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

                                   FORM 10-KSB

                 ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the fiscal year ended September 30, 2002

                          Commission file number 27859

                          RAD SOURCE TECHNOLOGIES, INC.
                 ----------------------------------------------
                 (Name of Small Business Issuer in its charter)

            FLORIDA                                      65-0882844
-------------------------------             ------------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

                    20283 STATE ROAD 7, BOCA RATON, FL 33498
               ---------------------------------------------------
               (Address of principal executive offices) (Zip Code)

                                 (561) 482-9330
                           ---------------------------
                           (Issuer's telephone number)

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

              Securities registered under Section 12(g) of the Act:
              -----------------------------------------------------
                          COMMON STOCK, PAR VALUE $.001

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

Check if 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 registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]

Issuer's revenues for its most recent fiscal year were $1,593,052

The aggregate market value of the voting and non-voting common equity held by
non-affiliates based on the average bid and asked price at January 8, 2003 was
approximately $319,000. At January 8, 2003, the issuer had 9,184,397 shares of
common stock, par value $.001 issued and outstanding.
<PAGE>

                                TABLE OF CONTENTS

                                     Part I
                                                                            Page
                                                                            ----

Item 1.  Description of Business                                            1

Item 2.  Description of Property                                            3

Item 3   Legal Proceedings                                                  3

Item 4.  Submission of Matters to a Vote of
         Security Holders                                                   3


                                     Part II

Item 5.  Market for Common Equity and Related Stockholder Matters           4

Item 6.  Management's Discussion and Analysis or Plan of operation          4

Item 7.  Financial Statements                                               8

Item 8.  Changes In and Disagreements With Accountants on
         Accounting and Financial Disclosure                                9


                                    Part III

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

Item 10. Executive Compensation                                             10

Item 11. Security Ownership of Certain Beneficial owners and Management     11

Item 12. Certain Relationships and Related Transactions                     12

Item 13. Exhibits and Reports on Form 8-K                                   13

Item 14. Controls and Procedures                                            13
<PAGE>

                  CAUTION REGARDING FORWARD-LOOKING INFORMATION

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

THIS ANNUAL REPORT CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS AND INFORMATION
RELATING TO THE COMPANY THAT ARE BASED ON THE BELIEFS OF THE COMPANY OR
MANAGEMENT AND ASSUMPTIONS,MADE BY AND INFORMATION CURRENTLY AVAILABLE TO THE
COMPANY OR MANAGEMENT. WHEN USED IN THIS DOCUMENT, THE WORDS "ANTICIPATE",
"BELIEVE", "ESTIMATE", "EXPECT" AND "INTEND" AND SIMILAR EXPRESSIONS, AS THEY
RELATE TO THE COMPANY OR ITS MANAGEMENT, ARE INTENDED TO IDENTIFY
FORWARD-LOOKING STATEMENTS. SUCH STATEMENTS REFLECT THE CURRENT VIEW OF THE
COMPANY REGARDING FUTURE EVENTS AND ARE SUBJECT TO CERTAIN RISKS, UNCERTAINTIES
AND ASSUMPTIONS, INCLUDING THE RISKS AND UNCERTAINTIES NOTED. SHOULD ONE OR MORE
OF THESE RISKS OR UNCERTAINTIES MATERIALIZE, OR SHOULD UNDERLYING ASSUMPTIONS
PROVE INCORRECT, ACTUAL RESULTS MAY VARY MATERIALLY FROM THOSE DESCRIBED HEREIN
AS ANTICIPATED, BELIEVED, ESTIMATED, EXPECTED OR INTENDED. IN EACH INSTANCE,
FORWARD-LOOKING INFORMATION SHOULD BE CONSIDERED IN LIGHT OF THE ACCOMPANYING
MEANINGFUL CAUTIONARY STATEMENTS HEREIN.


                                     PART I

References herein to the "Company" refer to Rad Source Technologies, Inc. and
its subsidiary.

Item 1.  Description of Business

Business Development
--------------------

The Company was incorporated in the State of Florida in 1990. Rad Source, Inc.,
its wholly owned subsidiary was incorporated in the State of Florida in 1996.


Business of the Company
-----------------------

The Company is in the business of researching, developing and producing
commercially viable products that utilize non-radioactive source radiation
technology. The Company's historical efforts have been in the area of developing
x-ray based equipment which can be substituted for that which utilizes
radioactive isotopes to produce radiation. Non-radioactive source technology can
be used in a variety of industries and the Company believes its expertise can be
applied to a wide variety of applications including those which require the
effect of radiation on objects or organisms (irradiation) or those used to
obtain images of items.

The Company has developed and currently sells irradiation equipment that
produces radiation utilizing x-rays, thereby eliminating the need for
radioactive sources. Radiation producing equipment is used in a variety of
applications ranging from medical equipment sterilization to biological
research. Radiation can be used to eliminate reproduction of harmful organisms
(applications include food and medical product sterilization, where bacteria
would otherwise be a human threat), or alter the effect of active cells (as is
the case with white blood cells in blood irradiation applications, which
otherwise would harm immuno-deficient patients). Unlike the Company's equipment,
radioactive source equipment is highly regulated and requires certain safety
precautions due to the nature of the source. That is, the source, generally
cesium or cobalt, is a radioactive isotope and its radiation emissions cannot be
"turned off". If the source were to escape its containment, its emissions are
highly hazardous. The Company has also developed imaging equipment. This
equipment utilizes x-rays to obtain images of objects. Imaging is used in a
variety of industries ranging from electronic component production to medical
research to view either the surface or interior of both organic and inorganic
substances to detect imperfections, growths, etc. The Company's imaging
equipment has not yet been commercially produced or sold due to funding and
vendor production limitations.
<PAGE>

The Company has produced two commercially available irradiation products, the RS
3000 Blood Irradiator and the RS 2000 Biological Irradiator. These products
utilize x-rays to produce radiation and compete with radioactive isotope based
equipment. These products require electricity to produce radiation and therefore
must be turned on to produce radiation and can be turned off to eliminate the
production of radiation. The Company sold its first RS 3000 in August 1999 and
its first RS 2000 in January 2000. Although the Company has offered these
products globally, it has only sold them in the U.S. The Company's ability to
enter foreign markets is limited and would require additional investment not
currently available to the Company.

The RS 3000 Blood Irradiator is designed to be used by hospitals and blood
centers for the irradiation of blood and blood products. The RS 3000 is a
non-nuclear, x-ray irradiator and has been approved by the U.S. Food and Drug
Administration ("FDA"). Irradiated blood is used by healthcare institutions for
immuno-deficient patients (e.g., the elderly, infants and children, cancer and
AIDS patients, transplant patients, etc.). Blood irradiation equipment has a
global market and is dominated by two large companies which produce
nuclear-based equipment only (i.e., they utilize radioactive isotopes as their
radiation source). These nuclear-based products have been serving the market for
over 20 years as opposed to the RS 3000 which is relatively new to the market.
The competitive radioactive source equipment is generally subject to stringent
regulation. For example, in the U.S., the Nuclear Regulatory Commission ("NRC")
requires compliance with its rules and regulations for operators of radioactive
source equipment. This means federal licensing, periodic reporting, minimum
personnel and recurrent training, and nuclear material disposal compliance are
applicable. Since the Company's equipment is non-radioactive source, operators
are not subject to NRC regulations. Additionally, minimum radiation shielding
requirements for radioactive source equipment cause it to weigh substantially
more than the Company's competitive equipment. This virtually eliminates the
mobility of competitive nuclear-based equipment and generally requires
restrictive location of the equipment to reinforced flooring only. Because of
the significant operational and regulatory requirements of radioactive isotope
based competitive equipment, the Company believes its x-ray based products open
the market to viable users who would otherwise not wish to contend with such
regulatory and operational restrictions inherent with nuclear equipment.

In 2001, the Company was granted a U.S. patent on the RS 3000 by the U.S. Patent
Office.

The Company also produces the RS 2000. This product is used by research
institutions for conducting biological experiments used in such areas as cancer
and genetic research. This is also a global market dominated by nuclear-based
equipment produced by only a couple of large, global competitors. The Company
introduced the RS 2000 to this market in 1999 and delivered the first unit in
early 2000. The competitive nuclear-based equipment is subject to the same
regulations, operational characteristics and restrictions as those competitive
with the RS 3000. Manufacturing the RS 2000 is not subject to FDA approval, but
FDA and USDA regulations cover its applications.

In 2001, the Company developed an x-ray imaging product, the RS 1000. The
Company has not yet commercially produced any of these units due to vendor
production and supply issues as well as the Company's capital deficits resulting
in limited operational and financial resources considered necessary for a new
product roll-out.

In October, 2001, it was discovered that Anthrax laced letters had been
distributed by an unknown source or sources to various persons in the United
States via the U.S. Postal Service. This quickly became an issue in the U.S. and
the security of U.S. mail. On a very limited basis, the government instituted a
response that included using high-dose irradiation on mail to government
officials and related sites. During that period, the Company began working with
a Russian partner on a project capable of low-volume mail irradiation for the
purpose of mitigating biological threats. However, based on the significantly
reduced attention to or concern about this issue since then, the Company has not
pursued further development of such equipment. Notwithstanding the above, the
Company has maintained a relationship with this Russian partner toward producing
high-dose equipment development for other applications. Due to political,
economic, and cultural considerations as well as the Company's own capital
constraints, the Company recognizes that development and success in ultimately
producing any commercially viable equipment from this relationship may not be
immediate.

The Company utilizes various vendors to supply components for its products.
Assembly of its products is outsourced to subcontract integrators. Any inability
by our vendors and subcontractors to deliver components or integrate our
products will require the Company to re-source such components or integration.
Although, there are various other vendors and integrators that may be able to

                                        2
<PAGE>

substitute for some or all of the components or services, the Company would
anticipate time delays in shifting to alternate sources. Because of the
Company's capital position, any delay would be extremely detrimental. The
Company's key component vendors are crucial to the Company's ability to continue
to operate.

The Company's products are sold directly by in-house personnel and through
independent sales representatives. The Company's customer base is varied and the
Company is not dependent on any single customer for its revenues.

The Company's RS 3000 is subject to regulation by the FDA. The RS 2000 is not
subject to such regulation. The RS 3000 and RS 2000 are subject to Federal
Regulations that require certain radiation safety specifications for radiation
producing equipment. The Company's continued sale of its existing products and
the development and sale of possible future products will require continued
regulatory compliance. Also, commercial distribution in certain foreign
countries is subject to government regulation. The process of obtaining required
regulatory approvals can be lengthy, expensive and uncertain. Moreover,
regulatory-approvals, if granted, may include significant limitations on the
indicated uses for which a product may be marketed. The FDA also regulates the
content of advertising and marketing materials relating to medical devices.
There can be no assurance that the advertising and marketing materials related
to the products will be in compliance with such regulations. The Company is also
subject to other federal, state, local and foreign laws, regulations and
recommendations relating to the production and use of its products. Failure to
comply with applicable regulatory requirements could result in, among other
things, fines, suspensions of approvals, seizures or recalls of products,
operating restrictions and criminal prosecutions. Furthermore, changes in
existing regulations or adoption of new regulations could affect the timing of,
or prevent us from obtaining, future regulatory approvals. The effect of
government regulation could delay us for a considerable period of time or
prevent the marketing and full commercialization of future products or services
that the Company may develop and/or to impose costly requirements on us. There
can also be no assurance that additional regulations will not be adopted or
current regulations will not be amended in such a manner as to adversely affect
the operations.

The manufacture and use of irradiation equipment is highly regulated, and there
can be no assurance that the Company will be able to comply with existing or
future regulations or that the regulatory environment in which the Company
operates will not change significantly and thus adversely affect the Company.

In the past two fiscal years, the Company has spent approximately $164,000 on
research and development.

The Company is not currently subject to any special compliance requirements of
any environmental laws and the Company does not anticipate any significant costs
in maintaining compliance in the future.

The Company has 4 employees. None of the employees are members of a union.


Item 2.  Description of Property

The Company's office is located at 20283 State Road 7, Suite 107, Boca Raton, FL
33498. The facility is approximately one-thousand square feet of office space
and is leased.


Item 3.  Legal Proceedings

There are no legal proceedings pending against the Company. From time to time
the Company may become involved in routine litigation incidental to its
business.


Item 4.  Submission of Matters to a Vote Of Security Holders

None.

                                       3
<PAGE>

                                     PART II

Item 5.  Market for Common Equity and Related Stockholder Matters

(a)      Market for Common Equity:

The Company's Common Stock is traded on the NASDAQ Over the Counter Bulletin
Board ("OTCBB") under the symbol IRAD. The following bid quotations have been
reported for the period beginning October 1, 2000, and ending September 30,
2002:

                                         Bid Quotation
                                      -------------------

               Quarterly Period                             High           Low
               ----------------                            ------         ------

               October 1, 2000 - December 31, 2000         $0.188         $0.104

               January 1, 2001- March 31, 2001             $0.208         $0.073

               April 1, 2001 - June 30, 2001               $0.243         $0.067

               July 1, 2001 - September 30, 2001           $0.163         $0.05

               October 1, 2001 - December 31, 2001         $0.08          $1.00

               January 1, 2002- March 31, 2002             $0.25          $0.12

               April 1, 2002 - June 30, 2002               $0.20          $0.07

               July 1, 2002 - September 30, 2002           $0.15          $0.05

As of December 31, 2002 the bid price was $0.06

Such quotations reflect inter-dealer prices, without retail mark-up, markdown or
commission. Such quotes are not necessarily representative of actual
transactions or of the value of the securities, and are in all likelihood not
based upon any recognized criteria of securities valuation as used in the
investment banking community.

As of December 31, 2002 there were approximately 91 holders of record of the
Company's common stock, $0.001 par value.

The Company has never declared dividends. The Company has no restrictions
limiting the ability to pay dividends, but the Company does not anticipate
paying dividends in the near future.


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

The following comments should be read in conjunction with the consolidated
financial statements contained herein beginning at page F-1


Financial Condition

The Company's working capital deficit as of September 30, 2002 is $521,428.
During the year, the Company was able to use stock, options, or warrants to pay
$132,965 in expenses and liabilities. The Company also sold restricted shares

                                        4
<PAGE>

resulting in cash proceeds of $15,000. However, this was not sufficient to
offset the Company's net loss of $255,721 without an increase in the Company's
working capital deficit. The Company has a history of losses resulting in a
stockholders' deficit of $507,623 as of September 30, 2002. The Company must
become profitable, raise additional equity, either directly or through the
conversion of existing debt to equity, and must continue to rely on vendors and
service providers for periodic payment deferrals and cost reductions, to improve
liquidity and sustain its operations. Although some of these means have been
used previously to sustain the operations of the Company, there can be no
assurances any or all of them will continue to be available to the Company to
allow it to continue to remain in operation.

The Company has been unable to expand its product offering beyond the RS 3000
and RS 2000 irradiators due to financial, production, and/or technical
constraints. Although the Company continues to pursue additional products and
new technology, its resources are extremely limited and therefore actualizing
new products is very difficult in the current circumstances.

The Company has recently raised prices on its RS 3000 and RS 2000 units in an
effort to raise revenue and offset cost increases. The effect of these increases
may have an unfavorable effect on unit sales, but the Company believes its
products have competitive advantages that may mitigate any negative effect on
overall sales. The Company continues to pursue capital and has had discussions
with sources but has not reached any commitments for any significant infusion.
With its limited resources and existing product base, the Company anticipates
that it will require capital to sustain operations and pursue growth through the
addition of foreign markets and/or new products.

In consideration of the above, the Company's independent auditors have issued a
going concern opinion since these issues raise substantial doubt as to the
Company's ability to continue as a going concern (See page F-1).


Results of Operations

Year ended September 30, 2002 compared to September 30, 2001:
-------------------------------------------------------------

Revenues increased slightly to $1,593,052 from $1,588,970 but cost of sales
increased 9.8% from $924,958 to $1,016,041 as a result of an increase in total
customer service costs for installed units in the field and materials costs of
unit production. These increases resulted in a reduction in the Company's gross
margin from 41.8% to 36.2%. The Company recently enacted a price increase for
its products as a means of improving its gross margin. However, the Company is
reliant on its vendors and it may not be able to offset price increases of its
materials with price increases passed on to its customers.

Selling, general and administrative expenses increased $35,121 or 5.0%. This
increase is primarily the result of an increase in professional fees for
business planning and consulting, investment banking, and legal services related
to the Company's efforts to maintain growth through internal development and/or
acquisitions. During the year ended September 30, 2002, the Company discontinued
its pursuit of an acquisition and this is expected to result in a reduction in
the above noted professional fees in 2003.

Research and development declined $20,786 due to the Company limiting its
ongoing projects as a result of the Company's capital constraints. The Company
expects to continue its research and development but is substantially restricted
due to its capital position. The Company, however, believes it must continue to
invest in research and development to add products to its revenue base and
innovate existing products in order to grow and reach profitability.

Interest expense increased $16,633 due to an increase in the average outstanding
balance of interest bearing debt. This was caused by the conversion of accounts
payable to interest bearing notes payable at the beginning of the year.

Year ended September 30, 2001 compared to September 30, 2000:
-------------------------------------------------------------

Revenues increased by 146% to $1,588,970 primarily as the result of increased
unit sales. Both the RS 3000 Blood Irradiator and the RS 2000 Biological
Irradiator showed increased unit sales during the year. Cost of Sales increased
by 135% and the Company experienced a slight improvement in its gross margin to
41% from 39% attributed to a slight product price increase during 2001.

                                        5
<PAGE>

The Company's Selling, General and Administrative expenses increased 80% or
$317,916. Approximately $244,000 of this is attributed to an increase in payroll
and support costs related to the addition of personnel to support a larger
operation based on increased sales, product offerings, and service requirements.
Additionally, sales commissions increased as a result of higher sales by
approximately $38,000 and office rent also rose approximately $23,000.

Research and Development expenses increased by $62,290. During 2001, the Company
developed the RS 1000 Imaging system and a high volume option for its RS 3000
Blood Irradiator. The increase in Research and Development is attributed
primarily to costs for outside services and materials related to these two
items. The effect on revenue from the RS 1000 is not expected to be felt until
the second quarter of the Company's 2002 fiscal year and the high-volume option
RS 3000 has already been sold during the first quarter of the Company's 2002
fiscal year. The Company expects R&D to be ongoing, limited to capital
availability and the expected imminence of positive impact on revenues. The
Company must continue to invest in R&D to add products to its revenue base in
order to maintain growth and gain profitability.

Issues and Uncertainties

The forward-looking statements included herein are based on current assumptions
that the Company will continue to develop, market, manufacture and ship products
on a timely basis, that competitive conditions within the Company's markets will
not change materially or adversely, that the Company will continue to identify
and satisfy customer needs for products and services, that the Company will be
able to retain and hire key personnel, that its equipment, processes,
capabilities and resources will remain competitive and compatible with the
current state of technology, that risks due to shifts in customer demand will be
minimized, and that there will be no material adverse change in the Company's
operations or business. Assumptions relating to the foregoing involve judgments
that are based on incomplete information and are subject to many factors that
may materially affect results.

Because of these and other factors affecting the Company's operating results,
past financial performance should not be considered an indicator of future
performance, and investors should not use historical trends to anticipate
results or trends in future periods. The following factors also may materially
affect results and therefore should be considered.

The Company generates all of its revenues from the RS 3000 and the RS 2000, the
vast majority being from the RS 3000. Although the Company has performed testing
and has refined these products, the Company's introduction and sale of the
products has been recent. Therefore, the Company has no significant historical
commercial performance data on the equipment. Should product performance issues
arise in the future which cannot be corrected by the Company, the Company's
operations would be detrimentally affected.

The Company primarily competes with a number of very large and well capitalized
competitors. Although the Company has successfully sold its products to
potential customers of the competitors, and the Company is confident of its
products' competitive advantages, there can be no assurance that these
competitors or others will not undertake steps to undermine the Company's sales
efforts or the Company's further penetration of the market through price
discounts, product enhancements, rebates or similar methods which could
drastically reduce or eliminate the sale of the Company's products. Because of
its competitors greater resources, the Company's marketing efforts may be far
less successful in comparison to its competitors'. The Company's competitors
have the resources and funding to advertise and promote their products that the
Company cannot match.

Although management anticipates an ongoing market for the use of radiation for
blood and blood products as well as for research purposes, there can be no
assurances that other breakthroughs, otherwise competitive technology, or blood
treatment may not be developed which would make the Company's products less
attractive or even obsolete. This could have a detrimental effect because these
are the only products of the Company.

                                        6
<PAGE>

There can be no assurance that the patent for the RS 3000 or other patents
applied for in the future will afford protection from material infringement or
that such patents will not be challenged. There also can be no assurance that
the technology will not infringe upon the patents of others. In the event that
any such infringement claim is successful, there can be no assurance that the
Company will be able to negotiate with the patent holder for a license, in which
case the Company could be prevented from utilizing the subject matter claimed by
such patent. In addition, there can be no assurance that the Company will be
able to redesign the products to avoid infringement. The inability to utilize
the subject matter of patents claimed by others, or to redesign the products to
avoid infringement, could have a material adverse effect on the business.

Any of the products may be subject to recall for unforeseen reasons. The medical
device industry has been characterized by significant malpractice litigation. As
a result, the Company faces a risk of exposure to product liability, errors and
omissions or other claims in the event that the use of the X-ray equipment,
components, accessories or related services or other future potential products
is alleged to have resulted in a false diagnosis or injury. There can be no
assurance that the Company will avoid significant liability. Any such claim
against the Company could adversely affect the business.

The Company's founder, Mr. Kirk is primarily responsible for the Company's
existing products, performance and technical characteristics. The Company
expects that additional products will be designed, developed, and/or produced
primarily in concert with Mr. Kirk. Therefore, any loss of Mr. Kirk's services
for any reason will have a significantly unfavorable effect on the Company. The
Company holds a $1.0 million key-man insurance policy on Mr. Kirk.

The Company has experienced substantial fluctuations in its annual and quarterly
operating results, and such fluctuations may continue in future periods. The
Company's operating results are affected by a number of factors, many of which
are beyond the Company's control. Factors contributing to fluctuations in the
Company's operating results include unforeseen design or manufacturing delays,
the inability to pass on cost overruns, the timing of expenditures in
anticipation of increased sales, and customer product delivery requirements. In
addition, the amount and timing of orders placed by customers may vary due to a
number of factors, including budget timing and impact, changes in strategy, and
variation in product demand attributable to, among other things, competitive
factors, and general economic conditions. Any one of these factors, or a
combination thereof, could adversely affect the Company's annual and quarterly
results of operations.

The Company's customers generally require short delivery cycles, and a
substantial portion of the Company's backlog is typically scheduled for delivery
within 90 days. Quarterly sales and operating results therefore depend in large
part on the volume and timing of orders received during or immediately prior to
the quarter and are difficult to forecast in advance. The short lead-time for
the Company's backlog also affects its ability to accurately project production
and inventory levels. In addition, a significant portion of the Company's
operating expenses is relatively fixed in nature and planned expenditures are
based in part on anticipated orders. Any inability to adjust spending quickly
enough to compensate for any revenue shortfall may magnify the adverse impact of
such revenue shortfall on the Company's results of operations.

The products of the Company require one or more components or integration
services that are ordered from, or which may be available from, only one source
or a limited number of sources. Delivery problems relating to components or
integration services purchased from any of the Company's suppliers could have a
material adverse impact on the financial performance of the Company. From time
to time, the Company's suppliers allocate capacity among their customers in
response to labor and/or material shortages. In some cases, these shortages will
substantially curtail production. While the Company has not experienced
sustained periods of shortages in the recent past, there can be no assurance
that shortages will not occur in the future. Any such shortages could have a
material adverse effect on the Company's operating results.

The level and timing of orders placed by customers vary due to the customers'
attempts to balance their cash flow, changes in customers' strategies, and
variations in demand for the customers' products. Due in part to these factors,
most of the Company's customers do not commit to firm orders for more than
several weeks in advance of requirements. The Company's inability to forecast
the level of customer orders with certainty makes it difficult to schedule
production and optimize utilization of its integrators, capacity. In the past,
the Company has been required to incur other marginal expenses in order to meet

                                        7
<PAGE>

the anticipated demands of its customers. From time to time, anticipated orders
from some of the Company's customers have failed to materialize and delivery
schedules have been deferred as a result of changes in a customer's business
needs, both of which have adversely affected the Company's operating results. On
other occasions, customers have required rapid increases in production that have
placed an excessive burden on the Company's resources. There can be no assurance
that the Company will not experience similar fluctuations in customer demand in
the future.

The Company's sales have varied significantly as customer demand for the
Company's products increases and decreases. The Company's future operating
results will depend on management's ability to manage periods of both growth and
downturn, to be able to hire, train and retain qualified employees, and to
forecast revenues and control expenses. Unexpected declines in revenues, without
corresponding and timely reductions in expenses, could have a material adverse
effect on the Company's business, results of operations, or financial condition.

The Company's continued growth and success depend to a significant extent on the
continued service of senior management and other key employees. Competition for
skilled business, product development, technical and other personnel is intense.
There can be no assurance that the Company will be successful in recruiting new
personnel and retaining existing personnel. The loss of one or more key
employees could have a material adverse effect on the growth of the Company.

The Company has a deficit and has been unable to raise capital sufficient to
have positive equity. Although the Company has been capable of operating with a
net stockholders' deficit, its ability to maintain its operations and raise
revenues through introduction of new products and entrance into additional
markets will be dependent on additional capital and a positive stockholder's
equity position. Without additional capital, the Company's ability to satisfy
existing vendors, add products, and enter other markets will be adversely
affected, which will limit the ability of the Company to maintain operations,
grow revenues and attain profitability.

The market price of the Company's Common Stock has experienced significant
fluctuations and may continue to fluctuate in the future. The market price of
the Common Stock may be significantly affected by factors such as changes in
requirements or demands for the Company's services, the announcement of new
products or product enhancements by the Company or its competitors,
technological innovations by the Company or its competitors, quarterly
variations in the Company's or its competitors' results of operations, changes
in prices of the Company's or its competitors' products and services, changes in
revenue and revenue growth rates of the Company, speculation in the press or
analyst community, and general market conditions or market conditions specific
to particular industries. The stock prices for many companies in the technology
sector have experienced wide fluctuations that often have been unrelated to
their operating performance. Such fluctuations may adversely affect the market
price of the Company's Common Stock.


Item 7.  Financial Statements

         TABLE OF CONTENTS                                                  Page

         Report of Independent Certified Public Accountants                 F-1

         Consolidated Balance Sheet                                         F-2

         Consolidated Statements of Operations                              F-3

         Consolidated Statement of Changes in Stockholders' Deficit         F-4

         Consolidated Statements of Cash Flows                              F-5

         Notes to Consolidated Financial Statements                         F-7

                                        8
<PAGE>

Item 8.  Changes In and Disagreements With Accountants on Accounting and
         Financial Disclosure.

None


                                    PART III

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

Directors and Executive Officers

         The following sets forth the names and ages of the officers and
directors. The term of the directors is annual and they serve until the
Company's next stockholder meeting.

Randol Kirk, 54. Mr. Randol Kirk is the founder of Rad Source and has served as
President and Chief Executive Officer of the Company since December 1998. Mr.
Kirk received his Bachelor of Arts from the University of Iowa and a Masters in
Business Administration from DePaul University. Mr. Kirk's professional career
as an entrepreneur in the healthcare and diagnostic imaging field has spanned
over twenty-five (25) years. Prior to founding Rad Source, Mr. Kirk was the
co-founder and President of Epsilon Medical Corporation ("Epsilon") from 1991 to
1995. Epsilon was a company that provided diagnostic evaluations for stroke
patients in skilled nursing facilities and used equipment designed by Mr. Kirk.
He sold the company to Integrated Health Services in 1995. In 1996 Mr. Kirk
founded Rad Source, Inc. to develop and sell safer, non-regulated radiation
application x-ray equipment as an alternative to nuclear equipment. From 1996 to
1999, Mr. Kirk's efforts were directed toward capital raising activities and
developing the Company's RS 2000 and RS 3000 irradiators.

William Hartman, 42. Mr. Hartman has been a Director of the Company since March
1999, and has been Executive Vice-President and Chief Financial Officer since
August 2000. Mr. Hartman has been employed by the Company since April 2000 to
provide strategic and financial consulting services. Previous thereto, he has
provided similar services to the Company and others, including services related
to business combinations, corporate finance, and business planning. From August
1998 to May 1999, Mr. Hartman was a senior manager for Neff Corporation, an NYSE
listed industrial equipment sales and leasing company, where he performed
corporate reporting, planning and financial analysis functions. From October
1996 to June 1998, Mr. Hartman served as a financial advisor to a holding
company for aviation investments, and from April 1998 to June 1998 served as CEO
of an affiliated U.S. Part 121 freight airline. Mr. Hartman is a CPA and holds a
BS in Accounting from Miami University as well as MBA and MAcc degrees from
Miami University. He began his career in 1984 with Price Waterhouse.

Richard Adams, 56. Mr. Adams has served as a Director of the Company since
December 24, 1998. Mr. Adams also performs marketing services for the Company.
He holds a B.A. from Michigan State University. Mr. Adams has had a long and
distinguished career in management in the healthcare and medical field, during
which, he co-founded Epsilon Medical Corporation with Mr. Kirk in 1991, as well
as aided in the development of the (D.I.A.) Scan Portable Fluoroscopy Unit. From
1978 to the present, Mr. Adams was the owner and President of LifeCare Imaging
International, Ltd, a fifteen (15) year old manufacturer of mobile medical
suites.

Adrian Kesala, 58. Mr. Kesala has been a director of the Company since December
24, 1998. Mr. Kesala served as the Senior Staff Radiologist at the
Columbus-Cuneo-Cabrini Medical Center in Chicago, Illinois from 1978 to 1985. He
also worked as an Assistant professor of Radiology at Northwestern University in
Chicago, Illinois from 1978 to 1990, and as the Director of Radiology at Swedish
Covenant Hospital in Chicago, Illinois from 1985 to 19,90. Presently, Mr. Kesala
is in the active practice of radiology at Resurrection Medical Center, Chicago,
Illinois, where he has been since 1991.

Robert Munson, 60. Robert Munson has served as a Director and provided marketing
services for the Company since December 24, 1998. Mr. Munson began his career
with Medical Supply Company ("MSCII) of Florida in 1965, where he rose to vice
President and eventually partner. After the sale of MSC, he was Vice President
of Sales and Marketing for Medical Resources International, which manufactured
and distributed medical gloves, from 1988 to 1991.

                                        9
<PAGE>

Item 10. Executive Compensation

The following tables and notes present, for the three fiscal years ended
September 30, 2002, the compensation paid by the Company to the Company's
executive officers.

Summary Compensation Table

<TABLE>
<CAPTION>
                                                          Restricted        Securities
                                                            Stock           Underlying
Name and Principal Position      Year      Salary($)       Award(s)       Optons/SARs(#)
---------------------------      ----      ---------      ----------      --------------

<S>                              <C>        <C>            <C>               <C>
Randol Kirk                      2002       109,600
President and CEO                2001       120,000                          90,000(1)
                                 2000       105,000

William Hartman,                 2002       101,200
Exec VP and CFO                  2001       108,000                          75,000(1)
                                 2000        54,000
</TABLE>


(1)      These options are vested and exercisable by the holder until December
         1, 2003 at an exercise price of $0.13.

Options/SAR Grants in Last Fiscal Year:

         There were no options to purchase stock granted during the fiscal year
ended September, 2002 to any person named in the Summary Compensation Table.

         The following table sets forth information as to the exercise of
options to purchase shares of common stock during the fiscal year ended
September 30, 2002 by each person named in the summary compensation table and
the unexercised options held as of the end of the 2002 fiscal year.


               Aggregated Option/SAR Exercises in Last Fiscal Year
                        and Fiscal Year End Option Values

<TABLE>
<CAPTION>
                                                     Number of Securities            Value of Unexercised
                                                    Underlying Unexercised               In-the-Money
                                                     Options at FY End(#)            Options at FY End($)
                     Shares
                   Acquired on       Value
Name               Exercise(#)    Realized($)    Exercisable    Unexercisable    Exercisable    Unexercisable
----               -----------    -----------    -----------    -------------    -----------    -------------

<S>                  <C>            <C>            <C>                <C>             <C>             <C>
Randol Kirk                                        90,000                             0               0

William Hartman      300,000        $16,000        75,000                             0               0
</TABLE>

2000 Stock Option Plan

         On November 6, 2000, the board of directors adopted the 2000 Stock
Option Plan. The plan made available 2,400,000 common stock purchase options for
our employees, officers, directors and consultants.

         Options issued under the plan may qualify as incentive stock options
under Section 422 of the Internal Revenue Code of 1986, as amended.

         As of December 31, 2002 we have issued 630,000 options under the 2000
Stock Option Plan.

                                       10
<PAGE>

Additional Stock Options

         No additional options were granted to officers or directors during
fiscal 2002.

Item 11. Security Ownership of Certain Beneficial owners and Management

The table below sets forth information with respect to the beneficial ownership
of the common stock by (a) each person known by us to be the beneficial owner of
five percent or more of the outstanding common stock, and (b) all executive
officers and directors both individually and as a group, as of December 31,
2002. Unless otherwise indicated, the Company believes that the beneficial owner
has sole voting and investment power over such shares.

Security Ownership of Certain Beneficial Owners:

                                                   Number of
                                                   Shares          Percentage
                    Name and Address of            Beneficially    Ownership of
Title of Class      Beneficial Owner               Owned           Class
--------------      -------------------            ------------    ------------

Common Stock        Richard Adams (1)                  505,002         5.48%
                    20283 State Rd. 7, Ste. 107
                    Boca Raton, FL 33498

Common Stock        William Hartman (2)              1,029,999        11.12%
                    20283 State Rd. 7, Ste. 107
                    Boca Raton, FL 33498

Common Stock        Adrian Kesala (1)                  863,334         9.37%
                    20283 State Rd. 7, Ste. 107
                    Boca Raton, FL 33498

Common Stock        Randol Kirk (3)                  1,833,354        19.77%
                    20283 State Rd. 7, Ste. 107
                    Boca Raton, FL 33498

Common Stock        Robert Munson (1)                  540,288         5.86%
                    20283 State Rd. 7, Ste. 107
                    Boca Raton, FL 33498

                                       11
<PAGE>

Security Ownership of Management:

                                                   Number of
                                                   Shares          Percentage
                    Name and Address of            Beneficially    Ownership of
Title of Class      Beneficial Owner               Owned           Class
--------------      -------------------            ------------    ------------

Common Stock        Richard Adams (1)                  505,002         5.48%
                    20283 State Rd. 7, Ste. 107
                    Boca Raton, FL 33498

Common Stock        William Hartman (2)              1,029,999        11.12%
                    20283 State Rd. 7, Ste. 107
                    Boca Raton, FL 33498

Common Stock        Adrian Kesala (1)                  863,334         9.37%
                    20283 State Rd. 7, Ste. 107
                    Boca Raton, FL 33498

Common Stock        Randol Kirk (3)                  1,833,354        19.77%
                    20283 State Rd. 7, Ste. 107
                    Boca Raton, FL 33498

Common Stock        Robert Munson (1)                  540,288         5.86%
                    20283 State Rd. 7, Ste. 107
                    Boca Raton, FL 33498

All officers and directors as a group                4,771,977        50.55%

   (1)   Includes 30,000 options immediately exercisable at an exercise price of
         $0.13 expiring December 1, 2003.
   (2)   Includes 75,000 options immediately exercisable at an exercise price of
         $0.13 expiring December 1, 2003.
   (3)   Includes 90,000 options immediately exercisable at an exercise price of
         $0.13 expiring December 1, 2003.

Beneficial Ownership Reporting Compliance

         Section 16(a) of the Exchange Act requires our directors and executive
officers, and persons who own more than ten percent (10%) of a registered class
of our equity securities, to file with the Securities and Exchange Commission
initial reports of ownership and reports of changes in their ownership of common
stock and other equity securities of Rad Source Technologies, Inc. Officers,
directors and greater than ten percent (10%) stockholders are required by
regulation to furnish us with copies of all Section 16(a) forms they file.

         To our knowledge, based solely on a review of the copies of such
reports furnished to us during the fiscal year ended September 30, 2002, all
Section 16(a) filing requirements applicable to our officers, directors and
greater than ten percent (10%) beneficial owners were completed and timely
filed.

Change in Control

There are no arrangements, which may result in a change in control of the
Company.


Item 12. Certain Relationships and Related Transactions

One of the Company's vendors, Livingston Products, Inc. is the owner of
approximately 250,000 shares of the Company's common stock. As of September 30,
2002, the Company had accounts payable and notes payable balances to Livingston
Products, Inc. totaling approximately $82,000.

                                       12
<PAGE>

Item 13. Exhibits and Reports on Form 8-K

(a) EXHIBIT INDEX

Exhibit Description

2.1      Share Exchange Agreement (incorporated by reference to Rad Source
            Technologies, Inc. Form 10SB, Amendment 1,Exhibit 2 filed November
            16, 1999.)

3.1      Articles of Incorporation (incorporated by reference to Rad Source
            Technologies, Inc. Form 10SB, Amendment 1, Exhibit 3.1 filed
            November 16, 1999.)

3.2      Bylaws

4        Specimen Share Certificate (incorporated by reference to Rad Source
            Technologies, Inc. Form 10SB, Amendment 1, Exhibit 4 filed November
            16, 1999.)

10.5     2000 Stock Option Plan (incorporated by reference to Rad Source
            Technologies, Inc. Form 10-KSB, Exhibit 10.5 filed December 29,
            2000.)

21       List of Subsidiaries of Rad Source Technologies, Inc. (incorporated by
            reference to Rad Source Technologies, Inc. Form 10SB, Amendment 1,
            Exhibit 21 filed November 16, 1999.)

99.1     Certification

(b) Reports on Form 8K

         None


Item 14. Controls and Procedures.

The Company maintains disclosure controls and procedures that are designed to
ensure that information required to be disclosed in the Company's Exchange Act
reports is recorded, processed, summarized, and reported within the time periods
specified in the SEC's rules and forms, and that such information is accumulated
and communicated to the Company's management, including its Principal Executive
Officer and Principal Financial Officer, to allow timely decisions regarding
required disclosure. Management necessarily applied its judgment in assessing
the costs and benefits of such controls and procedures which, by their nature,
can provide only reasonable assurance regarding management's control objectives.

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

                                       13
<PAGE>

                                   SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.

                                      RAD SOURCE TECHNOLOGIES INC.



Dated:   January 10, 2003             /s/ RANDOL KIRK
         ----------------             ------------------------------------------
                                      Randol Kirk, Chief Executive officer



Dated:   January 10, 2003             /s/ WILLIAM HARTMAN
         ----------------             ------------------------------------------
                                      William Hartman, Chief Financial Officer


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


Dated:   January 10, 2003             /s/ RANDOL KIRK
                                      ------------------------------------------
                                      Randol Kirk, Director,
                                      Principal Executive Officer


Dated:   January 10, 2003             /s/ WILLIAM HARTMAN
                                      ------------------------------------------
                                      William Hartman, Director,
                                      Principal Financial and Accounting Officer


Dated:   January 10, 2003             /s/ ROBERT MUNSON
                                      ------------------------------------------
                                      Robert Munson, Director


                                       14
<PAGE>

                          FORM OF OFFICER'S CERTIFICATE
                             PURSUANT TO SECTION 302
                             -----------------------

     The undersigned Chief Executive Officer of Rad Source Technologies, Inc.
hereby certifies that:

          1.   he has reviewed the report;

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

          3.   based on his knowledge, the financial statements, and other
financial information included in the report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
issuer as of, and for, the periods presented in the report;

          4.   he and the other certifying officers:

               a.   are responsible for establishing and maintaining "disclosure
controls and procedures" (a newly-defined term reflecting the concept of
controls and procedures related to disclosure embodied in Section 302(a)(4) of
the Act) for the issuer;

               b.   have designed such disclosure controls and procedures to
ensure that material information is made known to them, particularly during the
period in which the periodic report is being prepared;

               c.   have evaluated the effectiveness of the issuer's disclosure
controls and procedures as of a date within 90 days prior to the filing date of
the report; and

               d.   have presented in the report their conclusions about the
effectiveness of the disclosure controls and procedures based on the required
evaluation as of that date;

          5.   he and the other certifying officers have disclosed to the
issuer's auditors and to the audit committee of the board of directors (or
persons fulfilling the equivalent function):

               a.   all significant deficiencies in the design or operation of
internal controls (a pre-existing term relating to internal controls regarding
financial reporting) which could adversely affect the issuer's ability to
record, process, summarize and report financial data and have identified for the
issuer's auditors any material weaknesses in internal controls; and

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

          6.   he and the other certifying officers have indicated in the report
whether or not there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date
of their evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.



               /s/ RANDOL KIRK                                   January 8, 2003
               ------------------------------------
               Randol Kirk, Chief Executive Officer

                                       15
<PAGE>

                          FORM OF OFFICER'S CERTIFICATE
                             PURSUANT TO SECTION 302
                             -----------------------

     The undersigned Chief Financial Officer of Rad Source Technologies, Inc.
hereby certifies that:

          1.   he has reviewed the report;

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

          3.   based on his knowledge, the financial statements, and other
financial information included in the report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
issuer as of, and for, the periods presented in the report;

          4.   he and the other certifying officers:

               a.   are responsible for establishing and maintaining "disclosure
controls and procedures" (a newly-defined term reflecting the concept of
controls and procedures related to disclosure embodied in Section 302(a)(4) of
the Act) for the issuer;

               b.   have designed such disclosure controls and procedures to
ensure that material information is made known to them, particularly during the
period in which the periodic report is being prepared;

               c.   have evaluated the effectiveness of the issuer's disclosure
controls and procedures as of a date within 90 days prior to the filing date of
the report; and

               d.   have presented in the report their conclusions about the
effectiveness of the disclosure controls and procedures based on the required
evaluation as of that date;

          5.   he and the other certifying officers have disclosed to the
issuer's auditors and to the audit committee of the board of directors (or
persons fulfilling the equivalent function):

               a.   all significant deficiencies in the design or operation of
internal controls (a pre-existing term relating to internal controls regarding
financial reporting) which could adversely affect the issuer's ability to
record, process, summarize and report financial data and have identified for the
issuer's auditors any material weaknesses in internal controls; and

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

          6.   he and the other certifying officers have indicated in the report
whether or not there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date
of their evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.



               /s/ WILLIAM HARTMAN                               January 8, 2003
               ----------------------------------------
               William Hartman, Chief Financial Officer

                                       16
<PAGE>

                  RAD SOURCE TECHNOLOGIES, INC. AND SUBSIDIARY
                        CONSOLIDATED FINANCIAL STATEMENTS



                                TABLE OF CONTENTS



                                                                            Page
                                                                            ----

Report of Independent Certified Public Accountants                          F-1

Consolidated Balance Sheet                                                  F-2

Consolidated Statements of Operations                                       F-3

Consolidated Statement of Changes in Stockholders' Deficit                  F-4

Consolidated Statements of Cash Flows                                       F-5

Notes to Consolidated Financial Statements                                  F-7
<PAGE>

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS



The Board of Directors
Rad Source Technologies, Inc. and subsidiary

We have audited the consolidated balance sheet of Rad Source Technologies, Inc.
and subsidiary, as of September 30, 2002, and the related consolidated
statements of operations, changes in stockholders' deficit, and cash flows for
the years ended September 30, 2002 and 2001. 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 audits 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 consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated 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 financial position of Rad Source
Technologies, Inc. and subsidiary, as of September 30, 2002, and the results of
their operations and cash flows for the years ended September 30, 2002 and 2001,
in conformity with accounting principles generally accepted in the United States
of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 3 to the
consolidated financial statements, the Company has suffered losses from
operations and has a net capital deficiency that raises substantial doubt about
its ability to continue as a going concern. Management's plans in regard to
these matters are also described in Note 3. The consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.


                                       Sweeney, Gates & Co.


December 13, 2002
Fort Lauderdale, Florida

                                       F-1
<PAGE>

                  RAD SOURCE TECHNOLOGIES, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEET
                               SEPTEMBER 30, 2002


ASSETS

Current assets:
   Cash and cash equivalents                                        $     2,046
   Accounts receivable                                                      720
   Inventories                                                          167,083
   Prepaid expenses                                                       6,476
                                                                    -----------

      Total current assets                                              176,325

Property and equipment, less accumulated
   depreciation of $10,350                                                7,594

Other assets                                                              6,211
                                                                    -----------

                                                                    $   190,130
                                                                    ===========

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
   Note payable                                                     $    74,874
   Note payable - stockholders                                           88,513
   Accounts payable                                                     374,170
   Accrued expenses                                                      89,612
   Accounts payable - stockholders                                       16,876
   Unearned revenue                                                      53,708
                                                                    -----------

      Total current liabilities                                         697,753
                                                                    -----------

Stockholders' deficit:
   Common stock, par value $.001; 150,000,000 shares authorized;
      9,064,397 issued and outstanding                                    9,064
   Additional paid-in capital                                         4,628,069
   Accumulated deficit                                               (5,144,756)
                                                                    -----------

      Total stockholders' deficit                                      (507,623)
                                                                    -----------

                                                                    $   190,130
                                                                    ===========


              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                       F-2
<PAGE>

                  RAD SOURCE TECHNOLOGIES, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED SEPTEMBER 30, 2002 AND 2001


                                                       2002             2001
                                                   -----------      -----------

Sales                                              $ 1,593,052      $ 1,588,970
Cost of sales                                        1,016,041          924,958
                                                   -----------      -----------

   Gross profit                                        577,011          664,012
                                                   -----------      -----------

Expenses:
   Selling, general and administrative                 742,565          707,444
   Research and development                             71,636           92,422
                                                   -----------      -----------

      Total expenses                                   814,201          799,866
                                                   -----------      -----------

Loss from operations                                  (237,190)        (135,854)
                                                   -----------      -----------

Other income (expense):
   Interest expense                                    (18,531)          (1,898)
                                                   -----------      -----------

      Total other income (expense)                     (18,531)          (1,898)
                                                   -----------      -----------

Net loss                                           $  (255,721)     $  (137,752)
                                                   ===========      ===========

Loss per share - basic and diluted                 $     (0.03)     $     (0.02)
                                                   ===========      ===========

Weighted average shares outstanding                  8,662,338        7,568,330
                                                   ===========      ===========


              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                       F-3
<PAGE>

<TABLE>
<CAPTION>
                              RAD SOURCE TECHNOLOGIES, INC. AND SUBSIDIARY
                       CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
                             FOR THE YEARS ENDED SEPTEMBER 30, 2002 AND 2001


                                            Common stock         Additional
                                     -------------------------     paid-in     Accumulated
                                        Shares        Amount       capital       deficit        Total
                                     -----------   -----------   -----------   -----------   -----------

<S>                                    <C>         <C>           <C>           <C>           <C>
Balance, October 1, 2000               7,230,111   $     7,230   $ 4,409,832   $(4,751,283)  $  (334,221)

Sale of common stock                     405,000           405        49,595            --        50,000

Stock options issued for services             --            --        14,606            --        14,606

Common stock issued for services         150,000           150         7,350            --         7,500

Net loss                                      --            --            --      (137,752)     (137,752)
                                     -----------   -----------   -----------   -----------   -----------

Balance, September 30, 2001            7,785,111         7,785     4,481,383    (4,889,035)     (399,867)

Sale of common stock                     100,000           100        14,900            --        15,000

Exercise of stock options                764,286           764        50,736            --        51,500

Common stock issued for services         415,000           415        49,050            --        49,465

Stock warrants issued for services            --            --        20,474            --        20,474

Stock options issued for services             --            --        11,526            --        11,526

Net loss                                      --            --            --      (255,721)     (255,721)
                                     -----------   -----------   -----------   -----------   -----------

Balance, September 30, 2002            9,064,397   $     9,064   $ 4,628,069   $(5,144,756)  $  (507,623)
                                     ===========   ===========   ===========   ===========   ===========
</TABLE>


              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                       F-4
<PAGE>

                       RAD SOURCE TECHNOLOGIES, INC. AND SUBSIDIARY
                           CONSOLIDATED STATEMENTS OF CASH FLOWS
                      FOR THE YEARS ENDED SEPTEMBER 30, 2002 AND 2001


<TABLE>
<CAPTION>
                                                                        2002         2001
                                                                     ---------    ---------

<S>                                                                  <C>          <C>
Cash flows from operating activities:
  Net loss                                                           $(255,721)   $(137,752)
  Depreciation                                                           4,705        4,561
  Issuance of stock, stock options and stock warrants for services      81,465       22,106
  Adjustments to reconcile net loss to net cash
    used in operating activities:
  Change in assets and liabilities:
    Decrease (increase) in:
      Accounts receivable                                               23,280       35,246
      Advances to stockholder                                               --      (10,256)
      Prepaid expenses                                                  44,103      (35,011)
      Inventories                                                      (28,444)    (105,725)
      Other assets                                                          --       (3,781)
    Increase (decrease) in:
      Accounts payable                                                  59,505       55,547
      Payable to related party                                        (105,930)      50,136
      Accrued expenses                                                 (21,620)      (2,914)
      Unearned revenue                                                  37,768       15,940
      Customer deposits                                                (22,000)      22,000
                                                                     ---------    ---------

        Net cash used by operating activities                         (182,889)     (89,903)
                                                                     ---------    ---------

Cash flows from investing activities:
      Purchase of property and equipment                                    --      (10,569)
                                                                     ---------    ---------

        Net cash used by investing activities                        $      --    $ (10,569)
                                                                     ---------    ---------
</TABLE>



(Continued)


              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                       F-5
<PAGE>

                       RAD SOURCE TECHNOLOGIES, INC. AND SUBSIDIARY
                           CONSOLIDATED STATEMENTS OF CASH FLOWS
                      FOR THE YEARS ENDED SEPTEMBER 30, 2002 AND 2001


<TABLE>
<CAPTION>
                                                                        2002         2001
                                                                     ---------    ---------

<S>                                                                  <C>          <C>
Cash flows from financing activities:
      Sale of common stock                                           $  15,000    $  50,000
      Exercise of stock options                                         51,500           --
      Proceeds from note payable                                       160,000           --
      Payments on note payable                                         (95,126)          --
      Proceeds from note payable to related party                      121,500       20,000
      Payments on note payable to related party                        (84,787)      (5,000)
                                                                     ---------    ---------

        Net cash provided by financing activities                      168,087       65,000
                                                                     ---------    ---------

        Net decrease in cash                                           (14,802)     (35,472)

Cash, beginning of period                                               16,848       52,320
                                                                     ---------    ---------

Cash, end of period                                                  $   2,046    $  16,848
                                                                     =========    =========

Supplementary disclosure of cash flow information:
  Cash paid for interest                                             $  16,615    $      --
                                                                     =========    =========

  Income taxes paid during the year                                  $      --    $      --
                                                                     =========    =========

Schedule of non-cash investing and financing activities:
                                                                     =========    =========
  Issuance of stock, stock options and stock warrants for services   $  81,465    $  22,106
                                                                     =========    =========
</TABLE>


              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                       F-6
<PAGE>

                  RAD SOURCE TECHNOLOGIES, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.       THE COMPANY AND BASIS OF PRESENTATION

Rad Source Technologies, Inc. was incorporated in the State of Florida on July
2, 1990. Its wholly-owned subsidiary Rad Source, Inc., is inactive.

The primary business of the Company is developing, producing and selling
non-radioactive irradiation products in the United States.

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation - The consolidated financial statements include the
accounts of the Company and Rad Source, Inc. All intercompany accounts and
transactions have been eliminated.

Cash and cash equivalents - The Company considers all unrestricted deposits and
highly liquid investments, readily convertible to known amounts, with an
original maturity of three months or less, to be cash equivalents.

Accounts receivable - The Company considers accounts receivable to be fully
collectible; accordingly, no allowance for doubtful accounts is required. If an
amount becomes uncollectible, an expense is charged to operations.

Inventories - Inventories are valued at the lower of cost or market and consist
of component parts held by subcontractors.

Property and equipment - Property and equipment are stated at cost. Major
renewals and improvements are capitalized, while maintenance and repairs are
expensed when incurred. The cost and accumulated depreciation for equipment
sold, retired, or otherwise disposed of are relieved from the accounts, and
resulting gains or losses are reflected in income. Depreciation is provided over
the estimated useful lives of the respective assets using the straight-line
method.

Impairment of long-lived assets - The Company evaluates the recoverability of
its property and equipment and other assets in accordance with Statement of
Financial Accounting Standards Board No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" ("SFAS 144"). SFAS 144 requires recognition of
impairment of long-lived assets in the event the net book value of such assets
exceeds the estimated future undiscounted cash flows attributable to such assets
or the business to which such assets relate. SFAS 144 excludes goodwill and
intangible assets. When an asset exceeds its expected operating cash flow, it is
considered to be impaired and is written down to fair value, which is determined
based on either discounted future cash flows or appraised values. The provisions
of SFAS 144 are effective for financial statements issued for fiscal years
beginning after December 15, 2001 with early application encouraged. The Company
adopted the statement for the year ending September 30, 2001. No impairments
were recognized during the years ended September 30, 2002 and 2001.

                                       F-7
<PAGE>

                  RAD SOURCE TECHNOLOGIES, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Unearned revenue - If a customer purchases an additional year of warranty, the
amount is recorded as unearned revenue, which is amortized ratably over 12
months.

Revenue recognition - Revenue is recognized when the product is shipped, title
and risk transfers to the customer and collection of the resulting receivable is
reasonably assured.

Cost of sales - The Company purchases the components and subcontracts the
integration and assembly of its products. Cost of sales includes materials,
supplies, assembly, freight and warranty expense.

Advertising costs - Advertising costs are charged to operations as incurred.
Advertising expense for the years ended September 30, 2002 and 2001 was $8,098
and $18,108, respectively.

Research and development expenses - Research and development expenses are
charged to operations as incurred.

Income taxes - The Company accounts for income taxes on the asset and liability
approach. Deferred income tax assets and liabilities are computed for the
difference between the financial statement and tax bases 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. A valuation allowance is
recognized if, based on the weight of available evidence, it is more likely than
not that some portion or all of a deferred tax asset will not be recognized.
Income tax expense or benefit is the tax payable or refundable for the period,
plus or minus the change during the period in deferred tax assets and
liabilities.

Earnings per share - Basic earnings per share is computed by dividing income
(loss) available to common stockholders by the weighted-average number of common
shares outstanding for the period. Diluted earnings per share considers the
potential dilution that could occur if securities or other contracts to issue
common stock were exercised or resulted in the issuance of common stock. Options
and warrants totaling 910,000 and 2,310,000 for the years ended September 30,
2002 and 2001, respectively, were not included in the computation of net loss
per share because the effect of inclusion would be anti-dilutive. All prior
period earnings per share data has been restated to reflect a 3-for-1 stock
split declared on October 1, 2001 (Note 6).

Use of estimates - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amount of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements, and the reported amount of
revenue and expenses during the reporting period. Actual results could differ
from those estimated.

                                       F-8
<PAGE>

                  RAD SOURCE TECHNOLOGIES, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Fair value of financial instruments - The fair value of the Company's financial
instruments approximate their carrying value.

Recent accounting pronouncements - In June 2001, the FASB issued Statement of
Financial Accounting Standards No. 141, "Business Combinations" ("SFAS 141"),
which establishes standards for reporting business combinations effective after
June 30, 2001 and supercedes APB Opinion 16, "Business Combinations" and SFAS
38, "Accounting for Preacquisition Contingencies of Purchased Enterprises". SFAS
141 requires that all business combinations be accounted for as purchase
transactions.

In June 2001, the FASB issued Statement of Financial Accounting Standards No.
142, "Goodwill and Other Intangible Assets" ("SFAS 142"), which establishes
standards for financial accounting and reporting for intangible assets acquired
individually or with a group of other assets and for the reporting of goodwill
and other intangible assets acquired in a business acquisition subsequent to
initial accounting under SFAS 142. SFAS 142 supercedes APB Opinion No. 17,
"Intangible Assets" and related interpretations. SFAS 142 is effective for
fiscal years beginning after December 15, 2001. The Company will adopt SFAS 142
for its fiscal year commencing October 1, 2002.

In June 2001, the FASB issued Statement of Financial Accounting Standards No.
143, " Accounting for Asset Retirement Obligations" ("SFAS No. 143") which
establishes standards of accounting for asset retirement obligations arising
from the acquisition, construction, or development and/or the normal operation
of a long-lived asset. SFAS is effective for fiscal years beginning after June
15, 2002.

In April of 2002, Statement of Financial Accounting Standards No. 145 ("SFAS
145") was issued, which rescinded SFAS Statements No. 4, 44 and 64, amended No.
13 and contained technical corrections. As a result of SFAS 145, gains and
losses from extinguishments of debt will be classified as extraordinary items
only if they meet the criteria in APB Opinion No. 30, that they are unusual and
infrequent and not part of an entity's recurring operations. The Company will
adopt SFAS 145 on October 1, 2002.

In June of 2002, Statement of Financial Accounting Standards No. 146 ("SFAS
146"), "Accounting for Costs Associated with Exit or Disposal Activities" was
issued to address these costs and to replace Emerging Issues Task Force Issue
No. 94-3. This Statement requires that a liability for a cost associated with an
exit or disposal activity be recognized and measured initially at fair value
only when the liability is incurred. The provisions of SFAS 146 are effective
for exit or disposal activities that are initiated after December 31, 2002, with
early application encouraged. The Company will adopt SFAS 146 on October 1,
2002.

The Company does not believe that adoption of the Financial Accounting Standards
Board pronouncements described above will have a material efect on its
consolidated financial statements.

                                       F-9
<PAGE>

                  RAD SOURCE TECHNOLOGIES, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


3.       UNCERTAINTY - GOING CONCERN

The Company's continued existence is dependent upon its ability to resolve its
liquidity problems, principally by obtaining equity, increasing sales and
achieving profitable operations. While undertaking the above, the Company must
continue to operate on cash flow generated from operations and loans from
officers and stockholders, if necessary. The Company generated losses of
$255,721 and $137,752 during 2002 and 2001, respectively, and has a net
deficiency in equity of $507,623 and a net working capital deficiency of
$521,428 as of September 30, 2002. These factors raise substantial doubt about
the Company's ability to continue as a going concern.

Management's plans in regard to this matter are to create additional revenue
opportunities by adding products and increase sales of its existing product line
in an effort to generate positive cash flow. Additionally, the Company must
raise equity either directly or through the conversion of existing debt, and
must continue to rely on vendors and service providers and management for
periodic payment deferrals and cost reductions to improve liquidity and sustain
operations. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

4.       RELATED PARTY TRANSACTIONS

At September 30, 2002 various directors and stockholders loaned the Company
$88,513 through unsecured demand notes bearing interest between 9% and 10% per
annum.

At September 30, 2002 the Company owed officers and stockholders $16,876, which
is included in accounts payable - stockholders.

5.        NOTES PAYABLE

Notes payable at September 30, 2002 consisted of the following:

         Unsecured note payable to supplier, payable in equal
           monthly installments of $8,634 plus interest on the
           unpaid balance at 9%. The note will mature in May
           2003.                                                       $  74,874
                                                                       =========


During the years ended September 30, 2002 and 2001, interest expense was $19,251
and $2,883, respectively.

                                      F-10
<PAGE>

                  RAD SOURCE TECHNOLOGIES, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


6.       ACCRUED EXPENSES

Accrued expenses at September 30, 2002 consisted of the following:

                  Accrued salaries                $  36,560
                  Customer deposit                   19,980
                  Accrued interest                    9,662
                  Warranty reserve                   16,410
                  Miscellaneous accruals              7,000
                                                  ---------

                                                  $  89,612
                                                  =========

7.        COMMON STOCK

On October 1, 2001, the Company authorized a three for one stock split of the
common stock. All references in the accompanying financial statements to the
number of common shares and per share amounts have been restated to reflect the
stock split.

On November 9, 2000, the Company sold 405,000 shares of restricted common stock
to an individual for $50,000.

On September 17, 2001, the Company issued 150,000 shares of common stock to an
investment banking firm for services. The Company recorded the shares at the
market value of $.05 per share or $7,500.

On October 5, 2001, the Company issued 400,000 shares of common stock to a
corporate image and growth consulting firm to provide services to the Company
over a nine-month period. The Company recorded the shares at the market value of
$.12 per share or $46,600.

On January 10, 2002, the Company issued 15,000 shares of restricted common stock
to an individual as payment for professional legal services. The Company
recorded the shares at the market value of $.19 per share or $2,865.

On February 12, 2002, 600,000 shares of restricted common stock were issued to
an officer and member of the board of directors upon conversion of stock options
and for a total conversion price of $40,000.

On March 29, 2002, the Company sold 100,000 shares of restricted common stock to
an individual for $15,000.

On June 30, 2002, 164,286 shares of restricted common stock were issued to a
member of the board of directors upon conversion of stock options for a total
conversion price of $11,500.

                                      F-11
<PAGE>

                  RAD SOURCE TECHNOLOGIES, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


8.       OPTIONS AND WARRANTS

The Company has a stock option plan under which employees and non-employee
directors may be granted options to purchase shares of the Company's common
stock at the fair market value at the date of grant. Options vest immediately
and expire in three years from the date of grant.

The following table summarizes stock options at September 30, 2002:

<TABLE>
<CAPTION>
                      Outstanding Stock Options              Exercisable Stock Options
                      -------------------------              -------------------------

                               Weighted                              Weighted
                               average      Weighted                 average      Weighted-
                              remaining     Average                 remaining      average
     Exercise                contractual    Exercise               contractual    exercise
   price range    Shares        life         Price      Shares        life         price
   -----------    ------     -----------    --------    ------     -----------    ---------

<S>               <C>           <C>         <C>         <C>           <C>         <C>
    $   0.13      480,000       1.17        $   0.13    510,000       1.17        $   0.13

    $   0.08      150,000       2.75        $   0.08    150,000       2.75        $   0.08
</TABLE>

The following table summarizes stock option activity for the year ended
September 30:

<TABLE>
<CAPTION>
                                                   2002                         2001
                                                   ----                         ----

                                                        Weighted                      Weighted
                                                         average                      average
                                                        exercise                     exercise
                                           Shares         price                        price
                                         ---------      --------                     --------

<S>                                      <C>            <C>           <C>            <C>
   Outstanding at beginning of year      2,310,000      $   0.09      1,800,000      $   0.07
   Granted                                 150,000          0.08        510,000          0.13
   Exercised                              (764,286)         0.07             --            --
   Expired                              (1,065,714)         0.07             --            --
                                         ---------                    ---------

   Outstanding at end of year              630,000      $   0.12      2,310,000      $   0.09
                                         =========                    =========

   Exercisable at end of year              630,000      $   0.12      2,310,000      $   0.09
                                         =========                    =========

   Weighted average fair value of
     options granted during the year                    $   0.08                     $   0.13
                                                        ========                     ========
</TABLE>

The Company has adopted SFAS No. 123, "Accounting for Stock Based Compensation."
As permitted by SFAS No. 123, the Company chose to apply APB Opinion No. 25,
"Accounting for Stock Issued to Employees" and related interpretations for stock
options issued to employees. Accordingly, no compensation cost was recognized
for options granted to employees.

                                      F-12
<PAGE>

                  RAD SOURCE TECHNOLOGIES, INC. AND SUBSIDIARY,
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


8.       OPTIONS AND WARRANTS (continued)

As required by SFAS 123, pro forma disclosures regarding net income and earnings
per share must be computed as if the Company had accounted for its employee
stock options under the fair value method. The fair value for these options was
estimated at the date of grant using the Black-Scholes option-pricing model with
the following assumptions used for grants in 2002 and 2001.

                                      For the year ended      For the year ended
                                      September 30, 2002      September 30, 2001
                                      ------------------      ------------------


         Risk free interest rate             5.00%                   6.42%
         Expected lives                         3                       3
         Expected volatility                 1.35                    1.35
         Expected dividend yield               --                      --

The Company's pro forma information under SFAS 123 for the years ended September
30, 2002 and 2001 were as follows:

<TABLE>
<CAPTION>
                                                 2002                        2001
                                                 ----                        ----
                                           As            Pro           As            Pro
                                        reported        forma       reported        forma
                                       ----------    ----------    ----------    ----------

<S>                                    <C>           <C>           <C>           <C>
         Net loss                      $ (255,721)   $ (255,721)   $ (137,752)   $ (182,630)
                                       ==========    ==========    ==========    ==========
         Net loss per share - basic
         and diluted                   $    (0.03)   $    (0.03)   $    (0.02)   $    (0.02)
                                       ==========    ==========    ==========    ==========
</TABLE>

In 2002, the Company issued 150,000 three year options (see below) and charged
operations during the same period. Therefore, the "as reported" and "pro-forma"
amounts are the same.

Other options and warrants issued

During the years ended September 30, 2002 and 2001, the Company granted options
and warrants to consultants. The Company charged to expense the fair value of
the instruments granted using the Black-Scholes option model.

On December 1, 2000, the Company issued 150,000 three-year stock options at an
exercise price of $.13 to consultants. The Company recorded a charge of $14,606.

On October 5, 2001, the Company issued 100,000 warrants to a corporate image and
growth consulting firm to provide related services to the Company over a
nine-month period. The warrants contain a five-year term and an exercise price
of $.50 per share. The Company recorded an expense of $8,999.

                                      F-13
<PAGE>

                  RAD SOURCE TECHNOLOGIES, INC. AND SUBSIDIARY,
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


8.       OPTIONS AND WARRANTS (continued)

Also, on October 5, 2001, the Company issued five-year warrants for the purchase
of 150,000 shares of the Company's common stock at an exercise price of $1.50
per share. These warrants were issued for business planning and capital
acquisition consulting services. The Company recorded a charge of $11,475.

On June 30, 2002, the Company issued 150,000 three-year stock options at an
exercise price of $.10 to an individual in exchange for assistance in technology
development. The Company recorded a charge of $11,526.

9.        INCOME TAXES

The Company had available at September 30, 2002, a net operating loss
carryforward for federal and state tax purposes of approximately $5,100,000 that
could be applied against taxable income in subsequent years through September
30, 2022. The tax effect of the net operating loss is approximately $1,919,000,
and a full valuation allowance has been recorded since realization is uncertain.

There were no significant differences for book and tax reporting purposes during
the years ended September 30, 2002 and 2001. Components of the Company's
deferred income taxes were as follows at September 30:

<TABLE>
<CAPTION>
                                                             2002           2001
                                                             ----           ----

<S>                                                      <C>            <C>
         Net operating loss carryforward                 $ 5,100,000    $ 4,880,000
                                                         ===========    ===========

         Net deferred tax asset                            1,919,000      1,836,000
         Less valuation allowance                         (1,919,000)    (1,836,000)
                                                         -----------    -----------

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


The net change in the valuation allowance for the years ended September 30, 2002
and 2001 was an increase of $83,000 and $49,000, respectively.

Reconciliation of the differences between income taxes computed at the federal
and state statutory tax rates and the provision for income taxes for the years
ended September 30, 2002 and 2001 was as follows:

<TABLE>
<CAPTION>
                                                             2002           2001
                                                             ----           ----

<S>                                                           <C>            <C>
         Income tax loss at federal statutory tax rate        (34.00)%       (34.00)%
         State taxes, net of federal benefit                   (3.63)%        (3.63)%
         Valuation allowance                                   37.63%         37.63%
                                                         -----------    -----------

         Provision for income taxes                               --%            --%
                                                         ===========    ===========
</TABLE>

                                      F-14
<PAGE>

                  RAD SOURCE TECHNOLOGIES, INC. AND SUBSIDIARY,
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


10.      COMMITMENTS AND CONTINGENCIES

The Company entered into a one-year lease for corporate office space, which
expires on January 31, 2003. Rent expense for the year ended September 30, 2002
was $38,726. The minimum future lease payments for fiscal year 2003 is $12,000.


                                      F-15