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, 1999

                          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)

               475 Ramblewood Drive, Coral Springs, Florida 33071
               (Address of principal executive offices) (Zip Code)

                                 (954) 755-1827
                           (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 Sectio 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 requirments for the past 90 days. Yes |_| No |X|

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not 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. |_|

Issuer's revenues for its most recent fiscal year $60,647

The aggregate market value of the voting and non-voting common equity held by
non-affiliates based on the average bid and asked price at January 11, 2000 was
$1,018,810


                                       1
<PAGE>

                                TABLE OF CONTENTS

                                     Part I

Item 1.  Description of Business..............................................3

Item 2.  Description of Property..............................................9

Item 3   Legal Proceedings....................................................9

Item 4.  Submission of Matters to a Vote of
                  Security Holders............................................9

                                     Part II

Item 5   Market for Common Equity and Related Stockholder Matters............11

Item 6   Management's Discussion and Analysis or Plan of Operation...........13

Item 7.  Financial Statements................................................14

Item 8.  Changes In and Disagreements With Accountants on Accounting and
         Financial Disclosure................................................15

                                     Part II

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

Item 10. Executive Compensation..............................................17

Item 11. Security Ownership of Certain Beneficial Owners and Management......17

Item 12. Certain Relationships and Related Transactions......................17

Item 13. Exhibits and Reports on Form 8-K....................................18


                                       2
<PAGE>

PART I

References herein to "We," "Us," or the "Company" refer to Rad Source
Technologies, Inc. and their subsidiary.

Item 1. Description of Business

(a)   Business Development.

      We were incorporated in the State of Florida on July 2, 1990 as Computer
      Vending, Inc. On December 24, 1998, we 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 we
      acquired all of the outstanding shares of Rad Source in exchange for
      2,278,266 (Pre-split) or 759,422(Post-split) newly issued shares of our
      Company. At the closing of the transaction, the shareholders of Rad Source
      obtained control of our Company, and we changed our name to Rad Source
      Technologies, Inc. Our then existing directors and executive officers
      resigned and were replaced by designees of Rad Source, which became our
      wholly owned subsidiary.

      Rad Source was incorporated in the State of Florida in October of 1996.
      Since incorporation, Rad Source has engaged in the development of our
      products described below. On September 9, 1999, we reverse split our stock
      on a (3) three for (1) one share basis. All references to our shares
      contained in this report reflect the stock split of September 9, 1999,
      unless otherwise indicated. We have not been involved in any bankruptcy,
      receivership or similar proceeding.

(b)   Business of the Company.

      The following is a description of our business. References to our business
      and operations include both our operations and those of Rad Source, our
      wholly owned subsidiary, unless otherwise specifically indicated.

      Our machines are based on technology developed and research conducted by
      our President and Director, Randol Kirk. Mr. Kirk currently owns the
      technology used for our machines. We have a license agreement with Mr.
      Kirk, which allows us to sell the two products utilizing this technology.

      We have developed two machines designed to replace radioactive sources
      with common x-ray, which has been traditionally used in imaging
      applications for airport scanners and medical x-rays. Irradiation is the
      process of killing organisms in a product by using high doses of gamma or
      x-rays to stop the reproduction of such organisms. Our products are
      designed to replace regulated, nuclear irradiation devices with x-ray
      technology that allow size, efficiency and cost to be optimized for
      application in the medical and industrial markets. Our products are
      manufactured to be immediately applicable to resolving highly publicized
      public health and consumer issues.

      X-ray machines are significantly less expensive to manufacture, require
      significantly less site cost and do not require disposal of radioactive
      waste. The key advantages of an X-ray source are:

      (1)   There are no disposal problems;

      (2)   No Nuclear Regulatory Commission licensing or reporting is required;


                                       3
<PAGE>

      (3)   There is no risk of radiation when the device is in the off
            position;

      (4)   Service rates of the device are compatible with that of other
            electronic equipment; and

      (5)   operator exposure and safety risk is reduced.

      (1)   Principal Products and their Markets

            We have developed two products to date, both of which are discussed
            below.

            RS2000

            The RS 2000 is used to irradiate human cells, bacteria, and small
            animals. The irradiation of these organisms is used in various
            aspects of cancer research to determine appropriate levels of cancer
            treatment for humans. Subsequent to September 30, 1999 we delivered
            one RS 2000 to Precision Therapeutics, Inc. to be used in cancer
            research. The manufacturing of our RS 2000 is not subject to FDA
            approval, but its applications are covered by FDA and USDA
            regulations.

            RS3000

            The RS 3000 Blood Irradiator was developed to replace existing
            radioactive cesium units currently in service and for use in
            additional facilities that want alternatives without radioactive
            sources on premises. This machine is capable of replacing low dose
            gamma irradiation. The RS 3000 Shielded Cabinet X-ray Source is
            designed to irradiate blood and blood products packaged in
            transfusion bags when irradiation for Graft Versus Host Disease
            ("GVHD") is necessary. GVHD is a life threatening complication
            arising from transfusion recipient's reaction to the white blood
            cells acquired in a transfusion from a blood donor. This disease
            occurs when the blood or blood product makes antibodies against the
            recipient tissues and tries to destroy the recipient tissue as if it
            were a disease. The machine can irradiate a single transfusion bag
            or its equivalent thereby reducing the risk of GVHD for transfusion
            recipients. We received FDA clearance for this product on March 30,
            1998.

            Orders

            Subsequent to September 30, 1999, we delivered another RS 3000 and
            one RS 2000 and as of January 11, 2000 have an order for a RS 3000
            outstanding. As of January 11, we have collected $9,532 of the
            $65,000 total purchase price in payment on the first RS 3000 (terms
            of this order consist of 24 monthly payments) order and the $89,000
            total purchase price in payment on the second RS 3000 unit order and
            $19,000 on the $89,000 purchase price on the third order which has
            not yet been delivered to the customer. As of January 11, 1999 we
            have received $0 of the $69,000 total purchase price in payment on
            the RS 2000 unit. Except as previously noted, all of these units
            have been delivered to the purchasers. There can be no assurance
            that


                                       4
<PAGE>

            these orders will be fully paid for which could have a material
            adverse effect on our business and operations.

            We have entered into an agreement with USI, Inc., whereby USI, Inc.
            will act as the exclusive distributor of our RS3000 within Maine,
            Massachusetts, Vermont, New Hampshire, Delaware, New York, New
            Jersey and Rhode Island, provided that they sell 8 of our RS3000
            units to third parties each year. Should USI, Inc. fail to sell at
            least 8 RS3000 units, the agreement may be immediately terminated at
            our option.

            There can be no assurance that we will be successful in developing,
            delivering and marketing, on a timely and cost effective basis, any
            of our products. Moreover, there can be no assurance that we will be
            able to successfully develop product enhancements or new products
            that respond to technological change, evolving industry standards or
            customer requirements. There can be no assurance that we will not
            experience difficulties that could delay or prevent the successful
            development, introduction or marketing of our products or that our
            products will achieve market acceptance.

            Marketing

            We market our products and services through individual,
            non-exclusive distributors and contacts of our President and some of
            our directors. Management cannot anticipate the nature or extent of
            additional marketing support which may be required to market our
            products, as the nature and cost of such marketing will depend, in
            part, upon the initial marketplace acceptance of our products. There
            is no assurance that we will have sufficient funds available to hire
            additional marketing persons, or that, if hired, the efforts of such
            persons will be effective in marketing our products.

            The current marketing of our products primarily consists of
            attending trade shows, advertisement in a professional trade
            journal, direct telemarketing to potential users based on review of
            health care provider data, and word-of mouth. There can be no
            assurance that such marketing activites will be successful.

      (2)   Distribution Methods.

            Distribution of our products will be handled on an individual basis
            depending on the needs of the consumer. There can be no assurance
            that we will be able to produce and manufacture our products on a
            timely basis for each order.

      (3)   Status of any Publicly Announced New Product.

            We currently have no publicly announced new products.

      (4)   Competitive Business Conditions.

            We are subject to competition from a number of companies who have
            considerably greater experience, engineering capability, and
            financial resources than we have. We compete with numerous companies
            involved in irradiation of blood including small and large


                                       5
<PAGE>

            businesses. There are several companies producing radiation sources
            that provide the same product functions. Several of these
            competitors are substantially better funded by established and
            ongoing relationships with many of the companies and organizations
            that we will seek as customers. One factor that differentiates our
            product from that of our competitors is our departure from a
            radioactive source within our products. Most competitors which
            produce irradiation devices do so through the utilization of some
            form of high-energy source, the presence of which gives rise to
            various radiation, safety and cost issues common among our
            competition.

            The markets in which we operate are characterized by significant
            technological change, evolving industry standards and new product
            introductions. Our competitors can be expected to continue to
            improve the design and performance of their products and to
            introduce new products with competitive price and performance
            characteristics. There can be no assurance that we will have
            sufficient resources to adopt to technological change. If our
            products or technologies become uncompetitive or obsolete, it will
            have a material adverse effect on our operations.

      (5)   Sources and Availability of Raw Materials.

            We are able to obtain the materials for the manufacturing of our
            products from various suppliers, and we do not anticipate any
            shortage of raw materials needed for the manufacturing of our
            products.

      (6)   Dependence on Certain Customers.

            We do not believe that we are dependent upon any single material
            customer.

      (7)   Intellectual Property.

            We have applied for a patent on the RS 3000 Unit (Serial Number
            09,383,228). There can be no assurance that patent protection for
            the RS 3000 will be granted. Further, there can be no assurance that
            if granted 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 our technology will not infringe
            upon the patents of others. In the event that any such infringement
            claim is successful, there can be no assurance that we will be able
            to negotiate with the patent holder for a license, in which case we
            could be prevented from utilizing the subject matter claimed by such
            patent. In addition, there can be no assurance that we will be able
            to redesign our products to avoid infringement. Our inability to
            utilize the subject matter of patents claimed by others, or to
            redesign our products to avoid infringement, could have a material
            adverse effect on our business.

            Mr. Kirk, our founder and President, developed the technologies used
            in our current products. There is currently an exclusive licensing


                                       6
<PAGE>

            agreement between our Company and Mr Kirk. Under the terms of this
            agreement, Randol Kirk is to be paid a five percent (5%) royalty
            based upon the total net selling price of the licensed technology
            and licensed products made, used or sold by the Company. Licensed
            technology and products consists of our irradiation devices. This
            agreement began on September 15, 1999 and is for a term of ten (10)
            years. The agreement is renewable at the option of the Company.
            Under the agreement, royalties are to be paid monthly, within ten
            (10) days after the end of the month in which they become due. Upon
            our default of payment which we fail to cure within thirty (30) days
            of notice, Mr. Kirk may terminate the licensing agreement. If the
            amount of royalty received by Mr. Kirk is less than $12,000 per
            fiscal quarter, including company compensation, the agreement
            between the parties will be terminated. As such, the rights to the
            licensed technology would revert back to Mr. Kirk. Should this
            occur, the operations of the Company could be adversely affected.
            For all sales made before December 31, 1999, Mr. Kirk has waived any
            royalty which otherwise would have been due him.

            As of the date of this annual report, we have no trademarks,
            franchises, concessions, or labor contracts.

    (8)-(9) Government Approvals and Government Regulation.

            Our two units comply with Federal Regulations 21 CFR 1020.40 and the
            NCRP Report No. 88, ANSI No. 1975, 1978, and 1979A. These
            regulations require that no radiation can escape the cabinet and
            that radiation production stops if the door is accidentally opened.

            Our services, medical products and manufacturing activities are
            subject to extensive and rigorous government regulation, including
            the provisions of the Federal Food, Drug and Cosmetic Act.
            Commercial distribution in certain foreign countries is also subject
            to government regulations. 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 Food and Drug Administration (the "FDA") enforces
            regulations prohibiting marketing without compliance with the
            pre-market approval provisions of medical devices. A Section 510(k)
            application is required in order to market a new or modified medical
            device. If specifically required by the FDA, a pre-market approval
            may be necessary. The FDA review process typically requires
            extensive procedures pertaining to the safety and efficacy of new
            products, which may delay or hinder a product's timely entry into
            the marketplace.

            The FDA also regulates the content of advertising and marketing
            materials relating to medical devices. There can be no assurance
            that our advertising and marketing materials related to our products
            are and will be in compliance with such regulations. We are also
            subject to other federal, state, local and foreign laws, regulations
            and recommendations relating to safe working conditions, laboratory
            and manufacturing practices. Failure to comply with applicable
            regulatory requirements can result in, among other things, fines,


                                       7
<PAGE>

            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 may be to delay us
            for a considerable period of time or to prevent the marketing and
            full commercialization of future products or services that we 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
            materially adversely affect our operations.

            Our irradiation products for blood units are used exclusively in the
            health care industry, which is highly regulated. The health care
            industry in certain markets for our products, including the United
            States, has experienced significant pressure to reduce costs, which
            has led in some jurisdictions to substantial reorganizations and
            consolidations of health care providers or payers. Cost reduction
            efforts by our customers may adversely affect the potential markets
            for our products and services. It is also possible that legislation
            could be adopted in any of these jurisdictions which could increase
            such pressures or which could otherwise result in a modification of
            the private or public health care system or both or impose
            limitations on our ability to market our products in any such
            jurisdiction. Any such event or condition could have an adverse
            impact on our business, financial condition or results of
            operations.

            The manufacture and use of irradiation equipment is highly
            regulated, and there can be no assurance that we will be able to
            comply with existing or future regulations or that the regulatory
            environment in which we operate will not change significantly and
            thus adversely effect our business and financial condition.

            Every state imposes licensing requirements on individual
            technicians, other equipment operators and the facilities that
            utilize irradiation equipment. We cannot predict with any level of
            certainty how these licensing requirements will affect our
            operations.

            We believe healthcare and food-processing regulations will continue
            to change; therefore, we will regularly monitor developments in
            healthcare, agricultural and food processing laws. We expect to
            modify our operations from time to time as the business and
            regulatory environment changes. There can be no assurance that we
            will be able to successfully address changes in the regulatory
            environment and, as such, our operations could be negatively
            impacted.

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


                                       8
<PAGE>

            we will avoid significant liability. Currently, we have no insurance
            coverage in place for such liabilities. Further, our assets are
            insufficient to compensate for any such claim. As such, any claim
            relating to malpractice litigation or recall could adversely affect
            our business.

            There also can be no assurance that we will be able to obtain
            adequate insurance coverage or that, if obtained, such coverage will
            continue to be available at an acceptable cost, if at all.
            Consequently, such claims could have a material adverse effect on
            our business or our financial condition.

      (10)  Research and Development.

            In our past two fiscal years, we have spent approximately $243,199
            on product research and development. We do not anticipate that this
            cost will be borne directly by the customers.

      (11)  Compliance with Environmental Laws.

            We are currently not subject to compliance with any environmental
            laws, to the best knowledge of our management, and we do not
            anticipate any significant costs in maintaining compliance in the
            future.

      (12)  Employees.

            We have two total employees. Of these, one is full time and one are
            part-time. None of our employees are members of a union. We believe
            that our relationship with our employees is favorable.

Item 2. Description of Property

Our headquarters are located at our central office/engineering facilities at 475
Ramblewood Drive, Suite 207, Coral Springs, Florida 33071. The facility is
approximately five hundred (500) square feet of office space. We lease this
space on a month-to-month basis at a rent of $560.00 per month. We believe that
this space is sufficient for our needs at this time.

Item 3. Legal Proceedings

We are not a party to any legal proceeding.

We are currently unaware of any pending legal proceeding or any
proceedingcontemplated by a governmental authority entity or other persons in
which we may be involved.

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

No matter was submitted during the fourth quarter of the fiscal year covered by
this report to a vote of security holders, through the solicitation of proxies
or otherwise.


                                       9
<PAGE>

PART II

Item 5. Market for Common Equity and Related Stockholder Matters

      (a) Market Information.

      The Company's Common Stock is traded on the NASDAQ Over the Counter
      Bulletin Board ("OTCBB") under the symbol IRAD. There is no active trading
      market for the Common Stock. The following bid quotations have been
      reported for the period beginning March 16, 1999, the date of our initial
      quotation, and ending September 30, 1999:

      --------------------------------------------------------------------------
                                                          Bid Quotation*
      --------------------------------------------------------------------------
      Quarterly Period                                 High             Low
      --------------------------------------------------------------------------
      March 16, 1999 - March 31, 1999                 $5.125           $4.25
      --------------------------------------------------------------------------
      April 1, 1999 - June 30, 1999                   $4.75            $2.25
      --------------------------------------------------------------------------
      July 1, 1999 - September 30, 1999*              $3.625           $0.125
      --------------------------------------------------------------------------

      * Reflects 1:3 reverse split on September 9, 1999.

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

      We currently have seven (7) market makers for our common stock. There is
      no assurance that an active trading market will develop which will provide
      liquidity for our existing shareholders or for persons who may acquire
      common stock through the exercise of warrants.

      (b) Holders

      As of January 10, 2000 there were approximately 74 holders of record of
      our 2,410,040 shares of common stock outstanding. Of these 2,410,040
      shares, 1,934,316 shares are restricted securities within the meaning of
      Rule 144(a)(3) promulgated under the Securities Act of 1933, as amended,
      because such shares were issued and sold by the Company in private
      transactions not involving a public offering. Certain of the shares of
      common stock are held in "street" name and may, therefore, be held by
      several beneficial owners. Our transfer agent is Interwest Stock Transfer,
      P.O. Box 17136, Salt Lake City, Utah 84117.

      No prediction can be made as to the effect, if any, that future sales of
      shares of common stock or the availability of common stock for future sale
      will have on the market price of the common stock prevailing


                                       10
<PAGE>

      (c) Dividends

      We have never declared any dividends since our inception. We have no
      restrictions limiting our ability to pay dividends, but we do not
      anticipate paying dividends in the near future.

      (d) Recent Sale of Unregistered Securities.

      Pursuant to the Share Exchange dated December 31, 1998 between Rad Source
      andthe Company, we issued 759,422 (Post-split) shares of our common stock.
      Of the shares issued in the exchange 69,326 (Post-split) shares were
      issued with a restrictive legend relying upon the exemption provided in
      section 4(2) of the Securities Act of 1933, as amended ("the Act")

      Of the shares issued in the exchange, we issued the following shares in
      reliance upon Rule 504 of Regulation D of the Act: (i) 16,667 (Post-split)
      shares were issued for legal services rendered to Rad Source in 1998; and
      (i) or 8,778 (Post-split) were issued to prior shareholders of Rad Source.
      At the closing of this Share Exchange we issued an additional 333,333
      (Post-split) shares of our common stock to Capital International Holdings
      Inc. and its affiliates in consideration for various services rendered to
      Rad Source pursuant to an agreement between Capital International Holdings
      Inc. and Rad Source dated October 20, 1998. We relied upon the following
      facts in determining that Rule 504 was available: (a) We were not subject
      to the reporting requirements of Section 13 or 15 (d) of the Exchange Act;
      (b) we were not a development stage Company with no specific business plan
      nor a company whose business plan was to merge with an unidentified
      private entity; (c) the aggregate offering price did not exceed
      $1,000,000.

      All references to our shares contained in this registration reflect the
      stock split of September 9, 1999, unless otherwise indicated. In March of
      1999, we issued 113,333 (Post-split) or 340,000 (Pre-split) shares of our
      common stock at a price of $6.00 per share (Post-split) or ($2.00 per
      share Pre-split) raising total proceeds of $680,000. We relied upon the
      following facts in determining that Rule 504 was available: (a) We were
      not subject to the reporting requirements of Section 13 or 15 (d) of the
      Exchange Act; (b) we were not a development stage Company nor a company
      whose business plan was to merge with an unidentified private entity; (c)
      the aggregate offering price did not exceed $1,000,000. A form D was
      filed. From the offering proceeds, we paid commissions in the amount of
      $102,000 to our placement agent, Capital International Securities, Inc.
      and their affiliates.

      We issued a total of 1,183,333 restricted shares of our common stock in
      September of 1999 in reliance upon Section 4(2) of the Securities Act of
      1933. Of these, 50,000 shares were issued for legal services rendered to
      the Company, 150,000 shares were issued to Consultants for services
      rendered to the Company, 400,000 shares were issued to Randol Kirk, our
      President and Director for services rendered to the Company, and 83,333
      shares were issued to William Hartman, our Director, for services rendered
      to the Company. In addition, 500,000 shares were sold at $0.20 per share,
      of which 375,000 were sold to Officers and Directors of the Company as
      follows:

            William Hartman, Director                  125,000
            Robert Munson, Director                     50,000
            Adrian Kesala, Director                    125,000


                                       11
<PAGE>

            Richard Adams, Director & Secretary         75,000

      In September of 1999 we issued 300,000 options to various consultants of
      the Company to purchase shares of our common stock at the price of 0.20
      per share. Additionally, we issued 100,000 options to each of our five
      officers and Directors (500,000 options total) at an exercise price of
      $0.20 per share. The options were granted in reliance upon section 4(2) of
      the Securities Act of 1933, as amended.

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

      Safe Harbor Statement.

      Statements which are not historical facts, including statements about the
      Company's confidence and strategies and its expectations about new and
      existing products, technologies and opportunities, market and industry
      segment growth, demand and acceptance of new and existing products are
      forward looking statements that involve risks and uncertainties. These
      include, but are not limited to, product demand and market acceptance
      risks, the impact of competitive products and pricing, the results of
      financing efforts, the effects of economic conditions and trade, legal,
      social, and economic risks, such as licensing, and, trade restrictions;
      and the results of the Company's business plan. Such forward-looking
      statements are subject to risks and uncertainties. Consequently, our
      actual results could materially differ from those anticipated in these
      forward-looking statements.

      Plan of Operation

      Management expects that we will enter our operational phase during the
      next twelve months with our first product, the RS 3000 Blood Irradiator,
      the first of which was delivered in August 1999 and has been used
      commercially since then. Our second unit was delivered in October 1999. As
      of January 11, 2000, the Company had a backlog of 1 RS 3000. These units
      are to be used by medical facilities for blood irradiation. We currently
      have two RS 3000's being used by two different customers in the United
      States and although there have been no significant technical problems to
      date, management cannot provide assurance that none will arise in the
      future. We have tested the RS 3000 and had an independent laboratory test
      the product, but should any substantial technical difficulties be
      discovered, management can make no assurances that we will be able to
      remedy such in a manner that guarantees commercial success of the product.
      Over the next 12 months, the Company will continue its efforts to market
      the RS 3000, manufacture, and deliver it. Additionally, certain foreign
      markets, including central Europe, will require additional certification
      of the RS 3000 before we will be able to sell in those markets and this is
      expected to cost $20,000 - $30,000. The Company does not expect to commit
      to this process until additional domestic orders for the RS 3000 are
      received.

      We have developed another product using the same technology as the RS 3000
      Blood Irradiator for use in research laboratories and, subsequent to
      September 30, 1999, delivered one unit to date. This product is the RS
      2000 Biological Irradiator. This product has not yet been used by


                                       12
<PAGE>

      the customer and is undergoing refinement by the Company at the customer's
      facility.

      We do not have a long history of either of these units being used
      commercially, the potential success of these products is not assured.

      Our ability to satisfy infrastructure requirements in order to operate as
      a going concern will be dependent on the success of the RS 2000 and RS
      3000 over the next twelve months and our ability to raise capital if
      product sales and cash collections from such sales are not sufficient.
      Management believes we will have to raise capital over the next twelve
      months to satisfy our working capital requirements and development costs.
      We expect to add employees and incur resultant administrative costs
      associated with a more substantial infrastructure in order to support the
      production and sale of our existing products and the development of
      others. This will necessitate the need for capital. In this regard,
      management's plan is to seek both private and institutional funds. In
      September and October 1999, our affiliates funded approximately $100,000
      for our operations; management may utilize this means of raising capital
      again in the near future, if necessary. Collections from deposits on new
      orders and outstanding receivables combined with continued cooperation of
      the Company's subcontractors are expected to mitigate the need for
      substantial additional capital, however no assurances that these
      expectations are correct can be made.

      Over the next twelve months, we expect to incur approximately $50,000 in
      capital expenditures, including test and assembly equipment for our
      products as well as office furnishings and equipment. Because management
      believes we are entering our operational phase, our number of employees is
      expected to increase by approximately three to five people. We utilize
      outsourcing for much of our manufacture and assembly, and we will require
      sales and administrative assistance.

Item 7. Financial Statements

                   Index to Consolidated Financial Statements

                                                                            Page
                                                                            ----

         Report of Independent Certified Public Accountants                  14

         Consolidated Balance Sheet                                          15

         Consolidated Statements of Operations                               16

         Consolidated Statement of Changes in Stockholders' Deficit          17

         Consolidated Statements of Cash Flows                               18

         Notes to Consolidated Financial Statements                          20


                                       13
<PAGE>

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

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

We have audited the consolidated balance sheet of Rad Source Technologies, Inc.
and subsidiary, formerly Computer Vending, Inc. (a development stage company) as
of September 30, 1999, and the related consolidated statements of operations,
consolidated changes in stockholders' deficit, and consolidated cash flows for
the years ended September 30, 1999 and 1998, and for the period October 11, 1996
(date of inception) to September 30, 1998, and for the period October 11, 1996
(date of inception) to September 30, 1999. 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 generally accepted auditing
standards. 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, formerly Computer Vending, Inc., (a
development stage company) as of September 30, 1999, and the results of its
operations and cash flows for the years ended September 30, 1999 and 1998, and
for the period October 11, 1996 (date of inception) to September 30, 1998, and
for the period October 11, 1996 to September 30, 1999, in conformity with
generally accepted accounting principles.

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 been in the development stage
since inception on October 11, 1996, and has suffered losses from operations and
has a net capital deficiency that raise 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.

Fort Lauderdale, Florida

January 6, 2000


                                       14
<PAGE>

                  RAD SOURCE TECHNOLOGIES, INC. AND SUBSIDIARY
                         FORMERLY COMPUTER VENDING, INC.
                          (a development stage company)
                           CONSOLIDATED BALANCE SHEET
                               SEPTEMBER 30, 1999

ASSETS

Current assets:
     Cash                                                           $    28,044
     Accounts receivable                                                 29,792
     Other receivable                                                    15,000
     Inventory                                                          121,303
     Prepaid expense                                                      5,700
                                                                    -----------

         Total current assets                                           199,839

Computer equipment, less accumulated
     depreciation of $580                                                 2,888
Long-term receivable                                                     28,087
Security deposit                                                            500
                                                                    -----------

                                                                    $   231,314
                                                                    ===========

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
     Notes payable                                                       10,000
     Accounts payable                                                   210,576
     Accounts payable - stockholders                                     87,791
     Accrued expenses                                                    52,267
     Due to stockholders                                                 31,800
                                                                    -----------

         Total current liabilities                                      392,434
                                                                    -----------

Stockholders' deficit
     Common stock, par value $.001; 50,000,000 shares authorized;
         2,410,040 issued and outstanding                                 2,410
     Additional paid-in capital                                       4,414,652
     Deficit accumulated during development stage                    (4,578,182)
                                                                    -----------

         Total stockholders' deficit                                   (161,120)
                                                                    -----------

                                                                    $   231,314
                                                                    ===========

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


                                       15
<PAGE>

                  RAD SOURCE TECHNOLOGIES, INC. AND SUBSIDIARY
                         FORMERLY COMPUTER VENDING, INC.
                          (a development stage company)
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                  Year Ended           October 11, 1996 (inception)
                                                 September 30,                to September 30,
                                          --------------------------   ----------------------------
                                              1999           1998           1999           1998
                                              ----           ----           ----           ----
<S>                                       <C>            <C>            <C>            <C>
Sales                                     $    60,647    $        --    $    60,647    $        --
Cost of sales                                  53,150             --         53,150             --
                                          -----------    -----------    -----------    -----------

    Gross profit                                7,497             --          7,497             --
                                          -----------    -----------    -----------    -----------

Expenses:
    Research and development                  232,526         10,673        259,888         27,362
    Selling, general and administrative       345,014        224,874        632,483        287,469
    Issuance of stock for services          3,567,161             --      3,567,161             --
                                          -----------    -----------    -----------    -----------

       Total expenses                       4,144,701        235,547      4,459,532        314,831
                                          -----------    -----------    -----------    -----------

Loss before other income (expense)         (4,137,204)      (235,547)    (4,452,035)      (314,831)
                                          -----------    -----------    -----------    -----------

Other income (expense):
    Interest income                             3,655             --          3,655             --
    Other income                                  738             --            738             --
    Interest expense                          (14,120)            --        (14,120)            --
    Other expense                             (99,921)       (15,056)      (116,420)       (16,499)
                                          -----------    -----------    -----------    -----------

       Other expense                         (109,648)       (15,056)      (126,147)       (16,499)
                                          -----------    -----------    -----------    -----------

Net loss                                  $(4,246,852)   $  (250,603)   $(4,578,182)   $  (331,330)
                                          ===========    ===========    ===========    ===========

Earnings per share - basic                $     (3.63)   $     (0.33)
                                          ===========    ===========

Weighted average shares outstanding:        1,170,196        759,422
                                          ===========    ===========
</TABLE>

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


                                       16
<PAGE>

                          RAD SOURCE TECHNOLOGIES, INC.
                         FORMERLY COMPUTER VENDING, INC.
                          (a development stage company)
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

<TABLE>
<CAPTION>
                                                                                          Deficit
                                                                                        accumulated
                                                    Common Stock          Additional      during
                                              -------------------------     paid-in     development
                                                 Shares        Amount       capital        stage          Total
                                              -----------   -----------   -----------   -----------    -----------
<S>                                           <C>           <C>           <C>           <C>            <C>
Balance at October 11, 1996 (inception)       $        --   $        --   $        --   $        --    $        --
Issue founders shares                             759,422           759           116                          875
Net loss                                               --            --            --       (80,727)       (80,727)
                                              -----------   -----------   -----------   -----------    -----------

Balance, September 30, 1997                       759,422           759           116       (80,727)       (79,852)
Net loss                                               --            --            --      (250,603)      (250,603)
                                              -----------   -----------   -----------   -----------    -----------

Balance, September 30, 1998                       759,422           759           116      (331,330)      (330,455)
Acquision of Computer Vending, Inc.                 1,800             2            --            --              2
Sale of common stock                              613,333           613       673,396            --        674,009
Issuance of stock for unsecured advances
  net of founders shares contributed to the
  Company                                           2,111             2        54,498            --         54,500
Issuance of stock for services                  1,033,374         1,034     2,312,968            --      2,314,002
Services paid by stock contributed by
   founder                                             --            --     1,253,160            --      1,253,160
Compensation for stock options issued                  --            --       120,514            --        120,514
Net loss                                               --            --            --    (4,246,852)    (4,246,852)
                                              -----------   -----------   -----------   -----------    -----------

Balance, September 30, 1999                     2,410,040   $     2,410   $ 4,414,652   $(4,578,182)   $  (161,120)
                                              ===========   ===========   ===========   ===========    ===========
</TABLE>

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


                                       17
<PAGE>

                  RAD SOURCE TECHNOLOGIES, INC. AND SUBSIDIARY
                         FORMERLY COMPUTER VENDING, INC.
                          (a development stage company)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                       Year Ended           October 11, 1996 (inception)
                                                                      September 30,                to September 30,
                                                               --------------------------   ----------------------------
                                                                   1999           1998           1999           1998
                                                                   ----           ----           ----           ----
<S>                                                            <C>            <C>            <C>            <C>
Cash flow (used) by operating activities:
   Net loss                                                    $(4,246,852)   $  (250,603)   $(4,578,182)   $  (331,330)
    Depreciation                                                       580             --            580             --
    Interest paid by issuing notes                                      --          6,400          6,400          6,400
    Issuance of stock for services                               3,567,161             --      3,567,161             --
    Compensation for stock options                                 120,514             --        120,514             --
    Write-off of obsolete inventory                                 36,959             --         36,959             --
    Adjustments to reconcile net loss to net cash
     used in operating activities:
    Change in assets and liabilities:
      Decrease (increase) in:
         Accounts receivable                                       (29,792)            --        (29,792)            --
         Other receivable                                          (15,000)                      (15,000)
         Inventories                                              (121,303)            --       (158,262)       (36,959)
         Other assets                                              (33,787)            --        (34,287)          (500)
      Increase (decrease) in:
         Accounts payable                                          166,952          3,387        210,576         43,624
         Accounts payable - stockholders                            87,791             --         87,791             --
         Accrued expenses                                         (114,337)       136,429         52,390        166,727
                                                               -----------    -----------    -----------    -----------

            Net cash provided (used) by operating activities      (581,114)      (104,387)      (733,152)      (152,038)
                                                               -----------    -----------    -----------    -----------

Cash flows used by investing activities:
         Purchase of property and equipment                         (3,468)            --         (3,468)            --
                                                               -----------    -----------    -----------    -----------

            Net cash used by investing activities                   (3,468)            --         (3,468)            --
                                                               -----------    -----------    -----------    -----------
</TABLE>

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


                                       18
<PAGE>

                  RAD SOURCE TECHNOLOGIES, INC. AND SUBSIDIARY
                         FORMERLY COMPUTER VENDING, INC.
                          (a development stage company)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                        Year Ended              October 11, 1996 (inception)
                                                                       September 30,                  to September 30,
                                                                ----------------------------    ----------------------------
                                                                    1999            1998            1999            1998
                                                                    ----            ----            ----            ----
<S>                                                             <C>             <C>             <C>             <C>
Cash flows provided from financing activities:
         Issuance of common stock                                    673,777              --         674,652             875
         Loans from stockholders                                       5,112              --          10,212           5,100
         Proceeds from notes payable                                  10,000         119,900         171,800         161,800
         Payments on notes payable                                   (78,500)        (13,500)        (92,000)        (13,500)
                                                                ------------    ------------    ------------    ------------

             Net cash provided (used) by financing activities        610,389         106,400         764,664         154,275
                                                                ------------    ------------    ------------    ------------

             Net increase (decrease) in cash                          25,807           2,013          28,044           2,237

Cash, beginning of period                                              2,237             224              --              --
                                                                ------------    ------------    ------------    ------------

Cash, end of period                                             $     28,044    $      2,237    $     28,044    $      2,237
                                                                ============    ============    ============    ============

Additional information:
    Cash paid for interest                                      $      2,684    $      1,100    $      1,100    $      1,100
                                                                ============    ============    ============    ============

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

Supplemental schedule of noncash financing activities:
    Payment of unsecured advances through issuance of stock     $     54,500    $         --    $         --    $         --
                                                                ============    ============    ============    ============
</TABLE>

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


                                       19
<PAGE>

                  RAD SOURCE TECHNOLOGIES, INC. AND SUBSIDIARY
                        FORMERLY COMPUTER VENDING, INC.,
                          (a development stage company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. THE COMPANY AND BASIS OF PRESENTATON

Rad Source Technologies, Inc. and subsidiary (the "Company"), was incorporated
in the State of Florida on July 2, 1990, as Computer Vending, Inc. The Company
had no assets, liabilities or operations prior to merging on December 24, 1998
with Rad Source, Inc. ("Rad Source"). Computer Vending, Inc. changed its name to
Rad Source Technologies, Inc. on December 17, 1998. The merger was accounted for
as a reverse acquisition, and accordingly, the financial statements of the
Company are those of Rad Source, Inc., since its inception on October 11, 1996.
The stockholders of Rad Source received 759,422 (or 2,278,267 pre-split) shares
of common stock of the Company in the merger. On September 9, 1999, the Company
reverse split the shares on a three for one basis. All shares and per share
information have retroactively reflected this split.

The primary business of the Company is to develop, patent, manufacture, market
and sell a new irradiation concept for food and commercial irradiation. Revenues
will be generated from the sale of irradiation products and sales will initially
be undertaken throughout the United States.

The Company has been in the development stage since inception and its efforts
through September 30, 1999, have been principally devoted to organizational
activities, raising capital and to the acquisition of patents.

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.

Property and equipment - Property and equipment are stated at cost. Depreciation
is provided over the estimated useful lives of the respective assets using the
straight-line method.

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. Accounts
receivable due after twelve months are carried as long-term receivables.

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

Advertising costs - Advertising costs are charged to operations as incurred.

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


                                       20
<PAGE>

                  RAD SOURCE TECHNOLOGIES, INC. AND SUBSIDIARY
                        FORMERLY COMPUTER VENDING, INC.,
                          (a development stage company)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

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 basis of
assets and liabilities that will result in taxable or deductible amounts in the
future, based on enacted tax laws and rates applicable to the periods in which
the differences are expected to affect taxable income. Valuation allowances are
established when necessary to reduce deferred tax assets to the amount expected
to be realized. Income tax expense is the tax payable or refundable for the
period, plus or minus the change during the period in deferred tax assets and
liabilities.

Income (loss) per share - The Company accounts for earnings per share according
to Financial Accounting Standards No. 128, "Earnings per Share" ("FAS 128"). FAS
128 requires presentation of basic and diluted earnings or loss per share. Since
the Company experienced losses no diluted earnings per share are presented.
Earnings or loss per share is computed by dividing net income or loss by the
weighted average number of shares outstanding during the period.

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.

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 ("FASB") No.121, "Accounting for the
Impairment of Long-Lived Assets to be Disposed of" ("SFAS 121"). SFAS 121
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. No impairments were recognized during the years ended September 30, 1999
and 1998 and the period from October 11, 1996 (inception) through September 30,
1999.

Segment reporting - In June 1997, the FASB issued Statement of Financial
Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and
Related Information" ("SFAS 131"). This statement requires companies to report
information about operating segments in interim and annual financial statements.
It also requires segment disclosures about products and services, geographic
areas and major customers. The Company has determined that it did not have any
separately reportable operating segments as of September 30, 1999 and 1998.


                                       21
<PAGE>

                  RAD SOURCE TECHNOLOGIES, INC. AND SUBSIDIARY
                        FORMERLY COMPUTER VENDING, INC.,
                          (a development stage company)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Comprehensive income - In June 1997, FASB issued Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS 130").
SFAS 130 establishes standards for reporting and display of comprehensive income
and its components in a full set of general-purpose financial statements. SFAS
130 is effective for financial statements for fiscal years beginning after
December 15, 1997. Its adoption did not impact the Company's financial position,
results of operations, or cash flows as the Company had no items of other
comprehensive income during the years ended September 30, 1999 and 1998.

Recent accounting pronouncements - In June 1998, FASB issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"). SFAS 133 establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts (collectively referred to as
derivatives), and for hedging activities. SFAS 133, as amended by SFAS 137, is
effective for all fiscal quarters of all fiscal years beginning after June 15,
2000, with earlier application encouraged. The Company does not currently use
derivative instruments and, therefore, does not expect that the adoption of SFAS
133 will have any impact on its financial position or results of operations.

3. UNCERTAINTY - GOING CONCERN

The Company's continued existence is dependent upon its ability to resolve its
liquidity problems, principally by obtaining equity and commencing profitable
operations. While pursuing capital, the Company must continue to operate on cash
flow generated from the loans of stockholders, if necessary. The Company
experienced a loss of $4,246,852 and $250,603 during 1999 and 1998,
respectively, and has a net deficiency in equity of $161,120 and a net working
capital deficiency of $192,596 as of September 30, 1999. While much of the 1999
loss resulted from non-cash expenses for the issuance of stock and stock
options, the Company still experienced a net cash deficit from operating
activities of $581,114. These factors raise substantial doubt about the
Company's ability to continue as a going concern.

Management's plans in regards to this matter are to raise capital and increase
its marketing efforts and increase sales of units in an effort to generate
positive cash flow. The financial statements do not include any adjustment that
might result from the outcome of this uncertainty.


                                       22
<PAGE>

                  RAD SOURCE TECHNOLOGIES, INC. AND SUBSIDIARY
                        FORMERLY COMPUTER VENDING, INC.,
                          (a development stage company)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

4. NOTES PAYABLE

Notes payable at September 30, 1999 consisted of the following:

                                                                   September 30,
                                                                       1999
                                                                       ----

      Unsecured demand note payable, bearing interest at 9%,
        Guaranteed by the President                                  $ 10,000
      Unsecured demand notes payable to a director and
        Shareholders, bearing interest at 10%                          31,800
                                                                     --------

                                                                     $ 41,800
                                                                     ========

During the year ended September 30, 1999, the Company paid its President and
Chief Executive Officer $10,212 for monies advanced since inception.

5. SALE OF SECURITIES

In fiscal 1997, the Company issued to founders of Rad Source 8,750,000 shares of
common stock for $875. On the date of the merger with the Company, the founding
stockholders received 759,422 shares in the Company in exchange for their
initial shares in Rad Source.

On December 24, 1998, Rad Source purchased the Company for $100,000. The
transaction was accounted for as a reverse merger and, therefore, the financial
statements are those of Rad Source since its inception on October 11, 1996.
Because there were no assets, liabilities or operations acquired, the $100,000
paid was charged to other non-operating expense. In connection with this
transaction, 1,800 shares of common stock were retained by the prior
stockholder.

In December 1998 and January 1999, the Company sold, pursuant to a private
placement, 113,333 shares of common stock for $573,777, net of expenses. On
September 16, 1999, the Company sold 500,000 shares of common stock for $100,000
and issued 683,333 shares for services, and an expense of $106,667 was recorded.

During the year ended September 30, 1998, individuals and a corporation advanced
the Company funds to purchase common stock. During fiscal year 1999, the Company
issued 20,667 shares of stock for these advances of which 18,556 shares were
contributed by one of the founders, for a net of 2,111 new shares of common
stock issued for the unsecured advances of $54,500.

During the year ended September 30, 1999, the Company issued 1,016,707 shares of
common stock for consulting services in the amount of $2,214,001 and 16,667
shares for legal services in the amount of $100,000. The charge to expense was
based on the fair market value of the securities issued at the time of issuance.
Also during the year, the founder contributed 198,860 of the original 759,422
shares that were reissued in the share exchange in payment for consulting
services totaling $1,193,160, based on the fair market value of the securities
at the time of issue. In addition, the founder contributed 10,000 shares for
legal fees amounting to $60,000.


                                       23
<PAGE>

                  RAD SOURCE TECHNOLOGIES, INC. AND SUBSIDIARY
                        FORMERLY COMPUTER VENDING, INC.,
                          (a development stage company)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. STOCK OPTIONS

The following table summarizes information about stock options at September 30,
1999:

<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>
$      0.20        807,000         2.96          $   0.20      807,000        2.96        $  0.20
===========        =======         ====          ========      =======        ====        =======
</TABLE>

The following table summarizes activity for the year ended September 30, 1999.

                                                             1999
                                                    ----------------------
                                                                 Weighted-
                                                                  Average
                                                                 Exercise
                                                     Shares        Price
                                                     ------        -----

      Outstanding on October 1, 1998                     --           --
      Granted                                       807,000       $ 0.20
      Outstanding on September 30,                  807,000       $ 0.20
      Exercisable on September 30,                  807,000       $ 0.20
      Shares available on September 30,
         for options that may be granted            807,000       $ 0.20

      Weighted average fair value of
         options granted                            $   .17
                                                    =======

The Company adopted SFAS No. 123, "Accounting for Stock Based Compensation." In
accordance with SFAS No. 123, the Company expensed $120,514 as compensation for
options granted to consultants during the fiscal year ended September 30, 1999.
As permitted by SFAS No. 123, the Company chose to apply APB Opinion No. 25,
"Accounting for Stock Issued to Employees" (APB 25) and related interpretations
for stock options issued to employees. Accordingly, no compensation cost has
been recognized for 100,000 options granted to one employee.

As required by SFAS 123, pro forma disclosures regarding net income and earnings
per share must be determined as if the Company had accounted for its employee
stock options under the fair value


                                       24
<PAGE>


                  RAD SOURCE TECHNOLOGIES, INC. AND SUBSIDIARY
                        FORMERLY COMPUTER VENDING, INC.,
                          (a development stage company)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. STOCK OPTIONS (continued)

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 1999.

                                                         For the year ended
                                                         September 30, 1999
                                                         ------------------

            Risk free interest rate                             5.67%
            Expected lives                                         3
            Expected volatility                                 1.62
            Expected dividend yield                               --

The Company's pro forma information under SFAS 123 for the year ended September
30, 1999 was as follows:

                                                            1999
                                                            ----
                                                    As               Pro
                                                 reported           forma
                                                 --------           -----

            Net loss                            $(4,246,852)     $(4,263,898)
                                                ===========      ===========
            Net loss per share - basic          $     (3.63)     $     (3.65)
                                                ===========      ===========

7. INCOME TAXES

The Company had available at September 30, 1999, a net operating loss
carry-forward for federal and state tax purposes of approximately $1,010,000
that could be applied against taxable income in subsequent years through
September 30, 2012 to 2018. The tax effect of the net operating loss is
approximately $380,000, and a full valuation allowance has been recorded, since
realization is uncertain.

8. LEASE COMMITMENTS

The Company entered into a vehicle lease on December 31, 1996 for a term of 39
months at $430 per month. The Company also assumed a lease for office space on
August 16, 1996 for a term of two years at $560 per month. The lease is
currently on a month to month basis. Future minimum lease payments under
noncancelable operating leases are $2,579 for the year ending September 30,
2000.

Rental expense for the vehicle and office leases charged to income for the years
ended September 30, 1999 and 1998 amounted to $11,880 and $ 6,839, respectively.


                                       25
<PAGE>

                  RAD SOURCE TECHNOLOGIES, INC. AND SUBSIDIARY,
                        FORMERLY COMPUTER VENDING, INC.,
                          (a development stage company)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. LICENSE AGREEMENT

The Company has a licensing agreement with its President to pay a license fee of
5% of the net selling price of licensed technologies. The term of the agreement
is for ten (10) years and it expires on September 14, 2009. If the President
does not receive at least $12,000 per quarter in licensing fees and salary, then
all rights based on the agreement are terminated and all rights to the
technologies revert to the President. This agreement cancelled a prior licensing
agreement that provided for a minimum of $48,000 per annum in licensing fees and
salary. As of September 30, 1999, the President waived all rights to any and all
fees not paid under the licensing agreements from inception through that date,
and no fees have been accrued as payable to the President. The Company is
dependent upon these technologies for its product line.


                                       26
<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.

(a)   Directors and Executive Officers

      The following sets forth the names and ages of our officers and directors.
      Our directors are elected annually by the shareholders, and the officers
      are appointed annually by the board of directors.

--------------------------------------------------------------------------------
Name                    Position              Age                    Term
--------------------------------------------------------------------------------
Richard Adams           Director              53                     Annual
--------------------------------------------------------------------------------
Will Hartman            Director              39                     Annual
--------------------------------------------------------------------------------
Adrian Kesala           Director              55                     Annual
--------------------------------------------------------------------------------
Randol Kirk             CEO, President,
                        Director              51                     Annual
--------------------------------------------------------------------------------
Robert Munson           Secretary & Director  57                     Annual
--------------------------------------------------------------------------------

      Richard Adams.

      Mr. Adams has served as a Director of the Company since December 24, 1998.
      He holds a B.A. from Michigan State University. Mr. Adams has had a long
      and distinguished career in management within the healthcare and medical
      field, during which, he co-founded Epsilon Medical Corporation with Mr.
      Kirk in 1991, as well as aided in the development of the (D.I.A.) Scan
      Portable Fluoroscopy Unit.

      From 1978 to the present, Mr. Adams was the owner and President of
      LifeCare Imaging International, Ltd, a fifteen (15) year old manufacturer
      of mobile medical suites.

      Will Hartman.

      William Hartman, a CPA, has served as a Director of the Company since
      March 1999. Mr. Hartman is a CPA and holds Bachelor of Science, Master of
      Business Administration and Master of Accounting Degrees from Miami
      University in Oxford, Ohio. Mr. Hartman has served in consulting and
      executive financial positions and began his career with Price Waterhouse
      in 1984. From April 1994 to June 1995, Mr. Hartman served as chief


                                       27
<PAGE>

      financial officer of Jansko, Inc., a furniture manufacturing company. From
      July 1995 to October 1996, Mr. Hartman served as vice-president of finance
      and administration for Turbo Power, Inc., an aircraft engine overhaul
      facility. From October 1996 to June 1998, Mr. Hartman served as a
      financial advisor to Custom Air Support Holdings, Inc., a holding company
      for aviation investments, and from April 1998 to June 1998 served as
      President of an affiliated freight airline, Custom Air Transport, Inc.
      From August 1998 to May 1999, Mr. Hartman was the senior manager of
      corporate reporting for Neff Corp., an industrial equipment leasing
      company listed on the NYSE. From June 1999 through October 1999 Mr.
      Hartman was employed by ecom ecom.com, Inc., a sports leisure and internet
      commerce company, and since then has been a financial consultant to them
      and the Company.

      Adrian Kesala.

      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, as well as
      the Director of Radiology at Swedish Covenant Hospital in Chicago,
      Illinois from 1985 to 1990. Presently, Mr. Kasala is in the active
      practice of radiology at Resurrection Medical Center, Chicago, Illinois,
      where he has been since 1991.

      Randol Kirk.

      Mr. Randol Kirk is the founder of Rad Source and has served as President
      of the Company since December 24, 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, which provided diagnostic evaluations for
      stroke patients in skilled nursing facilities. He worked in this capacity
      from 1991 to 1995. In 1996 Mr. Kirk founded Rad Source, Inc. Mr. Kirk's
      most recent efforts have been directed towards developing and building our
      RS 2000 and RS 3000 irradiators.

      Robert Munson.

      Robert Munson has served as our Director of Marketing 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 the Vice President of Sales and Marketing
      for Medical Resources International, which manufactured and distributed
      medical gloves, from 1988 to 1991.

(b)   Significant Employees.

      There are no employees expected to make a significant contribution to the
      business that are not mentioned above.

(c)   Family Relationships.


                                       28
<PAGE>

      There are no family relationships among directors, executive officers, or
      persons nominated for such positions.

(d)   Involvement in Certain Legal Proceedings.

      From April of 1994 to June 1995, Will Hartman our Director, served as
      Chief Financial Officer for Jansko Inc. which entered Chapter 7 bankruptcy
      May 1, 1996 in the Southern District of Florida.

      Other than the aforementioned, during the past five years there have been
      no bankruptcies, criminal proceedings, or other legal proceedings, which
      would be material to the evaluation of the ability or integrity of any
      director, executive officer, or any person, nominated for such positions
      in the Company.

Item 10. Executive Compensation

(a)   General.

The following tables and notes present, for the two fiscal years ended September
30, 1999, the compensation paid by the Company to the Company's chief executive
officers:

(b)   Summary Compensation Table

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                                         Long Term Compensation
------------------------------------------------------------------------------------------------------------------------------------
                               Annual Compensation                       Awards                             Payouts
------------------------------------------------------------------------------------------------------------------------------------
(a)                   (b)      (c)         (d)       (e)                 (f)            (g)                 (h)         (i)
------------------------------------------------------------------------------------------------------------------------------------
Name and              Year     Salary      Bonus     Other Annual        Restricted     Securities          LTIP        All Other
Principle Position                                   Compensation        Stock          Underlying          Payouts     Compensation
                                                                         Award(s)       Options/SARs
------------------------------------------------------------------------------------------------------------------------------------
<S>                   <C>      <C>         <C>       <C>                 <C>            <C>                 <C>         <C>
Richard Adams,        1999     5000        0         0                   $0             100,000 (1)         0           0
Secretary             1998     0           0         0                   $0             0                   0           0
------------------------------------------------------------------------------------------------------------------------------------
Will Hartman,         1999     6250        0         0                   $15,583        100,000 (1)         0           0
Director              1998     0           0         0                   $0             0                   0           0
------------------------------------------------------------------------------------------------------------------------------------
Adrian Kesala,        1999     0           0         0                   $0             100,000 (1)         0           0
Director              1998     0           0         0                   $0             0                   0           0
------------------------------------------------------------------------------------------------------------------------------------
Randol Kirk,          1999     20,000      0         0                   $74,800        100,000 (1)         0           0
President, CEO        1998     48,000      0         0                   $0             0                   0           0
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       29
<PAGE>

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
<S>                   <C>      <C>         <C>       <C>                 <C>            <C>                 <C>         <C>
Robert Munson,        1999     10,000      0         0                   $0             100,000 (1)         0           0
Director              1998     0           0         0                   $0             0                   0           0
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)   These options are vested and exercisable by the holder until September 30,
      2002

(c)   Options/SAR Grants Table

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
                        Number of
Name/Position           Underlying           % of Total Options        Exercise Price       Expiration Date
                        Securities                Granted
-----------------------------------------------------------------------------------------------------------
<S>                     <C>                  <C>                       <C>                  <C>
Richard Adams,          100,000              20%                       $0.20                9/15/02
Secretary
-----------------------------------------------------------------------------------------------------------
Will Hartman,           100,000              20%                       $0.20                9/15/02
Director
-----------------------------------------------------------------------------------------------------------
Adrian Kesala,          100,000              20%                       $0.20                9/15/02
Director
-----------------------------------------------------------------------------------------------------------
Randol Kirk,            100,000              20%                       $0.20                9/15/02
President, CEO
-----------------------------------------------------------------------------------------------------------
Robert Munson,          100,000              20%                       $0.20                9/15/02
Director
-----------------------------------------------------------------------------------------------------------
</TABLE>

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 October 5, 1999.
Unless otherwise indicated, we believe that the beneficial owner has sole voting
and investment power over such shares.

(a)   Security Ownership of Certain Beneficial Owners

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
Title Of Class         Name and Address of                      Number of Shares           Percentage Ownership
                       Beneficial Owner                         Beneficially Owned         of Class
---------------------------------------------------------------------------------------------------------------
<S>                    <C>                                      <C>                        <C>
Common Stock           Richard Adams                            258,334                    10.16%
                       475 Ramblewood Drive, Ste. 207
                       Coral Springs, Florida 33071
---------------------------------------------------------------------------------------------------------------
</TABLE>


                                       30
<PAGE>

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
<S>                    <C>                                      <C>                        <C>
Common Stock           Will Hartman                             318,333                    12.52%
                       475 Ramblewood Drive, Ste. 207
                       Coral Springs, Florida 33071
---------------------------------------------------------------------------------------------------------------
Common Stock           Adrian Kesala                            277,778                    10.92%
                       475 Ramblewood Drive, Ste. 207
                       Coral Springs, Florida 33071
---------------------------------------------------------------------------------------------------------------
Common Stock           Randy Kirk                               801,451                    31.51%
                       475 Ramblewood Drive, Ste. 207
                       Coral Springs, Florida 33071
---------------------------------------------------------------------------------------------------------------
Common Stock           Robert Munson                            235,334                    9.25%
                       475 Ramblewood Drive, Ste. 207
                       Coral Springs, Florida 33071
---------------------------------------------------------------------------------------------------------------
</TABLE>

(b)   Security Ownership of Management

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
Title Of Class           Name and Address of                  Number of Shares               Percentage Ownership
                         Beneficial Owner                     Beneficially Owned             of Class
-----------------------------------------------------------------------------------------------------------------
<S>                      <C>                                  <C>                            <C>
Common Stock             Richard Adams                        258,334                        10.16%
                         475 Ramblewood Drive, Ste. 207
                         Coral Springs, Florida 33071
-----------------------------------------------------------------------------------------------------------------
Common Stock Will        Will Hartman                         318,333                        12.52%
                         475 Ramblewood Drive, Ste. 207
                         Coral Springs, Florida 33071
-----------------------------------------------------------------------------------------------------------------
Common Stock             Adrian Kesala                        277,778                        10.92%
                         475 Ramblewood Drive, Ste. 207
                         Coral Springs, Florida 33071
-----------------------------------------------------------------------------------------------------------------
Common Stock             Randy Kirk                           801,451                        31.51%
                         475 Ramblewood Drive, Ste. 207
                         Coral Springs, Florida 33071
-----------------------------------------------------------------------------------------------------------------
</TABLE>


                                       31
<PAGE>

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
<S>                      <C>                                  <C>                            <C>
Common Stock             Robert Munson
                         475 Ramblewood Drive, Ste. 207       235,334                        9.25%
                         Coral Springs, Florida 33071
-----------------------------------------------------------------------------------------------------------------
                         Total Officers & Directors (5)     1,857,897                        64.25%
-----------------------------------------------------------------------------------------------------------------
</TABLE>

(c)   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

On September 15, 1999, we entered into an employment agreement with Mr. Randol
Kirk for him to provide management, product research and development, and other
activities within his field of expertise to the Company. This agreement is for a
term of three years from the date of execution, and provides for a salary of
$120,000 for the first year of employment, $140,000 for the second year of
employment and $150,000 for the third year of employment under the agreement. In
addition, the agreement requires that we give the employee an option to purchase
100,000 shares of our common stock at $0.20 per share and 400,000 share of
restricted common stock.

This agreement is terminable upon mutual agreement of the parties, action by the
Board of Directors in the event of illness or disability or material default or
breach of the agreement.

There is currently an exclusive licensing agreement between us and Mr. Randol
Kirk, our founder and President. Under the terms of this agreement, Randol Kirk
is to be paid a five percent (5%) royalty based upon the total net selling price
of the licensed technology and licensed products made, used or sold by the
Company. Licensed technology and products consists of our irradiation devices.
This agreement began on September 15, 1999 and is for a term of ten (10) years.
The agreement is renewable by the Company. Under the agreement, royalties are to
be paid monthly, within ten (10) days after the end of the month in which they
become due. Upon our default in making any payment not cured within thirty (30)
days of notice, Mr. Kirk may terminate the licensing agreement. If the amount of
royalty received by Mr. Kirk is less than $12,000 per fiscal quarter, including
company compensation, the agreement between the parties will be terminated. As
such, the rights to the licensed technology would revert back to Mr. Kirk.
Should this occur, the operations of the Company could be adversely affected.

Other than the aforementioned, we do not intend to enter into any transactions
with our beneficial owners. We are not a subsidiary of any parent company.

Item 13. Exhibits and Reports on Form 8-K


                                       32
<PAGE>

EXHIBIT INDEX

Exhibit Description                                                         Page
--------------------------------------------------------------------------------

2     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 2 filed November 16, 1999.)

3.2   Bylaws (incorporated by reference to Rad Source
        Technologies, Inc. Form 10SB, 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.)

10.1  License Agreement between Randol Kirk and the Company
        (incorporated by reference to Rad Source Technologies,
        Inc. Form 10SB, Amendment 1, Exhibit 10.1 filed
        November 16, 1999.)

10.2  Employment Agreement between Randol Kirk and the
        Company (incorporated by reference to Rad Source
        Technologies, Inc. Form 10SB, Amendment 1, Exhibit
        10.2 filed November 16, 1999.)

10.3  Agreement between Rad Source Technologies Inc., and
        Capital International Holdings Inc.incorporated by
        reference to Rad Source Technologies, Inc. Form 10SB,
        Amendment 1, Exhibit 10.3 filed November 16, 1999.)

10.4  Agreement between Rad Source Technologies Inc. and USI
        Inc. (incorporated by reference to Rad Source
        Technologies, Inc. Form 10SB, Amendment 1, Exhibit
        10.4 filed November 16, 1999.)

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.)

23    Consent of Independent Auditors                                        35

27    Financial Data Schedule


                                       33
<PAGE>

SIGNATURES

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

                                            RAD SOURCE TECHNOLOGIES INC.


   Dated:  January 13, 1999                 By: /s/ Randol Kirk
           ----------------                 --------------------------------
                                            Randol Kirk, President and
                                            Principal Financial Officer


                                       34