
     at $54,747 were also issued related to the acquisition. The transaction was
     accounted for as a purchase and the total purchase price was $396,000.

     The Company sold the stock of HPI, effective June 30, 1999, for a note
     receivable of $323,582. The non-interest-bearing note has been discounted
     at 10% and is receivable in monthly instalments of $10,000. The unamortized
     discount at December 31, 2000 and 1999 is $6,255 and $16,480, respectively.
     The note receivable is in default and an allowance for notes receivable of
     $113,745 was established at December 31, 2000.

4.   Discontinued Operations

     Effective December 31, 1998, the Company discontinued the operations of ETC
     Administrative Services, Inc. ("Administrative"). Administrative was
     created in 1998 to offer third party administrative services. The Company
     has accounted for the operations of Administrative as a discontinued
     operation in the accompanying statement of operations.

5.   Property and Equipment

     The following is a summary of property and equipment:

                                                           December 31,
                                                     ---------------------------
                                                         2001            2000
                                                     -----------      ----------
     Furniture                                       $   102,885      $ 117,260
     Computer and office equipment                       828,595        819,205
     Computer software                                   296,490        172,356
     Leasehold improvements                                1,678         16,564
        Less accumulated depreciation                 (1,017,892)      (986,566)
                                                     -----------      ---------
                                                     $   211,756      $ 138,819
                                                     ===========      =========

                                      F-10

<PAGE>

               ELECTRONIC TRANSMISSION CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



6.   Long-Term Debt

     The following is a summary of long-term debt:
<TABLE>
<CAPTION>

                                                                       December 31,
                                                                    2001           2000
                                                                  ---------     --------
<S>                                                               <C>          <C>
     Note payable to a corporation, discounted at 7.5%,
     principal and interest payments of $5,000 due monthly,
     unamortized discount of $20,436.                             $ 149,564     $      -

     Note payable to the Company's former President,
      discounted at 10%, payable monthly of $8,787,
     unamortized discount of $3,142 and $10,739, respectively.       52,858       96,261
                                                                  ---------     --------
                                                                    202,422       96,261
     Less current maturities                                        (93,235)     (43,402)
                                                                  ---------     --------
                                                                  $ 109,187     $ 52,859
                                                                  =========     ========
</TABLE>

     The maturities of long-term debt at December 31, 2001 are as follows:

                          2002                                    $93,235
                          2003                                     61,189
                          2004                                     47,998

     On October 14, 2000, the Company settled a lawsuit filed by the Company's
     former President. The settlement calls for the Company to pay the former
     President an aggregate of $132,000 in varying payments through February
     2003. The Company has accrued the present value of these payments,
     amounting to $118,279 and has reflected that amount as other expense in the
     accompanying statement of operations for the year ended December 31, 2000.
     As part of the settlement agreement, the Company has executed a Promissory
     note payable to the former President in the amount of $600,000. This note
     shall be reduced pro rata as the Company makes the payments on the note
     above (for example, the Company receives $113,637 credit against the
     $600,000 note if it makes a $25,000 payment). The remaining balance of the
     Promissory Note shall become due and payable in full should the Company
     default upon its obligations on the note above.

                                      F-11

<PAGE>

               ELECTRONIC TRANSMISSION CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



7.   Lease Obligations Payable

     The Company, as lessee, has entered into various non-cancelable leases for
     service equipment, vehicles, and office facilities. Future minimum lease
     payments under non-cancelable leases at December 31, 2001 are as follows:

                                                       Capital        Operating
             For the Years Ending December 31,         Leases          Leases
             ---------------------------------       -----------      ---------

                         2002                            $71,315        123,000
                         2003                              6,883        125,050
                         2004                              1,460        147,600
                         2005                                  -        147,600
                         2006                                  -        135,300
                                                         -------      ---------
     Total minimum lease payments                         79,658      $ 678,550
       Less amount representing interest                  (8,144)     =========
                                                         -------
     Present value of minimum lease payments              71,514
       Less current portion                              (65,048)
                                                         -------
     Long-term capital lease obligation                  $ 6,466
                                                         =======

     Rent expense during the years ended December 31, 2001 and 2000 for
     operating leases was $113,440 and $132,398, respectively, and is included
     in operating expenses.

     The cost of assets subject to capital leases included in office furniture
     and equipment is as follows:

                                                            December 31,
                                                       -------------------------
                                                         2001            2000
                                                       ---------      ----------

     Computer and office equipment                     $ 265,868      $ 260,032
        Less accumulated depreciation                   (242,283)      (228,208)
                                                       ---------      ---------
                                                       $  23,585      $  31,824
                                                       =========      =========

     Effective October 1, 1998, the Company executed a thirty-six (36) month
     equipment lease ("Lease Agreement") that consolidated all existing lease
     obligations with Ironwood Leasing, Ltd. ("Ironwood"). The stated terms of
     the Lease Agreement called for payments of $5,000 per month. Also on
     October 1, 1998 the Company amended a stock option agreement with Ironwood
     which, as amended, grants Ironwood the right to purchase 200,000 shares of
     Common Stock at $1.00 per share. Dennis Barnes, a


                                      F-12

<PAGE>

               ELECTRONIC TRANSMISSION CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


7.   Lease Obligations Payable (Continued)

     principal of Ironwood, had been a director of the Company. On January 12,
     2000 Ironwood demanded payment for unpaid lease payments, which at the time
     amounted to $15,000. The Company believed the terms of the Lease Agreement
     to be usurious and negotiated to resolve the matter.

     On May 23, 2001, the Company executed a Settlement Agreement ("Settlement")
     with Ironwood to resolve the matter. The Settlement calls for the Company
     to pay $93,000 to Ironwood: $16,000 upon execution of the Settlement and
     $5,000 per month for fifteen months and a final payment of $2,000. After
     recording the discounted payable to Ironwood, the Company recorded a gain
     of approximately $13,700 on the transaction. The Settlement also called for
     repricing of the stock options to $.45 per share (see Note 9).

8.   Income Taxes

     ETC has net operating loss carryforwards of approximately $7,049,000 that
     are available to offset any future income tax liability. The net operating
     loss carryforwards expire as follows:


             For the Years Ending
                 December 31,                              Expiring
             --------------------                         ----------
                    2010                                  $  880,000
                    2011                                   2,006,000
                    2012                                   1,396,000
                    2013                                   1,114,000
                    2014                                   1,080,000
                    2015                                     473,000
                    2016                                     100,000
                                                          ----------
                                                          $7,049,000
                                                          ==========

     Deferred income taxes result from the book versus tax accounting difference
     for net operating loss carryforwards, accrued payroll and stock
     option-based compensation. The Company has deferred tax assets amounting to
     approximately $2,600,000 at December 31, 2001 and 2000. The realization of
     the benefits from these deferred tax assets appears uncertain due to going
     concern questions. Accordingly, a valuation allowance has been recorded
     which offsets the deferred tax assets at December 31, 2001 and 2000.

                                      F-13

<PAGE>

               ELECTRONIC TRANSMISSION CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



9.   Stock Options

     The Company has issued various stock options and warrants to employees and
     non-employees which are considered compensatory. Vesting varies by
     agreement ranging from 2 to 7 years. The contractual life of outstanding
     employee stock options at December 31, 2001 is the term of employment of
     the holder.

     A summary of the status of stock options and warrants is set forth below:


<TABLE>
<CAPTION>
                                                      Year Ended                     Year Ended
                                                   December 31, 2001              December 31, 2000
                                                ----------------------        ------------------------
                                                              Weighted                        Weighted
                                                              Average                         Average
                                                              Exercise                        Exercise
     Stock Options                               Shares        Price            Shares         Price
     -------------                              ----------    --------        ---------       ---------
 <S>                                            <C>         <C>              <C>           <C>
     Outstanding, beginning or period           1,390,021      $0.500*        1,502,521        $0.640
     Granted                                    1,050,000      $0.170                 -        $    -
     Exercised                                          -      $    -                 -        $    -
     Forfeited/expired                                  -      $    -          (112,500)       $0.917
                                                ---------                     ---------
     Outstanding, end of period                 2,440,021      $0.390         1,390,021        $0.500*
                                                =========                     =========
     Options exercisable, end of period         1,890,021      $0.340         1,390,021        $0.500
                                                =========                     =========
     *After revaluation.
</TABLE>
     The following table summarizes information about stock options outstanding
     at December 31, 2001 and 2000:

<TABLE>
<CAPTION>
                                  Options         Weighted Average           Weighted               Options           Weighted
                                Outstanding          Remaining                Average             Exercisable          Average
     Exercise Prices            at 12/31/01       Contractual Life         Exercise Price         at 12/31/01       Exercise Price
     ---------------            -----------       ----------------         --------------         -----------       --------------
<S>                           <C>                 <C>                   <C>                     <C>                <C>
         $0.438                   300,000            May 1, 1006              $0.438                 300,000            $0.438
         $0.450                   200,000               Oct-03                $0.450                 200,000            $0.450
         $0.250                   220,021             1.5 Years               $0.250                 170,021            $0.250
     $0.190 to $.52               595,000           Term of Employ            $0.505                 595,000            $0.505
         $0.150                 1,000,000               2 Years               $0.150                 500,000            $0.150
         $1.000                   125,000           Term of Employ            $1.000                 125,000            $1.000
                                ---------                                                          ---------
                                2,440,021                                                          1,890,021
                                =========                                                          =========
</TABLE>

                                      F-14

<PAGE>

               ELECTRONIC TRANSMISSION CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



9.   Stock Options (Continued)
<TABLE>
<CAPTION>
                                  Options         Weighted Average           Weighted               Options           Weighted
                                Outstanding          Remaining                Average             Exercisable          Average
     Exercise Prices            at 12/31/00       Contractual Life         Exercise Price         at 12/31/00       Exercise Price
     ---------------            -----------       ----------------         --------------         -----------       --------------
<S>                           <C>                 <C>                    <C>                     <C>                <C>
         $0.438                   300,000            May 1, 1006              $0.438                 300,000            $0.438
         $0.500                    50,000          Various to 2001            $0.500                  50,000            $0.500
      $0.190 to $.52              595,000           Term of Employ            $0.505                 595,000            $0.505
         $1.000                   320,021          October 1, 2003            $1.000                 320,021            $1.000
         $1.000                   125,000           Term of Employ            $1.000                 125,000            $1.000
                                ---------                                                          ---------
                                1,390,021                                                          1,390,021
                                =========                                                          =========
</TABLE>
     Fair values for the stock underlying stock options and stock warrants
     consisted of quoted market prices as listed in stock-trading business
     journals. These fair values were used to determine the compensatory
     components of the stock options and stock warrants granted during the years
     ended December 31, 2001 and 2000.

     Compensation costs for options issued to employees will be recognized as an
     expense over the vesting period of the options at an amount equal to the
     excess of the fair market value of the stock at the date of measurement
     over the amount the employee must pay. The measurement date is generally
     the grant date. There is $35,000 compensation expense to be recorded in
     subsequent periods as of December 31, 2001.

     Using the fair value method, the fair value of each option grant is
     estimated on the date of grant using the Black-Scholes option pricing model
     with the following weighted-average assumptions used for grants in 2001:
     dividend yield of 0.0 percent; expected volatility of 208 percent; risk
     free interest rates of 4.5 percent; expected lives of two years. The
     Company recorded $96,615 in expense for 2001 for stock options issued or
     repriced to nonemployees.

     Pro forma disclosures as required by SFAS 123 for 2001 are as follows:

                    Net loss                            $($175,241)
                    Net loss per common share           $($.01)

10.  Customer Concentration

     For the years ended December 31, 2001 and 2000, revenues from one customer
     amounted to approximately 57% and 54% of total revenues, respectively.

     Trade accounts receivable included $99,690 and $115,699 relating to these
     customers at December 31, 2001 and 2000, respectively.

                                      F-15

<PAGE>

               ELECTRONIC TRANSMISSION CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



11.  Commitments And Contingencies

     Concentration of Credit Risk

     The Company invests its cash and certificates of deposit primarily in
     deposits with major banks. Certain deposits, at times, are in excess of
     federally insured limits. The Company has not incurred losses related to
     its cash.

     Litigation

     The Company is in certain lawsuits arising in the ordinary course of
     business. The Company is vigorously defending all allegations against it.
     While the Company's legal counsel and management do not expect any adverse
     judgments, should the Company be required to pay damages as a result of any
     litigation, the payment of such damage award may have a material adverse
     effect on its financial condition and results of operations.

     Settlement Agreement

     See Note 6 regarding the Company's contingent amount payable to its former
     President in connection with a settlement agreement.

12.  Supplemental Disclosure of Cash Flow Information

     During the years ended December 31, 2001 and 2000, the Company paid $26,438
     and $29,875 for interest, respectively. During the years ended December 31,
     2001 and 2000, the Company made no payments for income taxes.

     Non-cash investing and financing activities include the following:

     The Company acquired assets valued at $5,836 and $29,875 through capital
     lease obligations during the years ended December 31, 2001 and 2000,
     respectively.

     During the year ended December 31, 2001, the Company issued 1,210,500
     shares of stock to settle $121,049 of debt to outside parties.

                                      F-16

<PAGE>

                               INDEX TO EXHIBITS

Exhibit Number     Description of Exhibits               Sequential Page Number


3.3                 Bylaws of the Company, as amended April 20, 2001.