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, 2001

                          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 is contained in this form, and no disclosure will be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]

Issuer's revenues for its most recent fiscal year were $1,588,970

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 December 20, 2001 was
$603,872. At December 20, 2001, the issuer had 8,185,111 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                                                 4
Item 4.  Submission of Matters to a Vote of
         Security Holders                                                  4
                                     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                                              9

Item 8.  Changes In and Disagreements With Accountants on
         Accounting and Financial Disclosure                               10

                                    Part III

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
         Compliance with Section 16(a) of the Exchange Act                 10

Item 10. Executive Compensation                                            11

Item 11. Security Ownership of Certain Beneficial owners and Management    12

Item 12. Certain Relationships and Related Transactions                    14

Item 13. Exhibits and Reports on Form 8-K                                  14



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                  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 on July 2, 1990 as Computer
Vending, Inc. On December 24, 1998, the Company entered into an agreement with
Rad Source, Inc. (hereinafter "Rad Source"), a Florida corporation, and the
holders of 100% of their issued and outstanding shares, whereby the Company
acquired all of the outstanding shares of Rad Source in exchange for 2,278,266
newly issued shares of the Company. At the closing of the transaction, the
shareholders of Rad Source obtained control of the Company, and the Company
changed the name to Rad Source Technologies, Inc. The existing directors
and executive officers resigned and were replaced by designees of Rad Source,
which became the wholly owned subsidiary.

Rad Source was incorporated in the State of Florida in October of 1996 and has
been conducting research and developing products based on x-ray technology since
its inception.

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

                                       1

<PAGE>

"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 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 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 is 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
about 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
of the Company's equipment 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 - up to
7 times as much. 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, previously outlined. 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 first
production RS 1000 is expected to be completed in early 2002. This product is
designed for electronic component producers and assemblers to inspect items for
faults/imperfections. In addition, it is expected to have applications in
non-destructive testing used in the aerospace and automotive manufacturing
industries. The markets for this product are global with both domestic and
foreign competitors. The Company's entry into this market is based on the RS
1000's expected performance/cost advantage over similar equipment and the
ability to scale its key components for different applications (larger product
testing, higher resolution of image requirements, etc.).

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 raised serious concern with government
officials and security institutions as to how to combat the threat of biological
weapons materials conveyed through the mails. In fact, the current response to
this potential threat has been to apply high-dose irradiation, on a very limited
basis, to certain mail as a means to eliminate certain biological threats
including Anthrax (none of the Company's equipment has been used for this
purpose). Considering the recent events that lead to this, the potential market
for mail irradiation cannot be determined. However, the Company has been working

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<PAGE>

with a potential partner regarding the development of a non-radioactive source
irradiation device that can be utilized to irradiate mail. The Company believes
the planned device will deliver the radiation dose currently being applied to
U.S. mail on a limited basis. The Company is in negotiations to reach definitive
venture terms with the potential partner. Should these negotiations not be
satisfactorily resolved, it may result in the Company not further proceeding
with production of the device. No assurance can be provided that the Company
will be successful in marketing this product.

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 these components and their
integration. Although, there are various other qualified vendors and
integrators, the Company would anticipate time delays in shifting to alternate
sources. This could affect the Company adversely.

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
directly 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 these 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 effect the Company.

In the past two fiscal years, the Company has spent approximately $123,000 on
research and development. The Company's research and development costs are not
borne directly by its customers.

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 eight 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.

                                       3
<PAGE>

Item 3. Legal Proceedings

As of December 21, 2001 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.

                                    PART II

Item 5. Market for Common Equity and Related Stockholder Matters

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, 1999, and ending September 30,
2001:

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

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

               October 1, 1999     December 31, 1999      $0.625         $0.172
               January 1, 2000     March 31, 2000         $0.50          $0.172
               April 1, 2000 - June 30, 2000              $0.417         $0.135
               July 1, 2000 - September 30, 2000          $0.223         $0.063
               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

As of December 20, 2001 the bid price was $0.19.

The above 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 20, 2001 there were approximately 85 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.

Sale of Securities

In October 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. These are unregistered securities and the Company is
relying on the exemption provided under Section 4(2) of the Securities Act of
1933.

In September 2001, the Company issued 150,000 shares of the Company's common
stock to an investment banking firm for investment banking services. These are
unregistered securities and the Company is relying on the exemption provided
under Section 4(2) of the Securities Act of 1933.

In October 2001, the Company issued five year warrants for the purchase of
100,000 shares of the Company's common stock at an exercise price of $0.50 per
share to a corporate image consultant for related services. These are
unregistered securities and the Company is relying on the exemption provided
under Section 4(2) of the Securities Act of 1933.

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

                                       4
<PAGE>

Financial Condition

The Company's working capital deteriorated to a deficit of $418,377 from
$342,942 in 2000. This is primarily the result of funding the Company's
operating loss through increased accruals and payables. The Company has a
history of losses and a shareholder's deficit of $399,867. 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/or cost reductions, to
improve liquidity and sustain its operations. In an effort to expand its revenue
base, the Company expects to complete its first commercial RS 1000 digital
imaging product in January 2002. Additionally, the Company has retained
investment bankers in its efforts to secure the financing necessary to enable
the Company to continue its growth. The Company's backlog of product orders as
of December 20, 2001 grew to approximately $441,000 The Company has maintained
relationships with its primary vendors who continue to respond to the Company's
production requirements.

Over the next twelve months, the Company anticipates continuing growth and,
therefore, an increase in costs and operating expenses related to payroll,
additional sales and marketing efforts, and further product development.
Therefore, management expects there to be an ongoing need for capital over the
next twelve months.

Regarding the Company's satisfaction of these cash requirements over the next
twelve months, management believes it will meet these only if the Company is
successful in maintaining its sales growth, as well as utilizing other actions
(raising additional capital or deferring payments) to maintain its operations.
In the event sales growth stagnates, the Company is unable to raise capital, or
methods that were utilized by the Company to maintain necessary liquidity for
operations are no longer available, the effect on the Company would be adverse.

In November 2001, the Company entered into a purchase agreement to acquire an
industrial imaging company. There are significant conditions to closing this
acquisition including the completion of the potential acquisition's audit and
the ability to satisfactorily finance the acquisition, among others. No
assurances can be made these conditions will be met.

Because of the above noted issues 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, 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
42% from 39% attributed to a slight product price increase during 2001.

The Company's selling, general and administrative expenses increased 80% or
$309,916. 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 expense 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 research and development to be ongoing, limited
to capital availability. The Company must continue to invest in research and
development to add products to its revenue base in order to maintain growth and
gain profitability.

                                       5
<PAGE>

Year ended September 30, 2000 compared to September 30, 1999.

Revenues increased by 966% to $646,488 as the result of increased unit sales.
2000 was the Company's first full year of sales of its RS 3000 Blood Irradiator.
Cost of sales increased at a rate less than the sales increase (639%) due to the
fact that the Company provided a substantial discount to its first customer in
1999 and the discounts were discontinued during 2000.

Research and Development costs have decreased as the result of completing the
design and development of the RS 3000 and RS 2000, both of which were available
for commercial sale in 2000 and efforts in 2000 began to be more marketing
oriented. The Company continues to evaluate other products for development. This
expense is expected to continue and will vary, depending on managements
evaluation of potential products and projects. Research and development costs
fluctuate because of the Company's significant capital constraints.

Selling, general and administrative expenses grew 15% to $397,544 from $345,014.
This is the general result of increased unit sales and operations to support
growth that have contributed to additional employees and resultant payroll cost
increases, as well as related support cost increases.

There was no stock issued for services in 2000, as compared to an expense of
$3,567,161 in 1999.

The Company's interest expense decreased by $11,190, or 79% primarily as the
result of the decrease in average interest bearing debt from 1999 to 2000.

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. Since these are the only products of the Company,
this could have a detrimental effect.

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<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 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
the 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. Factors
contributing to fluctuations in the Company's operating results include
unforeseen design or manufacturing delays, price competition, functional
competition (other means of accomplishing the same or similar end result), 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. Annual sales and operating results therefore depend in large
part on the volume and timing of orders received during or immediately prior to
the year-end, which 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 customers orders with certainty makes it difficult to schedule

                                       7
<PAGE>

production and optimize utilization of its integrators capacity. 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 is in a deficit position and has been unable to raise capital
sufficient to provide a positive equity position. Although the Company has been
capable of operating with a net shareholders' 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 shareholder'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.

                                       8
<PAGE>

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


                                       9

<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.

Richard Adams, 55. Mr. Adams has served as a Director of the Company since
December 24, 1998. Mr. Adams also performs sales representative 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.
He also assisted 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.

William Hartman, 41. 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 services. Previous, he 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.

Adrian Kesala, 57. 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.

Randol Kirk, 53. 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
date, Mr. Kirk's efforts have been directed to capital raising activities and
developing the Company's RS 2000 and RS 3000 irradiators.

Robert Munson, 59. Robert Munson has served as Director of Marketing of the
Company since December 24, 1998. Mr. Munson began his career with Medical Supply
Company ("MSC") 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.

                                       10
<PAGE>

Item 10.  Executive Compensation

The following tables and notes present, for the three fiscal years ended
September 30, 2000, the compensation paid by the Company to the Company's
executive officers.

Summary Compensation Table

                                                      Restricted    Securities
                                                        Stock       Underlying
Name and Principal Position      Year     Salary($)    Award(s)   Optons/SARs(#)
---------------------------      ----     --------     -------    -------------
Randol Kirk (3)                  2001      120,000                   90,000(2)
President and CEO                2000      105,000
                                 1999       20,000                  300,000(1)

William Hartman,                 2001      108,000                   75,000(2)
Exec VP and CFO                  2000       54,000

(1)  These options are vested and exercisable by the holder until September 30,
     2002 at an exercise price of $0.07.
(2)  These options are vested and exercisable by the holder until December 1,
     2003 at an exercise price of $0.13.
(3)  Mr. Kirk has an employment agreement with the Company that expires
     September 15, 2002.

Options/SAR Grants in Last Fiscal Year:

       The following table sets forth information with respect to the grant of
options to purchase shares of common stock during the fiscal year ended
September, 2001 to each person named in the Summary Compensation Table.

                            Number of     % of Total
Name and Principal         Underlying      Options      Exercise     Expiration
Position                   Securities      Granted       Price         Date
------------------         ----------     ----------    --------     ----------

Randol Kirk                 90,000           18%         $0.13       12/1/2003
President and CEO

William Hartman,            75,000           15%         $0.13       12/1/2003
Exec Vice Pres. and CFO


         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, 2001 by each person named in the summary compensation table and
the unexercised options held as of the end of the 2001 fiscal year.

                                       11
<PAGE>
<TABLE>
<CAPTION>
                                Aggregated Option/SAR Exercises in Last Fiscal Year
                                         and Fiscal Year End Option Values

                                                         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                                            390,000
William Hartman                                        375,000
</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 20, 2001 we have issued 510,000 options under the 2000
Stock Option Plan.

Additional Stock Options

         On December 1, 2000, the Company issued options to purchase shares of
common stock to Mr. Richard Adams, Dr. Adrian Kesala, and Mr. Robert Munson.
Each of them received an option to purchase up to 30,000 shares. The option
exercise price is $0.13 and the option term is three years.

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 20,
2001. 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
Title of Class         Beneficial Owner         Owned             of Class
-----------------      -------------------      ------------      -----------
Common Stock           Richard Adams (1)         805,002            9.45%
                       20283 State Rd. 7,
                       Ste. 107
                       Boca Raton, FL 33498

Common Stock           William Hartman (2)     1,029,999           12.03%
                       20283 State Rd. 7,
                       Ste. 107
                       Boca Raton, FL 33498


                                       12
<PAGE>

                                                Number of
                                                Shares            Percentage
                        Name and Address of     Beneficially      Ownership
Title of Class          Beneficial Owner        Owned             of Class
-----------------       -------------------     ------------      -----------
Common Stock            Ken Kaiser               420,000            5.13%
                        126 Sohier Road
                        Beverly, MA 01915

Common Stock            Adrian Kesala (3)        863,334           10.14%
                        20283 State Rd. 7,
                        Ste. 107
                        Boca Raton, FL 33498

Common Stock            Randol Kirk (4)        2,133,354           24.88%
                        20283 State Rd. 7,
                        Ste. 107
                        Boca Raton, FL 33498

Common Stock            Robert Munson (5)        676,002            7.94%
                        20283 State Rd. 7,
                        Ste. 107
                        Boca Raton, FL 33498

Security Ownership of Management:

Common Stock            Richard Adams (1)        805,002            9.45%
                        20283 State Rd. 7,
                        Ste. 107
                        Boca Raton, FL 33498

Common Stock            William Hartman (2)    1,029,999           12.03%
                        20283 State Rd. 7,
                        Ste. 107
                        Boca Raton, FL 33498

Common Stock            Adrian Kesala (3)        863,334           10.14%
                        20283 State Rd. 7,
                        Ste. 107
                        Boca Raton, FL 33498

Common Stock            Randol Kirk (4)        2,133,354           24.88%
                        20283 State Rd. 7,
                        Ste. 107
                        Boca Raton, FL 33498

Common Stock            Robert Munson (5)        676,002            7.94%
                        20283 State Rd. 7,
                        Ste. 107
                        Boca Raton, FL 33498

All officers and directors as a group          5,507,691           55.41%

(1)  Includes 300,000 stock options immediately exercisable at an exercise price
     of $0.07 expiring September 30, 2002 and 30,000 options immediately
     exercisable at an exercise price of $0.13 expiring December 1, 2003.

(2)  Includes 300,000 stock options immediately exercisable at an exercise price
     of $0.07 expiring September 30, 2002 and 75,000 options immediately
     exercisable at an exercise price of $0.13 expiring December 1, 2003.

                                       13
<PAGE>

(3)  Includes 300,000 stock options immediately exercisable at an exercise price
     of $0.07 expiring September 30, 2002 and 30,000 options immediately
     exercisable at an exercise price of $0.13 expiring December 1, 2003.

(4)  Includes 300,000 stock options immediately exercisable at an exercise price
     of $0.07 expiring September 30, 2002 and 90,000 options immediately
     exercisable at an exercise price of $0.13 expiring December 1, 2003.

(5)  Includes 300,000 stock options immediately exercisable at an exercise price
     of $0.07 expiring September 30, 2002 and 30,000 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 Viragen (Europe). 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, 2001, 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,
2001, the Company's accounts payable due to Livingston Products, Inc. was
approximately $108,000.

Item 13.  Exhibits and Reports on Form 8-K

                                       14
<PAGE>


                                 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 (incorporated by reference to Rad Source Technologies, Inc.
          Form IOSB, Amendment 1, Exhibit 3.2 filed November 16, 1999.)

  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.)


                                       15
<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: December 28, 2001                /s/ Randol Kirk
       ----------------------           --------------------------------------
                                        Randol Kirk, Chief Executive officer



Dated: December 28, 2001                /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:         December 28, 2001               /s/ Richard Adams
                                               ---------------------------------
                                               Richard Adams, Director

                                                /s/ William Hartman
Dated:         December 28, 2001               ---------------------------------
                                               William Hartman, Director

                                                /s/ Adrian Kesala
Dated:         December 28, 2001               ---------------------------------
                                               Adrian Kesala, Director

                                                /s/ Randol Kirk
Dated:         December 28, 2001               ---------------------------------
                                               Randol Kirk, Director

                                                /s/ Robert Munson
Dated:         December 28, 2001               ---------------------------------
                                               Robert Munson, Director

                                       16
<PAGE>
                  RAD SOURCE TECHNOLOGIES, INC. AND SUBSIDIARY




 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, 2001, and the related consolidated
statements of operations, consolidated changes in stockholders' deficit, and
consolidated cash flows for the years ended September 30, 2001 and 2000. 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, 2001, and the results of
its operations and cash flows for the years ended September 30, 2001 and 2000,
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 3, 2001
Fort Lauderdale, Florida

                                      F-1


<PAGE>

                  RAD SOURCE TECHNOLOGIES, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEET
                               SEPTEMBER 30, 2001

 ASSETS

Current assets:
     Cash and cash equivalents                                      $    16,848
     Accounts receivable                                                 24,000
     Inventory                                                          138,639
     Prepaid expense                                                     50,579
                                                                    -----------

        Total current assets                                            230,066

Property and equipment, less accumulated
     depreciation of $5,645                                              12,299
Other assets                                                              6,211
                                                                    -----------

                                                                    $   248,576
                                                                    ===========

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
     Note payable                                                   $    10,000
     Accounts payable                                                   314,665
     Accrued expenses                                                   111,232
     Accounts payable - stockholders                                    122,806
     Notes payable to stockholders                                       51,800
     Unearned revenue                                                    15,940
     Customer deposits                                                   22,000
                                                                    -----------

        Total current liabilities                                       648,443
                                                                    -----------

Stockholders' deficit:
     Common stock, par value $.001; 150,000,000 shares authorized;
        7,785,111 issued and outstanding                                  7,785
     Additional paid-in capital                                       4,481,383
     Accumulated deficit                                             (4,889,035)
                                                                    -----------

        Total stockholders' deficit                                    (399,867)
                                                                    -----------

                                                                    $   248,576
                                                                    ===========

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, 2001 AND 2000


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


Sales                                              $ 1,588,970      $   646,488
Cost of sales                                          924,958          392,910
                                                   -----------      -----------

     Gross profit                                      664,012          253,578
                                                   -----------      -----------

Expenses:
     Selling, general and administrative               707,444          397,528
     Research and development                           92,422           30,132
                                                   -----------      -----------

        Total expenses                                 799,866          427,660
                                                   -----------      -----------

Loss from operations                                  (135,854)        (174,082)
                                                   -----------      -----------

Other income (expense):
     Interest income                                       985            3,911
     Interest expense                                   (2,883)          (2,930)
                                                   -----------      -----------

        Total other income (expense)                    (1,898)             981
                                                   -----------      -----------

Net loss                                           $  (137,752)     $  (173,101)
                                                   ===========      ===========

Earnings per share - basic and diluted             $     (0.02)     $     (0.02)
                                                   ===========      ===========

Weighted average shares outstanding                  7,568,330        7,230,120
                                                   ===========      ===========




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

                                      F-3

<PAGE>

                          RAD SOURCE TECHNOLOGIES, INC.
           CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
                 FOR THE YEARS ENDED SEPTEMBER 30, 2001 AND 2000

<TABLE>
<CAPTION>

                                                         Common stock                Additional
                                                   ----------------------------       paid-in         Accumulated
                                                     Shares           Amount           capital          deficit            Total
                                                   -----------      -----------      -----------      -----------       -----------
<S>                                                  <C>            <C>              <C>              <C>               <C>
Balance, September 30, 1999                          7,230,111      $     7,230      $ 4,409,832      $(4,578,182)      $  (161,120)

Net loss                                                    --               --               --         (173,101)         (173,101)
                                                   -----------      -----------      -----------      -----------       -----------

Balance, September 30, 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

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)
                                                   ===========      ===========      ===========      ===========       ===========
</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, 2001 AND 2000
<TABLE>
<CAPTION>

                                                                                        2001              2000
                                                                                     ---------         ---------
<S>                                                                                  <C>               <C>
 Cash flow from operating activities:
    Net loss                                                                         $(137,752)        $(173,101)
     Depreciation                                                                        4,561               504
     Issuance of stock options for services                                             14,606                --
     Issuance of stock for services                                                      7,500                --
     Adjustments to reconcile net loss to net cash
       used in operating activities:
     Change in assets and liabilities:
        Decrease (increase) in:
           Accounts receivable                                                          35,246           (14,453)
           Advances to stockholder                                                     (10,256)               --
           Prepaid expenses                                                            (35,011)              388
           Inventories                                                                (105,725)           88,389
           Long-term receivable                                                             --            28,087
           Other assets                                                                 (3,781)           (1,930)
        Increase (decrease) in:
           Accounts payable                                                             55,547            48,542
           Accounts payable - stockholders                                              50,136           (15,121)
           Accrued expenses                                                             (2,914)           61,879
           Unearned revenue                                                             15,940                --
           Customer deposits                                                            22,000                --
                                                                                     ---------         ---------

              Net cash provided (used) by operating activities                         (89,903)           23,184
                                                                                     ---------         ---------

 Cash flows from investing activities:
           Purchase of property and equipment                                          (10,569)           (3,908)
                                                                                     ---------         ---------

               Net cash used by investing activities                                 $ (10,569)        $  (3,908)
                                                                                     ---------         ---------
</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, 2001 AND 2000

<TABLE>
<CAPTION>



                                                                                        2001              2000
                                                                                     ---------         ---------
<S>                                                                                  <C>               <C>
 Cash flows from financing activities:
           Sale of common stock                                                      $  50,000         $      --
           Proceeds from note payable to stockholders                                   20,000             5,000
           Payments on note payable to stockholders                                     (5,000)               --
                                                                                     ---------         ---------

               Net cash provided by financing activities                                65,000             5,000
                                                                                     ---------         ---------

               Net increase (decrease) in cash                                         (35,472)           24,276

 Cash, beginning of period                                                              52,320            28,044
                                                                                     ---------         ---------

 Cash, end of period                                                                 $  16,848         $  52,320
                                                                                     =========         =========

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

     Income taxes paid during the year                                               $      --         $      --
                                                                                     =========         =========
</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 subsidiary Rad Source, Inc. is inactive.

The primary business of the Company is developing, producing and selling
non-radioactive irradiation products. Revenue is generated from the sale of
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 material 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 uncollectable, an expense is charged to operations.

Inventory - Inventory is valued at the lower of cost or market and consists of
component parts held by a subcontractor.

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.



                                       F-7


<PAGE>



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


2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

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") which replaces SFAS 121 which
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 intangible assets
relate. 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. SFAS 144 provides
updated guidance concerning the recognition and measurement of an impairment
loss for certain types of long-lived assets and also expands the scope of a
discontinued operation to include a component of an entity. 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, 2001 and 2000.

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 ships, 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, 2001 and 2000 were $18,108
and $22,481, respectively.

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

Income taxes - The Company accounts for income taxes on an asset and liability
approach to financial accounting. 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 the deferred asset will not be recognized.
Income tax expense is the tax payable or refundable for the period, plus or
minus the change during the period in deferred tax assets and liabilities.


                                       F-8


<PAGE>

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


2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

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 converted into common stock or resulted in the
issuance of common stock that then shared in the earnings of the entity. Stock
options granted during the year were not included in the computation of net loss
per share because the effect of inclusion would be anti-dilutive due to the
Company's net loss. The diluted weighted-average number of common shares
outstanding equaled basic for the years ended September 30, 2001 and 2000. 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
generally accepted accounting principles 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.

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 July 1, 2002, and the Company has not concluded
the effect, if any, SFAS 142 will have on its financial statements.

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. The Company has not concluded the effect, if any, SFAS 143 will have
on it 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 experienced a loss of
$137,748 and $173,101 during 2001 and 2000, respectively, and has a net
deficiency in equity of $399,867 and a net working capital deficiency of
$418,377 as of September 30, 2001. 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 units 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, 2001 various directors and stockholders loaned the Company
$51,800 through unsecured demand notes bearing interest at 10% per annum.

At September 30, 2001, the Company owed one vendor, a stockholder, $107,806.
Additionally, at September 30, 2001 the Company owed officers and stockholders
$15,000, which is included in accounts payable - stockholders.


5.       NOTES PAYABLE

Notes payable at September 30, 2001 consisted of the following:


      Unsecured demand note payable, bearing interest at 9%,
         guaranteed by the President of the Company                   $   10,000
                                                                      ==========

During the years ended September 30, 2001 and 2000, the Company recorded
interest expense of $2,883 and $2,930, respectively.



                                      F-10


<PAGE>

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


6.       SALE OF SECURITIES

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 144 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.


7.       STOCK OPTIONS

The following table summarizes stock options at September 30, 2001:
<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           510,000          2.17       $   0.13          510,000        2.17        $   0.13

 $    0.07         1,800,000          0.96       $   0.09        1,800,000        0.96        $   0.07
</TABLE>




                                      F-11


<PAGE>



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


7.       STOCK OPTIONS (continued)

The following table summarizes stock option activity for the year ended
September 30:
<TABLE>
<CAPTION>

                                                            2001                            2000
                                                            ----                            ----

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

<S>                                             <C>                <C>            <C>                 <C>
  Outstanding at beginning of year              1,800,000          $  0.07        2,421,000           $   0.07
  Granted                                         510,000             0.13               --               -
  Expired                                              --               --         (621,000)              0.07
                                                ---------                         ---------

  Outstanding at end of year                    2,310,000          $  0.09        1,800,000           $   0.07
                                                =========                         =========

  Exercisable at end of year                    2,310,000          $  0.09        1,800,000           $   0.07
                                                =========                         =========

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

The Company has adopted SFAS No. 123, "Accounting for Stock Based Compensation."
In accordance with SFAS No. 123, the Company expensed $14,606 as compensation
for options granted to consultants during the fiscal year ended September 30,
2001. 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 360,000 options granted to employees.

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 2001. No options were granted
during the year ended September 30, 2000.

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

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


                                      F-12


<PAGE>

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


7.       STOCK OPTIONS (continued)

The Company's pro forma information under SFAS 123 for the years ended September
30, 2001 and 2000 were as follows:
<TABLE>
<CAPTION>

                                                    2001                               2000
                                                    ----                               ----
                                            As               Pro               As               Pro
                                         reported           forma           reported           forma
                                         --------           -----           --------           -----
<S>                                    <C>               <C>              <C>               <C>
         Net loss                      $ (137,752)       $ (182,630)      $ (173,101)       $ (173,101)
                                       ===========       ===========      ===========       ===========
         Net loss per share - basic
         and diluted                   $   (0.02)        $  (0.02)        $   (0.02)        $  (0.02)
                                       ==========        =========        ==========        =========
</TABLE>


8.       INCOME TAXES

The Company had available at September 30, 2001, a net operating loss
carryforward for federal and state tax purposes of approximately $4,880,000 that
could be applied against taxable income in subsequent years through September
30, 2021. The tax effect of the net operating loss is approximately $1,836,000,
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, 2001 and 2000. Components of the Company's
deferred income taxes were as follows at September 30:

                                                     2001             2000
                                                     ----             ----

         Net operating loss carryforward         $   4,880,000    $   4,750,000
                                                 =============    =============

         Net deferred tax asset                      1,836,000        1,787,000
         Less valuation allowance                   (1,836,000)      (1,787,000)
                                                 --------------   -------------

         Net deferred tax asset                  $          --    $          --
                                                 ==============   =============


The net change in the valuation allowance for the years ended September 30, 2001
and 2000 was an increase of $49,000 and $65,000, respectively.






                                      F-13


<PAGE>

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

8.       INCOME TAXES (continued)

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, 2001 and 2000 were as follows:

                                                           2001         2000
                                                           ----         ----

         Income tax loss at federal statutory tax rate    (34.00)%     (34.00)%
         State taxes, net of federal benefit               (3.63)%      (3.63)%
         Change in valuation allowance
                                                           -----        -----
                                                           37.63%       37.63%
                                                           -----        -----

         Provision for income taxes
                                                              --%          --%
                                                           =====        =====


9.       COMMITMENTS AND CONTINGENCIES

The Company entered into a one-year lease for corporate office space, which
expires on January 31, 2002. Rent expense for the year ended September 30, 2001
was $28,301. The minimum future lease payments for fiscal year 2002 is $12,000.

10.      SUBSEQUENT EVENTS

During October 2001, the Company issued 400,000 shares of common stock as
payment to a consultant engaged to enhance the corporate image of the Company.

The Company signed a definitive purchase agreement to acquire a company which
assembles and sells a complete line of radioscopic analysis equipment for
economic and versatile inspection and process control applications. It also
sells high voltage generators for high power applications and microprocessors
based universal controllers for generators. The purchase is subject to certain
contingencies, including financing and to the completion of the target's audit.




                                      F-14