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

                                    FORM 10-K

[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934
                     For the fiscal year ended June 30, 2002

[  ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES
         EXCHANGE ACT OF 1934
         For the transition period ________________ to _________________

                         Commission file number: 0-28168

                        STRATEGIC CAPITAL RESOURCES, INC.
             (Exact name of registrant as specified in its charter)

          Delaware                                               11-3289981
(State or other jurisdiction of                               (I.R.S Employer
incorporation or organization)                               Identification No.)

             7900 Glades Road, Suite 610, Boca Raton, Florida 33434
                     (Address of principal executive office)

                                 (561) 558-0165
                         (Registrant's telephone number)


           Securities registered pursuant to Section 12(b) of the Act:

                                      None

           Securities registered pursuant to Section 12(g) of the Act:

                          Common Stock, $.001 par value

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

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best  of  the  Registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. [ ]

The aggregate market value of the Registrant's  outstanding Common Stock held by
non-affiliates  of the  Registrant on December 19, 2002,  was $ -0-.  There were
77,192 shares of Common Stock outstanding as of December 19, 2002.


<PAGE>

                       DOCUMENTS INCORPORATED BY REFERENCE

Form 8-K, dated May 30, 2002,  Form 8-K, dated June 30, 2002 and Form 8-K, dated
December 16, 2002 are hereby incorporated by reference into Part II and Part III
of this Form 10-K as if set forth.

         PRIVATE SECURITIES LITIGATION REFORM ACT SAFE HARBOR STATEMENT

This Annual  Report on Form 10-K  contains  certain  forward-looking  statements
within the meaning of the Private Securities  Litigation Reform Act of 1995, and
may be identified by the use of such words as "believe," "expect," "anticipate,"
"should," "planned,"  "estimated" and "potential."  Examples of forward- looking
statements  include,  but are not  limited  to,  estimates  with  respect to our
financial  condition,  results of  operations  and business  that are subject to
various factors which could cause actual results to differ materially from these
estimates.  These  factors  include,  but are not limited to,  general  economic
conditions,  changes in interest rates,  ability to continue insurance coverage,
real estate values, and competition; changes in accounting principals, policies,
or  guidelines;  changes  in  legislation  or  regulation;  and other  economic,
competitive, governmental, regulatory, and technological factors that may affect
our operations, pricing, products and services.


                                                                               2

<PAGE>

                                TABLE OF CONTENTS

                           FORM 10-K ANNUAL REPORT OF

                        STRATEGIC CAPITAL RESOURCES, INC.

                                                                            PAGE

Facing Page
Index
PART I
Item 1.       Business.........................................................4
Item 2.       Properties......................................................10
Item 3.       Legal Proceedings...............................................10
Item 4.       Submission of Matters to a Vote of Security Holders.............12

PART II
Item 5.       Market for the Registrant's Common Equity and
                 Related Stockholder Matters..................................12
Item 6.       Selected Financial Data.........................................14
Item 7.       Management's Discussion and Analysis of Financial
                 Condition and Results of Operations..........................15
Item 7A.      Quantitative and Qualitative Disclosures About Market Risks.....21
Item 8.       Financial Statements and Supplementary Data.....................23
Item 9.       Changes in and Disagreements With Accountants
                 on Accounting and Financial Disclosure.......................52
Item 9B.      Compliance With Section 16(a) of the Exchange Act...............52

PART III
Item 10.      Directors and Executive Officers of the Registrant..............52
Item 11.      Executive Compensation..........................................54
Item 12.      Security Ownership of Certain Beneficial Owners and Management..55
Item 13.      Certain Relationships and Related Transactions..................56

PART IV
Item 14.      Exhibits, Financial Statement Schedules
                 and Reports on Form 8-K......................................57

SIGNATURES....................................................................59


                                                                               3

<PAGE>

                                     PART I

As used in this Form  10-K,  "we",  "us" and "our"  refer to  Strategic  Capital
Resources, Inc. and our consolidated subsidiaries, depending on the context.

ITEM 1.  BUSINESS

We  are a  Delaware  corporation  organized  in  1995.  We  provide  specialized
financing for major  homebuilders and real estate  developers.  The arrangements
may take  several  forms  including  operating  leases,  option  agreements,  or
management  agreements.  We account for all such agreements as direct  financing
arrangements.  Such agreements may represent  off-balance sheet  transactions of
our  customers and clients.  We are engaged in such  financing  arrangements  in
three lines of business,  consisting of one reportable  segment,  all with major
homebuilders and real estate developers throughout the United States:

         Model home programs

         Residential real estate land banking

         Multi-family residential and other real estate

We have formed  several  wholly  owned,  special  purpose  subsidiaries  for the
exclusive purpose of acquiring specific  properties,  which subsidiaries perform
no other functions  other than to manage the activities and operations  directly
related to its specific purpose. The special purpose subsidiary is structured in
a way that its sole activity is the specific project.  We control the activities
and retain the risks and rewards of our ownership of such subsidiaries.  We also
guarantee  the  debt  of  each  subsidiary.  We do not  have  off-balance  sheet
arrangements with our special-purpose entities or special-purpose entities owned
by others.

MODEL HOME PROGRAMS

We purchase and leaseback  fully furnished model homes complete with options and
upgrades  to major  publicly  traded  homebuilders.  The model  homes are leased
pursuant  to a triple  net  lease  where  the  lessee  is  obligated  to pay all
maintenance,  taxes,  insurance and other applicable costs,  including,  but not
limited to, utilities and homeowner association assessments.  These arrangements
terminate only upon the sale of the model homes. In this regard, we have entered
into net listing  agreements  with real  estate  brokerage  affiliates  of those
clients  with whom we enter into the  leaseback  arrangement.  These  agreements
provide  for  commissions  and  incentives,   which  are  negotiated  on  a  per
transaction basis. The sale price may not be less than the original cash closing
purchase price, unless the client elects to pay any deficiencies at the closing.

All of our clients are  required to provide a surety  bond,  letter of credit or
equivalent  financial  instrument  in order to assess the  performance  of their
obligations.   These  financial   instruments   provided  by  our  clients  have
historically ranged from 5% to 110% of our purchase price of the model homes.

In many cases, we have obtained  various forms of insurance,  which  effectively
serve as credit  enhancements.  The  insurance  instrument  insures  the  timely
performance of our client of its obligations  under the relevant  agreement.  In
the event of default by our client, the insurer has an obligation to continue to
make the payments up to the penal sum of the bond.  All such  insurance has been
obtained  from major  domestic  insurance  companies  rated "A" through "AAA" by
major credit rating agencies.

                                                                               4

<PAGE>

The intent of these  arrangements is to reduce our cost of funds and to increase
the amounts borrowed, thereby increasing our profitability and leverage.

Since  inception,  we have  purchased a total of 463 model homes at an aggregate
purchase price in excess of $102,000,000.  The following is a breakdown of model
homes which we have  purchased and the purchase price by state at June 30, 2002,
and June 30, 2001:


                               June 30, 2002              June 30, 2001
                        -------------------------   -------------------------
     State              No. of Homes     Amount     No. of Homes    Amount
---------------         ------------  -----------   ------------  -----------
Arizona                       1       $   134,650         7       $   764,356
California                   25         6,703,315        44        11,669,315
Florida                       0                --         3           836,403
Iowa                          8         1,259,335        15         2,622,695
Minnesota                     1           226,040         7         1,683,505
Nevada                        4           469,960        13         1,667,790
New Jersey                   20         5,028,087        29         8,079,198
New York                      1           254,000         3           883,291
North Carolina                5         1,155,778         7         1,648,741
Pennsylvania                  1           250,000         8         1,851,686
Texas                         2           659,000         9         2,299,900
Utah                          0                --         3           496,097
                             --       -----------       ---       -----------
TOTAL                        68       $16,140,165       148       $34,502,977
                             ==       ===========       ===       ===========

The following is a summary by state of our model home  purchases and sales since
inception, as well as our inventory at June 30, 2002.

                                                               Model Home
                     Number of Model     Number of Model       Inventory
    State            Homes Purchased       Homes Sold       at June 30, 2002
--------------       ---------------     ---------------    ----------------
Arizona                     19                  18                  1
California                  62                  37                 25
Colorado                    22                  22                  0
Georgia                      5                   5                  0
Florida                    107                 107                  0
Iowa                        15                   7                  8
Minnesota                   21                  20                  1
Nevada                      13                   9                  4
New Jersey                 111                  91                 20
New York                     9                   8                  1
North Carolina              12                   7                  5
Pennsylvania                31                  30                  1
Texas                       25                  23                  2
Utah                         5                   5                  0
Virginia                     6                   6                  0
                           ---                 ---                ---
TOTAL                      463                 395                 68
                           ===                 ===                ===

                                                                               5
<PAGE>

The following chart summarizes our model home purchases and sales by state since
inception as well as the current model home inventory at June 30, 2002:


                                                               Model Home
                     Cost of Model       Cost of Model         Inventory
     State          Homes Purchased        Homes Sold       at June 30, 2002
---------------     ---------------      -------------      ---------------
Arizona              $  2,124,640         $ 1,989,990         $   134,650
California             16,267,394           9,564,079           6,703,315
Colorado                4,715,463           4,715,463                   -
Georgia                 1,576,755           1,576,755                   -
Florida                20,086,710          20,086,710                   -
Iowa                    2,622,695           1,363,360           1,259,335
Minnesota               4,852,110           4,626,070             226,040
Nevada                  1,667,790           1,197,830             469,960
New Jersey             28,335,475          23,307,388           5,028,087
New York                3,301,435           3,047,435             254,000
North Carolina          2,758,255           1,602,477           1,155,778
Pennsylvania            7,191,197           6,941,197             250,000
Texas                   5,060,757           4,401,757             659,000
Utah                      837,726             837,726                   -
Virginia                1,495,847           1,495,847                   -
                     ------------         -----------         -----------
TOTAL                $102,894,249         $86,754,084         $16,140,165
                     ============         ===========         ===========

The  following is a breakdown  of model home lease  revenues by state for fiscal
years ended June 30, 2002, 2001, and 2000:


                      Lease Revenue      Lease Revenue      Lease Revenue
                        Year Ended         Year Ended         Year Ended
     State              06/30/2002         06/30/2001         06/30/2000
---------------       -------------      -------------      -------------
Arizona                $   45,387         $  132,499          $  180,455
California              1,218,504          1,529,366           1,304,561
Colorado                        -                  -              81,126
Florida                    53,050            102,954             246,035
Iowa                      169,880            290,065                   -
Minnesota                  82,458            356,362              19,744
Nevada                    154,749            200,135             183,914
New Jersey                657,938          1,085,792           1,572,944
New York                   66,264            110,837             247,714
North Carolina            182,794            204,057             156,520
Pennsylvania              100,577            331,163             491,788
Texas                     177,663            407,561             287,196
Utah                       29,335             59,532              70,359
                       ----------         ----------          ----------
TOTAL                  $2,938,599         $4,810,323          $4,842,346
                       ==========         ==========          ==========


                                                                               6

<PAGE>



MODEL HOME PROGRAM SUBSEQUENT EVENTS

From July 1, 2002,  through the date of this Report, we sold nine model homes at
an aggregate  sales price of  $1,988,690.  These model homes were acquired at an
aggregate cost of $1,863,685.  In addition,  we have contracts  pending on eight
model homes at an aggregate sales price of $1,933,456, which were acquired at an
aggregate cost of $1,649,446.

RESIDENTIAL REAL ESTATE LAND BANKING

We  purchase  parcels of  residential  real  estate  from  non-affiliated  third
parties.   These  parcels  are  selected  by  homebuilders  with  whom  we  have
established a business  relationship.  We also purchase  residential real estate
owned by the homebuilders  and lease it back to them on a triple-net  basis. The
parcels of land are acquired at the lower of appraised  value or contract price.
The parcels of land may require additional  government approvals or entitlements
and  development  work or consist  of  finished  lots.  If  development  work is
required,  the homebuilder  enters into a fixed price  development  agreement to
develop the  parcels of land for us, and in some  cases,  is required to provide
completion  bonds  for some or all work by a surety  company  acceptable  to us.
Reimbursement for development work performed is typically paid monthly.  A lease
and exclusive option to purchase agreement are entered into with the homebuilder
simultaneously  with the land  acquisition.  The  terms and  conditions  of each
transaction are project  specific (lease rate,  term,  option deposit,  takedown
schedule, etc.). Insurance coverage is obtained to insure the prompt payment and
performance of the homebuilder, as well as the fully developed value of the real
estate acquired.

During the year  ended June 30,  2002,  we entered  into three (3)  Acquisition,
Development and Sale of Residential Real Estate Agreements in California (2) and
New Jersey  (1).  The  following  is a summary of the  project  costs by project
number:


                                                        Remaining
Project    Purchase   Development Costs   Total Costs  Development     Total
 Number     Price       Paid to Date     Paid to Date     Work     Project Costs
-------  -----------  -----------------  ------------  ----------- -------------
   1     $20,546,010     $         -     $ 20,546,010  $ 3,085,749  $ 23,631,759
   2       1,680,925         989,489        2,670,414      185,220     2,855,634
   3       2,539,458       2,174,460        4,713,918            -     4,713,918
   4       3,554,591       1,965,374        5,519,965      347,835     5,867,800
   5       8,083,084       3,629,757       11,712,841      977,901    12,690,742
   6       6,762,000               -        6,762,000            -     6,762,000
   7      11,800,000       3,312,379       15,112,379    4,245,432    19,357,811
   8      11,736,233               -       11,736,233    5,093,099    16,829,332
   9       7,680,468      18,930,561       26,611,029    9,142,987    35,754,016
         -----------     -----------     ------------  -----------  ------------

TOTAL    $74,382,769     $31,002,020     $105,384,789  $23,078,223  $128,463,012
         ===========     ===========     ============  ===========  ============

The  following is a summary of total costs paid to date,  sales of finished lots
and our residential real estate balance at June 30, 2002:

                                                                               7

<PAGE>


Project    Total Costs       Sale of         Balance at
Number    Paid to Date    Finished Lots    June 30, 2002          Location
-------   ------------    -------------    -------------    -------------------
   1      $ 20,546,010     $ 7,097,320      $13,448,690     California
   2         2,670,414       1,241,579        1,428,835     Arizona
   3         4,713,918       4,713,918                -     Utah
   4         5,519,965       4,746,984          772,981     Nevada
   5        11,712,841       5,703,720        6,009,121     Nevada
   6         6,762,000       6,762,000                -     California
   7        15,112,379       1,640,492       11,736,233     New Jersey
   8        11,736,233               -       13,471,887     California
   9        26,611,029      11,458,234       15,152,795     California
          ------------     -----------      -----------

TOTAL     $105,384,789     $43,364,246      $62,020,542
          ============     ===========      ===========

The following is a breakdown of interest income on residential  real estate land
banking by state:


                                          Year Ended June 30,
                                      -------------------------
                   State                 2002           2001
               -------------          ----------     ----------
               Arizona                $  209,961     $  146,417
               California              4,270,960      2,453,415
               Nevada                  1,210,232        454,122
               New Jersey              1,288,196              -
               Utah                      127,503        210,645
                                      ----------     ----------
               Total                  $7,106,852     $3,264,599
                                      ==========     ==========

RESIDENTIAL REAL ESTATE LAND BANKING SUBSEQUENT EVENTS

The following is a summary of development  costs paid and sales of finished lots
from July 1, 2002, through the date of this Report.


                  Project       Development      Sales of
                   Number       Costs Paid     Finished Lots
                  -------       ----------     -------------
                     1          $2,604,559      $ 9,154,945
                     2             131,674          595,958
                     3                   -          772,981
                     4             565,835        2,281,493
                     5             629,122        3,609,078
                     6           1,332,966                -
                     7           2,260,625        7,861,078
                                ----------      -----------

                  TOTAL         $7,524,781      $24,275,533
                                ==========      ===========

MULTI-FAMILY RESIDENTIAL AND OTHER REAL ESTATE

On July 15, 1999, we purchased a 288 unit multi-family  residential  property in
Jacksonville,  Florida, for a purchase price of $10,227,999.  The purchase price
was paid as follows:

                                                                               8

<PAGE>




           Assumption of existing first mortgage        $ 4,927,999
           New loan                                       5,300,000
                                                         -----------
           Total Purchase Price                          $10,227,999
                                                         ===========

Simultaneous with the purchase, we entered into an operation,  maintenance,  and
management agreement,  which provides for payment of a minimum income stream per
month.  The  agreement  also  requires  the  management  company to purchase the
property at the end of five years.  Their  performance  under the  agreement  is
insured by an insurance company rated "AAA" by Standard & Poor's.

Since 2000, three of our major clients have represented a significant portion of
our total revenues.  Of our total revenues,  one of these clients represents 57%
of our revenues  during 2002,  52% in 2001,  and 57% in 2000. A second  customer
represented  23% in 2002,  15% in 2001, and 22% of our revenues in 2000. A third
client represented 11% of our total revenue in 2001.

COMPETITION AND MARKET FACTORS

We are subject to all the general risks  associated with financing and investing
in real estate such as adverse changes in general or local economic  conditions,
changes in the supply of or demand for  similar or  competing  properties  in an
area, changes in interest rates and operating expenses, changes in market rental
rates,  changes in and compliance with accounting issues relating to off-balance
sheet  financing,   inability  to  procure  residual  value  insurance  polices,
inability to lease  properties  upon the  termination  or expiration of existing
leases,  the renewal of existing leases,  and inability to collect payments from
clients.

Our  business  operates  in a  highly  competitive  environment.  The  financial
services  industry  consists of a large number of  companies,  including  banks,
pension funds, insurance companies,  finance companies,  leasing companies,  and
real  estate  investment  trusts,  most of which  are  larger  and have  greater
financial resources than we do.

There  can be no  assurance  that we will be able to  raise  sufficient  capital
through  borrowings,  or the issuance of debt and equity securities,  to achieve
our investment objectives.

We are  dependent on the efforts of our  executive  officers,  key employees and
directors.  We have an employment contract with only one person. There can be no
assurance that we will be able to recruit  additional  personnel with equivalent
experience in the event of our loss of their services.

EMPLOYEES

At December 19, 2002, we employed seven (7) full-time employees,  which included
executive,  financial, sales and administrative personnel. Our employees are not
represented  by unions  or  subject  to any  collective  bargaining  agreements.
Management  considers the  relationship  with its employees to be excellent.  In
addition,  from  time  to  time,  we  retain  outside  professional  and  expert
consultants  to assist us with our business  plan.  At December 19, 2002, we had
one outside consultant,  our corporate and securities counsel, who is performing
additional  consulting  services to us separate from his legal services and whom
we have retained on a month to month basis.


                                                                               9

<PAGE>

ITEM 2.  PROPERTIES

Our  corporate  office is located at 7900 Glades  Road,  Suite 610,  Boca Raton,
Florida  33434,  where we lease 2,216  square  feet of  executive  office  space
pursuant to a five (5) year  written  lease  expiring  March 2007,  at an annual
lease rate of $68,539 during 2002  (approximately  $5,700 per month). Our annual
lease rate will be $65,062 in 2003.  We moved to this  location in January 2002,
when our prior  lease at 2500  Military  Trail  North,  Suite 260,  Boca  Raton,
Florida 33431, expired. We believe that our current facility is adequate for our
current and planned level of operations.

We own additional properties more fully described in Item 1, above.

INSURANCE

We have  comprehensive  insurance  including  liability,  fire, flood,  extended
coverage  personal  injury  and  rental  loss  insurance  with  respect  to  our
properties. We believe that such insurance provides adequate coverage.

ITEM 3.  LEGAL PROCEEDINGS

During the year ended June 30, 1997, we disposed of our construction subsidiary,
Iron Eagle  Contracting and Mechanical,  Inc.  ("IECM").  Under the terms of the
agreement,  we  sold  the  net  assets  of  IECM  for a note  in the  amount  of
$1,312,500.  The note bore  interest  at the prime  rate plus 1%.  Interest  was
payable in monthly  installments.  The note was  secured by all assets of IECM's
parent company,  Monarch  Investment  Properties,  Inc.  ("Monarch"),  which was
formerly known as Iron Holdings Corp.,  and by all of the issued and outstanding
shares of IECM.

During June 1999, we filed a lawsuit against Monarch, and its subsidiaries, IECM
and Tahoe Realty Corp., as well as two of its officers and other individuals, in
the Supreme Court of the State of New York, County of Queens. The action asserts
seven separate causes of action arising out of a default in payment of the
remaining $1,100,000 balance due under the promissory note evidencing moneys due
to us from Monarch as a result of its purchase of IECM from us.

The Court  granted our motion for summary  judgment  during  March 2000  against
Monarch in the sum of $1,100,000  plus interest from January 1, 1999, a judgment
of possession of all collateral  pledged by Monarch and judgment that we are the
rightful  owner  and  entitled  to  immediate   possession  of  the  collateral,
impressing a trust on said  collateral,  declaring  defendants to be trustees of
said  collateral and directing said trustees to deliver such collateral to us. A
decision  of  the  Appellate  Division  limited  the  extent  of  the  corporate
defendant's  liability  and the thrust of the action is against the  guarantors.
The action is now in the discovery  stage.  While it is difficult to predict the
outcome of any litigation,  there are no  counterclaims  asserted against us and
there does not appear to be a range of potential loss to us.

During the years ended June 30, 2002, 2001 and 2000, we took impairment  charges
for the remaining  $1,000,000  balance on the promissory note. The amount of the
write-down was determined by evaluating the underlying  value of the collateral,
the cost of recovery,  ongoing  litigation costs and the difficulty in realizing
the collateral securing the promissory note. Actual losses could differ from our
current  estimate  and will be  reflected  as  adjustments  in future  financial
statements.

Also, we filed suit against  BankAtlantic  Bancorp.,  Inc. and  BankAtlantic,  a
federal  savings bank, in the Circuit Court of the 15th Judicial  Circuit in and
for Palm Beach County, Florida, by complaint dated

                                                                              10

<PAGE>



December 30, 1998.  The complaint  charges a breach of fiduciary  duty and seeks
unspecified damages in that the defendant undertook to act as agent or broker in
connection  with  obtaining a $200 million loan facility  relating to a sale and
lease back program for a major,  publicly-traded  national builder.  Rather than
complete the financing  transaction,  the complaint alleges economic opportunity
was  usurped by  defendant  and  entered  into an  agreement  directly  with the
builder,  utilizing, inter alia, the terms of our program. This matter is in the
early stages of discovery. Since this represents a potential contingent gain for
us, there are no receivable  amounts recorded in the  accompanying  consolidated
balance sheets.

During May 2000,  we, along with FPE Funding,  LLC , filed a complaint  entitled
"In the case of Strategic Capital Resources,  Inc. and FPE Funding, LLC v. Dylan
Tire  Industries,  LLC,  Dylan  Custom  Mixing,  LLC;  Mid-American  Machine and
Equipment, LLC f/k/a Mid-American Tire and Machine, LLC; GMAC Commercial Credit,
LLC; Robert C. Liddon,  Trustee;  Mary Aronov,  Trustee;  David  Feingold;  John
Tindal;  Brett Morehouse;  Johnny Guy; Shan  Sutherland;  and Pirelli Tire LLC,"
Chancery Court for Davidson County, Tennessee, Case No. 00-1296-III, against the
referenced defendants alleging,  among other things, breach of contract,  fraud,
and civil conspiracy, arising from the breach of a sale and leaseback commitment
for which we procured  funding and under which FPE was to be the owner/lessor of
a manufacturing facility.

The  defendants/counter-plaintiffs,  Dylan Tire  Industries,  LLC,  Mid-American
Machine  and  Equipment,   LLC  and  Dylan  Custom  Mixing,  LLC  have  filed  a
counterclaim,  seeking  unspecified  consequential  damages "estimated to exceed
$500,000" for alleged breach of a loan commitment issued by us. The basis of the
claim is that we  allegedly  failed  to  honor  our  commitment  to lend for the
acquisition  of  a   manufacturing   facility,   resulting  in  damages  to  the
defendants/counter-plaintiffs,  who borrowed the money directly from ours lender
at allegedly  greater cost and who  allegedly had to pay a greater price for the
facility  as a result  of the  alleged  delay in the  closing.  We  believe  the
counterclaim is without merit and are vigorously  defend itself.  As such, there
is no accrual in the accompanying consolidated balance sheets.

Our claims were  substantially  dismissed by the lower court and affirmed by the
appellate  court.  We have  appealed to the  Tennessee  Supreme  Court.  We have
additional claims that have not as yet been filed pending the appeal outcome. We
have recorded a receivable from Dylan Tire Industries,  LLC for a commitment fee
of approximately  $180,000.  As a result of the uncertainty regarding collection
of the receivable,  we have reserved the entire balance. For the year ended June
30,  2002,  we recorded an  impairment  charge for the  receivable  amounting to
$91,122.

We are also party to an action  entitled  Star  Insurance  Company v.  Strategic
Capital Resources,  Inc., 15th Judicial Court, Palm Beach County,  Florida, Case
No. CL 00-433 AD, which is an action on an indemnity  bond.  Discovery  has been
conducted,  but is not completed.  Mediation,  which was conducted on August 13,
2002, has been adjourned. The Plaintiff has not been vigorously prosecuting this
action.  We intend to  vigorously  defend this action if and when the  plaintiff
proceeds. Due to the uncertainties of litigation,  we are unable to evaluate the
likelihood  of an  unfavorable  outcome  or  estimate  the  amount  of  range of
potential  loss. This matter has been referred by the court for mediation to see
if the parties  can settle the case.  We are  mediating  with the  plaintiff  to
settle the case but there is no assurance  that the  settlement  will occur.  As
such there are no accruals in the  accompanying  consolidated  balance sheet for
this matter.

We are not  presently  involved  in any other  material  litigation  nor, to our
knowledge,  is any other material litigation threatened against us or any of our
properties,  other than routine  litigation  arising in the  ordinary  course of
business. See Notes to Financial Statements.


                                                                              11

<PAGE>

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

During June 2002, a majority of our  shareholders by consent  approved a reverse
stock  split,  whereby one (1) share of our Common  Stock was issued in exchange
for every two hundred (200) shares of Common Stock issued and outstanding on the
record date. An applicable  Information  Statement was filed with the Securities
and Exchange Commission and disseminated to our shareholders.

                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS

Until  November 20, 2002,  our Common Stock was traded on the OTC Bulletin Board
under the symbol  "SCPI."  Our  trading  symbol was  changed  from "JJFN" to the
current  symbol on the  effective  date of the reverse  stock  split  referenced
above.  Because this report was filed late,  our common stock was delisted  from
trading on the OTC Bulletin Board.  Upon information and belief,  as of the date
of this  report,  our  Common  Stock  does not  trade..  We  intend  to cause an
application  to be filed to  reinstate  our common  stock for trading on the OTC
Bulletin Board  subsequent to the filing of this report and our quarterly report
on Form 10-Q for the three month  period  ended  September  30,  2002.  While no
assurances  can be  provided,  we believe  trading  of our common  stock will be
reinstated on the OTC Bulletin Board in the near future.

The following table sets forth, for the periods indicated,  the high closing bid
price and low closing  asked  price for our Common  Stock as reported by the OTC
Bulletin Board during the two year period prior to July 1, 2002. All current and
historical figures to our Common Stock have been adjusted to reflect our reverse
stock split (200 to 1).


                                      Year Ended June 30,
                 ----------------------------------------------------------
                       2002                 2001                2000
                 ----------------     ----------------     ----------------
   Quarter        High      Low        High      Low        High      Low
    Ended         Bid      Asked       Bid      Asked       Bid      Asked
------------     ------    ------     ------    ------     ------    ------
September 30          -         -     $40.00    $36.00     $60.00    $50.00
December 31           -         -     $28.00    $24.00     $50.00    $48.00
March 31         $34.00    $24.00     $26.00    $24.00          -         -
June 30          $51.00    $ 3.00     $38.00    $30.00          -         -

As of the date of this report,  there is no bid or asked price applicable to our
Common Stock, as our Common Stock does not publicly trade as of the date hereof.
The last sale price of our Common Stock as reported on the OTC  Bulletin  Board,
which took place on November 13, 2002,  was $10.00.  As of June 30, 2002,  there
were  approximately 557 shareholders of record,  not including those persons who
held their shares in "street name."

We have not paid any cash  dividends on our Common  Stock and do not  anticipate
paying any in the foreseeable  future.  We intend to continue our present policy
of retaining earnings for investment in our operations.


                                                                              12

<PAGE>

On November 2, 1995, we sold 400,000 shares of our 6% Participating  Convertible
Preferred  Stock for $1,000,000 in cash.  Each share was originally  convertible
into one share of our Common  Stock at $2.50 per share  commencing  in  December
1996.  Dividends are declared on the basis of a 50%  participation in the rental
revenue  stream up to $60,000 per year. At June 30, 2001, we had 400,000  shares
of 6% Participating  Convertible Preferred Stock issued and outstanding.  We had
not paid any  distributions on this Preferred Stock since July 1996, as a result
of a dispute between two unaffiliated parties who were entitled to dividends. In
July  1998,  David  Miller,  our  Chairman,  acquired  all of  these  shares  of
Convertible  Preferred  Stock.  At December 30, 1998, we owed $130,000 in unpaid
distributions.  In October 1998, we began paying  distributions to Mr. Miller at
the  rate  of  $10,000  per  month,   which  brought  us  current  on  preferred
distributions  in November  2000.  During  June 2002,  these  400,000  shares of
Convertible  Preferred  Stock were  redeemed for $500,000 in cash and a note for
$500,000. The note bears 6% interest,  payable monthly.  $250,000 is due July 1,
2003 and the balance is due July 1, 2004.

On April 8, 2002,  our Board of Directors  voted to authorize and recommend that
our  shareholders  approve a reverse  stock split,  whereby one (1) share of our
common stock would be issued for every two hundred (200) shares  outstanding  on
the established record date of April 8, 2002. Messrs.  Miller and Wilson, two of
our directors,  abstained from voting due to a perceived  potential  conflict of
interest  arising out of these directors  holding warrants to purchase shares of
our Common Stock. This reverse stock split was subsequently approved by those of
our  shareholders  representing  a majority  of the shares of Common  Stock then
outstanding pursuant to the laws of the State of Delaware.

Most of our  previously  outstanding  warrants to purchase  shares of our Common
Stock had been issued to Mr. Miller, our Chairman, in connection with loans that
had been extended to us by Mr. Miller and another member of our management  from
time to time  since  our  inception.  The  loans  represented  funds  that  were
necessary to conclude  transactions in the ordinary course of our business,  but
were unavailable  from other sources.  According to the terms of these warrants,
in the event of a  transaction  that  resulted in a  reduction  of the number of
outstanding  shares of our Common Stock,  including a reverse stock split, there
would be no  proportionate  adjustment  in the  number of shares  issuable  upon
exercise of the  warrants or in the  exercise  price  thereof.  The warrants had
exercise  prices that ranged from $.13 to $.47.  In June 2002,  an  aggregate of
1,430,000  warrants were  exercised for an aggregate  exercise price of $236,100
(approx. $0.17 per warrant).

SUBSEQUENT EVENT

In December  2002,  the warrant  exercise  discussed  above was rescinded by the
mutual consent of the former warrant  holders and our Company.  This  rescission
was necessary due to what we believe to be inaccurate  advice  provided to us by
our former independent accountants, who failed to advise of various negative tax
consequences to the warrant holder, and more importantly,  significant  negative
impact to our income statement  relating to the fact that the applicable warrant
agreement contained the provisions discussed above.

In  addition,  also in December  2002,  pursuant to the approval of our Board of
Directors and the warrant holders,  the relevant warrant agreements were amended
to negate the  provisions  specifying  that they are not affected by any reverse
stock split,  effective as of the date of our reverse stock split.  As a result,
the  8,797,114  previously  outstanding  warrants  have been  reduced  to 38,856
pursuant to the 200:1 reverse stock split  previously  undertaken.  The exercise
prices has also be adjusted  pursuant to the reverse  stock split,  resulting in
exercise  prices  ranging from $24 to $94 per warrant.  This  amendment was also
necessary  as a result of  incorrect  advice  provided by our prior  independent
accountants.


                                                                              13

<PAGE>

ITEM 6.  SELECTED FINANCIAL DATA

The selected  financial data presented  below for the years ended June 30, 2002,
2001,  2000,  1999,  and 1998 have been  derived  from our audited  consolidated
financial statements. This data should be read in conjunction with "Management's
Discussion and Analysis of Financial  Condition and Results of  Operations"  and
the  consolidated  financial  statements  and  related  notes  thereto  included
elsewhere in this Report.

As  more  fully  described  in  Note 1 to  our  audited  consolidated  financial
statements  included in "Part II, Item 8, Financial  Statements and Supplemental
Data" below,  errors resulting in a net  understatement  of previously  reported
interest  expense for the years ended June 30, 2001 and 2000 was  discovered  by
our management during 2002. Accordingly, our consolidated balance sheets and our
statement of operations and  stockholders'  equity for the years presented below
have been restated to reflect corrections to previously reported amounts.

<TABLE>
                           SELECTED FINANCIAL DATA (In
                        thousands, except per share data)

<CAPTION>
                                                                      June 30,
                                             -------------------------------------------------------
                                               2000       2001        2000       1999         1998
                                             --------   --------    --------    --------    --------
                                                       (Restated)  (Restated)  (Restated)  (Restated)
<S>                                          <C>        <C>         <C>         <C>         <C>
Income Statement Data:
  Revenues                                   $ 53,878   $ 11,383    $  6,846    $ 26,287    $ 21,303
                                             --------   --------    --------    --------    --------
  Expenses                                     51,714     10,234       6,757      26,469      21,709
  Impairment charge                                91      1,000         100          --          --
                                                                    --------    --------    --------
  Operating expenses                           51,805     11,234       6,857      26,469      21,709
                                             --------   --------    --------    --------    --------
  Income (loss) from continuing operations
    Before income tax benefit (expense)          2073        149         (11)       (182)       (406)
  Income tax expense                             1121        (95)        (67)        (80)         10
                                             --------   --------    --------    --------    --------
  Net income (loss)                               951         54         (79)       (262)       (396)
  Preferred stock distributions                    55         85         120          90          --
                                             --------   --------    --------    --------    --------
  Income (loss) applicable to
     common shareholders                     $    896   $    (31)   $   (199)   $   (352)   $   (396)
                                             ========   ========    ========    ========    ========

Per Share Data:
  Basic:
    Net income (loss)                        $  11.61   $   (.40)   $  (2.50)   $  (3.23)   $  (4.66)
    Weighted average number of common
          shares outstanding                       78         78          79          81          85
  Assuming Dilution:
    Net income (loss)                        $  11.55   $   (.40)   $  (2.50)   $  (3.23)   $  (4.66)
    Weighted average number of common
          shares outstanding                       78         78          79          95          85

                                                                              14
<PAGE>

<CAPTION>
                                                                      June 30,
                                             -------------------------------------------------------
                                               2000       2001        2000       1999         1998
                                             --------   --------    --------    --------    --------
                                                       (Restated)  (Restated)  (Restated)  (Restated)
<S>                                          <C>        <C>         <C>         <C>         <C>
Balance Sheet Data:
  Total assets                               $ 90,798   $ 94,954    $ 56,146    $ 37,159    $ 40,824
  Mortgages and notes payable                $ 77,592   $ 83,351    $ 46,541    $ 27,958    $ 31,538
  Other liabilities                          $  4,674   $  3,067    $  1,192    $    765    $    685
  Stockholders' equity                       $  8,531   $  8,536    $  8,413    $  8,436    $  8,601

</TABLE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

A summary of our operating  results,  including our  subsidiaries for the fiscal
years ended June 30, 2002, June 30, 2001, and June 30, 2000 are presented below.
As  more  fully  described  in  Note 1 to  our  audited  consolidated  financial
statements  included in "Part II, Item 8, Financial  Statements and Supplemental
Data" below,  errors resulting in a net  understatement  of previously  reported
interest  expense for the years ended June 30, 2001 and 2000 was  discovered  by
our management during 2002.  Accordingly,  our consolidated balance sheets as of
June 30, 2001 and our  statement of  operations,  stockholders'  equity and cash
flows for the years ended June 30,  2001 and 2000 have been  restated to reflect
corrections to previously reported amounts.

<TABLE>
<CAPTION>
                                                                      Years Ended June 30,
                                                      -----------------------------------------------
                                                                           2001             2000
                                                           2002         (Restated)       (Restated)
                                                      -------------   --------------   --------------
<S>                                                   <C>      <C>    <C>       <C>    <C>       <C>
Revenues:
  Interest income on direct financing arrangements:
    Model homes                                       $ 2,939    5%   $ 4,810    42%   $ 4,842    70%
    Residential real estate                             7,107   13%     3,265    29%        --    --
    Multi-family residential                            1,409    3%     1,378    12%     1,356    20%
  Sale of direct financing arrangements:
    Model homes - net                                     394    1%       377     3%       324     5%
    Residential real estate                            41,947   78%     1,417    12%        --    --
  Other income                                             81   --        136     2%       324     5%
                                                      -------  ---    -------   ---    -------   ---
Total revenues                                         53,877  100%    11,383   100%     6,846   100%

Costs and expenses:
  Interest and financing costs                          5,171   10%     5,985    52%     4,184    62%
    Multi-family operating                                484    1%       365     3%       355     5%
    Cost of direct financing arrangements sold:
    Residential real estate                            41,947   77%     1,417    13%        --    --
    Depreciation and amortization                       1,547    3%       931     8%       665    10%
    Corporate                                           2,564    5%     1,536    14%     1,554    23%
    Impairment charge                                      91   --      1,000     9%       100    --
                                                      -------  ---    -------   ---    -------   ---
Total costs and expenses                               51,804   96%    11,234    99%     6,858   100%

                                                                              15
<PAGE>
<CAPTION>
                                                                      Years Ended June 30,
                                                      -----------------------------------------------
                                                                           2001             2000
                                                           2002         (Restated)       (Restated)
                                                      -------------   --------------   --------------
<S>                                                   <C>      <C>    <C>       <C>    <C>       <C>

Income (loss) before income tax expense                 2,073    4%       149     1%       (12)   --
Income tax expense                                      1,121    2%        95     1%        67     1%
                                                      -------  ---    -------   ---    -------   ---
Net income (loss)                                     $   952    2%   $    54     1%   $   (79)   (1%)
                                                      =======  ===    =======   ===    =======   ===

</TABLE>

Comparison of Year Ended June 30, 2002 to Year Ended June 30, 2001.

Interest  income on direct  financing  arrangements  for the year ended June 30,
2002,  increased  $2,001,688  (21%)  compared  to the  prior  year  period.  The
increased  revenue was  primarily  attributable  to the  interest  income on the
increased  number of  residential  real estate  arrangements,  which amounted to
$7,106,852  for the period,  compared to  $3,264,599  for the prior year period,
offset by a decrease in interest income on model homes of $1,871,724.

Sale of direct financing arrangements increased $40,547,109 (2260%) for the year
ended June 30, 2002,  compared to the prior year  period.  During the year ended
June 30, 2002, we sold 80 model homes at an average price of $248,480,  compared
to 69 model  homes at an average  price of $260,101  for the prior year  period,
resulting in increased revenue.  The balance of $41,947,444 was from residential
real  estate.  Relevant  to our model  home  activities,  as of the date of this
report our portfolio of model homes is decreasing as a result of continued sales
of these  homes.  Unless we are able to acquire  additional  inventory  of model
homes in the  future our  revenues  from this  business  will  decrease.  We are
currently  negotiating with various builders to purchase  additional model homes
and expect to acquire the same in the near future.

Interest expense  decreased  $813,913 (14%) during the year ended June 30, 2002,
compared  to the prior  year  period,  primarily  due to the  decrease  in loans
utilized to purchase  additional assets under direct financing  arrangements and
lower interest rates.

Corporate  costs  increased  $1,028,224 (a 67% increase) from $1,536,118 for the
year ended June 30, 2001, to $2,564,342 for the year ended June 30, 2002.  These
costs  increased  as a  result  of our  re-audit  of three  years  of  financial
statements,  retention  of  experts to advise us on  various  accounting  issues
related to  outstanding  warrants and our reverse  stock split (which issues are
discussed above under "Part II, Item 5"), our retaining additional legal counsel
and consultants  applicable to the aforesaid issues,  consulting fees of $70,470
paid during this period,  termination  fees  pursuant to a settlement  agreement
between us and our former chief financial officer of $72,550,  professional fees
of $143,500 and moving  costs of $35,697.  Corporate  costs as a  percentage  of
total revenue decreased compared to the prior year period by 9%.

Net income  for the year ended June 30,  2002,  was  $951,339,  compared  to net
income of $53,791 for the prior year  period,  an increase of $897,548  (1669%).
Net  income  as a  percentage  of  total  revenue  increased  due to the  larger
impairment charge recognized in our prior fiscal year.

Comparison of Year Ended June 30, 2001 to Year Ended June 30, 2000.

Interest  income on direct  financing  leases for the year  ended June 30,  2001
increased  $3,254,518 (or 53%) compared to the prior year period.  The increased
revenue was primarily attributable to the interest

                                                                              16

<PAGE>



income on the residential  real estate leases,  which amounted to $3,264,599 for
the period. We did not generate income from this source during 2000.

Sale of direct  financing  leases  increased  $1,470,384  (or 454%) for the year
ended June 30, 2001,  compared to the prior year  period.  During the year ended
June 30, 2001, we sold 69 model homes at an average price of $260,131,  compared
to 76 model  homes at an average  price of $257,255  for the prior year  period,
resulting in the decreased revenue.

Interest  expense  increased  $1,800,638 (or 43%) during the year ended June 30,
2001  compared to the prior year period,  primarily due to the increase in loans
utilized to purchase additional assets under direct financing leases.

Corporate costs decreased $17,822 (a 1% decrease),  from $1,553,940 for the year
ended June 30, 2000, to $1,536,118  for the year ended June 30, 2001.  Corporate
costs as a  percentage  of total  revenue  was  consistent  with the prior  year
period.

Net income for the year ended June 30, 2001 was $53,791,  compared to a net loss
of ($78,706) for the prior year period.

LIQUIDITY AND CAPITAL RESOURCES

Our  uses for cash  during  the year  ended  June  30,  2002,  were for  revenue
producing asset acquisitions,  interest,  operating expenses,  and redemption of
Preferred Stock. We provided for our cash requirements from borrowings, the sale
of direct financing  arrangements  and other revenues.  At June 30, 2002, we had
approximately $21 million of unused, committed credit facilities available to us
under existing revolving loan agreements, which may be utilized to acquire model
homes and  residential  real estate land banking in accordance with the terms of
those  agreements.  These  facilities  expire through August 2003. We received a
commitment for $15,700,000 from a new financial institution.  The loan will bear
interest  based on 30 day LIBOR  plus a  premium.  It is our policy not to incur
costs from  activation  of our credit  facilities  unless and until  needed.  We
believe that these sources of cash are sufficient to finance our working capital
requirements and other needs for the next twelve months. However, as part of our
ongoing business,  we have had constant discussions with financial  institutions
for increased credit facilities and with investment bankers regarding private or
public  placement  of our  debt  or  equity  securities.  We  constantly  review
financing availability in the capital markets.  However, there are no definitive
agreements in place for us to obtain any additional  financing and no assurances
can be provided that we will undertake any such action in the immediate future.

At June 30,  2002,  we had notes  payable  in the  amount of  $1,909,200  due to
members of our  management,  which arose from advances they have made to us. The
notes are payable on demand and accrue  interest at 9%,  which  interest is paid
monthly.  Interest related to the 9% coupon on stockholder notes payable totaled
$115,361,  $109,543 and  $112,220  for the years ended June 30,  2002,  2001 and
2000, respectively. Additionally, we incurred non-cash interest expense relating
to the  issuance of warrants  with the  stockholder  loan  amounting to $98,668,
$269,142  and  $235,660  for the  years  ended  June 30,  2002,  2001 and  2000,
respectively.  At June 30, 2002 and 2001,  stockholder  loans  outstanding  were
$1,909,200 and $1,223,100, respectively.


                                                                              17

<PAGE>

COMMON STOCK REPURCHASE PROGRAM

As of June 30, 2002,  10,368 (post reverse  split)  shares had been  repurchased
under  this  program,  at a cost of  $457,999  (approximately  $44.17 per share,
adjusted for our reverse stock split). We did not purchase any shares during our
fiscal year ended June 30, 2002,  and we do not  anticipate  implementing  a new
repurchase  program.  We are currently  evaluating a tender offer for fractional
and odd lot shares to reduce our costs but there are no assurances  that we will
undertake this activity in the near future, or at all.

IMPAIRMENT CHARGE

In 2001, we took a pre-tax  non-cash  charge for the impairment of the remaining
$1,000,000 balance on a Promissory Note,  effectively  writing down the carrying
value of the Note to $0. In March  2000,  we set up a loss  reserve of  $100,000
against the Note, and have taken the remaining $1,000,000 charge during the year
ended June 30, 2001.  The amount of the write down was  determined by evaluating
the underlying value of the collateral and the difficulty anticipated in efforts
to realize the value of such  collateral  securing the Note.  We also  evaluated
cost of recovery,  ongoing  litigation costs, and other economic  conditions and
trends in making our determination.  Actual losses could differ from our current
estimate and will be reflected as  adjustments in future  financial  statements.
See "Part I, Item 3, Legal  Proceedings"  and "Item 8, Financial  Statements and
Supplementary Data."

CASH FLOWS

Net cash provided by operating  activities totaled $3,494,802,  comprised of net
income of $951,339, plus net adjustments for non-cash items of $1,822,102,  plus
a net change in other  operating  assets and  liabilities of $721,361.  Net cash
used  in  investing   activities   comprised   investment  in  direct  financing
arrangements of $7,900,478, offset by $9,233,393 in proceeds from sale of direct
financing arrangements.

Net cash provided by financing  activities  comprised  proceeds  from  mortgages
payable of $11,191,370, less repayment from stockholder loans of $50,000, offset
by  deferred  financing  costs of  $1,649,038,  purchase of  preferred  stock of
$500,000,  principal  payments on mortgages payable of $16,950,273 and preferred
distributions of $55,000.

SEGMENT REPORTING

Segment  Reporting - Statement of Financial  Accounting  Standards No. 131 ("FAS
131")  "Disclosures  about  Segments of an Enterprise  and Related  Information"
established  standards  for  the  manner  in  which  public  enterprises  report
information  about  operating  segments.  We have determined that our operations
primarily involve one reportable segment, direct financing arrangements.

NEW ACCOUNTING PRONOUNCEMENTS

The  Financial  Accounting  Standards  Board has  recently  issued  several  new
Statements  of  Financial  Accounting  Standards  ("SFAS").  Statement  No. 141,
"Business  Combinations"  supersedes Accounting Principles Board ("APB") Opinion
No. 16 and  various  related  pronouncements.  Pursuant  to the new  guidance in
Statement  No. 141, all business  combinations  must be accounted  for under the
purchase  method of  accounting;  the  pooling-of-interests  method is no longer
permitted.  SFAS 141 also  establishes  new rules  concerning the recognition of
goodwill and other intangible assets arising in a purchase business  combination
and requires disclosure of more information concerning a business combination in
the period in which it is completed.  This statement is generally  effective for
business combinations

                                                                              18

<PAGE>



initiated  on or after July 1, 2001.  Statement  No.  142,  "Goodwill  and Other
Intangible  Assets"  supercedes  APB  Opinion  17 and  related  interpretations.
Statement No. 142  establishes  new rules on accounting  for the  acquisition of
intangible assets not acquired in a business combination and the manner in which
goodwill and all other  intangibles  should be accounted for subsequent to their
initial recognition in a business combination  accounted for under SFAS No. 141.
Under  SFAS No.  142,  intangible  assets  should  be  recorded  at fair  value.
Intangible  assets with finite useful lives should be amortized over such period
and those with indefinite lives should not be amortized.  All intangible  assets
being  amortized  as well as those that are not,  are both subject to review for
potential  impairment  under SFAS No. 121,  "Accounting  for the  Impairment  of
Long-Lived  Assets and for  Long-Lived  Assets to be Disposed  of". SFAS No. 142
also  requires  that goodwill  arising in a business  combination  should not be
amortized  but is subject to impairment  testing at the reporting  unit level to
which the goodwill was assigned to at the date of the business combination.

SFAS No. 142 is effective for the fiscal years beginning after December 15, 2001
and must be applied as of the  beginning  of such year to all goodwill and other
intangible assets that have already been recorded in the balance sheet as of the
first day in which SFAS No. 142 is initially  applied,  regardless  of when such
assets  were  acquired.  Goodwill  acquired  in  a  business  combination  whose
acquisition  date is on or after July 1,  2001,  should  not be  amortized,  but
should be reviewed for impairment pursuant to SFAS No. 121, even though SFAS No.
142 has not yet been  adopted.  However,  previously  acquired  goodwill  should
continue to be amortized until SFAS No. 142 is first adopted.

Statement No. 143  "Accounting  for Asset  Retirement  Obligations"  establishes
standards for the initial measurement and subsequent  accounting for obligations
associated with the sale,  abandonment,  or other type of disposal of long-lived
tangible  assets  arising from the  acquisition,  construction,  or  development
and/or normal operation of such assets. SFAS No. 143 is effective for the fiscal
years beginning after June 15, 2002, with earlier application encouraged.

In August 2001,  the FASB issued SFAS 144,  "Accounting  for the  Impairment  or
Disposal of Long-Lived Assets".  This statement  addresses financial  accounting
and reporting for the impairment or disposal of long-lived assets and supercedes
FASB Statement No. 121, "Accounting for the Impairment of Long- Lived Assets and
for  Long-Lived  Assets to be Disposed Of". The  provisions of the statement are
effective for financial  statements  issued for the fiscal years beginning after
December 15, 2001.

The adoption of these  pronouncements  is not expected to have a material effect
on our consolidated financial statements.

In April 2002,  the FASB issued SFAS 145,  Rescission of FASB  Statements No. 4,
44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections.  SFAS
145 rescinds the  provisions of SFAS No. 4 that  requires  companies to classify
certain  gains and losses  from debt  extinguishments  as  extraordinary  items,
eliminates  the  provisions  of SFAS No. 44  regarding  transition  to the Motor
Carrier  Act of 1980 and amends the  provisions  of SFAS No. 13 to require  that
certain  lease  modifications  be treated as sale  leaseback  transactions.  The
provisions of SFAS 145 related to  classification  of debt  extinguishments  are
effective for fiscal years beginning after May 15, 2002. Earlier  application is
encouraged. We do not believe the adoption of this standard will have a material
impact on our consolidated financial statements.

In July 2002,  the FASB  issued  SFAS No.  146,  "Accounting  for  Restructuring
Costs." SFAS 146 applies to costs  associated  with an exit activity  (including
restructuring)  or with a disposal of long-lived  assets.  Those  activities can
include  eliminating  or  reducing  product  lines,  terminating  employees  and
contracts

                                                                              19

<PAGE>

and relocating plant  facilities or personnel.  Under SFAS 146, we will record a
liability  for a cost  associated  with an exit or disposal  activity  when that
liability is incurred  and can be measured at fair value.  SFAS 146 will require
us to disclose information about our exit and disposal  activities,  the related
costs,  and  changes  in those  costs in the  notes to the  interim  and  annual
financial  statements  that  include  the  period in which an exit  activity  is
initiated and in any subsequent period until the activity is completed. SFAS 146
is  effective  prospectively  for exit or disposal  activities  initiated  after
December 31, 2002, with earlier adoption  encouraged.  Under SFAS 146, a company
cannot restate its previously issued financial  statements and the new statement
grandfathers  the  accounting  for  liabilities  that a company  had  previously
recorded  under  Emerging  Issues Task Force  Issue 94-3.  We do not believe the
adoption  of this  statement  will have a  material  impact on our  consolidated
financial statements.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

We have identified critical accounting policies that, as a result of judgements,
uncertainties,   uniqueness  and  complexities  of  the  underlying   accounting
standards  and  operation  involved,  could  result in  material  changes to our
consolidated  financial  position  or  results  of  operations  under  different
conditions or using different assumptions. The most critical accounting policies
and estimates are:

     >    Estimated allowance for uncollectible accounts receivable;

     >    Estimate  of the fair  value of  warrants  issued in  connection  with
          stockholder loans;

     >    Estimates regarding ongoing litigation;

     >    Estimates of the fair value of financial instruments;

     >    Revenue  recognition  in accordance  with SFAS No. 13,  Accounting for
          Leases;

Details  regarding  our use of these  policies  and the  related  estimates  are
described in the accompanying  consolidated  financial statements as of June 30,
2002 and 2001 and for the years ended June 30, 2002,  2001 and 2000.  During the
year ended June 30,  2002,  there have been no material  changes to our critical
accounting  policies  that  impacted  our  consolidated  financial  condition or
results  of  operations  other than the  correction  of errors as  discussed  in
footnote 1(O) to our consolidated financial statements.

TRENDS

During  our fiscal  year  ended  June 30,  2002,  our  operations  continued  to
accelerate  at a rapid  pace.  For the fiscal  year ended June 30,  2002,  total
purchases of revenue producing assets were in excess of $53 million, compared to
approximately $11 million for the year ended June 30, 2001. Monthly revenue from
direct financing arrangements  outstanding at June 30, 2002, 2001, and 2000 were
$955,000,  $912,000, and $521,000,  respectively.  During our fiscal year ending
June 30, 2003, we expect to continue to focus on improving our profitability and
returns on our invested capital.

It is anticipated that demand for our specialty financial services will continue
to develop  during  2003,  as our clients  continue to desire to maintain  their
financial ratios.  Further, our financial services allow our clients the ability
to maximize  financial  leverage  while  reducing  their  applicable  risks.  We
anticipate  that  continued  strong demand in the housing  industry,  along with
favorable interest rate spreads, should allow us to continue our growth.

                                                                              20

<PAGE>

While no  assurances  can be provided,  we believe that  favorable  demographics
should prevent a significant  downturn. In this regard, a recent study performed
by  the  Joint  Center  for  Housing  Studies  of  Harvard  University  included
projections  suggesting that the number of owners will rise by an average of 1.1
million  annually  over the next two decades.  Much of this growth  reflects the
dramatic rise in the foreign-born population since the 1970's with the pickup in
Latin American and Asian  immigration.  Today, over one in ten U.S. residents is
foreign-born.

The housing outlook remains bright with about 1.2 million households expected to
form each year  through  2020.  Reflecting  the growing  immigrant  and minority
populations,  Joint Center projections  suggest that homeowners will account for
the lion's share of household growth, rising in number from just over 70 million
in 2000 to 92.3 million by 2020.

Producing  housing for the burgeoning number of U.S.  households,  together with
meeting baby-boomer demand for vacation and retirement homes and replacing units
lost from the stock,  calls for average annual  construction  of 1.7 million new
homes and apartments in the decades ahead.  Add to this the enormous  investment
required to maintain and upgrade the existing inventory of homes and it is clear
to us that housing  will remain a key driver of the economy for the  foreseeable
future.

INFLATION

Inflation has not had a significant  impact on the results of operations  and is
not anticipated to have a significant negative impact in the foreseeable future.
Although  increases in the rate of inflation may tend to increase interest rates
which may increase our cost of borrowed  funds, we attempt to pass the increases
through to our customers through increased charges. The potential adverse impact
of inflation on our lease operations is further  mitigated by requiring  clients
to pay all operating expenses, including but not limited to real property taxes,
insurance and utilities.  However, there is no assurance that inflation will not
have a material adverse impact on our future results of operation.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are  exposed  to  changes  in  interest  rates  primarily  as a result of our
floating rate debt arrangements, which include borrowings under lines of credit.
These  lines,  along  with  cash  flow  from  operations,  are used to  maintain
liquidity  and fund business  operations.  The nature and amount of our debt may
vary as a result of business requirements,  market conditions and other factors.
It has not been  necessary for us to use  derivative  instruments  to adjust our
interest  rate risk  profile,  although we  continuously  evaluate  the need for
interest rate caps, swaps, and other interest rate-related derivative contracts,
to mitigate this risk.

A hypothetical  100 basis point adverse move  (increase) in interest rates along
the entire interest rate curve would  adversely  affect our annual interest cost
by approximately $775,000.

RISK FACTORS

Our business is subject to numerous risk factors,  which should be considered in
evaluating our Company and our financial outlook, including the following:

There are  risks  due to recent  events,  including  increased  insurance  risk,
perceived risk of travel and adverse changes in economic conditions, which could
negatively affect our business. Due in large part to the terrorist activities of
September  11, 2001,  and other recent  events,  we believe that  insurance  and
surety companies are re-examining  many aspects of their business,  and may take
actions including

                                                                              21

<PAGE>

increasing premiums,  requiring higher self-insured  retentions and deductibles,
requiring additional  collateral on surety bonds,  reducing limits,  restricting
coverages,  imposing exclusions, such as sabotage and terrorism, and refusing to
underwrite  certain  risks and  classes of  business.  Any  increased  premiums,
mandated  exclusions,  change in  limits,  coverages,  terms and  conditions  or
reductions in the amounts of bonding capacity available may adversely affect our
ability to obtain  appropriate  insurance  coverages at reasonable costs,  which
could have a material adverse effect on our business.

Terrorist  attacks or acts of war may  seriously  harm our  business.  Terrorist
attacks  or acts of war may  cause  damage or  disruption  to our  Company,  our
employees,  our facilities  and our customers,  which could impact our revenues,
costs and expenses,  and financial  condition.  The terrorist  attacks that took
place in the  United  States on  December  11,  2001,  were  unprecedented.  The
potential for future  terrorist  attacks has created many economic and political
uncertainties, some of which may have additional material adverse affects on our
business, results of operations, and financial condition.

The FASB has issued an Exposure Draft  "Consolidation of Certain Special Purpose
Entities" ("SPE's"),  a proposed  Interpretation of Accounting Research Bulletin
(ARB) No. 51, "Consolidated  Financial  Statements" that establishes  accounting
guidance for  consolidation  of SPE's.  We believe that  implementation  of this
Exposure  Draft,  when and if it  becomes  a final  accounting  rule,  would not
require our clients to consolidate our transactions.

There are appraisal risks. Real estate appraisals are only estimates of property
values based on a professional's  opinion and may not be accurate  predictors of
the actual amount that we would receive from a property sale. If an appraisal is
too high, the property's value could go down upon reappraisal or if the property
is sold for a lower price than the  appraisal.  An appraisal  does not guarantee
the value of a property.

We may need additional funds for the growth and development of our business.  If
we are unable to obtain these  funds,  we may not be able to expand our business
as planned and this could adversely  affect our results of operations and future
growth.

There is a risk of change of economic  conditions in the homebuilding  industry.
The  homebuilding  industry  historically  has  been  cyclical  and is  affected
significantly by adverse changes in general and local economic conditions,  such
as:

          -    employment levels;
          -    population growth;
          -    consumer confidence and stability of income levels;
          -    availability of financing for land acquisitions, construction and
               permanent  mortgages;
          -    interest rates;
          -    inventory levels of both new and existing homes;
          -    supply of rental properties; and
          -    conditions in the housing resale market.

There is a current crisis in the United States involving investor confidence due
to  financial   statement  fraud  and  restatement  of  other  issuer  financial
statements.  In  response  to a stream of  business  scandals  that  have  shook
investor  confidence,  landmark  corporate and accounting reform legislation has
been passed by the US Congress  this  summer,  including  creation of the Public
Company  Accounting  Oversight  Board.  Regulators and continuing the process of
reworking accounting issues and

                                                                              22

<PAGE>

policies that previously have been open to  interpretation.  We have not, nor do
we  believe  that our  clients  have  engaged  in overly  aggressive  accounting
strategies.

We have attempted to comply with the  Sarbanes-Oxley Act of 2002. The Securities
and Exchange  Commission  implemented  Section 302 of the  Sarbanes-Oxley Act of
2002 (the "Act") effective  August 29, 2002.  Provisions of the Act apply to all
public  reporting  companies who file reports with the  Securities  and Exchange
Commission.  In addition to  certification  by the Chief  Executive  Officer and
Chief  Financial  Officer  as to the  accuracy  and  completeness  of  financial
statements  contained in filed reports,  other restrictions and requirements are
part of the Act. The consensus of the AICPA and public filers is that additional
clarification will be needed to fully comply with the Act.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                                                                              23

<PAGE>










                        STRATEGIC CAPITAL RESOURCES, INC.
                                AND SUBSIDIARIES
                        CONSOLIDATED FINANCIAL STATEMENTS
                          AS OF JUNE 30, 2002 AND 2001


                                                                              24
<PAGE>







                        STRATEGIC CAPITAL RESOURCES, INC.
                                AND SUBSIDIARIES



                                    CONTENTS


PAGE    F - 2     INDEPENDENT AUDITORS' REPORT

PAGE    F - 3     CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2002 AND 2001

PAGE    F - 4     CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED JUNE 30,
                  2002, 2001 AND 2000

PAGES   F - 5 -   CONSOLIDATED  STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE YEARS
        F - 6     ENDED JUNE 30, 2002, 2001 AND 2000

PAGE    F - 7     CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED JUNE
                  30, 2002,  2001 AND 2000

PAGES   F - 8 -   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2002, 2001
        F - 27    AND 2000


                                      F - 1

                                                                              25
<PAGE>




                          INDEPENDENT AUDITORS' REPORT

The Board of Directors
Strategic Capital Resources, Inc.
  and Subsidiaries
Boca Raton, Florida

We have  audited  the  accompanying  consolidated  balance  sheets of  Strategic
Capital  Resources,  Inc. and  subsidiaries as of June 30, 2002 and 2001 and the
related consolidated  statements of operations,  stockholders'  equity, and cash
flows for the years  ended  June 30,  2002,  2001 and 2000.  These  consolidated
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audits.

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

As more fully  described  in Note 1 of the notes to the  consolidated  financial
statements,  errors  resulting in a net  understatement  of previously  reported
interest  expense for the years ended June 30, 2001 and 2000 was  discovered  by
management of the Company during 2002.  Accordingly,  the  consolidated  balance
sheets  as of June 30,  2001 and the  statements  of  operations,  stockholders'
equity  and cash  flows for the  years  ended  June 30,  2001 and 2000 have been
restated to reflect corrections to previously reported amounts.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  consolidated  financial  position  of
Strategic Capital Resources,  Inc. and subsidiaries as of June 30, 2002 and 2001
and the results of their  consolidated  operations and their  consolidated  cash
flows for the years  ended June 30,  2002,  2001 and 2000,  in  conformity  with
accounting principles generally accepted in the United States of America.


s/Weinberg & Company, P.A.

Weinberg & Company, P.A.
Certified Public Accountants

Boca Raton, Florida
November 27, 2002

                                      F - 2
                                                                              26
<PAGE>


               STRATEGIC CAPITAL RESOURCES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                             JUNE 30, 2002 AND 2001


                                     ASSETS
                                     ------
                                                                         2001
                                                         2002      (As Restated)
                                                      -----------   -----------
REVENUE PRODUCING ASSETS
 Net investment in direct financing arrangements:
  Model homes                                         $16,140,165   $34,502,977
  Residential real estate                              62,020,542    44,524,990
  Multi-family residential properties                  10,227,999    10,227,999
                                                      -----------   -----------
        Total Revenue Producing Assets                 88,388,706    89,255,966
                                                      -----------   -----------

OTHER ASSETS
 Cash and cash equivalents                                801,415     3,986,639
 Deferred charges, net                                    848,466       673,382
 Deferred income taxes                                          -       284,000
 Other                                                    758,923       754,519
                                                      -----------   -----------
        Total Other Assets                              2,408,804     5,698,540
                                                      -----------   -----------

TOTAL ASSETS                                          $90,797,510   $94,954,506
------------                                          ===========   ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------

LIABILITIES
 Mortgages and notes payable                          $77,592,476   $83,351,379
 Accounts payable and accrued expenses                  1,739,401     1,055,764
 Unearned income                                          173,038       368,003
 Current income taxes                                     237,093             -
 Deferred income taxes                                    615,035       420,000
 Stockholder loans                                      1,909,200     1,223,100
                                                      -----------   -----------
        Total Liabilities                              82,266,243    86,418,246
                                                      -----------   -----------

STOCKHOLDERS' EQUITY
 Convertible preferred stock, $.01 par value,
  5,000,000 shares authorized, 400,000 shares
  issued and outstanding in 2001                                -         4,000
 Common stock, $.001 par value, 25,000,000 shares
  authorized, 87,560 shares issued and
  77,192 shares outstanding in 2002, 87,560 shares
  issued and 77,192 shares outstanding in 2001                 88            88
 Additional paid-in capital                             8,847,616     9,744,948
 Treasury stock, 10,368 shares at cost                   (457,999)     (457,999)
 Retained earnings/(deficit)                              141,562      (754,777)
                                                      -----------   -----------

TOTAL STOCKHOLDERS' EQUITY                              8,531,267     8,536,260
                                                      -----------   -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY            $90,797,510   $94,954,506
------------------------------------------            ===========   ===========

                 See notes to consolidated financial statements
                                      F - 3

                                                                              27
<PAGE>

<TABLE>

               STRATEGIC CAPITAL RESOURCES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                FOR THE YEARS ENDED JUNE 30, 2002, 2001 AND 2000


<CAPTION>
                                                                        2001            2000
                                                         2002       (As Restated)  (As Restated)
                                                     ------------   ------------    ------------
<S>                                                  <C>            <C>             <C>
REVENUES
 Interest income on direct financing arrangements:
  Model homes                                        $  2,938,599   $  4,810,323    $  4,842,346
  Residential real estate                               7,106,852      3,264,599               -
  Multi-family residential                              1,409,372      1,378,213       1,356,271
 Sales of direct financing arrangements:
  Model homes, net                                        393,859        377,392         323,810
  Residential real estate                              41,947,444      1,416,802               -
 Interest and other income                                 81,470        135,798         323,620
                                                     ------------   ------------    ------------
       Total Revenues                                  53,877,596     11,383,127       6,846,047
                                                     ------------   ------------    ------------

OPERATING EXPENSES
 Interest and financing costs                           5,170,865      5,984,778       4,184,140
 Multi-family residential                                 483,885        365,696         354,722
 Cost of residential real estate sold                  41,947,444      1,416,802               -
 Depreciation and amortization                          1,547,136        930,942         664,751
 Corporate                                              2,564,342      1,536,118       1,553,940
 Impairment charge                                         91,122      1,000,000         100,000
                                                     ------------   ------------    ------------
       Total Operating Expenses                        51,804,794     11,234,336       6,857,553
                                                     ------------   ------------    ------------

INCOME (LOSS) BEFORE INCOME TAX EXPENSE                 2,072,802        148,791         (11,506)

INCOME TAX EXPENSE                                      1,121,463         95,000          67,200
                                                     ------------   ------------    ------------

NET INCOME (LOSS)                                         951,339         53,791         (78,706)

PREFERRED STOCK DISTRIBUTIONS                              55,000         85,000         120,000
                                                     ------------   ------------    ------------
INCOME APPLICABLE TO COMMON SHAREHOLDERS             $    896,339   $    (31,209)   $   (198,706)
                                                     ============   ============    ============

EARNINGS PER SHARE DATA:

Basic earnings (loss) per share                      $      11.61   $       (.40)   $      (2.50)
                                                     ============   ============    ============

Diluted earnings (loss) per share                    $      11.55   $       (.40)   $      (2.50)
                                                     ============   ============    ============

</TABLE>

                 See notes to consolidated financial statements
                                      F - 4

                                                                              28
<PAGE>
<TABLE>
               STRATEGIC CAPITAL RESOURCES, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                FOR THE YEARS ENDED JUNE 30, 2002, 2001 AND 2000



<CAPTION>
                                                                      Additional                      Retained
                                    Preferred Stock    Common Stock   Paid - In    Treasury Stock     Earnings
                                     Shares  Amount   Shares  Amount    Capital   Shares    Amount    (Deficit)    Total
                                    -------  ------   ------  ------  ----------  -------  ---------  --------  -----------
<S>                                 <C>      <C>      <C>     <C>     <C>         <C>      <C>        <C>        <C>
Balance, July 1, 1999, as
 previously reported                400,000  $4,000   85,060  $   85  $8,363,479   (5,541) $(282,786) $351,308   $8,436,086

Prior period adjustment to account
 for financing warrants                   -       -        -       -     876,170        -          -  (876,170)           -
                                    -------  ------   ------  ------  ----------  -------  ---------  --------   ----------
Balance, July 1, 1999
 (as restated)                      400,000   4,000   85,060      85   9,239,649   (5,541)  (282,786) (524,862)   8,436,086

Treasury stock purchased                  -       -        -       -           -   (1,211)   (60,390)        -      (60,390)

Preferred distributions                   -       -        -       -           -        -          -  (120,000)    (120,000)

Issuance of financing warrants            -       -        -       -     235,660        -          -         -      235,660

Net loss (as restated)                    -       -        -       -           -        -          -   (78,706)     (78,706)
                                    -------  ------   ------  ------  ----------  -------  ---------  --------   ----------
Balance, June 30, 2000
 (as restated)                      400,000   4,000   85,060      85   9,475,309   (6,752)  (343,176) (723,568)   8,412,650

Treasury stock purchased                  -       -        -       -           -   (3,616)  (114,823)        -     (114,823)

Financing warrants exercised              -       -    2,500       3         497        -          -         -          500

Preferred distributions                   -       -        -       -           -        -          -   (85,000)     (85,000)

Issuance of financing warrants            -       -        -       -     269,142        -          -         -      269,142

Net income (as restated)                  -       -        -       -           -        -          -    53,791       53,791
                                    -------  ------   ------  ------  ----------  -------  ---------  --------   ----------

                 See notes to consolidated financial statements
                                      F - 5

                                                                              29
<PAGE>
<CAPTION>
                                                                      Additional                      Retained
                                    Preferred Stock    Common Stock   Paid - In    Treasury Stock     Earnings
                                     Shares  Amount   Shares  Amount    Capital   Shares    Amount    (Deficit)    Total
                                    -------  ------   ------  ------  ----------  -------  ---------  --------  -----------
<S>                                 <C>      <C>      <C>     <C>     <C>         <C>      <C>        <C>        <C>
Balance, June 30, 2001
 (as restated)                      400,000   4,000   87,560      88   9,744,948  (10,368)  (457,999) (754,777)   8,536,260

Preferred distributions                   -       -        -       -           -        -          -   (55,000)     (55,000)

Preferred stock redemption         (400,000) (4,000)       -       -    (996,000)       -          -         -   (1,000,000)

Issuance of financing warrants            -       -        -       -      98,668        -          -         -       98,668

Net income                                -       -        -       -           -        -          -   951,339      951,339
                                    -------  ------   ------  ------  ----------  -------  ---------  --------   ----------
BALANCE, JUNE 30, 2002                    -  $    -   87,560  $   88  $8,847,616  (10,368) $(457,999) $141,562   $8,531,267
----------------------              =======  ======   ======  ======  ==========  =======  =========  ========   ==========

</TABLE>

                 See notes to consolidated financial statements
                                      F - 6

                                                                              30
<PAGE>

<TABLE>

               STRATEGIC CAPITAL RESOURCES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                FOR THE YEARS ENDED JUNE 30, 2002, 2001 AND 2000


<CAPTION>
                                                                       2002           2001             2000
                                                                  ------------    ------------    ------------
<S>                                                               <C>             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income (loss)                                                $    951,339    $     53,791    $    (78,706)
                                                                  ------------    ------------    ------------
 Adjustments to reconcile net income (loss) to net cash provided by operating
 activities:
  Amortization expense                                               1,530,124         912,191         647,300
  Depreciation expense                                                  17,012          18,751          17,451
  Deferred income taxes                                                479,035               -               -
  Gain on sale of direct financing arrangements, model homes net      (393,859)       (377,396)       (323,810)
  Impairment charge                                                     91,122       1,000,000         100,000
  Interest expense from issuances of warrants                           98,668         269,142         235,660
  Changes in operating assets and liabilities:
    (Increase) decrease in other assets                                 (4,404)       (418,554)       (241,746)
    Increase (decrease) in current income taxes                        237,093          36,000          (9,800)
    Increase (decrease) in accounts payable and accrued expenses       683,637         356,897         169,236
    Increase (decrease) in unearned income                            (194,965)         11,149         188,611
                                                                  ------------    ------------    ------------

            Total adjustments                                        2,543,463       1,808,180         782,902
                                                                  ------------    ------------    ------------

        Net Cash Provided By Operating Activities                    3,494,802       1,861,971         704,196
                                                                  ------------    ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
 Investment in direct financing arrangements:
  Model homes                                                                -        (482,500)     (5,105,645)
  Residential real estate                                           (7,900,478)     (4,874,095)              -
 Proceeds from the direct financing arrangements:
  Model homes                                                        1,878,105       1,913,058       3,186,506
  Residential real estate                                            7,355,288          70,839               -
 Loan advance                                                                -               -      (1,000,000)
 Proceeds from note receivable                                               -         650,000         350,000
 Capital expenditures                                                        -          (9,513)         (3,933)
                                                                  ------------    ------------    ------------
         Net Cash Provided By (Used In) Investing Activities         1,332,915      (2,732,211)     (2,573,072)
                                                                  ------------    ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from mortgages and notes payable                          11,191,370       5,773,240       4,519,462
 Principal payments on mortgages payable                           (16,950,273)     (1,301,754)       (958,886)
 Deferred finance charges                                           (1,649,038)       (948,012)       (566,494)
 Proceeds from (repayment of) stockholder loans                        (50,000)         81,680        (183,987)
 Preferred distributions                                               (55,000)        (85,000)       (120,000)
 Redemption of preferred stock                                        (500,000)              -               -
 Purchase of treasury stock                                                  -        (114,823)        (60,390)
                                                                  ------------    ------------    ------------
         Net Cash (Used In) Provided By Financing Activities        (8,012,941)      3,405,331       2,629,705
                                                                  ------------    ------------    ------------

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                (3,185,224)      2,535,091         760,829

CASH AND CASH EQUIVALENTS - BEGINNING                                3,986,639       1,451,548         690,719
                                                                  ------------    ------------    ------------

CASH AND CASH EQUIVALENTS - ENDING                                $    801,415    $  3,986,639    $  1,451,548
----------------------------------                                ============    ============    ============

</TABLE>

                 See notes to consolidated financial statements
                                      F - 7

                                                                              31
<PAGE>
               STRATEGIC CAPITAL RESOURCES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          JUNE 30, 2002, 2001 AND 2000
                          ----------------------------



NOTE 1   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------   ------------------------------------------

     (A) Description of Business
     ---------------------------

     Strategic Capital Resources, Inc. and Subsidiaries (the "Company") provides
     specialized  financing for major  homebuilders  and real estate  developers
     throughout the Untied States. The arrangements may take several forms which
     include operating leases, option agreements, or management agreements.  The
     Company accounts for all such agreements as direct financing  arrangements.
     Such  arrangements  may represent  off-balance  sheet  transactions for the
     Company's customers.

     The  Company is engaged in such  financing  arrangements  in three lines of
     business, consisting of one reportable segment, all with major homebuilders
     and real estate developers  throughout the United States (See Note 2(A) and
     (B)):

     1) Fully furnished model homes.

     2) Residential real estate land banking.

     3) Multi-family residential and other real estate.

     (B) Basis of Presentation
     -------------------------

     This summary of significant accounting policies of the Company is presented
     to assist in  understanding  the  consolidated  financial  statements.  The
     consolidated  financial  statements  and notes are  representations  of the
     Company's  management,   which  is  responsible  for  their  integrity  and
     objectivity.  These accounting  policies  conform to accounting  principles
     generally   accepted  in  the  United  States  of  America  and  have  been
     consistently  applied  in the  preparation  of the  consolidated  financial
     statements.

     (C) Principles of Consolidation
     -------------------------------

     The accompanying  consolidated financial statements include the accounts of
     Strategic  Capital  Resources,  Inc. and of its wholly owned  subsidiaries,
     including special purpose subsidiaries. Intercompany transactions have been
     eliminated in consolidation.

     (D) Special Purpose Subsidiaries
     --------------------------------

     The Company has several wholly owned special purpose  subsidiaries,  all of
     which are  consolidated.  They were  formed  for the  exclusive  purpose of
     acquiring specific properties and perform no functions other than to manage
     a specific project. A special purpose subsidiary is an entity structured in
     a way that its sole activity is the specific project.

                                       F-8
                                                                              32
<PAGE>
               STRATEGIC CAPITAL RESOURCES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          JUNE 30, 2002, 2001 AND 2000
                          ----------------------------

     (E) Special Purpose Entities
     ----------------------------

     The Company  does not have  off-balance  sheet  arrangements  with  special
     purpose entities.

     (F) 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 amounts of assets and liabilities and
     disclosure of contingent  assets and  liabilities  at the date of financial
     statements,  and the reported  amounts of revenues and expenses  during the
     reporting period. Actual results could differ from those estimates.

     (G) Fair Value of Financial Instruments
     ---------------------------------------

     The carrying value of all financial  instruments,  including  long-term and
     short-term debt, cash and temporary cash  investments,  approximates  their
     fair value at year-end.

     (H) Segment Reporting
     ---------------------

     The Company determined that its operations involve one reportable  segment,
     direct financing arrangements.

     (I) Concentration of Credit Risk
     --------------------------------

     Financial   instruments,   which   potentially   subject   the  Company  to
     concentration  of credit risk,  consist  principally of cash and a customer
     receivable included in other assets, described below.

     At June 30, 2002 and 2001,  the Company had cash  balances  with two banks,
     which were, in the  aggregate,  $154,279 and  $3,184,000  respectively,  in
     excess of the  $100,000  limit  insured by the  Federal  Deposit  Insurance
     Corporation  for each  bank.  Based on  credit  analysis  of the  financial
     institutions  with which it does business,  the Company  believes it is not
     exposed to any significant credit risk on cash.

     A customer  owes the Company  $668,000  for past due lease  payments,  real
     estate taxes,  other  operating  costs under the leases,  model home resale
     deficiencies  as well as  un-reimbursed  costs and  expenses.  The customer
     filed Chapter 11 bankruptcy  reorganization  in May 2002. The receivable is
     covered by surety bonds, other insurance,  as well as a claim on the assets
     of the  client/customer.  The Company has  commenced  the process of filing
     proofs of claim, making appropriate motions and taking other actions in the
     Bankruptcy  Court to recover and receive lease payments,  real estate taxes
     and other  operating  costs under the leases in addition to the outstanding
     balances.  Management  believes that the Company has  sufficient  insurance
     coverage  and surety  bonds to fully  cover the amount  due.  Also See Note
     2(A)).

                                       F-9
                                                                              33
<PAGE>
               STRATEGIC CAPITAL RESOURCES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          JUNE 30, 2002, 2001 AND 2000
                          ----------------------------

     (J) Depreciation
     ----------------

     Office  furniture and  equipment  (included in other assets) are carried at
     cost and are  depreciated on the  straight-line  method over five years. At
     June 30, 2002, office furniture and equipment were fully depreciated.

     (K) Treasury Stock
     ------------------

     Treasury  stock is  recorded  at  cost.  Issuance  of  treasury  shares  is
     accounted for on a first-in,  first-out basis. Differences between the cost
     of treasury shares and the  re-issuance  proceeds are charged to additional
     paid-in capital, if reissued. No shares have been reissued.

     (L) New Accounting Pronouncements
     ---------------------------------

     The Financial  Accounting  Standards  Board has recently issued several new
     Statements of Financial Accounting  Standards ("SFAS").  Statement No. 141,
     "Business  Combinations"  supersedes  Accounting  Principles  Board ("APB")
     Opinion  No. 16 and  various  related  pronouncements.  Pursuant to the new
     guidance in Statement No. 141, all business  combinations must be accounted
     for  under the  purchase  method of  accounting;  the  pooling-of-interests
     method  is no  longer  permitted.  SFAS  141  also  establishes  new  rules
     concerning the recognition of goodwill and other intangible  assets arising
     in  a  purchase  business  combination  and  requires  disclosure  of  more
     information  concerning a business combination in the period in which it is
     completed.  This statement is generally effective for business combinations
     initiated on or after July 1, 2001.  Statement No. 142, "Goodwill and Other
     Intangible Assets"  supercedes APB Opinion 17 and related  interpretations.
     Statement No. 142  establishes  new rules on accounting for the acquisition
     of intangible assets not acquired in a business  combination and the manner
     in which  goodwill  and all  other  intangibles  should  be  accounted  for
     subsequent to their initial recognition in a business combination accounted
     for under SFAS No. 141.  Under SFAS No. 142,  intangible  assets  should be
     recorded at fair value.  Intangible  assets with finite useful lives should
     be amortized over such period and those with indefinite lives should not be
     amortized.  All intangible assets being amortized as well as those that are
     not, are both  subject to review for  potential  impairment  under SFAS No.
     121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
     Assets to be Disposed of". SFAS No. 142 also requires that goodwill arising
     in a  business  combination  should  not be  amortized  but is  subject  to
     impairment  testing at the  reporting  unit level to which the goodwill was
     assigned to at the date of the business combination.

     SFAS No. 142 is effective for the fiscal years beginning after December 15,
     2001 and must be applied as of the  beginning  of such year to all goodwill
     and other intangible  assets that have already been recorded in the balance
     sheet as of the  first  day in which  SFAS No.  142 is  initially  applied,
     regardless  of when such  assets  were  acquired.  Goodwill  acquired  in a
     business combination whose acquisition date is on or after July 1,

                                      F-10
                                                                              34
<PAGE>
               STRATEGIC CAPITAL RESOURCES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          JUNE 30, 2002, 2001 AND 2000
                          ----------------------------

     2001,  should not be  amortized,  but  should be  reviewed  for  impairment
     pursuant  to SFAS  No.  121,  even  though  SFAS  No.  142 has not yet been
     adopted.  However,  previously  acquired  goodwill  should  continue  to be
     amortized until SFAS No. 142 is first adopted.

     Statement No. 143 "Accounting for Asset Retirement Obligations" establishes
     standards  for  the  initial  measurement  and  subsequent  accounting  for
     obligations  associated  with  the  sale,  abandonment,  or  other  type of
     disposal  of  long-lived  tangible  assets  arising  from the  acquisition,
     construction,  or development and/or normal operation of such assets.  SFAS
     No. 143 is effective  for the fiscal years  beginning  after June 15, 2002,
     with earlier application encouraged.

     In August 2001, the FASB issued SFAS 144, "Accounting for the Impairment or
     Disposal  of  Long-Lived   Assets".   This  statement  addresses  financial
     accounting  and  reporting  for the  impairment  or disposal of  long-lived
     assets  and  supercedes  FASB  Statement  No.  121,   "Accounting  for  the
     Impairment of Long-Lived  Assets and for  Long-Lived  Assets to be Disposed
     Of". The provisions of the statement are effective for financial statements
     issued for the fiscal years beginning after December 15, 2001.

     The  adoption of these  pronouncements  is not  expected to have a material
     effect on our consolidated financial statements.

     In April 2002, the FASB issued SFAS 145,  Rescission of FASB Statements No.
     4,  44,  and  64,  Amendment  of  FASB  Statement  No.  13,  and  Technical
     Corrections.  SFAS 145 rescinds the  provisions of SFAS No. 4 that requires
     companies to classify certain gains and losses from debt extinguishments as
     extraordinary  items,  eliminates  the  provisions of SFAS No. 44 regarding
     transition  to the Motor  Carrier Act of 1980 and amends the  provisions of
     SFAS No. 13 to require that certain lease  modifications be treated as sale
     leaseback   transactions.   The   provisions   of  SFAS  145   related   to
     classification  of debt  extinguishments  are  effective  for fiscal  years
     beginning  after May 15,  2002.  Earlier  application  is  encouraged.  The
     Company does not believe the adoption of this standard will have a material
     impact the consolidated financial statements.

     In July 2002, the FASB issued SFAS No. 146,  "Accounting for  Restructuring
     Costs."  SFAS  146  applies  to  costs  associated  with an  exit  activity
     (including  restructuring) or with a disposal of long-lived  assets.  Those
     activities can include  eliminating or reducing product lines,  terminating
     employees and contracts and relocating plant facilities or personnel. Under
     SFAS 146, the Company will record a liability for a cost associated with an
     exit or  disposal  activity  when that  liability  is  incurred  and can be
     measured  at fair  value.  SFAS 146 will  require  the  Company to disclose
     information about its exit and disposal activities,  the related costs, and
     changes in those  costs in the notes to the  interim  and annual  financial
     statements  that include the period in which an exit  activity is initiated
     and in any subsequent  period until the activity is completed.  SFAS 146 is
     effective  prospectively  for exit or disposal  activities  initiated after
     December 31,  2002,  with earlier  adoption  encouraged.  Under SFAS 146, a
     company cannot restate its

                                      F-11
                                                                              35
<PAGE>
               STRATEGIC CAPITAL RESOURCES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          JUNE 30, 2002, 2001 AND 2000
                          ----------------------------

     previously issued financial  statements and the new statement  grandfathers
     the accounting for liabilities that a company had previously recorded under
     Emerging  Issues Task Force Issue  94-3.  The Company  does not believe the
     adoption of this statement will have a material impact on the  consolidated
     financial statements.

     (M) Cash and Cash Equivalents
     -----------------------------

     For financial statement  presentation  purposes,  the Company considers all
     highly liquid investments with an original maturity of three months or less
     to be cash equivalents.

     (N) Revenue Recognition
     -----------------------

     The Company accounts for all of its financing arrangements under the direct
     financing method of accounting prescribed under SFAS No. 13, Accounting for
     Leases.

     Under the direct finance  method of accounting,  the assets are recorded as
     an investment in direct finance  arrangements and represent the minimum net
     payments receivable,  including third-party guaranteed residuals,  plus the
     un-guaranteed residual value of the assets, if any, less unearned income.

     Sales and cost of direct  financing  arrangements  are recorded at the time
     each  property  sale is  closed  and when  title  and  possession  has been
     transferred to the buyer.

     (O) Earnings Per Common Share
     -----------------------------

     Basic  earnings  per common  share is computed  by dividing  the net income
     applicable to common stock  stockholders by the weighted  average number of
     shares of common stock outstanding during the period.  Diluted earnings per
     share is computed by dividing net income by the weighted  average number of
     common  shares  including the dilutive  effect of common share  equivalents
     then outstanding.

     In  2002,   the  Board  of  Directors  and  a  majority  of  the  Company's
     stockholders  approved a 200 for 1 reverse  stock split of the  outstanding
     shares  of the  Company's  common  stock,  effective  June  13,  2002 . The
     Company's  capital  structure,  weighted average common shares and earnings
     per share have been  restated for all years  presented to give  retroactive
     effect to the reverse stock split.

     The following is the  calculation  of basic and diluted  earnings per share
     for the years ended June 30, 2002, 2001 and 2000:


                                      F-12
                                                                              36
<PAGE>
               STRATEGIC CAPITAL RESOURCES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          JUNE 30, 2002, 2001 AND 2000
                          ----------------------------


                                                   For the Year Ended June 30,
                                                    2002      2001      2000
                                                  --------  --------  ---------
Earnings:
Net income (loss)                                 $951,339  $ 53,791  $ (78,706)

Dividends on preferred shares                      (55,000)  (85,000)  (120,000)
                                                  --------  --------  ---------
Income (loss) applicable to common stockholders   $896,339  $(31,209) $(198,706)
                                                  ========  ========  =========

Basic:
Income (loss) applicable to common stockholders   $896,339  $(31,209) $(198,706)
                                                  ========  ========  =========
Weighted average shares outstanding during the
 year                                               77,192    78,009     79,363
                                                  ========  ========  =========
Basic earnings (loss) per share                   $  11.61  $   (.40) $   (2.50)
                                                  ========  ========  =========

Diluted:
Income (loss) applicable to common stockholders   $896,339  $(31,209) $(198,706)
                                                  ========  ========  =========
Weighted average shares outstanding during the
 year                                               77,192    78,009     79,363

Effect of dilutive securities:
 Stock options                                         293         -          -
 Warrants                                              110         -          -
                                                  --------  --------  ---------
Diluted weighted average shares outstanding         77,595    78,009     79,363
                                                  ========  ========  =========
Diluted earnings (loss) per share                 $  11.55  $   (.40) $   (2.50)
                                                  ========  ========  =========

     Additionally,   the  Company's  400,000  shares  of  preferred  stock  were
     convertible  into  400,000  shares of  pre-split  common stock at $2.50 per
     share.  Such  conversion  has not been assumed for the years ended June 30,
     2001 or 2000,  since  the  effect on  earnings  (loss)  per share  would be
     anti-dilutive.  The preferred  shares were  redeemed  during the year ended
     June 30, 2002 (See Note 9).

     (P) Reclassifications
     ---------------------

     Certain  amounts  have been  reclassified  in prior years to conform to the
     current year's presentation.

                                      F-13
                                                                              37
<PAGE>
               STRATEGIC CAPITAL RESOURCES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          JUNE 30, 2002, 2001 AND 2000
                          ----------------------------

     (Q)  Restatement  of  Consolidated  Financial Statements Resulting from the
     ---------------------------------------------------------------------------
     Correction of an Error
     ----------------------

     The  accompanying  consolidated  balance  sheet as of June 30, 2001 and the
     statements of operations, stockholders' equity and cash flows for the years
     ended June 30, 2001 and 2000 have been restated to correct errors resulting
     in the net  understatement  of  interest  expense  and  additional  paid-in
     capital.

     One of the errors  resulted  from the Company not  recording the effects of
     detachable  warrants issued with stockholder  debt. Also see Note 9(C). The
     effect of the error was to increase  non-cash interest expense and decrease
     net income by $269,142 and $235,660  for 2001 and 2000,  respectively.  The
     effect of the error was to also  increase  additional  paid-in  capital  by
     $1,380,972 at June 30, 2001.

     The second  error  resulted  from the  Company's  over-accrual  of interest
     expense at June 30, 2001. The effect of the error was to decrease  interest
     expense  and  increase  net income by $98,395  for 2001.  The effect of the
     error was to also increase  retained earnings and decrease accrued expenses
     by $98,395 at June 30, 2001.

     The accumulated deficit and additional paid-in capital accounts in the June
     30, 2001 consolidated  balance sheet and statement of stockholders'  equity
     and the net income (loss) for the years ended June 30, 2001 and 2000 in the
     statements  of  operations,  stockholders'  equity and cash flows have been
     restated for the effects of the  adjustments  resulting from the correction
     of the errors.

NOTE 2  DIRECT FINANCING ARRANGEMENTS
------  -----------------------------

     (A) Model Home Program
     ----------------------

     The Company has entered into a series of direct financing arrangements with
     various major  homebuilders  and real estate  developers (the  "Customers")
     that  provide  for  monthly  payments,   which  are  negotiated  on  a  per
     transaction  basis and are  designed  to cover  debt  service as well as to
     provide positive cash flow. Under the terms of the agreements, all expenses
     arising  during  the  term  of the  agreement  are  paid  by  the  Customer
     including,   but  not  limited   to,   utilities,   homeowner   association
     assessments, maintenance, insurance and real estate taxes.

     The  arrangements  terminate  only  upon the sale of the  model  homes.  In
     connection  therewith,  the Company has entered into net listing agreements
     with the real estate  brokerage  affiliates of some of the Customers.  Such
     agreements provide for commissions and incentives,  which are negotiated on
     a per transaction  basis. The sales price may not be less than the original
     cash  closing  purchase  price  unless  the  Customer  elects  to  pay  any
     deficiency at the closing.

                                      F-14
                                                                              38
<PAGE>
               STRATEGIC CAPITAL RESOURCES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          JUNE 30, 2002, 2001 AND 2000
                          ----------------------------

     All  Customers  are required to provide a surety bond,  letter of credit or
     equivalent financial instrument in order to assure the performance of their
     obligations.   The  financial   instruments   provided  by  Customers  have
     historically  ranged from 5% to 110% of the Company's purchase price of the
     model homes.

     In many cases, the Company has obtained  various forms of insurance,  which
     effectively serve as credit enhancements.  The insurance instrument insures
     the timely payment by the Customer of its obligations  under the agreement.
     In the event of default by the  Customer,  the insurer has an obligation to
     continue to make the  payments up to the face amount of the bond.  All such
     insurance has been obtained from major domestic based  insurance  companies
     rated "A" through  "AAA" by major  credit  rating  agencies.  The intent of
     these  arrangements  is to reduce the cost of funds,  and to  increase  the
     amounts borrowed, thereby increasing profitability and leverage.

     (B) Residential Real Estate Land Banking Program
     ------------------------------------------------

     The  Company  purchases  parcels of  residential  real  estate  selected by
     homebuilders.  They also  purchase  residential  real  estate  owned by the
     homebuilders  and lease it back to them on a triple-net  basis. The parcels
     of land are acquired at the lower of appraised value or contract price. The
     parcels  of land may  require  entitlement  and  development  or consist of
     finished lots. If development work is required, the homebuilder enters into
     a fixed price  development  agreement to develop the parcels of land and in
     some cases is required to provide  completion bonds for some or all work by
     a surety company  acceptable to the Company.  Reimbursement for development
     work is typically  paid monthly.  A lease and exclusive  option to purchase
     agreement  are entered into with the  homebuilder  simultaneously  with the
     land  acquisition.  The  terms  and  conditions  of  each  transaction  are
     project-specific  (interest rate, term, option, deposit, takedown schedule,
     etc.)  Insurance  coverage  is  obtained  to insure the prompt  payment and
     performance of the homebuilder, as well as the fully developed value of the
     real estate acquired.

     (C) Major Customers
     -------------------

     The  percentages of total financing  revenues  derived from major customers
     are as follows:

                                               For the Year Ended June 30,
                                              2002        2001        2000
                                              ----        ----        ----

     Customer A                                57%         52%         57%

     Customer B                                23%         15%         22%

     Customer C                                 -          11%          -
                                              ---         ---         ---
                                               80%         78%         79%
                                              ===         ===         ===

                                      F-15
                                                                              39
<PAGE>

               STRATEGIC CAPITAL RESOURCES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          JUNE 30, 2002, 2001 AND 2000
                          ----------------------------


NOTE 3  NET INVESTMENT IN DIRECT FINANCING ARRANGEMENTS
------  -----------------------------------------------

     The components of the net investment in direct  financing  arrangements are
     as follows:

                                                            June 30,
                                                       2002          2001
                                                   -----------   -----------
     Gross investment in direct
        financing arrangements                     $88,561,744   $89,623,969

     Less: unearned income                             173,038       368,003
                                                   -----------   -----------
     Total net investment in direct
        financing arrangements                     $88,388,706   $89,255,966
                                                   ===========   ===========

NOTE 4  MULTI-FAMILY RESIDENTIAL PROPERTY OPERATIONS
------  --------------------------------------------

     On July 15, 1999, the Company purchased a 288 unit multi-family residential
     property in Jacksonville, Florida, for a purchase price of $10,227,999. The
     purchase price was paid as follows:

     Assumption of existing first mortgage                       $ 4,927,999
     New loan                                                      5,300,000
                                                                 -----------
     Total purchase price                                        $10,227,999
                                                                 ===========

     Simultaneously,  the Company  entered into an operation,  maintenance,  and
     management  agreement,  which provides for an  independent,  non-affiliated
     management  company to manage the property and to pay the Company a minimum
     income  stream per month  sufficient  to service debt and provide  positive
     cash flow.  The  agreement  also  provides  for the  management  company to
     purchase the property  during the five-year  period of the  agreement.  The
     performance of the management  company under the agreement is guaranteed by
     an insurance company rated "AAA" by Moody's and "AA+" by Standard & Poors.

NOTE 5  IMPAIRMENT CHARGES
------  ------------------

     During  the  year  ended  June  30,  1997,  the  Company  disposed  of  its
     construction  subsidiary,  Iron  Eagle  Contracting  and  Mechanical,  Inc.
     ("IECM"). Under the terms of the agreement, the Company sold the net assets
     of IECM for a note in the amount of $1,312,500.  The note bears interest at
     the prime rate plus 1%. Interest was payable in monthly  installments.  The
     note was secured by all assets of IECM's parent company, Monarch Investment
     Properties,  Inc.  ("Monarch"),  which was formerly  known as Iron Holdings
     Corp., and by all of the issued and outstanding shares of IECM.

                                      F-16
                                                                              40
<PAGE>
               STRATEGIC CAPITAL RESOURCES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          JUNE 30, 2002, 2001 AND 2000
                          ----------------------------

     During June 1999,  the Company  filed a lawsuit  against  Monarch,  and its
     subsidiaries,  IECM and Tahoe Realty Corp.,  as well as two of its officers
     and  other  individuals,  in the  Supreme  Court of the  State of New York,
     County of  Queens.  The  action  asserts  seven  separate  causes of action
     arising out of a default in payment of the remaining $1,100,000 balance due
     under the promissory note evidencing moneys due to the Company from Monarch
     as a result of its purchase of IECM from the Company.

     The Court granted the Company's  motion for summary  judgment  during March
     2000 against Monarch in the sum of $1,100,000 plus interest from January 1,
     1999, a judgment of  possession  of all  collateral  pledged by Monarch and
     judgment  that the Company is the rightful  owner and entitled to immediate
     possession  of the  collateral,  impressing  a trust  on  said  collateral,
     declaring  defendants to be trustees of said  collateral and directing said
     trustees  to deliver  such  collateral  to the  Company.  A decision of the
     Appellate  Division  limited  the  extent  of  the  corporate   defendant's
     liability  and the  thrust of the  action is against  the  guarantors.  The
     action is now in the  discovery  stage.  Management  has pursued the action
     appropriately and aggressively  since its inception.  While it is difficult
     to  predict  the  outcome  of any  litigation,  there are no  counterclaims
     asserted  against  the  Company  and there does not appear to be a range of
     potential loss to the Company.

     During the year ended June 30, 2001, the Company took an impairment  charge
     for the remaining  $1,000,000 balance on the promissory note. The amount of
     the write-down  was  determined by evaluating  the underlying  value of the
     collateral,  the  cost  of  recovery,  ongoing  litigation  costs  and  the
     difficulty in realizing the collateral securing the promissory note. Actual
     losses  could  differ from our current  estimate  and will be  reflected as
     adjustments in future financial statements.

     In the case of Strategic Capital  Resources,  Inc. and FPE Funding,  LLC v.
     Dylan Tire Industries,  LLC, Dylan Custom Mixing, LLC; Mid-American Machine
     and  Equipment,   LLC  f/k/a  Mid-American  Tire  and  Machine,  LLC;  GMAC
     Commercial Credit, LLC; Robert C. Liddon,  Trustee;  Mary Aronov,  Trustee;
     David Feingold; John Tindal; Brett Morehouse;  Johnny Guy; Shan Sutherland;
     and Pirelli Tire LLC Chancery Court for Davidson County, Tennessee Case No.
     00-1296-III

     During May 2000,  the Company and FPE Funding,  LLC filed the  complaint in
     this case against the referenced  defendants alleging,  among other things,
     breach of contract, fraud, and civil conspiracy, arising from the breach of
     a sale and leaseback commitment for which Strategic Capital Resources, Inc.
     ("Strategic")   procured  funding  and  under  which  FPE  was  to  be  the
     owner/lessor of a manufacturing facility.

     The defendants/counter-plaintiffs, Dylan Tire Industries, LLC, Mid-American
     Machine  and  Equipment,  LLC and Dylan  Custom  Mixing,  LLC have  filed a
     counterclaim,  seeking  unspecified  consequential  damages  "estimated  to
     exceed  $500,000"  for alleged  breach of a loan  commitment  issued by the
     Company. The basis of the claim is that the Company

                                      F-17
                                                                              41
<PAGE>
               STRATEGIC CAPITAL RESOURCES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          JUNE 30, 2002, 2001 AND 2000
                          ----------------------------

     allegedly  failed to honor its commitment to lend for the  acquisition of a
     manufacturing     facility,     resulting     in     damages     to     the
     defendants/counter-plaintiffs,  who  borrowed the money  directly  from the
     Company's  lender at allegedly  greater cost and who allegedly had to pay a
     greater  price for the  facility  as a result of the  alleged  delay in the
     closing.  The Company  believes the  counterclaim is without merit and will
     vigorously  defend itself. As such, there is no accrual in the accompanying
     consolidated balance sheets.

     The Company's  claims were  substantially  dismissed by the lower court and
     affirmed by the appellate  court. The Company has appealed to the Tennessee
     Supreme  Court and have  additional  claims that have not as yet been filed
     pending the appeal  outcome.  The company  recorded a receivable from Dylan
     Tire Industries,  LLC for a commitment fee of approximately  $180,000. As a
     result of the  uncertainty  regarding  collection  of the  receivable,  the
     Company has reserved the entire balance.  For the year ended June 30, 2002,
     the Company recorded an impairment  charge for the receivable  amounting to
     $91,122.

NOTE 6  DEFERRED CHARGES
------  ----------------

     Deferred charges consist of the following:

                                                          June 30,
                                                  2002                2001
                                            ---------------     ---------------
     Deferred finance charges               $       848,466     $       611,222
     Deferred offering costs                              -              62,160
                                            ---------------     ---------------
                                            $       848,466     $       673,382
                                            ===============     ===============

     Deferred  finance charges are carried at cost.  Amortization is provided on
     the straight-line  method over the lives of the loans to which the deferred
     finance charges relate.  Amortization  expense of deferred  finance charges
     was  $1,530,124  for the year ended June 30,  2002,  $901,591  for the year
     ended June 30, 2001 and $635,186 for the year ended June 30, 2000.

NOTE 7  MORTGAGES AND NOTES PAYABLE
------  ---------------------------

     Mortgages  and notes  payable  are  collateralized  by first  mortgages  on
     specific  properties.  Interest  is payable  monthly in arrears at interest
     rates ranging from 4.75% to 8.75% as of June 30, 2002.  The maturity  dates
     range from one to fifteen years.

     During  December  2001,  the  Company   consolidated  its  $15,000,000  and
     $45,000,000 revolving credit facility into one commercial revolving line of
     credit  totaling a maximum loan amount of $60,000,000  which expires August
     2003.  The interest rate is a thirty-day  LIBOR based  floating rate plus a
     premium and a floor.

                                      F-18
                                                                              42
<PAGE>
               STRATEGIC CAPITAL RESOURCES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          JUNE 30, 2002, 2001 AND 2000
                          ----------------------------

     In addition to the  mortgages  being  secured by specific  properties,  all
     loans are secured by  specific  leases and related  security  bonds  and/or
     residual value insurance policies.

     At June 30, 2002, maturities of mortgages and notes payable are as follows:

                     Year ending June 30, 2003                   $    8,608,912
                     Year ending June 30, 2004                       60,582,454
                     Year ending June 30, 2005                        4,450,752
                     Year ending June 30, 2006                          212,509
                     Year ending June 30, 2007                          230,055
                            Thereafter                                3,507,794
                                                                 --------------
                                                                 $   77,592,476
                                                                 ==============

NOTE 8  STOCKHOLDER LOANS PAYABLE
------  -------------------------

     Stockholder loans payable arose from advances various  stockholders made to
     the Company. The notes are payable on demand, bearing interest at 9%, which
     is payable monthly.  Interest on stockholder notes payable totaled $115,361
     for the year  ended  June 30,  2002,  $109,653  for the year ended June 30,
     2001,  and $112,220 for the year ended June 30, 2000.  Management  believes
     that the loans from  stockholders  were made on equal or better  terms than
     were available  elsewhere.  During the years ended June 30, 2002, 2001, and
     2000,  the Company  issued a total of 5,366,  7,460,  and 5,730  detachable
     warrants,  respectively, to stockholders who had made loans to the Company.
     The Company  does not believe  that the  detachable  warrants  are embedded
     derivatives  under the  provisions of SFAS 133,  Accounting  for Derivative
     Instruments  and  Hedging  Activities,  and  therefore  accounted  for  the
     detachable   warrants  in  accordance  with  APB  No.  14,  Accounting  for
     Convertible  Debt  and  Debt  Issued  with  Stock  Purchase  Warrants.   In
     accordance with APB 14, the Company  apportioned  fair value (see below) to
     the  warrants  using  the  Black-Scholes  pricing  model.  Fair  value  was
     determined using the closing market prices of the Company's common stock on
     the grant  date.  The fair value of the  warrants  on the date of grant was
     treated  as  additional  interest  expense  in the year of grant  since the
     stockholder  loans are due on  demand.  In the past,  the  Company  did not
     account for the grants of the warrants. The Company is currently accounting
     for  the  warrants  as  a  correction  of  an  error  in  the  accompanying
     consolidated  financial statements (See Note 1(N)). The additional non-cash
     interest expense resulting from the accounting for the warrants amounted to
     $98,668,  $269,142 and $235,660 for the years ended June 30, 2002, 2001 and
     2000, respectively.

     A note for  $500,000  was issued to a  stockholder  in partial  payment for
     redemption of the convertible  preferred  stock. The note bears interest of
     6% payable  monthly;  $250,000 is due July 1, 2003 and  $250,000 on July 1,
     2004. (See Note 9(A)).

                                      F-19
                                                                              43
<PAGE>
               STRATEGIC CAPITAL RESOURCES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          JUNE 30, 2002, 2001 AND 2000
                          ----------------------------

NOTE 9  STOCKHOLDERS' EQUITY
------  --------------------

     (A) Convertible Preferred Stock
     -------------------------------

     At June 30, 2001, the Company had 400,000 shares of its 6%, $2.50 par value
     participating  convertible  preferred stock outstanding.  During June 2002,
     the  400,000  outstanding  shares of  preferred  stock  were  redeemed  for
     $1,000,000,  the original sales price amount  received on issuance.  A note
     for  $500,000  was issued and a cash  payment of  $500,000  was paid to the
     preferred stockholders (See Note 8).

     As of June 30, 2002, there are no unpaid distributions in arrears.

     (B) Common Stock
     ----------------

     During April 2002,  the Board of Directors  and a majority of the Company's
     stockholders  approved a 200 for 1 reverse  stock split of the  outstanding
     shares of the  Company's  common  stock.  The reverse  stock  split  became
     effective in June 2002. The Company's capital  structure,  weighted average
     common  shares  and  earnings  per share have been  restated  for all years
     presented  to give  retroactive  effect to the  reverse  stock  split.  The
     trading  symbol was changed from JJFN to SCPI on the effective  date of the
     reverse stock split.

     (C) Warrants
     ------------

     The  following is a summary of warrant  transaction  during the years ended
     June 30, 2002, 2001 and 2000 (also See Note 8):

                                          Number of Shares of    Weighted
                                              Common Stock        Average
                                          Underlying Warrants  Exercise Price
                                          -------------------  --------------

     Outstanding at July 1, 1999                       27,930  $        46.51

     Issued                                             5,730  $        47.95
     Expired                                           (5,130) $        30.34
                                          -------------------
     Outstanding at June 30, 2000                      28,530  $        49.71

     Issued                                             7,460  $        34.86
     Exercised                                         (2,500) $         0.20
     Expired                                          (10,505) $        53.74
                                          -------------------
     Outstanding at June 30, 2001                      22,985  $        48.43

     Issued                                             5,366  $        31.43
     Cancelled/Expired                                (10,146) $        58.73
                                          -------------------
     Outstanding at June 30, 2002                      18,205  $        37.68
                                          ===================

                                      F-20
                                                                              44
<PAGE>
               STRATEGIC CAPITAL RESOURCES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          JUNE 30, 2002, 2001 AND 2000
                          ----------------------------

     (D) Stock Option Plans
     ----------------------

     The Company has established Equity Incentive Plans (the "Plans") to attract
     and retain key  employees,  to  provide  an  incentive  for them to achieve
     long-range  performance  goals and to  enable  them to  participate  in the
     long-term growth of the Company.  Under the terms of the Plans, the Company
     may award  Incentive  Stock  Options  which are  intended to qualify  under
     Section  422A  of the  Internal  Revenue  Code.  All  such  options  may be
     exercised  during a four-year  period  commencing one year from the date of
     the option grant and terminating five years from date of issuance.

     The following is a summary of option transactions during the years ended
     June 30, 2002, 2001 and 2000:

                                                                 Weighted
                                                 Number of        Average
                                                  Shares       Exercise Price
                                                 ---------     --------------

     Outstanding at July 1, 1999                    16,875     $        52.00

     Granted - November 1999                         3,875     $        58.00
     Cancelled / Expired                            (2,250)             56.00
                                                 ---------
     Outstanding at June 30, 2000                   18,500     $        52.00

     Granted - December 2000                         3,750     $        32.00
     Cancelled / Expired                            (1,500)    $        60.00
                                                 ---------
     Outstanding at June 30, 2001                   20,750     $        52.00

     Granted - October 2001                          3,000     $        26.00
     Cancelled / Expired                           (11,250)    $        44.00
                                                 ---------
     Outstanding at June 30, 2002                   12,500     $        46.00
                                                 =========

     The Company  accounts  for  stock-based  compensation  in  accordance  with
     Accounting Principles Board Opinion No. 25 ("APB 25"), Accounting for Stock
     Issued  to  Employees.  Under  APB  25,  the  Company  does  not  recognize
     compensation  expense  for  stock  options  granted  under the plans as the
     options are  granted at  exercise  prices  equal to, or greater  than,  the
     market price of the  Company's  common  stock at the date of grant.  If the
     Company were to issue  options at less than the market  price,  the Company
     would then recognize  compensation expense in an amount equal to the excess
     of the market value of the underlying  stock over the exercise price of the
     stock option.  No pro forma  disclosures  have been presented since, in the
     opinion of management,  the effect of the  application of such provision is
     immaterial to the  consolidated  financial  statements  for the years ended
     June 30, 2002, 2001 and 2000.

                                      F-21
                                                                              45
<PAGE>
               STRATEGIC CAPITAL RESOURCES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          JUNE 30, 2002, 2001 AND 2000
                          ----------------------------

NOTE 10  INCOME TAXES
-------  ------------

     The Company's  effective tax rates for the years ended June 30, 2002,  2001
     and 2000 were 54.1%, 29.7% and 30.0%, respectively.

     The  provision  for income  taxes for each of the three years ended June 30
     was as follows:

                                              For the Year Ended June 30,
                                           2002         2001          2000
                                        ----------   ----------   -----------
     Current:
      Federal                           $  433,250   $        -   $        -
      State                                209,213            -            -

     Deferred:
      Federal                              374,000       71,500       50,400
      State                                105,000       23,500       16,800
                                        ----------   ----------   ----------
     Total provision for income taxes   $1,121,463   $   95,000   $   67,200
                                        ==========   ==========   ==========

     Deferred income taxes arise from temporary  differences in reporting assets
     and liabilities  for income tax and financial  accounting  purposes.  These
     temporary differences primarily resulted from net operating losses and from
     depreciating model homes for tax purposes only.

     The components of the deferred income tax liabilities are as follows:

<TABLE>
<CAPTION>
                                                 2002                       2001
                                      --------------------------  --------------------------
                                      Deferred Tax  Deferred Tax  Deferred Tax  Deferred Tax
                                         Assets     Liabilities      Assets     Liabilities
                                      ------------  ------------  ------------  ------------
<S>                                   <C>           <C>           <C>           <C>
Deferred income taxes, current:
Operating loss and credit
 carryforwards                                   -             -       284,000             -
Prepaid and deferred charges                     -       235,152             -             -
                                      ------------  ------------  ------------  ------------
Total Current                                    -       235,152       284,000             -
                                      ------------  ------------  ------------  ------------
Net Current                                      -       235,152       284,000             -
                                      ------------  ------------  ------------  ------------

Deferred income taxes, non-current:
Accumulated depreciation                         -       379,883             -       420,000
Interest from issuances of warrants        591,856             -             -             -
Operating loss and credit
 carryforwards                                   -             -             -             -
                                      ------------  ------------  ------------  ------------
Total Long-Term                                  -       379,883             -       420,000
                                      ------------  ------------  ------------  ------------

Valuation allowance                       (591,856)            -             -             -

Net Long-Term                                    -       379,883             -       420,000
                                      ------------  ------------  ------------  ------------

Net Deferred Tax Assets/Liabilities              -       615,035             -       136,000
                                      ============  ============  ============  ============

</TABLE>

                                      F-22
                                                                              46
<PAGE>
               STRATEGIC CAPITAL RESOURCES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          JUNE 30, 2002, 2001 AND 2000
                          ----------------------------

     In assessing the realizability of deferred tax assets, management considers
     whether it is more likely than not that some portion or all of the deferred
     tax assets will not be realized.  The valuation  allowance at June 30, 2002
     is related to deferred  tax assets on interest  expense  from  issuances of
     warrants.  The warrants  must be exercised in order to generate  sufficient
     future  taxable  income to realize  the  deferred  tax  assets.  Management
     believes  it is more  likely  than not that  these  warrants  will never be
     exercised.

     The following is a reconciliation of the federal statutory income tax
     amount on income to the provision for income taxes:

                                                For the Year Ended June 30,
                                              2002         2001         2000
                                           -----------  -----------  ----------

     Federal statutory income tax
      (benefit) at 34%                     $   704,753  $   108,600  $   76,300
     State tax cost, net of federal tax
       benefit                                 180,825       19,200      13,450
     Depreciation - current                   (216,535)    (329,000)   (324,000)
     Gain on sales                             399,538      190,680     237,000
     Gain on future sales - net of
       depreciation                            (40,000)     140,000      (2,300)
     Bad debt allowance                              -      (40,000)     40,000
     Interest from issuances of warrants        39,466
     Other                                      53,416        5,520      27,250
     Net operating loss                              -            -        (500)
                                           -----------  -----------  ----------
     Total provision for income taxes        1,121,463       95,000      67,200
                                           ===========  ===========  ==========

NOTE 11  SUPPLEMENTAL CASH FLOW INFORMATION
-------  ----------------------------------

     The Company's non-cash investing and financing activities were as follows:

     During the years ended June 30, 2002,  2001, and 2000, the Company acquired
     revenue  producing  assets  at a  cost  of  $54,984,307,  $53,776,279,  and
     $35,953,869, respectively. Such purchases were financed as follows:

                                              For the Year Ended June 30,
                                           2002          2001          2000
                                       ------------  ------------  ------------

Revenue producing assets               $ 54,992,141  $ 53,776,279  $ 35,953,868
Bank borrowings                         (47,083,233)  (48,419,682)  (30,848,223)
                                       ------------  ------------  ------------

Investment in direct financing leases  $  7,908,908  $  5,356,597  $  5,105,645
                                       ============  ============  ============

                                      F-23
                                                                              47
<PAGE>
               STRATEGIC CAPITAL RESOURCES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          JUNE 30, 2002, 2001 AND 2000
                          ----------------------------

     Interest paid totaled  $5,072,185,  $5,360,997,  and $3,836,804  during the
     years ended June 30, 2002, 2001 and 2000,  respectively.  Income taxes paid
     totaled $405,000, $35,000 and $18,000 during the years ended June 30, 2002,
     2001 and 2000, respectively.

     During  the year ended  June 30,  2002,  the  Company  redeemed  all of its
     preferred stock as follows:

     Redemption price                                             $  1,000,000
     Notes issued                                                     (500,000)
                                                                  ------------
     Cash paid                                                    $    500,000
                                                                  ============

NOTE 12  COMMITMENTS AND CONTINGENCIES
-------  -----------------------------

     (A) Lease Agreement
     -------------------

     The Company leases its office space under a non-cancelable  operating lease
     for a five-year term ending in March 2007. Rent expense for the years ended
     June  30,  2002,  2001  and  2000,  was  $68,539,   $85,972,   and  $75,015
     respectively. The following is a schedule of future minimum lease payments:

                       Year Ending:
                       June 30, 2003                              $     65,062
                       June 30, 2004                                    66,780
                       June 30, 2005                                    68,566
                       June 30, 2006                                    70,424
                       June 30, 2007                                    50,555
                                                                  ------------
                                                                  $    321,387
                                                                  ============

     (B) Employment Agreements
     -------------------------

     Effective  July 29,  1997,  the Board of  Directors  elected the  Company's
     principal  stockholder to the position of Chairman of the Board and entered
     into a  ten-year  employment  agreement  with  the  stockholder.  Effective
     January 1, 1998, the employment  agreement provides for annual compensation
     of  $225,000  with 10% annual  increases  during the second  through  tenth
     years.  During June 2002, the Board of Directors  extended this  employment
     agreement for an additional five years with the same terms and conditions.

     (C) Qualified Retirement Plans
     ------------------------------

     During  the year ended  June 30,  2002,  the  Company  instituted  a Profit
     Sharing Plan. No contributions  have been made or accrued for this plan for
     the year ended June 30, 2002.

                                      F-24
                                                                              48
<PAGE>
               STRATEGIC CAPITAL RESOURCES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          JUNE 30, 2002, 2001 AND 2000
                          ----------------------------

     Effective  January 1, 2000,  the Company  instituted a savings plan,  which
     qualifies under Section 401(k) of the Internal Revenue Code.  Participating
     employees may  contribute up to 25% of their pre-tax  salary,  but not more
     than  statutory  limits.  The  Company  contributes  3% of a  participant's
     earnings,  which totaled $31,846,  $28,880, and $12,654 for the years ended
     June 30, 2002, 2001 and 2000, respectively.

     (D) Compensation Plan
     ---------------------

     The   Company's   compensation   plan  rewards  all   employees  for  their
     contribution  to achievement of Company  goals.  The program  establishes a
     targeted award based upon the level and role for each eligible participant.
     At this time,  the Company has not incurred  any expenses  relating to this
     compensation plan.

     (E) Financing Activities
     ------------------------

     At June 30,  2002,  the  Company had  approximately  $21 million of unused,
     committed  credit  facilities   available  under  existing  revolving  loan
     agreements,  which  may be  utilized  to  acquire  real  estate  assets  in
     accordance  with the  terms of those  agreements.  Such  credit  facilities
     expire through August 2003.

     Subsequent  to  year-end,  the Company  received a  commitment  for a $15.7
     million credit facility.  The interest rate is based on a 30-day LIBOR rate
     plus a premium.

     As a part of its ongoing  business,  the Company is in constant  discussion
     with financial  institutions for credit  facilities,  as well as private or
     public placements of its debt or equity securities.  An offering or private
     placement of senior notes with  warrants,  convertible  preferred  stock or
     similar type of security is currently being evaluated.  It is the Company's
     policy not to incur costs from activation of credit  facilities  unless and
     until needed.

     (F) Legal Proceedings
     ---------------------

     BankAtlantic Bankcorp, Inc.
     15th Judicial Circuit Court, Palm beach County, Florida
     Case No. CL 98-11662-AG

     The  Company   filed  suit   against   BankAtlantic   Bancorp.,   Inc.  and
     BankAtlantic,  a federal  savings  bank,  in the Circuit  Court of the 15th
     Judicial  Circuit in and for Palm Beach County,  Florida by complaint dated
     December 30, 1998.  The  complaint  charges a breach of fiduciary  duty and
     seeks unspecified  damages in that the defendant  undertook to act as agent
     or broker in  connection  with  obtaining  a $200  million  loan  facility,
     relating  to a sale and lease  back  program  for a major,  publicly-traded
     national  builder.  Rather than  complete the  financing  transaction,  the
     complaint alleges economic opportunity was usurped by defendant and entered
     into an agreement directly with the builder, utilizing,

                                      F-25
                                                                              49
<PAGE>
               STRATEGIC CAPITAL RESOURCES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          JUNE 30, 2002, 2001 AND 2000
                          ----------------------------

     inter alia, the terms of the Company's program. This matter is in the early
     stages of discovery.  Since this represents a potential contingent gain for
     the Company there are no receivable  amounts  recorded in the  accompanying
     consolidated balance sheets.

     Star Insurance Company v. Strategic Capital Resources, Inc.
     15th Judicial Court, Palm beach County, Florida
     Case No. CL 00-433 AD

     This is an action on an indemnity bond.  Discovery has been conducted,  but
     is not  completed.  Mediation,  which was conducted on August 13, 2002, has
     been adjourned.  Plaintiff has not been vigorously prosecuting this action.
     Defendant  will  vigorously  defend this  action if and when the  plaintiff
     proceeds. Due to the uncertainties of litigation, we are unable to evaluate
     the likelihood of an unfavorable outcome or estimate the amount of range of
     potential loss.

     This  matter has been  referred  by the court for  mediation  to see if the
     parties can settle the case. The Company is mediating with the plaintiff to
     settle the case but there is no assurance that the  settlement  will occur.
     As such there are no  accruals  in the  accompanying  consolidated  balance
     sheet for this matter.

     The  Company is  involved in various  litigation  incident to its  business
     which the Company  believes the outcomes of such litigation will not have a
     material adverse impact on the Company's consolidated financial statements.

NOTE 13  SUBSEQUENT EVENTS
-------  -----------------

     (A) Model Home Program
     ----------------------

     From July 1, 2002  through the date of this  report,  the Company sold nine
     model homes at an aggregate  sales price of  $1,988,690.  These models were
     acquired at an aggregate cost of $1,863,685.

     The Company also has contracts pending on eight model homes at an aggregate
     sales price of  $1,933,456,  which were  acquired at an  aggregate  cost of
     $1,649,446.

     (B) Residential Real Estate Land Banking
     ----------------------------------------

     From  July 1,  2002  through  the date of this  report,  the  Company  paid
     development  costs in the amount of approximately  $7,524,781 and had sales
     of finished lots in the amount of approximately $24,275,533.

                                      F-26
                                                                              50
<PAGE>
               STRATEGIC CAPITAL RESOURCES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          JUNE 30, 2002, 2001 AND 2000
                          ----------------------------

     (C) Amendment to Warrant Agreements
     -----------------------------------

     The agreements for the  non-detachable  warrants  issued in connection with
     loans  from  stockholders  included a  provision  that the number of shares
     exercisable  and the exercise  price were not to be  effectuated by reverse
     splits.  On December 12, 2002, with the approval of the warrant holders and
     the  Board  of  Directors,  the  Company  amended  the  warrant  agreements
     effective as of the date of the reverse split (June 13, 2002),  to have the
     number of shares and exercise  prices be  effectuated  by the reverse stock
     split.  As such,  all  disclosures  relating  to the  warrants  and diluted
     earnings per share in the accompanying  consolidated  financial  statements
     and footnotes  have been restated to reflect the amendment (See Notes 8 and
     9(C)).

                                      F-27
                                                                              51
<PAGE>

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE

Effective  October 11, 2002, our  independent  accountants,  Citrin  Cooperman &
Company, LLP ("Citrin"), resigned. Thereafter, on October 14, 2002, our Board of
Directors,  on the  recommendation of our Audit Committee,  retained the firm of
Weinberg & Company,  P.A. to audit our financial statements for our fiscal years
ended June 30, 2002, 2001 and 2000.

We are uncertain as to whether there were any  disagreements  with Citrin on any
matters of accounting  principles or practices,  financial statement disclosure,
or auditing  scope or  procedure,  which  disagreements,  if not resolved to the
satisfaction  of Citrin,  would have caused  Citrin to make a  reference  to the
subject matter on the  disagreements  in connection with its report,  or whether
there existed a disagreement  relating to interpretation of law. In this regard,
we filed various  reports on Form 8-K,  including a Form 8-K on or about October
24, 2002, which explain the various issues involved in this matter.  Readers are
urged  to  review  this  aforesaid  report.  All of our  Form  8-K  reports  are
incorporated herein by reference as if set forth.

ITEM 9B.  COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Section  16(a) of the  Securities  Exchange Act of 1934  requires our  officers,
directors  and person who own more than 10% of our Common  Stock to file reports
of  ownership  and  changes  in  ownership  with  the  Securities  and  Exchange
Commission.  All of the  aforesaid  persons are  required by SEC  regulation  to
furnish us with  copies of all  Section  16(a)  forms  they file.  In June 2002,
certain of our officers,  including David Miller, our Chairman and Scott Miller,
our Vice  President,  did exercise an  aggregate  of  1,430,000  warrants for an
aggregate  exercise price of $236,100  (approx.  $0.17 per warrant).  They filed
Form 4's with the SEC relevant  thereto in July 2002,  which  filings were late.
Thereafter,  as discussed  in "Part II, Item 5" above,  in December  2002,  this
warrant  exercise was rescinded by the mutual consent of the warrant holders and
our Company.  The warrant  holders,  including  Messrs.  David and Scott Miller,
filed Form 4's with the SEC, advising of this rescission. These forms were filed
late. However, we did file a report on Form 8-K in a timely manner with the SEC,
advising of the rescission of the warrant exercise.  We are unaware of any other
matters not in compliance with Section 16(a).

                                                     PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

As of December  19,  2002,  our  officers  and  directors  and their  respective
positions with our Company were as follows:

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

         David Miller                57      President, CEO and
                                             Chairman of the Board

         Cary Greenberg              59      Treasurer, Chief Financial Officer
                                             and Chief Accounting Officer

         Samuel G. Weiss             53      Secretary, Director


                                                                              52

<PAGE>



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

         Scott Miller                27      Vice President, Assistant Secretary

         Ralph Wilson                73      Director

         John H. Roach, Jr.          61      Director

David  Miller  is  the  father  of  Scott  Miller.  There  are no  other  family
relationships amongst our management.

RESUMES

David Miller was  appointed  Chairman of the Board on July 29, 1997. On December
1, 2000, Mr. Miller was elected President and Chief Executive Officer.  Prior to
that time,  Mr. Miller had been engaged as a consultant to the Company since its
organization.  Prior,  from 1992 through 1997, he was a strategic  consultant to
several companies,  including Antares Resources Corporation and Priority Capital
Corporation.  Since 1994, Mr. Miller has served as Chairman of the Board of Lite
'N Low,  Inc., a holding  company no longer  actively  engaged in business.  Mr.
Miller is  currently  Chairman of Priority  Capital  Corp.  Mr.  Miller  devotes
substantially all of his time to the business of the Company.

Cary  Greenberg  was appointed  Treasurer,  Chief  Accounting  Officer and Chief
Financial Officer in April 2002. Prior to joining our Company, from January 1998
through  February  2001,  Mr.  Greenberg  was a  consultant  to Mobile  Computer
Training,  Inc.,  Fort  Lauderdale,  FL, a privately held  educational  software
company.  From January 1998  through  February  2001,  Mr.  Greenberg  was Chief
Financial Officer of Sunvest Resorts, Inc., Hollywood,  FL, a publicly held real
estate company. From July 1996 through January 1998, he was also Chief Financial
Officer for Central Press, Inc.,  Pompano,  FL, a subsidiary of Wallace Computer
Systems,  Inc., a publicly  held  printing  company.  Mr.  Greenberg  received a
Bachelor of Science degree in accounting  from C.W. Post University in 1973. Mr.
Greenberg devotes substantially all of his time to our business.

Samuel G.  Weiss,  Secretary  and  Director,  has been our  Secretary  since our
organization.  Effective May 1997, Mr. Weiss was interim President and served in
that capacity  until January 1, 1999.  Since 1974, Mr. Weiss has been engaged in
the  practice  of law in the  State  of New  York.  Mr.  Weiss  also  served  as
Secretary,  General Counsel, and Director of Antares Resources  Corporation from
June 1993 to December  1996. Mr. Weiss devotes only such time as is necessary to
our business.

Scott  Miller,  Vice  President and  Assistant  Secretary,  was appointed to his
positions with us in September  2000.  Prior to joining our Company,  Mr. Miller
earned a Master's  Degree in mediation and  arbitration  from Nova  Southeastern
University.  He  received a Bachelor  of Arts  degree in  English  from  Hofstra
University in 1997. He devotes substantially all of his time to our business.

Ralph Wilson,  Director,  has held this position  since our  organization.  From
October  1990  through  February  1995,  Mr.  Wilson  was  President  of Antares
Resources  Corporation and served as a Director of Antares from December 1994 to
December 1996. In addition,  since 1971, Mr. Wilson has been a principal officer
of Comet Electronics  Corp., a privately owned  manufacturer of subassemblies in
Farmingdale,  New York. Mr. Wilson devotes only such time as is necessary to our
business.


                                                                              53

<PAGE>

John H. Roach, Jr. was elected a Director of our Company in December 1998. Since
January  2002,  he has been self  employed as a financial  consultant to various
private companies and individuals. From May 2000 through December 2001, he was a
Senior Client Advisor for J.P. Morgan Private Bank. Prior thereto,  from 1998 to
2000 he was Senior Managing Director for Reliance  National.  From 1995 to 1997,
he was Senior Managing  Director,  Client  Management and Marketing for American
International  Group, AIG Risk Finance.  From 1992 to 1995, he was Vice Chairman
and Senior Managing Director for Geneva Companies, Geneva Financial Corporation.
From 1964 to 1992, he was Managing  Director,  Head of Corporate  Finance Client
Management and Loan Products for Chemical Bank. Mr. Roach devotes only such time
as is necessary to our business.

ITEM 11.  EXECUTIVE COMPENSATION

The following table reflects all forms of compensation for services  rendered to
us for the  fiscal  years  ended  June 30,  2002,  2001,  and 2000 of our  Chief
Executive  Officer and one other member of  management  who  received  aggregate
compensation  of $100,000  during our prior three years.  No other member of our
management  received  compensation  in excess of $100,000 during our fiscal year
ended June 30, 2002.

<TABLE>
                           SUMMARY COMPENSATION TABLE

<CAPTION>
                                        ANNUAL COMPENSATION          LONG TERM COMPENSATION
                                  -----------------------------  -------------------------------
                                                                         Awards          Payouts
                                                                 ----------------------  -------
                                                          Other              Securities
                                                         Annual  Restricted  Underlying           All Other
        Name and                                         Compen     Stock     Options/    LTIP     Compen-
   Principal Position       Year    Salary     Bonus     sation    Award(s)   SAR's (2)  Payouts  sation (3)
  --------------------      ----  --------- -----------  ------  ----------  ----------  -------  ----------
<S>                         <C>   <C>       <C>            <C>      <C>        <C>         <C>      <C>
David Miller,               2002  $371,127  $132,355(1)    (1)      $ 0              -     N/A      $ 5,100
Chairman of the Board,      2001  $308,115  $ 59,319(1)    (1)      $ 0        200,000     N/A      $12,836
President, Chief Executive  2000  $291,098  $ 50,262(1)    (1)      $ 0        200,000     N/A      $ 4,037
Officer and Director

John Kushay, (4)            2002  $191,469         -        -       $ 0              -     N/A            -
Treasurer, Chief Financial  2001  $115,617  $ 11,011(1)    (1)      $ 0        100,000     N/A      $ 4,661
Officer, Vice President     2000  $107,030  $ 16,362(1)    (1)      $ 0        100,000     N/A      $ 1,067
and Director
-------------------------------------
<FN>
(1)  Includes  perquisites  and other  personal  benefits  unless the  aggregate
     amount is less than either $50,000 or 10% of the total of annual salary and
     bonus reported for the named executive officer.

(2)  We do not have a stock appreciation  right ("SAR") program.  (3) Represents
     contributions  made by us to our 401(k) plan and auto  allowances.  (4) Mr.
     Kushay resigned his positions with us in April 2002.
</FN>
</TABLE>


EMPLOYMENT AGREEMENT

On July 29, 1997,  our Board of Directors  provided our Chairman,  David Miller,
with a ten year  employment  agreement which became  effective  January 1, 1998.
This agreement  provides for annual  compensation  of $225,000,  with 10% annual
increases  which began in 1999 and  continue  through the balance of the term of
the agreement.  During 2002, our Board extended this agreement for an additional
five years with the same terms and conditions.


                                                                              54

<PAGE>

STOCK OPTION PLAN/OPTIONS AND WARRANTS

In June 2001, a majority of our shareholders approved by consent our "2001 Stock
Option Plan" (the  "Plan").  This Plan  provides for the grant of incentive  and
non-qualified  stock options that may be issued to key  employees,  non-employee
directors, independent contractors and others and we have reserved 12,500 shares
of our Common Stock for issuance  under the Plan.  The options are to be granted
for a term of not more than five (5) years and other terms and  conditions  that
are usual and customary.  As of the date of this report, options to purchase all
of the 12,500 shares  reserved for issuance under this Plan had previously  been
issued,  but in December  2002,  all of these  options were  cancelled  with the
consent of the holders thereof.

The purpose of the Plan is to aid us in retaining  the services of executive and
key employees and in attracting new management  personnel when needed for future
operations and growth, and to offer such personnel  additional  incentive to put
forth  maximum  efforts for the success of our  business  and  opportunities  to
obtain or increase  proprietary interest and, thereby, to have an opportunity to
share in our success.

In  addition,  at June 30,  2002,  there  were  additional  options  issued  and
outstanding  to purchase an aggregate of 7,250  shares of our Common  Stock.  In
December  2002,  all of these  options  were  cancelled  with the consent of the
holders thereof.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

The following tables sets forth certain  information  regarding ownership of our
Common  Stock as of December  19,  2002,  by (i) each person  known to us to own
beneficially more than 5% of our Common Stock, (ii) each officer and director of
our Company;  and (iii) all directors and officers as a group.  Unless otherwise
indicated, each person listed on the tables has sole voting and investment power
as to the shares shown.

                                       Amount and Nature of
Name and Address of Beneficial Owner   Beneficial Ownership  Percent of Class(1)
------------------------------------   --------------------  ------------------

Directors and Officers:

   David Miller                               33,354(2)             43.2%
   3565 NW 61st Circle
   Boca Raton, Florida  33496

   Scott Miller                                6,600                 8.6%
   3565 NW 61st Circle
   Boca Raton, Florida  33496

   Samuel G. Weiss                               770                 1.0%
   265 Sunrise Hwy, Su. 30
   Rockville Center, New York  11570

   Ralph Wilson                                  787                 1.0%
   7 Ensign Lane
   Massapequa, New York  11758


                                                                              55

<PAGE>




   All Officers and Directors as a Group      41,511                53.8%
   (5 persons)
----------------------------
(1)  Does not include Treasury Shares.

(2)  Includes  5,250 of shares  owned by Lite 'N Low,  Inc.  and 7,750 of shares
     owned by Priority Capital Corp.

                                       Amount and Nature of
Name and Address of Beneficial Owner   Beneficial Ownership  Percent of Class(1)
------------------------------------   --------------------  ------------------

Other 5% Shareholders:

   Libo Fineberg, Trustee (1)                  6,250                 8.1%
   Helen Miller Irrevocable Trust
   3500 Gateway Drive
   Pompano Beach, Florida  33069

Rita Miller  (2) 6,600  7.6%  3565 NW 61st  Circle  Boca  Raton,  Florida  33496
---------------------------

(1)  David Miller direct  beneficiary.  No voting power.  David Miller disclaims
     any beneficial ownership.

(2)  Wife of David  Miller - sole  voting  power  and  ownership.  David  Miller
     disclaims any beneficial ownership.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

We have various  notes payable to members of our  management.  These loans arose
from advances various  stockholders made to us. The notes are payable on demand,
bearing interest at 9%, which is payable monthly.  Interest on stockholder notes
payable totaled $115,361 for the year ended June 30, 2002, $109,653 for the year
ended  June 30,  2001,  and  $112,220  for the year  ended  June 30,  2000.  Our
management  believes  that the  loans  from  stockholders  were made on equal or
better  terms than were  available  elsewhere.  During the years  ended June 30,
2002,  2001, and 2000, we issued a total of 5,366,  7,460,  and 5,730 detachable
warrants,  respectively, to these stockholders. These warrants have subsequently
been  terminated.  In accordance  with APB 14, we apportioned  fair value to the
warrants using the Black-Scholes  pricing model. Fair value was determined using
the closing  market prices of our common stock on the grant date. The fair value
of the warrants on the date of grant was treated as additional  interest expense
in the year of grant since the stockholder loans are due on demand. In the past,
we did not account for the grants of the warrants.  We are currently  accounting
for the warrants as a correction  of an error in our  accompanying  consolidated
financial  statements.  The additional  non-cash interest expense resulting from
the accounting for the warrants  amounted to $98,668,  $269,142 and $235,660 for
the years ended June 30, 2002, 2001 and 2000,  respectively.  See "Part II, Item
5" above and "Part II, Item 8, Financial  Statements and Supplementary Data" and
the notes thereto for a more detailed description of these obligation and events
applicable thereto.

In June 2002, we also issued a note for $500,000 to our Chairman,  David Miller,
in partial payment for our redemption of our convertible  preferred  stock.  The
note bears  interest  of 6% payable  monthly.  $250,000  is due July 1, 2003 and
$250,000 is due on July 1, 2004. See "Part II, Item 8, Financial  Statements and
Supplementary Data" and Note 9(A) thereto.

                                                                              56
<PAGE>

We have been advised by Weinberg & Company, P.A., that neither the firm nor any
of its associates has any relationships with us or our subsidiaries other than
the usual relationship that exists between certified public accountants and
clients.

Audit Fees:  An  aggregate  of  $125,196  was billed for  professional  services
rendered for the audit of our annual  financial  statements  for the fiscal year
ended June 30, 2002.  Weinberg & Company,  P.A. was retained as our  independent
auditor  subsequent  to the filing of our last report on Form 10-Q filed  during
the  fiscal  year  ended  June 30,  2002 and as a  result,  we did not incur any
charges relevant thereto.

Financial Information Systems Design and Implementation Fee: Weinberg & Company,
P.A..  did  not  render  professional  services  to  us  relating  to  financial
information systems design and implementation during our 2002 fiscal year.

                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K

(a)    1.    Financial Statements:  Reference  is made to the index set forth in
"Item 8,  Financial Statements and Supplementary Data"  of this Annual Report on
Form 10-K.

       2.    Exhibits:  The  following exhibits are filed as part of this Annual
Report on Form 10-K.

                    Incorporated by
                Reference to Registration
Exhibit No.        Statement 333-1842                     Description
-----------  --------------------------------  ---------------------------------

    3.1                    X                   Certificate of Incorporation, as
                                               amended to date

    3.2                    X                   By-laws, as amended to date

                      Incorporated by
                 Reference to Form 10-K for
Exhibit No.  Fiscal Year Ended June 30, 1998              Description
-----------  -------------------------------   ---------------------------------

  10.12                    X                    Employment Contract with
                                                David Miller dated as of
                                                January 1, 1998.

                     Incorporated by
               Reference to Form 10-K for
Exhibit No.  Fiscal Year Ended June 30, 1997              Description
-----------  -------------------------------   ---------------------------------

  10.14                    X                   Incentive Stock Plan


                                                                              57
<PAGE>

Exhibit No.          Filed Herewith                       Description
-----------  -------------------------------   ---------------------------------

  21.1                     X                   List of Company subsidiaries.

  99.1                     X                   Certification of Financial
                                               Statements in Accordance with
                                               Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K

On or about  May 30,  2002,  we  filed a report  on Form  8-K,  advising  of the
authorization  of our pending  reverse stock split  effective  June 17, 2002 and
matters ancillary thereto.

Subsequent  to June 30,  2002,  we filed two (2) reports on Form 8-K,  including
those reports dated October 11, 2002,  wherein we advised of the  resignation of
Citrin Cooperman & Company,  LLP as our independent auditor and the retention of
Weinberg & Company,  P.A. as our  independent  auditor who audited the financial
statements  included  in this  report.  This  Form 8-K also  included  a lengthy
narrative on the events and circumstances  surrounding the resignation of Citrin
Cooperman & Company, LLP.

On or about  December  16,  2002,  we filed a report  on Form 8-K,  advising  of
various changes to the accounting  treatment we had  historically  attributed to
the sales of our model homes, as well as the accounting  treatment applicable to
our amending certain warrant  agreements  relating to our outstanding  warrants.
For a more detailed description of these matters see "Part II, Item 8, Financial
Statements and Supplementary Data" and Notes thereto.


                                                                              58

<PAGE>



                                   SIGNATURES


Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this Report to be signed on its
behalf by the undersigned, thereunto duly authorized, on December 23, 2002.

                                   STRATEGIC CAPITAL RESOURCES, INC.

                                   By: s/ David Miller
                                      -------------------------------------
                                      David Miller, President, CEO,
                                      and Chairman of the Board


                                   By: s/ Cary Greenberg
                                      -------------------------------------
                                      Cary Greenberg, Treasurer, Chief Financial
                                      Officer and Chief Accounting Officer

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



s/ David Miller                                     Dated: December 23, 2002
-----------------------------------
David Miller, Director

s/ Samuel G. Weiss                                  Dated: December 23, 2002
-----------------------------------
Samuel G. Weiss, Director

s/ Ralph Wilson                                     Dated: December 23, 2002
-----------------------------------
Ralph Wilson, Director

s/ John H. Roach, Jr.   .                           Dated: December 23, 2002
-----------------------------------
John H. Roach, Jr., Director


                                 CERTIFICATIONS

We, David Miller and Cary Greenberg, certify that:

     1.   We have reviewed this annual report on Form 10-K of Strategic  Capital
          Resources, Inc.;

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


                                                                              59

<PAGE>


     3.   Based on our knowledge, the financial statements,  and other financial
          information  included in this  annual  report,  fairly  present in all
          material respects the financial  condition,  results of operations and
          cash flows of the Registrant as of, and for, the periods  presented in
          this annual report;

     4.   We  are  responsible  for  establishing  and  maintaining   disclosure
          controls and  procedures  (as defined in Exchange Act Rules 13a-14 and
          15d-14) for the Registrant and have;

          a.   designed such  disclosure  controls and procedures to ensure that
               material  information  relating to the Registrant,  including its
               consolidated  subsidiaries,  is made known to us by others within
               those  entities,  particularly  during  the  period in which this
               annual report is being prepared;

          b.   evaluated  the  effectiveness  of  the  Registrant's   disclosure
               controls and  procedures  as of a date within ninety (90) days of
               the filing date of this annual  report (the  "Evaluation  Date");
               and

          c.   presented  in  this  annual  report  our  conclusions  about  the
               effectiveness of the disclosure  controls and procedures based on
               our evaluation as of the Evaluation Date;

     5.   We  have  disclosed,  based  on our  most  recent  evaluation,  to the
          Registrant's  auditors  and the Audit  Committee  of the  Registrant's
          Board of Directors (or persons performing the equivalent function):

          a.   all  significant  deficiencies  in the  design  or  operation  of
               internal  controls which could adversely  affect the Registrant's
               ability to record,  process,  summarize and report financial data
               and have  identified for the  Registrant's  auditors any material
               weakness in internal controls; and

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

     6.   We have  indicated  in this  annual  report  whether or not there were
          significant  changes in  internal  controls or in other  factors  that
          could significantly affect internal controls subsequent to the date of
          our most recent  evaluation,  including  any  corrective  actions with
          regard to significant deficiencies and material weaknesses.


Dated: December 23, 2002                     s/ David Miller
                                             -----------------------------------
                                             Chief Executive Officer


Dated: December 23, 2002                     S/ Cary Greenberg
                                             -----------------------------------
                                             Chief Financial Officer



                                                                              60