KAIRE HOLDINGS INC
<DOCUMENT>
<TYPE>EX-10.42
<SEQUENCE>3
<FILENAME>doc2.txt
<TEXT>
                                                                   Exhibit 10.42

                                WORKOUT AGREEMENT

WHEREAS,  in  May  of  2000, Kaire Holdings, Inc. entered into an "Agreement and
Plan  or  Merger"  ("Agreement")  to  purchase  Classic  Care, Inc. a California
corporation  DBA  Classic Care Pharmacy ("Classic Care") from Steve Oscherowitz,
and  Sarit  Rubenstein  ("CC  Owners");

WHEREAS, according to the terms of this Agreement, the CC owners were to receive
a  combination  of  cash  and  Kaire Common Stock, totaling approximately USD $8
million,  in  exchange  for  100%  ownership  of  all  Classic  Care shares (the
"transaction");

WHEREAS,  in  December  of  2000, both Kaire and the CC Owners executed a Second
Addendum  to Agreement and Plan of Merger ("Addendum") wherein they modified the
value  of  the  transaction  and  the  terms  of  payment  to  the  CC  Owners

WHEREAS,  according  to  the  terms  of  the  Addendum, the parties acknowledged
compliance with the prior terms of the Agreement, and imputed a new value of the
overall  transaction  as  USD  $9.5  million, to be paid in a combination of the
Kaire  common  stock  and  additional  cash;

WHEREAS,  the  parties  to  the  Agreement acknowledge that per the terms of the
Agreement  and Addendum, Kaire has paid $1,662,500.00 in cash, 15,500,000 shares
of  Kaire  common  stock  valued  at  USD $.01 per share or USD $155,000.00, and
various  other  compensations  (hereinafter  collectively  referred  to  as  "CC
Compensation;"

WHEREAS,  the  parties  to  the  aforementioned Agreement and Addendum intend to
reach  a  global settlement (i.e. "Work Out") of all rights and responsibilities
related  to  all  transactions and agreements, verbal or written, related to the
Agreement  and  Addendum  and  any  other  agreements  related  thereto;

NOW,  THEREFORE,  in consideration of mutual promises, covenants, and agreements
contained  herein,  the  parties  agree  as  follows:

I.     Terms

A.     General

1.     Kaire  wishes  to  assign  and transfer all of its rights to Classic Care
Pharmacy to the CC Owners in consideration of the CC Owners forgiving Kaire from
payment  of  any  and all additional consideration related to the aforementioned
Agreement  and  Addendum,  all  parties  assenting  to  the  foregoing  equity
distribution,  and  until the CC Owners acquire and transfer 100% ownership of a
fully  licensed retail pharmacy to Kaire (according to the terms below), Classic
Care  agrees  to  perform  certain  pharmacy-related services (outlined below in
section  I.B.5)  for  Kaire  and  it's  Health  Advocate  Program  (the  "HAP").



WORKOUT  AGREEMENT
October  29,  2001
Page  2

          2.     For  the purposes of this Work Out Agreement, the term "Classic
Care"  shall  refer to all of the business that Classic Care currently conducts,
excluding any and all HIV-related trade (designated as "Health Advocate Program"
or  "HAP"  or  "Consumer  Advocate  Program"  or  "CAP"  business).

B.     Specific  Terms

1.     Assignment  and  Transfer  of  Rights.
       -------------------------------------

a.     Subject  to  the  terms  herein,  Kaire  will  assign  and  transfer
All  of  it's  rights  to  Classic  Care  Pharmacy  to  the  CC  Owners.

2.     Changes  to  Classic  Corporate  Structure.
       ------------------------------------------

a.     Increase  its  authorized  common  stock  to  150,000,000:and
b.     Authorize  a class of "Series A Preferred", which will have the following
rights  and  privileges:

(1)     76  votes  to  each  one  common  share  outstanding.
     There  is  no  conversion  to  common  share  feature.

2.5     Outstanding  One  Year  4%  Convertible  Note.
        ---------------------------------------------

a.     The  CC  Owners  agree  to  hold  a  One  Year  4%  Convertible
Note  (the "Note") in the amount of USD $2,000,000.00.  The note will mature one
year  hence  ("Maturity  Date"),  and  if not paid when due, Kaire will have the
option  to return 2,000,000 of its shares of Classic Care to the note holders in
settlement  of the note. Interest will be payable within 30 days of the maturity
date  in  cash or in Kaire common stock, or it may be offset against monies owed
related  to  section  4  of  the  Work  Out  Agreement.

3.     The  Health  Advocate  Program.
       ------------------------------

a.     General

(1)     The  Health  Advocate  Program  (which  also  may  be
Referred  to,  as the "HAP" or "Consumer Advocate Program" or "CAP" is a program
that  sells  goods  and  services to HIV patients in Southern California.  These
customers  have been specifically designated as such under a specific account in
the  Classic  Care  billing  system.






WORKOUT  AGREEMENT
October  29,  2001
Page  3


b.     Specific

(1)     Kaire  will  retain  all  of  the  accounts/customers
     Related  to  the  Health  Advocate  Program.

4.     Kaire's  New  Retail  Pharmacy.
       ------------------------------

a.     CC  Owners  Agree  to  exercise  their  best  efforts  to  obtain
100%  ownership  of  a  Southern  California  licensed retail pharmacy for Kaire
Holdings, within 12 months following the transfer and assignment of Classic Care
to  the  CC Owners: provided that the CC Owners shall have no liability to Kaire
if  such  facility  is  not  secured  for  Kaire.

5.     Pharmacy  Management  Services  and  Operations  Agreement.
       ----------------------------------------------------------

a.     General

     Within  30  days  of  the  date  of  the  execution  of  this
Agreement,  Kaire  and  CC  will  enter  into a Pharmacy Management Services and
Operations  Agreement  whereby  CC  will  provide  certain a pharmacy management
services  and operation services for Kaire.  This agreement will be for a period
of  twelve  months.  The  cost  of  such  services  will  be  paid for by Kaire.

               b.     The  cost  due  CC  by  Kaire  will  be  determined  on  a
month-by-month  basis  reflecting various factors including the HAP performance.

6.     Classic  Care  Equity  Distribution.
       -----------------------------------

a.     General

The  foregoing  is  a  list  of  Classic  Care  shareholders  of
Classic  Care,  Inc.  equity.  The  shares  below  shall  be registered with the
Securities  Exchange  Commission  in a registration statement to be filed by the
parties.

b.     Specific  Issuances

(1)     3,900,000  common  shares  to  Kaire;
(2)     6,000,000  common  shares  to  CC  Owners;
(3)     100,000  Series  'A'  Preferred  shares  to  CC  Owners;
(4)     150,000  common  shares  to  Owen  Naccarato;
(5)     150,000  common  shares  to  Mark  L.  Baum;



WORKOUT  AGREEMENT
October  29,  2001
Page  4

(6)     100,000  common  shares  to  Stason  Biotech;
(7)     300,000  common  shares  to  Steven  R.  Westlund;  and


c.     Employee  Stock  Options

(1)     400,000  common  shares  shall  be  designated  and
Registered  with  90  days of the effectiveness of the Classic Care registration
statement  under  an  S-8.

7.     Non-Compete  Agreement.
       ----------------------

Within  30  days  of  the  date  hereof,  Kaire  and  Classic  Care  agree  to
Execute  a  non-compete  agreement, which shall state that both parties agree to
not  compete  in  their respective businesses and in their respective geographic
markets.  For  Kaire,  this  shall  mean  that it shall not compete for assisted
living customers in the greater Los Angeles area, and for Classic Care, it shall
mean  that  it  shall  not  compete  for  HIV/AIDS
Business  in  the  greater  Los  Angeles  area.  The  agreement  shall include a
provision  for  attorney's  fees and there shall be a liquidated damages clause.

8.     Non  Performance
       ----------------

If  Kaire  is  unsuccessful  in  obtaining  the  required  shareholder
Approval  for the spin-off, Kaire will return 85% ownership of Classic Care (the
"foreclosure Shares") back to the CC Owners as an accord and satisfaction of the
debt  owed  by Kaire to the CC Owners, it being acknowledged and agreed by Kaire
that  the  fair  market  value of 85% of Classic Care is substantially below the
amount  owed  by  Kaire  to the CC Owners. Upon such transfer of the Foreclosure
Share  to the CC Owners, In addition, the CC Owners shareholders will cancel any
amounts due them by Kaire.  The shareholder approval date shall be no later than
February  9,  2002.  In  connection  herewith,  Kaire  agrees  to deposit into a
mutually  acceptable escrow the Foreclosure Share, duly endorsed for transfer to
the  CC  Owners  in  the  event  that  the  provisions  of this Section 8 become
operable.  If  these  provisions  do  not  become operable, then the Foreclosure
Shares  shall  be  voided  and  cancelled.  Additionally, Kaire hereby agrees to
indemnify,  defend  and  hold  harmless  the  CC  Owners  from any claims by the
shareholders  of  Kaire  that  the  transfer to the CC Owners of the Foreclosure
Shares  was  not  duly  approved  of  by  the  Shareholders.

II.     General  Terms
1.     Choice  of  Law.  This  Agreement,  and  any  dispute  arising  from  the
       ---------------
relationship  between  the  parties  to  this  Agreement,  shall  be governed by
       -
California  law,  excluding  any  laws  that  direct  the application of another
jurisdiction's  laws.
October  29,  2001
Page  5

2.     Attorney  Fees  Provision.  In  any  litigation,  arbitration,  or  other
       -------------------------
proceeding  by  which  one  party  either seeks to enforce its rights under this
Agreement  (whether  in  contract,  tort, or both) or seeks a declaration of any
rights  or  obligations  under  this  Agreement,  the  prevailing party shall be
awarded  its  reasonable  attorney  fees,  and  costs  and  expenses  incurred.
3.     Notice.  Any notices required or permitted to be given hereunder shall be
       ------
given  in  writing  and shall be delivered (a) in person, (b) by certified mail,
postage  prepaid,  return  receipt  requested,  (c)  by  facsimile,  or (d) by a
commercial  overnight  courier  that guarantees next day delivery and provides a
receipt,  and  such  notices  shall  be  addressed  as  follows:
If  to  Kaire:     Steven  R.  Westlund

If  to  CC  Owners:     Joel  Rubenstein

Or  to  such  other  address  as  either  party may from time to time specify in
writing  to  the other party.  Any notice shall be effective only upon delivery,
which  for  any  notice  given  by  facsimile  shall  mean notice which has been
received  by  the  party  to  whom it is sent as evidenced by confirmation slip.
3.     Modification  of Agreement.  This Agreement may be supplemented, amended,
       --------------------------
or  modified  only  by  the  mutual  agreement  of  the parties.  No supplement,
amendment,  or  modification  of this Agreement shall be binding unless it is in
writing  and  signed  by  all  parties.
4.     Entire Agreement.  This Agreement and all other agreements, exhibits, and
       ----------------
schedules  referred  to in this Agreement constitute(s) the final, complete, and
exclusive statement of the terms of the agreement between the parties pertaining
to  the  subject  matter  of  this  Agreement  and  supersedes  all  prior  and
contemporaneous understandings or agreements of the parties.  This Agreement may
not  be  contradicted  by evidence of any prior or contemporaneous statements or
agreements.  No  party  has been induced to enter into this Agreement by, nor is
any  party  relying on, any representation, understanding, agreement, commitment
or  warranty  outside  those  expressly  set  forth  in  this  Agreement.
5.     Severability of Agreement.  If any term or provision of this Agreement is
       -------------------------
determined  to be illegal, unenforceable, or invalid in whole or in part for any
reason, such illegal, unenforceable, or invalid provisions or part thereof shall
be  stricken  from  this  Agreement,  and  such  provision  shall not affect the
legality,  enforceability,  or  validity of the remainder of this Agreement.  If
any  provision  or part thereof of this Agreement is stricken in accordance with
the  provisions of this section, then this stricken provision shall be replaced,
to  the  extent possible, with a legal, enforceable, and valid provision that is
as  similar  in  tenor  to  the  stricken  provision  as  is  legally  possible.

October  29,  2001
Page  6

6.     Separate  Writings  and Exhibits.  All agreements, exhibits, schedule, or
       --------------------------------
other  separate  writings  related  to  this Agreement constitute a part of this
Agreement  and  are  incorporated into this Agreement by this reference.  Should
any  inconsistency  exist  or  arise between a provision of this Agreement and a
provision of any exhibit, schedule, or other incorporated writing, the provision
of  this  Agreement  shall  prevail.
7.     Time of the Essence.  Time is of the essence in respect to all provisions
       -------------------
of  this  Agreement that specify a time for performance; provided, however, that
the foregoing shall not be construed to limit or deprive a party of the benefits
of  any  grace  or  use  period  allowed  in  this  Agreement.
8.     Survival.  Except  as  otherwise  expressly  provided  in this Agreement,
       --------
representations,  warranties,  and  covenants contained in this Agreement, or in
any  instrument,  certificate, exhibit, or other writing intended by the parties
to  be  a part of this Agreement, shall survive for two (2) years after the date
of  this  Agreement.
9.     Ambiguities.  Each  party  and its counsel have participated fully in the
       -----------
review  and  revision of this Agreement.  Any rule of construction to the effect
that  ambiguities  are to be resolved against the drafting party shall not apply
in  interpreting  this  Agreement.  The  language  in  this  Agreement  shall be
interpreted  as  to  its fair meaning and not strictly for or against any party.
10.     Waiver.  No  waiver  of a breach, failure of any condition, or any right
        ------
or  remedy  contained in or granted by the provisions of this Agreement shall be
effective  unless  it  is in writing and signed by the party waiving the breach,
failure, right, or remedy.  No waiver of any breach, failure, rights, or remedy,
whether  or  not  similar,  nor  shall any waiver constitute a continuing waiver
unless  the  writing  so  specifies.
11.     Headings.  The  headings  in this Agreement are included for convenience
        --------
only  and  shall  neither  affect  the  construction  or  interpretation  of any
provision  in  this Agreement nor affect any of the rights or obligations of the
parties  to  this  Agreement.
12.     Necessary Acts, Further Assurances.  The parties shall at their own cost
        ----------------------------------
and expense execute and deliver such further documents and instruments and shall
take  such
other  actions as may be reasonably required or appropriate to evidence or carry
out  the  intent  and  purposes  of  this  Agreement.
13.     Execution.  This  Agreement  may be executed in counterparts and by fax.
        ---------
14.     Consent  to  Jurisdiction and Forum Selection.  The parties hereto agree
        ---------------------------------------------
that  all actions or proceedings arising in connection with this Agreement shall
be  tried  and  litigated exclusively in the State and Federal courts located in
the  County  of  Los Angeles, State of California.  The aforementioned choice of
venue  is  intended  by  the  parties  to  be  mandatory  and  not permissive in
WORKOUT  AGREEMENT
October  29,  2001
Page  7

nature,  thereby  precluding  the  possibility of litigation between the parties
with  respect to or arising out of this Agreement in any jurisdiction other than
that  specified  in  this  paragraph.  Each party hereby waives any right it may
have  to  assert  the doctrine of forum non convenient or similar doctrine or to
object  to  venue with respect to any proceeding brought in accordance with this
paragraph,  and  stipulates  that  the  State  and Federal courts located in the
County  of  Los  Angeles, State of California shall have in persona jurisdiction
and  venue  over  each  of  them  for  the
Purpose  of litigating any dispute, controversy, or proceeding arising out of or
related  to this Agreement.  Each party hereby authorizes and accepts service of
process  sufficient  for  personal  jurisdiction  in  any  action  against it as
contemplated  by  this paragraph by registered or certified mail, return receipt
requested,  postage  prepaid,  to  its  address for the giving of notices as set
forth  in  this  Agreement.  Any  final judgment rendered against a party in any
action  or  proceeding  shall  be  conclusive  as  to  the subject of such final
judgment  and  may  be enforced in other jurisdictions in any manner provided by
law.
15.     Jury  Trial  Waivers.  To  the  fullest  extent permitted by law, and as
        --------------------
separately  bargained-for-consideration,  each  party hereby waives any right to
trial  by  jury  in  any  action,  suit, proceeding, or counterclaim of any kind
arising  out  of  or  relating  to  this  Agreement.
16.     Representation on Authority of Parties/Signatories.  Each person signing
        --------------------------------------------------
this Agreement represents and warrants that he or she is duly authorized and has
legal capacity to execute and deliver this Agreement.  Each party represents and
warrants  to  the other that the execution and delivery of the Agreement and the
performance  of such party's obligations hereunder have been duly authorized and
that  the  Agreement  is  a  valid and legal agreement binding on such party and
enforceable  in  accordance  with  its  terms.
17.     Force  Majeure.  No party shall be liable for any failure to perform its
        --------------
obligations  in  connection with any action described in this Agreement, if such
failure results from any act of God, riot, war, civil unrest, flood, earthquake,
or other cause beyond such party's reasonable control (including any mechanical,
electronic, or communications failure, but excluding failure caused by a party's
financial  condition  or  negligence).
18.     Assignment.  Neither  party  shall  voluntarily  or  by operation of law
        ----------
assign,  hypothecate,  give,  transfer,  mortgage, sublet, license, or otherwise
transfer  or  encumber  all or part of its rights, duties, or other interests in
this Agreement or the proceeds thereof (collectively, "Assignment'), without the
other  party's  prior  written  consent.  Any  attempt  to make an Assignment in
violation of this provision shall be a material default under this Agreement and
any  Assignment  in  violation  of  this  provision  shall  be  null  and  void.
19.     Arbitration.  Any  controversy,  claim  or  dispute  arising  out  of or
        -----------
relating  to  this  Agreement,  shall  be  settled by binding arbitration in Los
Angeles, California.  Such arbitration shall be conducted in accordance with the
then  prevailing  commercial  arbitration  rules  of
WORKOUT  AGREEMENT
October  29,  2001
Page  8
JAMS/Endispute  ("JAMS"), with the following exceptions if in conflict:  (a) one
arbitrator  shall  be  chosen  by  JAMS;  (b) each party to the arbitration will
Pay its pro rata share of the expenses and fees of the arbitrator, together with
other  expenses  of  the arbitration incurred or approved by the arbitrator; and
(c)  arbitration  may  proceed  in  the  absence  of any party if written notice
(pursuant  to the JAMS' rules and regulations) of the proceedings has been given
to  such party.  The parties agree to abide by all decisions and awards rendered
in such proceedings.  Such decisions and awards rendered by the arbitrator shall
be  final  and  conclusive  and  may be entered in any court having jurisdiction
thereof  as  a  basis  of  judgment  and  of  the  issuance of execution for its
collection.  All such controversies, claims or disputes shall be settled in this
manner  in
Lieu  of  any  action  at  law or equity; provided however, that nothing in this
subsection  shall  be  construed  as  precluding  the  bringing  an  action  for
injunctive  relief or other equitable relief.  The arbitrator shall not have the
right to award punitive damages or speculative damages to either party and shall
not have the power to amend this Agreement.  The arbitrator shall be required to
follow  applicable  law.  IF  FOR ANY REASON THIS ARBITRATION CLAUSE BECOMES NOT
APPLICABLE,  THEN EACH PARTY, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
HEREBY  IRREVOCABLY  WAIVES  ALL RIGHT TO TRIAL BY JURY AS TO ANY ISSUE RELATING
HERETO  IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS  AGREEMENT  OR  ANY  OTHER  MATTER  INVOLVING  THE  PARTIES  HERETO.
                                 SIGNATURE LINES


     IN  WITNESS  WHEREOF,  this  Consulting  Agreement has been executed by the
Parties  as  of  the  date  first  above  written.

CC  Owners     Kaire

/s/Steve  Oscherowitz                         /s/  Steven  R.  Westlund
__________________________________          _____________________________
----------------------------------          -----------------------------
Steve  Oscherowitz                             Steven  R.  Westlund
                                               Chairman  and  CEO
/s/  Sarit  Rubenstein
__________________________________
Sarit  Rubenstein













                           KAIRE HOLDINGS INCORPORATED
                                AND SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS
                               FOR THE YEARS ENDED
                           DECEMBER 31, 2001 AND 2000


<PAGE>
                           KAIRE HOLDINGS INCORPORATED
                                AND SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 2001 AND 2000





                             C  O  N  T  E  N  T  S




Report  of  Independent  Certified  Public  Accountants          F1

Consolidated  Balance  Sheets                              F2  - F3

Consolidated  Statements  of  Operations                         F4

Consolidated  Statements  of  Stockholders'  Equity              F5

Consolidated  Statements  of  Cash  Flows                  F6  - F8

Notes  to  Consolidated  Financial  Statements            F9  - F40



<PAGE>






               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS



Board  of  Directors  and  Stockholders
Kaire  Holdings  Incorporated

We  have  audited the accompanying consolidated balance sheets of Kaire Holdings
Incorporated  and subsidiaries as of December 31, 2001 and 2000, and the related
consolidated  statements of operations, stockholders' equity, and cash flows for
the  years then ended.  These financial statements are the responsibility of the
Company's  management.  Our  responsibility  is  to  express an opinion on these
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  audit  to  obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test  basis,  evidence  supporting  the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made  by  management,  as well as evaluating the overall
financial  statement  presentation.  We  believe  that  our  audits  provide  a
reasonable  basis  for  our  opinion.

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

The  accompanying  financial  statements  have  been  prepared assuming that the
Company  will  continue  as  a  going  concern.  As  discussed  in Note 2 to the
financial  statements, the Company has suffered recurring losses from operations
and  has  a  net  capital  deficiency,  which raises doubts about its ability to
continue  as  a  going concern.  Management's plans regarding those matters also
are  described  in  Note  2.  The  financial  statements  do  not  include  any
adjustments  that  might  result  from  the  outcome  of  this  uncertainty.

As  discussed  in  Note  3  to  the  financial  statements, an error resulted in
understatement  of  previously  reported  goodwill,  notes  payable  to  related
parties, related accrued interest and retained earnings as of December 31, 2000.
Accordingly,  the  2000  financial statements have been restated to correct this
error.




/s/Pohl,  McNabola,  Berg  &  Company  LLP

Pohl,  McNabola,  Berg  &  Company  LLP
San  Francisco,  CA
March  27,  2002


<TABLE>
<CAPTION>

                                 KAIRE HOLDINGS INCORPORATED
                                     AND SUBSIDIARIES
                                      BALANCE SHEETS
                               DECEMBER 31, 2001 AND 2000
                                          ASSETS

                                                             2001          2000
                                                            -------------------------
CURRENT ASSETS
<S>                                                         <C>          <C>
  Cash and cash equivalents. . . . . . . . . . . . . . . .  $    62,707  $   311,716
  Accounts receivable, net of allowance for doubtful
    accounts of 201,360 and 397,362, respectively. . . . .    1,089,739      714,882
  Other receivables. . . . . . . . . . . . . . . . . . . .       23,030            -
  Inventory. . . . . . . . . . . . . . . . . . . . . . . .      728,410      385,219
  Deposits . . . . . . . . . . . . . . . . . . . . . . . .        4,750        4,750
  Amounts due from related parties . . . . . . . . . . . .      415,664      612,300
  Other current asset. . . . . . . . . . . . . . . . . . .       14,686       14,179
                                                            ------------------------
    Total current assets . . . . . . . . . . . . . . . . .    2,338,986    2,043,046
                                                            ------------------------
NONCURRENT ASSETS
  Debt issuance costs. . . . . . . . . . . . . . . . . . .       88,124       76,541
  Property and Equipment, net of accumulated depreciation.      200,952      278,147
  Investments. . . . . . . . . . . . . . . . . . . . . . .       30,028       35,028
  Goodwill, net of accumulated amortization. . . . . . . .    8,958,539    9,444,975
                                                            ------------------------
    Total noncurrent assets. . . . . . . . . . . . . . . .    9,277,643    9,834,691
                                                            ------------------------
        TOTAL ASSETS . . . . . . . . . . . . . . . . . . .  $11,616,629  $11,877,737
                                                            ========================
</TABLE>


                               (continued)




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

<TABLE>
<CAPTION>

                                 KAIRE HOLDINGS INCORPORATED
                                     AND SUBSIDIARIES
                                      BALANCE SHEETS
                               DECEMBER 31, 2001 AND 2000

                             LIABILITIES AND STOCKHOLDERS' EQUITY

                                                                  2001          2000
                                                                 ----------------------------
CURRENT LIABILITIES
<S>                                                              <C>            <C>
  Accounts payable and accrued expense. . . . . . . . . . . . .  $  1,665,437   $  1,968,779
  Income tax payable. . . . . . . . . . . . . . . . . . . . . .         4,000          4,000
  Due to Stason Biotech . . . . . . . . . . . . . . . . . . . .       175,000        175,000
  Sales tax payable . . . . . . . . . . . . . . . . . . . . . .             -          5,727
  Note payable - acquisition. . . . . . . . . . . . . . . . . .     7,419,881      1,301,000
  Notes payable - related parties . . . . . . . . . . . . . . .       250,000        250,000
  Convertible notes - current portion . . . . . . . . . . . . .       598,383         71,000
  Capital leases-short term . . . . . . . . . . . . . . . . . .        66,428         73,262
                                                                 ----------------------------
    Total current liabilities . . . . . . . . . . . . . . . . .    10,179,129      3,848,768

LONG TERM LIABILITIES
  Convertible notes payable and debentures. . . . . . . . . . .       429,964        750,000
  Capital leases-long term. . . . . . . . . . . . . . . . . . .        69,863        123,847
                                                                 ----------------------------
    Total long term liabilities . . . . . . . . . . . . . . . .       499,827        873,847
                                                                 ----------------------------
      Total liabilities . . . . . . . . . . . . . . . . . . . .    10,678,956      4,722,615
                                                                 ----------------------------
STOCKHOLDERS' EQUITY
  Common stock, $0.001 par value
    400,000,000 shares authorized; 277,041,071
    and 117,765,033 shares issued and outstanding, respectively       277,042        117,765
  Common Stock Subscriptions Receivable . . . . . . . . . . . .             -        (20,000)
  Additional paid in capital. . . . . . . . . . . . . . . . . .    36,676,339     40,671,855
  Accumulated deficit . . . . . . . . . . . . . . . . . . . . .   (36,015,708)   (33,614,498)
                                                                 ----------------------------
      Total stockholders' equity. . . . . . . . . . . . . . . .       937,673      7,155,122
                                                                 ----------------------------
        TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY. . . . . . .  $ 11,616,629   $ 11,877,737
                                                                 ============================
</TABLE>




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



<TABLE>
<CAPTION>

                             KAIRE HOLDINGS INCORPORATED
                                   AND SUBSIDIARIES
                               STATEMENTS OF OPERATIONS
                     FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
                                                    2001           2000
                                                 ---------------------------
NET REVENUES                                     $15,862,690    $5,707,700
<S>                                             <C>            <C>
COST OF GOODS SOLD . . . . . . . . . . . . . .    13,317,413      4,042,549
                                                 ---------------------------

GROSS PROFIT . . . . . . . . . . . . . . . . .     2,545,277      1,665,151
                                                 ---------------------------

OPERATING EXPENSES
  Depreciation and amortization. . . . . . . .       579,957        336,917
  General and administrative . . . . . . . . .     1,825,390      1,212,678
  Rent . . . . . . . . . . . . . . . . . . . .        75,553         57,351
  Salaries . . . . . . . . . . . . . . . . . .     2,054,696      2,615,132
  Selling expense. . . . . . . . . . . . . . .        40,901         67,243
  Debt issuance costs. . . . . . . . . . . . .       166,667         10,934
                                                 ---------------------------

    Total operating expenses . . . . . . . . .     4,743,164      4,300,255
                                                 ---------------------------

LOSS FROM OPERATIONS . . . . . . . . . . . . .    (2,197,887)    (2,635,104)
                                                 ---------------------------

OTHER INCOME (EXPENSES)
  Interest expense . . . . . . . . . . . . . .      (150,162)       (41,352)
  Non-cash miscellaneous income. . . . . . . .             -        160,264
  Shareholder fees . . . . . . . . . . . . . .       (41,569)        (3,369)
  Write-down of accounts payable . . . . . . .             -         60,812
  Gain (loss) on disposal of assets. . . . . .        (3,392)        28,509
  Gain (loss) on investment. . . . . . . . . .        (5,000)             -
  Equity in earnings of Stason Biotech . . . .             -          5,028

    Total other income (expenses). . . . . . .      (200,123)       209,892
                                                 ---------------------------

LOSS BEFORE PROVISION FOR INCOME TAXES . . . .    (2,398,010)    (2,425,212)

PROVISION FOR INCOME TAXES . . . . . . . . . .         3,200          4,000
                                                 ---------------------------


NET LOSS . . . . . . . . . . . . . . . . . . .  $ (2,401,210)  $ (2,429,212)
                                                 ---------------------------

BASIC LOSS PER SHARE . . . . . . . . . . . . .  $      (0.01)  $      (0.02)
                                                 ---------------------------

DILUTED LOSS PER SHARE . . . . . . . . . . . .  $      (0.01)  $      (0.02)
                                                 ---------------------------

WEIGHTED-AVERAGE SHARES OUTSTANDING - BASIC. .   169,827,480    104,953,458
                                                 ---------------------------

WEIGHTED-AVERAGE SHARES OUTSTANDING - DILUTED.   169,827,480    104,953,458
                                                 ---------------------------

</TABLE>


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



<TABLE>
<CAPTION>

                                             KAIRE HOLDING INCORPORATED
                                                    AND SUBSIDIARIES
                                    CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                     FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000


                                                          Common         Additional
                                   Common Stock           Subscription     Paid-In      Accumulated
                               Shares        Amount       Receivable      Capital        Deficit            Total
<S>                          <C>            <C>           <C>            <C>            <C>              <C>


Balance, December 31, 1999. . 77,197,226  $  77,197            -         $$ 30,521,658  $(31,185,286)   $ (586,431)

Issued for conversion
of notes payable. . . . .        200,000        200            -                 9,800             -        10,000

Issued for convertible
note interest . . . . . . .      389,110        389            -                17,611             -        18,000

Issued for professional
services. . . . . . . . . .    2,123,168      2,123            -                91,933             -        94,056

Issued for services . .  .     4,140,000      4,140            -               305,860             -       310,000

Issued for investment-NetFame     50,000         50            -                4,950              -         5,000

Issued for conversion
of debt . . . . . . . . . . .    596,550        597            -               26,248              -        26,845

Issued for options exercised. 16,456,980     16,457            -            1,633,142              -     1,649,599

Issued for Lost certificates.  1,112,000       1,112           -               (1,112)             -             -

Shares issued for Acquisition 15,499,999      15,500           -            6,484,500              -     6,500,000

Deferred compensation expense                   -              -             (463,135)             -      (463,135)

Issued for employee compensation.     -         -              -            2,040,400              -     2,040,400

Stock Subscriptions receivable. .     -         -         (20,000)               -                 -       (20,000)
                               -----------   ----------   --------       -------------    -----------   -----------
Net loss. .      . . . .             -          -            -              -             (2,429,212)   (2,429,212)
                               -----------   ----------   --------       -------------    -----------   -----------

Balance, December 31, 2000.   117,765,033  $ 117,765  $   (20,000)     $ 40,671,855     $(33,614,498)   $ 7,155,122
                               -----------   ----------   --------       -------------    -----------   -----------

Issued for conversion
of notes payable. . . . .     126,680,856    126,681         -              865,972               -         992,653

Issued for convertible
note interest . . . . . . .     5,428,516      5,429         -               28,360               -          33,789

Issued for professional
services. . . . . . . . . .       850,000      6,350         -               18,275               -          24,625

Conversion of stock options    16,650,000     11,150         -              126,853               -         138,003

Consulting expense recognized
   in stock conversions .             -          -           -              790,475               -         790,475

Issued for officers'
Compensation                    9,666,666      9,667          -             237,000              -          246,667

Recognition of deferred
   compensation expense . .           -          -            -             142,549              -          142,549

Stock Subscriptions receivable.       -          -         20,000               -                -           20,000

Adjustment for acquisition
   of Classic Care. . . . .           -          -            -          (6,345,000)             -       (6,345,000)

Debt issuance costs . .              -           -            -             140,000              -          140,000

Net loss. . .  . . . . .             -           -            -                -         (2,401,210)     (2,401,210)
                               -----------   ----------   --------       -------------    -----------   -----------


Balance, December 31, 2001.  277,041,071  $  277,042  $       -        $ 36,676,339    $(36,015,708)    $   937,673
                               -----------   ----------   --------       -------------    -----------   -----------


</TABLE>



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


<TABLE>
<CAPTION>

                                 KAIRE HOLDINGS INCORPORATED
                                        AND SUBSIDIARIES
                                   STATEMENTS OF CASH FLOWS
                        FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000


                                                                       2001          2000
                                                                   -----------   ------------
Increase (decrease) in cash and cash equivalents
<S>                                                                <C>           <C>
    Net (loss). . . . . . . . . . . . . . . . . . . . . . . . . .  $(2,401,210)  $(2,429,212)
    Adjustments to reconcile net loss to net cash used
    in operating activities
      Depreciation and amortization . . . . . . . . . . . . . . .       93,521        53,160
      Amortization of goodwill. . . . . . . . . . . . . . . . . .      486,436       283,757
      Allowance for bad debts . . . . . . . . . . . . . . . . . .            -       396,362
      Debt issuance costs . . . . . . . . . . . . . . . . . . . .      128,417        10,934
      Common stock issued for services. . . . . . . . . . . . . .            -       310,000
      Common stock issued for professional services . . . . . . .      915,100        94,056
      Common stock issued in payment of interest. . . . . . . . .       33,789        18,000
      Common stock issued for other compensation. . . . . . . . .       77,185             -
      Loss on disposal of assets. . . . . . . . . . . . . . . . .        3,392             -
      Loss on investment. . . . . . . . . . . . . . . . . . . . .        5,000             -
      Stock options issued for services at below the fair market
        value of the stock on the date of the grant . . . . . . .            -     1,577,265
      Other . . . . . . . . . . . . . . . . . . . . . . . . . . .            -       (59,616)
      Non-cash other expenses (Income). . . . . . . . . . . . . .            -      (251,243)
                                                                   -----------   ------------

      Total adjustments to net income . . . . . . . . . . . . . .  $  (658,370)  $     3,463
                                                                   -----------   ------------

Cash flow from operating activities:
  Changes in assets and liabilities
    Trade accounts receivable . . . . . . . . . . . . . . . . . .  $  (178,855)  $(1,413,712)
    Inventories . . . . . . . . . . . . . . . . . . . . . . . . .     (343,191)     (385,219)
    Deposits. . . . . . . . . . . . . . . . . . . . . . . . . . .            -        (4,750)
    Other assets. . . . . . . . . . . . . . . . . . . . . . . . .      (23,030)            -
    Prepaid expenses and other current assets . . . . . . . . . .         (507)      (14,179)
    Debt Issuance cost. . . . . . . . . . . . . . . . . . . . . .      (11,583)      (87,475)
    Income and Sales tax payable. . . . . . . . . . . . . . . . .       (5,726)        9,727
    Accrued interest on convertible notes . . . . . . . . . . . .       74,524        14,602
    Accrued interest on notes payable - related parties . . . . .       15,000         8,750
    Accounts payable and accrued expenses . . . . . . . . . . . .     (281,057)    1,303,566
                                                                   -----------   ------------

        Cash flow generated by (used in) operating activities . .  $(1,412,795)  $  (565,227)
                                                                   -----------   ------------

Cash flow from investing activities:
    Purchase of property, equipment and leaseholds. . . . . . . .  $    (3,916)  $   (48,823)
    Note Receivable - related party, net. . . . . . . . . . . . .      196,636      (280,500)
    Other Investments . . . . . . . . . . . . . . . . . . . . . .            -       (25,000)
    Investment in YesRX (due to Stason) . . . . . . . . . . . . .            -       175,000
                                                                   -----------   ------------

        Net cash generated by (used in) investing activities. . .  $   192,720   $  (179,323)
                                                                   -----------   ------------
</TABLE>


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





<TABLE>
<CAPTION>
                              KAIRE HOLDINGS INCORPORATED
                                  AND SUBSIDIARIES
                        STATEMENTS OF CASH FLOWS (CONTINUED)
                    FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
                                                                                                            2001          2000

Cash flow from financing activities:
<S>                                                                                                      <C>          <C>
  Payment on Notes Payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $        -   $   (25,000)
  Payment on Note payable - Classic Care. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    (226,119)   (1,699,000)
  Capital lease payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     (60,818)
  Common stock issued for options exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      38,003     1,649,599
  Notes payable - related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           -       250,000
  Subscriptions received. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      20,000             -
  Proceeds from convertible debenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   1,200,000       750,000

        Net cash generated by (used in) financing activities. . . . . . . . . . . . . . . . . . . . . .  $  971,066   $   925,599

        Net (decrease) increase in cash
        and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ (249,009)  $   181,049

        Cash and cash equivalents at beginning of year. . . . . . . . . . . . . . . . . . . . . . . . .     311,716       130,667

        Cash and cash equivalents at end of year. . . . . . . . . . . . . . . . . . . . . . . . . . . .  $   62,707   $   311,716
                                                                                                         ===========  ============


SUPPLEMENTARY DISCLOSURES OF CASH FLOW INFORMATION
  Cash paid during the year for
    Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $   26,957   $         -
                                                                                                         ===========  ============
    Income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $    3,200   $     7,264
                                                                                                         ===========  ============
</TABLE>


SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
During the year ended December 31, 2001, the Company entered into the following
non-cash transactions:

Issued 132,109,372 shares of common stock for conversion of $992,653 of notes
payable, and $33,789 of  accrued interest.

  Issued 850,000 shares of common stock for professional fees valued at $24,625

  Issued 16,650,000 shares of common stock for conversion of conversion of stock
options for consulting services valued at $890,475

  Issued 9,666,666 shares of common stock for officers' compensation expense
valued at $389,216



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


                              KAIRE HOLDINGS INCORPORATED
                                  AND SUBSIDIARIES
                        STATEMENTS OF CASH FLOWS (CONTINUED)
                    FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000


SUPPLEMENTAL  SCHEDULE  OF  NON-CASH  INVESTING  AND  FINANCING  ACTIVITIES
(CONTINUED):
During  the year ended December 31, 2000, the Company entered into the following
non-cash  transactions:

Issued  589,110  shares  of common stock for conversion of $10,000 of notes
payable,  and  $18,000  of
accrued  interest.

Issued  4,140,000  shares  of  common stock for services valued at $310,000

Issued  2,123,168  shares  of  common stock for professional fees valued at
$94,056

Issued  596,550  shares  of  common  stock for conversion of debt valued at
$26,845.

Issued  15,499,999  shares  of common stock for acquisition of Classic Care
Pharmacy  valued  at  $6,500,000

Issued 50,000 shares of common stock for investment in NetFame.  Com valued
at  $5,000


In  May  2000,  the  Company  acquired  100%  of stock of Classic Care
Pharmacy
  Assets  acquired:
   Non-cash working capital assets       $     471,960
   Property & Equipment, net of
   Accumulated depreciation of $107,348        282,485
   Goodwill                                  9,728,732
                                         -------------
                                            10,483,177

Liabilities assumed:
   Accounts payable                           486,427
   Long term liabilities                      246, 750
                                         -------------
                                              733,177

Cost of net assets acquired              $   9,750,000
                                         =============
Payment for net assets acquired:
   Cash paid at closing                      1,112,500
   Notes issued to stockholders of
   acquired company                           1,887,500
   Notes payable                                250,000
15,499,999 shares issued for the acquisition  6,500,000
                                          -------------
                                         $    9,750,000

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


                    KAIRE HOLDINGS INCORPORATED
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  DECEMBER 31, 2001 AND 2000
NOTE  1  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

Organization  and  Line  of  Business
-------------------------------------

Kaire  Holdings Incorporated ("Kaire" or "the Company"), a Delaware corporation,
was incorporated on June 2, 1986.  Effective February 3, 1998, Kaire changed its
name  to Kaire Holdings Incorporated from Interactive Medical Technologies, Ltd.
in  connection  with  its  investment  in  Kaire  International,  Inc.  ("KII").

In  1999, the Company formed YesRx.  Com, Inc., an Internet drugstore focused on
pharmaceuticals, health, and wellness and beauty products.  YesRx.Com focuses on
selling  drugs  for  chronic care as opposed to emergency needs and works mainly
with the patient who has regular medication needs and requires multiple refills.

During  2000,  the  Company  completed  a  reorganization  of the Company, which
included  the  transfer  of  the  assets  of EZ TRAC, Inc. to a new corporation,
Stason Biotech, Inc., in exchange for 40% of the outstanding common stock of the
new  corporation  and  the  acquisition  of  Classic  Care  Pharmacy.  These
transactions reflected management's strategic plan to transform the Company from
a  provider of medical testing and laboratory analysis to becoming a provider of
prescription  medication and supplies to senior citizens and individuals needing
chronic  care.

In May 2000, the Company acquired Classic Care, Inc. ("Classic Care"), which was
organized  as  a  corporation  in  April  1997,  under  the Laws of the State of
California.  Classic  Care  operates  as an agency distributor of pharmaceutical
products,  via  a  unique  prescription packaging system for consumers at senior
assisted  living  and  retirement centers in the Los Angeles area.  Classic Care
purchases  prescription  drugs  in  bulk and fills prescriptions for individuals
living  in  the aforementioned facilities.  Primary sales are to individuals and
consist  of  packaged  prescription drugs in prescribed dosages.  These packaged
drug  sales  are  primarily  paid for by Medi-Cal, and the balances of the sales
that are not covered by Medi-Cal are paid directly by individuals.  Classic Care
bills  Medi-Cal  and  other  third-party  payors  on  behalf of the customer and
receives  payment  directly  from  Medi-Cal.

In  November  of  2000,  the  Company  advanced  its  business strategy with the
introduction  of the YesRx Health Advocate Program.  The Health Advocate Program
provides  medication compliance programs to HIV/AIDS, diabetic and senior health
communities.


Principles  of  Consolidation
-----------------------------

The  consolidated  financial  statements  include  the accounts of Kaire and its
wholly  owned  subsidiaries  (collectively  the  "Company").  The  Company's
subsidiaries  include  See/Shell  Biotechnology,  Inc.,  E-Z  TRAC,  Inc., Venus
Management,  Inc.,  EFFECTIVE  Health,  Inc, and Classic Care, Inc. (dba Classic
Care  Pharmacy).  Only  Classic Care, Inc, has current operations; the remaining
subsidiaries  are  dormant.  Intercompany  accounts  and  transactions have been
eliminated  upon  consolidation.

The  consolidated  statements of operations, shareholders' equity and cash flows
for the year ended December 31, 2000, include activity for Classic Care Inc. for
the  seven-month period starting June 1, 2000 (acquisition date) to December 31,
2000.

<PAGE>
NOTE  1  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)


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 the disclosures of
contingent  assets  and  liabilities at the date of the financial statements, as
well  as  the  reported  amounts  of  revenues and expenses during the reporting
period.  Actual  results  could  differ  from  those  estimates.  Significant
estimates  include  goodwill,  allowance  for  doubtful accounts and third-party
contractual  agreements.


Cash  and  Cash  Equivalents
----------------------------

For  purpose  of  the statements of cash flows, cash equivalents include amounts
invested  in  a  money market account with a financial institution.  The Company
considers  all  highly  liquid  investments  with  an original maturity of three
months  or  less  to be cash equivalents.  Cash equivalents are carried at cost,
which  approximates  market.


Concentration  of  cash
-----------------------

The  Company at times maintains cash balances in excess of the federally insured
limit  of  $100,000 per institution.  Uninsured balances as of December 31, 2000
were  $11,907.  There  were  no  uninsured  balances  as  of  December 31, 2001.


Revenue  Recognition
--------------------

The  Company  recognizes  revenue  at  the  time  the  product is shipped to the
customer  or  services are rendered.  Outbound shipping and handling charges are
included  in  net  sales.


Net  Client  Revenue
--------------------

Net client revenue represents the estimated net realizable amounts from clients,
third-party  payors,  and  others for sale of products or services rendered. For
revenue recognition, revenue is recorded when the prescription is filled or when
services  are  performed.  A  significant portion of revenue is from federal and
state  reimbursement  programs.


Third-Party  Contractual  Adjustments
-------------------------------------

Contractual adjustments represent the difference between Classic Care Pharmacy's
established  billing  rate  for  covered  products  and  services  and  amounts
reimbursed  by  third-party  payors,  pursuant  to  reimbursement  agreements.

<PAGE>
NOTE  1  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

Net  Loss  Per  Share
---------------------

Income  (loss)  per  common  share is computed on the weighted average number of
common shares outstanding during each year.  Basic EPS is computed as net income
(loss)  applicable to common stockholders divided by the weighted average number
of common shares outstanding for the period.  Diluted EPS reflects the potential
dilution  that  could  occur  from common shares issuable through stock options,
warrants  and  other  convertible  securities when the effect would be dilutive.


Inventory
---------

Inventory  consists primarily of pharmaceuticals and health care products and is
stated  at  the  lower  of  cost  or  market  on  a  first-in-first-out  basis.


Property  and  Equipment
------------------------

Property  and  Equipment  are  stated  at  cost.  Depreciation  is  computed for
financial  reporting  purposes using the straight-line method over the estimated
useful  lives of the assets.  Amortization of leasehold improvements is computed
using  the  straight-line method over the shorter of the remaining lease term or
the  estimated  useful  lives  of  the  improvements.  The  Company  uses  other
depreciation  methods  (generally  accelerated)  for  tax purposes.  Repairs and
maintenance  that  do  not  extend the useful life of property and equipment are
charged  to  expense  as  incurred.  When  property and equipment are retired or
otherwise  disposed  of,  the asset and its accumulated depreciation are removed
from  the  accounts  and  the  resulting  profit or loss is reflected in income.

The  estimated  service  lives  of  property  and  equipment  are principally as
follows:

                                            Leasehold improvements     3-7 years
                                           Computers and equipment     3-5 years
                                              Furniture & Fixtures     5-7 years
                                                          Software     3-5 years

Assets  held  under  capital leases are recorded at the lower of the net present
value of the minimum lease payments or the fair value of the leased asset at the
inception  of  the  lease.  Amortization  expense  is  computed  using  the
straight-line  method  over  the  shorter  of  the estimated useful lives of the
assets  or  the  period  of  the  related  lease.


Goodwill
--------

The  Company  capitalized as goodwill the excess acquisition costs over the fair
value  of  net  assets acquired, in connection with business acquisitions, which
costs  were  being  amortized  on  a  straight-line  method  over 20 years.  The
carrying  amount  of  goodwill  will  be  reviewed  periodically  based  on  the
undiscounted cash flows of the entities acquired over the remaining amortization
period.


<PAGE>
NOTE  1  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

Income  Taxes
-------------

The Company utilizes SFAS No. 109, "Accounting for Income Taxes," which requires
the  recognition  of deferred tax assets and liabilities for the expected future
tax  consequences  of events that have been included in the financial statements
or tax returns.  Under this method, deferred income taxes are recognized for the
tax  consequences in future years of differences between the tax bases of assets
and  liabilities  and their financial reporting amounts at each period end based
on  enacted  tax laws and statutory tax rates applicable to the periods in which
the differences are expected to affect taxable income.  Valuation allowances are
established,  when  necessary,  to  reduce  deferred  tax  assets  to the amount
expected  to  be  realized.  The  provision  for income taxes represents the tax
payable  for  the period and the change during the period in deferred tax assets
and  liabilities.


Fair  Value  of  Financial  Instruments
---------------------------------------

The  Company  measures  its  financial assets and liabilities in accordance with
generally  accepted accounting principles.  SFAS NO. 107, "Disclosure about Fair
Value of Financial Instruments," requires certain disclosures regarding the fair
value  of  financial  instruments.  For  certain  of  the  Company's  financial
instruments,  including  cash  and  cash  equivalents  and  accounts payable and
accrued  liabilities,  the  carrying amounts approximate fair value due to their
short  maturities.  The  amounts  shown  for notes payable also approximate fair
value  because current interest rates offered to the Company for debt of similar
maturities  are  substantially  the  same.


Stock-Based  Compensation
-------------------------

SFAS  No.  123,  "Accounting  for  Stock-Based  Compensation,"  establishes  and
encourages  the use of the fair value based method of accounting for stock-based
compensation  arrangements under which compensation cost is determined using the
fair value of stock-based compensation determined as of the date of grant and is
recognized  over  the  periods  in which the related services are rendered.  The
statement also permits companies to elect to continue using the current implicit
value  accounting  method  specified  in  Accounting Principles Bulletin ("APB")
Opinion  No.  25,  "Accounting  for  Stock  Issued to Employees," to account for
stock-based  compensation.

The Company determined that it will not change to the fair value method and will
continue  to  use  the  implicit  value based method for stock options issued to
employees  and  has disclosed the pro forma effect of using the fair value based
method  to  account  for  its  stock-based  compensation.



<PAGE>
NOTE  1  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

Stock-Based  Compensation  (continued)
--------------------------------------

In  March 2000, the FASB released Interpretation No.44, " Accounting for Certain
Transactions  Involving  Stock  Compensation."  This  Interpretation  addresses
certain  practice  issues  related to APB Opinion No.25.  The provisions of this
Interpretation are effective July 1, 2000, and, except for specific transactions
noted in paragraphs 94-96 of this Interpretation, shall be applied prospectively
to new awards, exchanges of awards in business combinations, modifications to an
outstanding  award,  and exchanges in grantee status that occur on or after that
date.

Certain  events  and  practices  covered in Interpretation No. 44 have different
application  dates, and events that occur after an application date but prior to
July  1, 2000, shall be recognized only on a prospective basis.  Accordingly, no
adjustment  shall  be  made  upon  initial  application of the Interpretation to
financial  statements for periods prior to July 1, 2000.  Thus, any compensation
cost measured upon initial application of this Interpretation that is attributed
to  periods  prior  to  July  1,  2000 shall not be recognized.  The Company has
adopted  the  provisions  of  this  Interpretation  starting  July  1,  2000.


Comprehensive  Income  (Loss)
-----------------------------

In  June  1999,  the  Financial  Accounting  Standards Board issued Statement of
Financial  Accounting  Standards No. 130, "Reporting Comprehensive Income" (SFAS
130).  This  pronouncement  establishes  standards  for reporting and display of
comprehensive  income (loss) and its components in a full set of general-purpose
financial  statements.  Comprehensive  income  consists  of  net  income  and
unrealized  gains  (losses)  on  available-for-sale securities; foreign currency
translation  adjustments;  changes  in  market  values  of future contracts that
qualify  as  a  hedge;  and negative equity adjustments recognized in accordance
with  SFAS  No.  87.  The  Company,  however,  does  not  have any components of
comprehensive  income (loss) as defined by SFAS 130 and therefore, for the years
ended  December  31,  2001  and  2000,  comprehensive  loss is equivalent to the
Company's  net  loss.


Long-lived  assets
------------------

In accordance with Statement of Financial Accounting Standards ("SFAS") No. 121,
the Company periodically evaluates the carrying value of long-lived assets to be
held  and  used,  including  intangible  assets,  when  events and circumstances
warrant  such  a review.  The carrying value of a long-lived asset is considered
impaired when the anticipated discounted cash flow from such asset is separately
identifiable  and  is  less  than  its carrying value.  In that event, a loss is
recognized  based  on  the  amount  by which the carrying value exceeds the fair
market value of the long-lived asset.  Fair market value is determined primarily
using the anticipated cash flows discounted at a rate commensurate with the risk
involved.  Losses  on  long-lived  assets  to be disposed of are determined in a
similar  manner,  except  that  fair  market  values are reduced for the cost to
dispose.

Investments in corporate equity securities of privately held companies, in which
the  Company holds a less than 20% equity interest, are classified as long-term.

<PAGE>
NOTE  1  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

Advertising  Costs
------------------

The  Company  expenses  advertising  and  marketing  costs as they are incurred.
Advertising  and  marketing costs for the years ended December 31, 2001 and 2000
were  $25,644  and  $19,600,  respectively.


Reclassifications
-----------------

Certain  amounts  in  the  2000  financial  statements have been reclassified to
conform  to  the  2001  presentations.  These reclassifications had no effect on
previously  reported  results  of  operations  or  retained  earnings.


Segment  and  Geographic  Information
-------------------------------------

The FASB issued SFAS No. 131 on "Disclosures about Segments of an Enterprise and
Related Information" effective in 1998.  SFAS 131 requires enterprises to report
information about operating segments in annual financial statements and selected
information  about  reportable  segments  in interim financial reports issued to
shareholders,  on  the  basis  that  is  used  internally for evaluating segment
performance  and  deciding  how  to  allocate  resources  to  segments.  It also
established  standards  for  related  disclosures  about  products and services,
geographic  areas  and  major customers.  The Company evaluated SFAS No. 131 and
determined  that  the  Company  operates  in  only  one  segment.


Other  Accounting  Pronouncements
---------------------------------

In  June  1998,  the  Financial Accounting Standard Board (FASB) issued SFAS No.
133,  "Accounting  for Derivative Instruments and Hedging Activities".  SFAS No.
133  requires  that  an enterprise recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at  fair  value.  This  statement  is effective for fiscal years beginning after
June  15, 2000, and has been adopted by the Company for the year ending December
31,  2000.  SFAS  No.  133  does  not  have  a  material impact on its financial
position  or  results of operations, as the Company does not have any derivative
instruments.

In  June  1999,  the  Financial  Accounting Standards Board issued SFAS No. 137,
"Accounting  for  Derivative  Instruments and Hedging Activities-Deferral of the
effective  Date  of  FASB  Statement  No.  133,"  The statement is effective for
periods  beginning  after  June 1999 and amends paragraph 48 of SFAS No. 133 and
supersedes  paragraph 50 of SFAS No. 133.  SFAS No. 137 does not have a material
impact  on  its  financial  position  or  results  of  operations.

In  June  2000,  the  Financial  Accounting Standards Board issued SFAS No. 138,
"Accounting for Certain Derivative Instruments and Certain Hedging Activities-an
amendment  of FASB Statement No. 133," The Statement is effective for all fiscal
quarters  of  all fiscal years beginning after June 15, 2000.  SFAS No. 138 does
not  have  a material impact on its financial position or results of operations.



<PAGE>
NOTE  1  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

Other  Accounting  Pronouncements  (continued)
----------------------------------------------

In  July  2001,  the  Financial  Accounting Standards Board issued Statements of
Financial  Accounting Standards No. 141, "Business Combinations" ("FAS 141") and
No.  142,  "Goodwill  and  Other  Intangible  Assets" ("FAS 142").  SFAS No. 141
requires all business combinations initiated after June 30, 2001 to be accounted
for  using  the  purchase  method.  Under  SFAS No. 142, goodwill and intangible
assets  with  indefinite  lives  are  no longer amortized but instead tested for
impairment  at  least annually in accordance with the provisions of FAS No. 142.
FAS  No.  142  will  also  require that intangible assets with definite lives be
amortized over their respective useful lives to their estimated residual values,
and reviewed for impairment in accordance with SFAS No. 121, "Accounting for the
Impairment  of  Long-Lived  Assets and for Long-Lived Assets to be Disposed Of."
The provisions of this Statement are required to be applied starting with fiscal
years  beginning  after  December  15,  2001.  The  Company will not continue to
amortize  goodwill  existing  at  December  31,  2001  until the new standard is
adopted  and  test goodwill for impairment in accordance with SFAS No. 121.  The
Company  will  adopt  the  standard  starting  January 1, 2002, and is currently
evaluating  the  effect that adoption of the provisions of FAS No. 142 will have
on  its  results of operations and financial position.  As of December 31, 2001,
the  value  of  goodwill  is  $9,728,732,  and  the  accumulated amortization of
goodwill  is  $770,193.

In  June  2001,  the  FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations."  SFAS  No.  143  requires  liability  recognition  for obligations
associated  with  the retirement of tangible long-lived asset and the associated
asset  retirement  costs.  The  Statement  is effective for financial statements
issued  for  fiscal years beginning after June 15, 2002 with earlier application
encouraged.  The  implementation of SFAS No. 143 will not have a material affect
on  the  Company's  results  of  operations  or  financial  position.

In August 2001, the FASB issued SFAFS No. 144, "Accounting for the Impairment or
Disposal  of  Long-Lived  Assets."  SFAS  No.  144  supersedes  SFAS  No.  121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be  Disposed  of",  in  that  it  removes goodwill from its impairment scope and
allows  for different approaches in cash flow estimation.  However, SFAS No. 144
retains  the  fundamental  provisions  of  SFAS  No. 121 for (a) recognition and
measurement  of  long-lived  assets  to  be held and used and (b) measurement of
long-lived  assets to be disposed of.  SFAS No. 144 also supersedes the business
segment  concept  in  APB  opinion  No.  30,  "Reporting  the  Results  of
Operations-Reporting  the  Effects  of  Disposal of a Segment of a Business, and
Extraordinary,  Unusual  and Infrequently Occurring Events and Transactions," in
that  it permits presentation of a component of an entity, whether classified as
held  for  sale  or disposed of, as a discontinued operation.  However, SFAS No.
144  retains  the  requirement  of  APB  Opinion  No.  30 to report discontinued
operations  separately  from  continuing  operations.  The  provisions  of  this
Statement  are  effective  for  financial  statements  issued  for  fiscal years
beginning  after  December  15,  2001  with  earlier  application  encouraged.
Implementation  of SFAS No. 144 will not have a material effect on the Company's
results  of  operations  or  financial  position.




<PAGE>
NOTE  2  -  GOING  CONCERN

The  accompanying  financial  statements  have  been prepared in conformity with
generally  accepted accounting principles, which contemplate continuation of the
Company  as a going concern.  However, the Company has experienced net losses of
$2,401,210  and  $2,429,212  for  the  years  ended  December 31, 2001 and 2000,
respectively.  The  Company  also  had  a  net working deficit of $7,840,144 and
$1,805,772  for  the  years  ended  December  31,  2001  and  2000 respectively.
Additionally,  the  Company  must  raise  additional capital to meet its working
capital  needs  subsequent  to  the spin-off of Classic Care.  If the Company is
unable  to  raise  sufficient  capital  to  fund  its  operations for the Health
Advocacy program, it might be required to discontinue operations.  These factors
raise  substantial  doubt  about  the  Company's  ability to continue as a going
concern.  In  view  of  the  matters  described above, recoverability of a major
portion of the recorded asset amounts shown in the accompanying balance sheet is
dependent  upon  the  Company's  ability  to generate sufficient sales volume to
cover its operating expenses and to raise sufficient capital to meet its payment
obligations.  The  financial  statements do not include any adjustments relating
to  the  recoverability and classification of recorded asset amounts, or amounts
and  classification of liabilities that might be necessary should the Company be
unable  to  continue  in  existence.

Management  has previously relied on equity financing sources and debt offerings
to  fund  operations.  The  Company's reliance on equity and debt financing will
continue,  and  the  Company  will  continue  to  seek  to  enter into strategic
acquisitions.



NOTE  3  -  PRIOR  PERIOD  ADJUSTMENT

During  2001,  the  Company discovered that its previously issued 2000 financial
statements  understated  goodwill  and  excluded  notes  payable and the related
accrued  interest.  The  accompanying  financial  statements  for 2000 have been
restated to reflect the recording and classification of these debt agreements as
a  note  payable  to  related  parties.  The  effect  of  the restatement was to
increase  net  loss  for  2000  by  $16,041,  net  of  related income tax of $0.

<TABLE>
<CAPTION>



                                          2001                 2000
                                          ----                 ----
<S>                                       <C>                  <C>
Accumulated deficit at beginning of year        $(33,614,498)        $(31,185,286)
                                                -------------
Net loss, as restated for 2000                    (2,401,210)          (2,429,212)
Accumulated deficit at end of year              $(36,015,708)        $(33,614,498)
                                                -------------        -------------
</TABLE>


NOTE  4  -  INVESTMENTS

Investments  as  of  December  31,  2001  consist  of  the  following:

         Stason  Biotech,  Inc.     $     5,028
         Ebility,  Inc.                  25,000
                                         ------
                                   $     30,028
                                         ------

The investment in Stason Biotech, made during 2000, represents the Company's 40%
share  of  earnings  in  this  company  for  the year ended December 31, 2000 as
recorded under the equity method of accounting.  The investment in Ebility, made
during  2000,  is  recorded  under  the  cost  method  of  accounting.

The  Company's  investment  in NetFame.Com, an Internet venture, was written off
during  2001,  due  to  NetFame.Com  ceasing  operations.



NOTE  5  -  ACCOUNTS  RECEIVABLE  -  TRADE

In  2001  and 2000, approximately 78% and 81% of net revenues were derived under
federal  and state third-party reimbursement programs. These revenues are based,
in  part,  on  cost  reimbursement  principles  and  are  subject  to  audit and
retroactive  adjustment  by the respective third-party fiscal intermediaries. In
the opinion of management, retroactive adjustments, if any would not be material
to  the  financial position, results of operations or cash flows of the Company.

The  Company  provides  an  allowance  for  doubtful  accounts  based  upon  its
estimation  of  uncollectible  accounts.  The  Company  bases  this  estimate on
historical  collection  experience  and  a review of the current status of trade
accounts  receivable.  It  is reasonably possible that the Company's estimate of
the  allowance for doubtful accounts will change.  Trade accounts receivable are
presented  net of an allowance for doubtful accounts of $201,360 and $397,362 at
December  31,  2001,  and  2000,  respectively.

As  of  December  31, 2000, the Company was owed $331,800 for sales to an entity
related  to  the  managing  director  of  Classic Care Pharmacy.  This amount is
included  in  receivables  from  related  parties.



NOTE  6  -  INVENTORIES

Inventories  consist  of  pharmaceuticals,  medical  supplies  and  equipment of
$728,410  and  $385,219  for  the  years  ended  December  31,  2001  and  2000,
respectively.  The  Company  regularly  checks  its inventory for any expired or
obsolete  pharmaceuticals.

<PAGE>

NOTE  7  -  INTANGIBLE  ASSETS

Intangible  assets  consist  of  the  following  at  December  31:


<TABLE>
<CAPTION>


                                  2001               2000
                                  ----               ----
<S>                               <C>                <C>
Goodwill, acquisition of
 Classic Care, Inc.                  $9,728,732         $9,728,732

Less Accumulated Amortization          (770,193)          (283,757)
                                     -----------        -----------
                                     $8,958,539         $9,444,975
</TABLE>


Amortization  expense  for  the  periods  ended  December 31, 2001, and 2000 was
$486,436  and  $283,757,  respectively.



NOTE  8  -  COMMON  STOCK  TRANSACTIONS

The  common  stock  transactions  during  2001  were  as  follows:

-     The  Company  converted  $992,653  in  convertible  notes  payable  into
126,680,855  shares  of  its common stock. The Company also converted $33,789 in
convertible  note  interest  into  5,428,516  shares  of  its  common  stock.

-     The  Company allowed three officers of the Company to exercise their stock
options  for  3,000,000  shares  of  common  stock, in lieu of cash payments for
services  provided to the Company.  Additionally, these three officers converted
their  stock  options  for  6,666,667  shares  of  common stock, and the Company
recognized  $389,216  in  compensation  expense.

-     The  Company issued 850,000 shares of common stock, with a market value of
$24,625,  for  consulting  services  provided  to  the  Company.

-     The  Company  converted stock options into 16,650,000 shares of its common
stock.  The  Company received $38,003 in cash and recorded consulting expense of
$890,475.

<PAGE>
NOTE  8  -  COMMON  STOCK  TRANSACTIONS  (continued)

The  common  stock  transactions  during  2000  were  as  follows:

-     During  the  year  ended  December 31, 2000, three officers of the Company
exercised options and acquired 4,500,000 shares of the Company's common stock at
prices  ranging  from  $.05-$.10 per share.  Additionally, a director, before he
was  appointed,  had  received  an  option  to  purchase 2,000,000 shares of the
Company's  common  stock  at  $0.05  in  exchange  for  professional  services.
Additionally,  the  Company converted stock options into 9,956,980 shares of its
common  stock.  The  value  of  these  combined  transactions  was  $1,649,599

-     The  Company  converted  $10,000 in convertible notes payable into 200,000
shares  of  its  common stock. The Company also converted $18,000 in convertible
note  interest  into  389110  shares  of  its  common  stock.

-     The  Company  issued 6,263,168 shares of common stock, with a market value
of  $404,056,  for consulting and professional services provided to the Company.

-     The Company issued 550,000 shares of common stock, with a value of $5,000,
as  part  of  its  investment  agreement  with  NetFame.  Com.

-     The Company converted $26,845 of debt into 596,550 shares of common stock.

-     The  Company  issued  15,499,999  of  its  common  stock  with  a value of
$6,500,000,  per  its  acquisition  agreement  with  Classic  Care,  Inc.


NOTE  9  -      RELATED  PARTY  TRANSACTIONS

The  following  transactions  occurred  between  the Company and certain related
parties:

Profit  Ventures,  Inc.
-----------------------

Mr.  Joel Rubenstein is the Managing Director of Classic Care, and his spouse is
a  shareholder in the Company.  Mr. Rubenstein is also a trustee of the Shagrila
Trust,  which  is  the parent company of Profit Ventures, Inc.  In 2000, Classic
Care  entered into an agreement with Profit Ventures, Inc., to purchase products
from  Classic  Care.  Sales  to Profit Ventures were $3,341,524 and $331,800 for
2001  and  2000, respectively. Sales to Profit represented 20.6% and 5.8% of the
Company's  total  revenue  for 2001 and 2000, respectively. The amounts due from
Profit  Ventures,  Inc.  are  included  in  amounts  due  from  related parties.



<PAGE>
------
NOTE  9  -      RELATED  PARTY  TRANSACTIONS  (CONTINUED)

Joel  Rubenstein
----------------

Mr. Rubenstein did not receive any compensation for the period starting November
1,  2001  to  December  31, 2001 for serving as the Managing Director of Classic
Care.  Mr.  Rubenstein  has  $20,000  in  salary  due  from  the Company for his
services during this period.  The amount is included in the accrued liabilities.

Mr. Rubenstein received advances from the Company totaling $3,500 and $44,000 in
2001  and  2000,  respectively.  In  2001,  Mr. Rubenstein repaid to the Company
$43,000,  and  the  balance  of  $4,500  is  included in Receivable from Related
Parties. In January 2002, Mr. Rubenstein advanced $150,000 to the Company, which
was  repaid  by  the  Company.  In  February  2002,  the Company advanced to Mr.
Rubenstein  $26,000,  and  the  Company  has  received payments of $26,500 as of
February 28, 2002, which results in a balance of $4,000 due from Mr. Rubenstein.


Transactions  with  Shareholders
--------------------------------

Mrs.  Sarit  Rubenstein

At  December  31,  2001, the Company has an unsecured note payable to Mrs. Sarit
Rubenstein,  a shareholder and an original owner of Classic Care.  The borrowing
was  due originally in October 2000, is now due on demand, and bears an interest
rate  of  6%  per  annum.  The outstanding balance on the note is $82,500.  This
amount  is  classified  as  a  Note  Payable  to  Related  Party.

Steve  Oscherowitz

Mr.  Steve  Oscherowitz,  a  shareholder  of  the  Company  who was the majority
shareholder  in  Classic  Care  prior  to  its  purchase  by the Company, has an
agreement  with  the  Company, under which he loaned funds to and borrowed funds
from  the Company. In previous years, this individual has loaned to Classic Care
Pharmacy  funds  to  meet  its  short-term  working  capital  needs. The Company
advanced  to  this  individual  $2,701,572 during 2001, and he has repaid to the
Company  $2,526,408  in  2001.  The terms of the borrowings allow the Company to
request  repayment on demand.  The note receivable bears an interest rate of 5%,
which  is  waived  if  all  amounts  outstanding  are paid by July 30, 2002. The
Company  has  a  receivable  from this individual of $411,164 and $236,000 as of
December  31,  2001  and  2000,  respectively.

In  January  and  February  2002,  the  Company  advanced  to Mr. Oscherowitz an
additional  $189,000,  and  the  Company  has received payments of $50,500 as of
February  28,  2002.

At  December  31,  2001,  the Company has an unsecured note payable to Mr. Steve
Oscherowitz, a shareholder and an original owner of Classic Care.  The borrowing
was  due originally in October 2000, is now due on demand, and bears an interest
rate  of  6%  per annum.  The outstanding balance on the note is $167,500.  This
amount  is  classified  as  a  Note  Payable  to  Related  Party.






<PAGE>

NOTE  10  -  PROPERTY  AND  EQUIPMENT

Property and equipment at December 31, 2001 and 2000 consisted of the following:


<TABLE>
<CAPTION>


                                                   2001                 2000
                                                   -----              --------
<S>                                                 <C>                <C>
Furniture and equipment                                $ 319,990             $ 319,990
Computers and equipment                                  311,353               307,172
Vehicles                                                  46,153                41,783
Other depreciable assets                                   7,000                 7,000
                                                       ----------             ---------

                                                         684,496               675,945
Less accumulated depreciation and amortization          (483,544)             (397,798)
                                                       ----------             ---------
                                     Total              $200,952              $278,147
                                                       ----------             ---------

</TABLE>

Depreciation  and amortization expense for the years ended December 31, 2001 and
2000  was  $93,521  and  $53,160,  respectively.



NOTE  11  -  ACCOUNTS  PAYABLE  AND  ACCRUED  EXPENSES

Accounts payable and accrued expenses at December 31, 2001 and 2000 consisted of
the  following:

<TABLE>
<CAPTION>


                                                     2001                    2000
                                                    -----                ----------
<S>                                                 <C>                   <C>
Accounts payable                                       $1,129,961              $1,480,217
Accrued professional and related fees                      50,000                  55,744
Accrued compensation and related payroll taxes            170,941                 170,616
Accrued interest payable                                  310,757                 244,983
Other accrued expenses                                      3,778                  17,219

                                    Total              $1,665,437              $1,968,779
</TABLE>


NOTE  12  -  NOTE  PAYABLE  -ACQUISITION

As  of  December  31,  2001,  the  Company  has  a  note  payable outstanding of
$1,074,881  as  a  result of its acquisition of Classic Care Pharmacy, Inc.  The
Company  has  a  contingent  liability  of  $6,345,00  due  to  the value of the
Company's  common stock being less than $0.42 per share.  The purchase agreement
for Classic Care stipulated that the value of the common stock issued to Classic
Care  shareholders  would  be $6,500,000.  The value of the stock at the date of
the  new  settlement agreement was $155,000.  This interest-free note is payable
on  demand,  since  the original maturity date was October 1, 2001.  The Company
has  negotiated  a  settlement  with  the  note  holders  (see  Note  19).



NOTE  13  -  CONVERTIBLE  NOTES  PAYABLE  AND  DEBENTURES

During  January  through  May  1997,  the  Company  issued  convertible  notes
aggregating  to  $479,655,  which are due in the same months in 2000.  The notes
have  a  stated  interest  rate  of  10%  per  annum,  and  interest  is payable
semi-annually.  The notes are convertible at $9.38 per share, which approximated
the average trading price of the Company's common stock.  $10,000 of these notes
were  converted  into common stock in 2000 and $71,000 of these notes were still
outstanding  as  of  December  31,  2001  and  2000.  These notes are now due on
demand.

During  October  2000,  the  Company  issued  convertible  notes  aggregating to
$750,000,  which are due in October 2002.  The notes have a stated interest rate
of  8% per annum, and interest is payable quarterly and the principal balance is
due  at  maturity.  In  2001, the Company has converted $360,000 into its common
stock,  and  $390,000  of  these  notes are still outstanding as of December 31,
2001.

The  convertible  debentures  amounting  to  $1,200,000 and $750,000, which were
issued  during  2001  and 2000 respectively, have a conversion price that is the
lesser  of  (1) 80% of the average of the three lowest closing prices out of the
thirty  closing prices prior to the closing date and (2) 80% of the lowest three
closing  prices  during  the  sixty  trading  days,  as reported on the NASD OTC
Bulletin  Board,  immediately preceding the purchase date.  Thus, the debentures
will  be  converted  at  prices below the current market price on the conversion
date.  If conversions of the debentures occur, shareholders may be subject to an
immediate  dilution  in  their  per  share net tangible book value.  The current
convertible  debentures  may be converted into common stock at any time prior to
their  maturity  date  of  October  25,  2002.

In 2001, the Company obtained additional capital financing of $1,200,000 through
the  issuance  of convertible notes payable. The Company also issued warrants to
purchase  4,000,000  shares  of the Company's common stock to various parties as
part  of  these  agreements.


<PAGE>
NOTE  13  -  CONVERTIBLE  NOTES  PAYABLE  AND  DEBENTURES  (CONTINUED)

Specifically,  it issued warrants which are convertible into 4,000,000 shares of
common  stock.  Warrants  for 1,000,000 shares bear an exercise price of $0.149,
which is based upon the lowest closing price for the five days preceding January
10, 2001.  Warrants for 1,500,000 shares bear an exercise price of $0.039, which
is  based upon the lowest closing price for the five days preceding May 9, 2001.
Warrants  for  1,500,000 shares bear an exercise price of $0.011, which is based
upon  the  lowest  closing price for the five days preceding August 17, 2001 The
exercise  price  is  subject  to adjustment and is tied to the being 110% of the
lowest  closing  price  for  the  ten  trading days preceding the exercise date;

-     During  January  2001, the Company issued convertible notes aggregating to
$500,000,  which are due in January 2003.  The notes have a stated interest rate
of  8% per annum, and interest is payable quarterly and the principal balance is
due  at  maturity. In 2001, the Company converted $85,000 into its common stock,
and  $415,000  of  these  notes  were still outstanding as of December 31, 2001.

-     During  May  2001,  the  Company  issued a convertible note aggregating to
$400,000,  which  is due in May 2002.  The note has a stated interest rate of 8%
per annum, and interest is payable quarterly and the principal balance is due at
maturity.  In  2001,  the  Company converted $398,650 into its common stock, and
$1,350  of  this  note  was  still  outstanding  as  of  December  31,  2001.

-     During  August  2001, the Company issued a convertible note aggregating to
$300,000,  which  is due in August 2002.  The note has a stated interest rate of
8% per annum, and interest is payable quarterly and the principal balance is due
at maturity.  In 2001, the Company converted $149,003 into its common stock, and
$150,997  of  this  note  was  still  outstanding  as  of  December  31,  2001.

The  total  notes  outstanding  at  December  31,  2001,  and  2000, amounted to
$1,028,347  and  $821,000  respectively, and the current portion is $598,383 and
$71,000  as  of  December  31,  2001  and  2000,  respectively.




<PAGE>
NOTE  14  -  INCOME  TAXES

Significant  components of the provision for taxes based on income for the years
ended  December  31  are  as  follows:

<TABLE>
<CAPTION>



                                                     2001         2000
                                                     ----         ------
<S>                                                 <C>          <C>
Current
          Federal                                   $    -          $    -
          State                                      3,200           4,000
                                                  ---------     ----------
                                                     3,200           4,000
                                                  ---------     ----------
Deferred                                                 -               -
          Federal                                        -               -
                                                  ---------     ----------
          State
                  Provision for income taxes         3,200          $4,000
                                                  ---------     ----------
</TABLE>

A  reconciliation  of  the  provision  for  income tax expense with the expected
income  tax computed by applying the federal statutory income tax rate to income
before provision for (benefit from) income taxes for the years ended December 31
is  as  follows:


<TABLE>
<CAPTION>



                                            2001      2000
                                          --------  --------
<S>                                       <C>       <C>
Income tax provisions (benefit) computed
  at federal statutory rate. . . . . . .  (35.00%)  (34.00%)

State taxes. . . . . . . . . . . . . . .   (8.84%)   (8.84%)

Increase in the valuation allowance. . .  (43.83%)  (42.83%)
                                          --------   -------
  Total. . . . . . . . . . . . . . . . .   (0.01%)   (0.01%)
                                          --------   -------
</TABLE>


NOTE  14  -  INCOME  TAXES  (CONTINUED)

Significant  components of the Company's deferred tax assets and liabilities for
income  taxes  consist  of  the  following:

<TABLE>
<CAPTION>



                                        2001          2000
                                    ------------  ------------
<S>                                 <C>           <C>
Deferred tax asset
  Net operating loss carryforwards  $ 7,935,602   $ 6,911,627
  Impairment of assets . . . . . .    2,032,518     2,032,518
  Options/warrants . . . . . . . .      627,898       675,700
  Other. . . . . . . . . . . . . .      135,439       223,641
                                    ------------  ------------

                                     10,731,457     9,843,486
                                    ------------  ------------
Deferred tax liability
  State income taxes . . . . . . .   (1,129,813)     (693,358)
                                    ------------  ------------

  Net deferred tax asset . . . . .    9,601,644     9,150,128
                                    ------------  ------------

  Valuation allowance. . . . . . .   (9,601,644)   (9,150,128)
                                    ------------  ------------

                                    $         -   $         -
                                    ------------  ------------
</TABLE>


At  December  31,  2001, the Company has available approximately $18,523,813 and
$6,834,845  in  Federal  and State net operating loss carryforwards available to
offset  future  federal  and  state  income  taxes, respectively, which begin to
expire  in  2020.

Tax  rules  impose  limitations  on  the  use  of net operating losses following
certain  changes  in  ownership.  Such a change occurred in 1999 and 2000, which
will  limit  the  utilization  of  the net operating losses in subsequent years.




<PAGE>
NOTE  15  -  COMMITMENTS  AND  CONTINGENCIES

Litigation
----------

Patent  Claim

An  individual filed a complaint against the Company alleging breach of contract
and  fraud  and  related  business  torts  related  to  certain patents that the
plaintiff transferred to the Company.  The Company believes that the plaintiff's
claims  are  without merit.  The Company reached a tentative settlement with the
plaintiff.  However,  due  to inaction on behalf of the plaintiff, the court has
scheduled  a  dismissal  hearing  on  this  matter.

Except  as  otherwise specifically indicated above, management believes that the
Company  doesn't  have  any  material  liability  for any lawsuits, settlements,
judgments,  or fees of defense counsel which have not been paid or accrued as of
December  31,  2001.  However,  there  can be no assurance that the Company will
prevail  in  any  of  the  above  proceedings.  In  addition, the Company may be
required  to  continue  to  defend  itself  resulting  in  additional  expense.


Other  Litigation

During  2001,  the  Company was involved in various legal actions arising in the
normal course of business.  Such matters did not have a material effect upon the
financial  position  of  the  Company.


Leases
------

Operating  leases

The  Company leased offices located at 7348 Bellaire Avenue, North Hollywood, CA
under  a non-cancelable operating lease agreement that requires a monthly rental
payment of $2,300.  This lease expired in May 2001, and the Company consolidated
its  offices  with  the  offices  of  the  pharmacy.  The  Company  leases three
automobiles  under  non-cancelable  operating  lease agreements.  The individual
automobile  leases  range  in  terms  of  thirty-six  to  thirty-nine  months.

The  pharmacy  is  located  at  1429  South  Robertson Blvd, Los Angeles, CA and
requires  a  monthly rental payment of $4,500.  The term of the lease is six (6)
years  and  expires  in  March  2005.


<PAGE>

NOTE  15  -  COMMITMENTS  AND  CONTINGENCIES  (CONTINUED)

Leases  (continued)
-------------------

Operating  leases  (continued)

Future  minimum lease payments due under non-cancelable operating leases consist
of  the  following  as  of  December  31,  2001


<TABLE>
<CAPTION>



2002                           $65,500
2003                            54,000
2004                            54,000
2005                            13,500
                               --------
Future minimum lease payments  $187,000
                               --------
<S>                            <C>



</TABLE>




Rent  expense  for  the  years  ended December 31, 2001 and 2000 was $75,553 and
$57,351  respectively.


Capital  leases

The  Company  maintains  capital  leases  for  some of its medical equipment and
certain  autos.  The  following  is a schedule by year of the approximate future
minimum  lease  payments  required  under  these  leases:


<TABLE>
<CAPTION>



<S>                                      <C>
2002. . . . . . . . . . . . . . . . . .  $ 79,753
2003. . . . . . . . . . . . . . . . . .    57,848
2004. . . . . . . . . . . . . . . . . .     8,609
2005. . . . . . . . . . . . . . . . . .     7,344
2006. . . . . . . . . . . . . . . . . .     2,129
Future Minimum lease payments . . . . .  $155,683
                                         ---------

Less amount representing interest . . .   (19,392)

Present value of minimum lease payments   136,291

Less current portion. . . . . . . . . .    66,428

Long-term capital lease obligation. . .  $ 69,863


</TABLE>




The  leased  property under capital leases as of December 31, 2001 has a cost of
$291,574, accumulated amortization of $155,634 and a net book value of $135,940.
Amortization  of  the  leased  property  is  included
in  depreciation  expense and amounts to $56,460 and $46,745 for the years ended
December  31,  2001  and  2000,  respectively.


NOTE  15  -  COMMITMENTS  AND  CONTINGENCIES  (CONTINUED)

Employment  Agreements
----------------------

Chief  Executive  Officer  Compensation

On  April  1,  2000, Mr. Westlund signed a three-year employment agreement.  The
contract calls for Mr. Westlund to be paid a base salary of $8,333 per month for
the  first year of the term.  Mr. Westlund's base salary was to increase 15% per
year  for  each  of  the  second  and  third  years  per  this  agreement.

Although  Mr.  Westlund's  Employment  Agreement states that his salary is to be
$8,333  per  month,  his  actual pay has been $4,000 per month.  Mr. Westlund is
entitled  to  be  paid the balance of his monthly compensation in either cash or
equity.  Additionally, Mr. Westlund has been granted an option to purchase up to
6,000,000  shares of Kaire common stock over the next 5 years at an option price
of  $0.05  per  share.  To  date, Mr. Westlund has exercised options to purchase
5,966,666  shares  of  common  stock.

The  CEO also receives a commission of 3% of the merger price for any mergers or
acquisitions  completed  by  the  Company  during  the  term  of  the agreement.


Chief  Financial  Officer  Compensation

On  April  1,  2000,  Mr.  Naccarato signed a three-year service agreement.  The
contract  calls for Mr. Naccarato to be paid $7,250 per month for the first year
of the term.  Mr. Naccarato's base compensation was to increase 15% per year for
each  of  the  second  and  third  years  per  this  agreement.

Although Mr. Naccarato's Service Agreement states that his compensation is to be
$7,250  per  month,  his  actual  remuneration  has  been $4,000 per month.  Mr.
Naccarato  is  entitled  to  be  paid the balance of his monthly compensation in
either  cash  or equity.  Additionally, Mr. Naccarato has been granted an option
to  purchase  up to 4,500,000 shares of Kaire common stock over the next 5 years
at  an  option  price  of $0.05 per share.  To date, Mr. Naccarato has exercised
options  to  purchase  3,500,000  shares  of  common  stock.

Mr. Naccarato resigned from his duties of Chief Financial Officer as of December
31,  2001.  He  is  still the general counsel for the Company and provides other
financial  consulting  services.



<PAGE>
NOTE  15  -  COMMITMENTS  AND  CONTINGENCIES  (CONTINUED)

Employment  Agreements  (continued)
-----------------------------------

President's  Compensation

On  April  1,  2000,  Mr.  Baum  signed  a three-year employment agreement.  The
contract calls for Mr. Baum to be paid a base salary of $6,250 per month for the
first year of the term.  Mr. Baum's base salary was to increase 15% per year for
each  of  the  second  and  third  years  per  this  agreement.

Although  Mr. Baum's Employment Agreement states that his salary is to be $6,250
per month, his actual pay has been $4,000 per month.  Mr. Baum is entitled to be
paid  the  balance  of  his  monthly  compensation  in  either  cash  or equity.
Additionally,  Mr.  Baum  has been granted an option to purchase up to 4,500,000
shares  of  Kaire common stock over the next 5 years at an option price of $0.05
per share.  To date, Mr. Baum has exercised options to purchase 3,500,000 shares
of  common  stock.

The  President  of  the  Company  resigned  effective  December  31,  2001.


Consulting  Agreements
----------------------

The  Company  has various consulting agreements that provide for issuance of the
Company's  common stock and/or stock options/stock purchase warrants in exchange
for  services rendered by the consultants.  These agreements relate primarily to
raising  of  capital  and  professional services rendered in connection with the
Company's  acquisition  efforts.  In  201,  the  Company  issued  stock  options
convertible  into 16,650,000 shares of common stock, and all these stock options
were  converted  into  common  stock  during  the  year.



NOTE  16  -  STOCK  OPTIONS  AND  WARRANTS

The  Company  has  adopted  the  provisions  of Financial Interpretation No. 44.
Accordingly,  the Company applies APB Opinion No. 25 and related interpretations
in  accounting  for  its  plans  for  employees.  If  the Company had elected to
recognize  compensation  expense based upon the fair value at the grant date for
awards  under  this  plan consistent with the methodology prescribed by SFAS No.
123, the Company's net loss and loss per share would be reduced to the pro forma
amounts  indicated  below  for  the  years  ended  December  31:


<TABLE>
<CAPTION>



                                             2001          2000
                                         ------------  ------------
<S>                                      <C>           <C>
Net loss
As reported . . . . . . . . . . . . . .  $(2,401,210)  $(2,429,212)
Pro forma . . . . . . . . . . . . . . .  $(2,401,210)  $(2,751,891)
Basic and diluted loss per common share
As reported . . . . . . . . . . . . . .  $     (0.01)  $     (0.02)
Pro forma . . . . . . . . . . . . . . .  $     (0.01)  $     (0.03)
</TABLE>



NOTE  16  -  STOCK  OPTIONS  AND  WARRANTS  (CONTINUED)

Options  are  granted  at prices that are equal to the current fair value of the
Company's  common  stock at the date of grant.  The Company records compensation
expense  on  options granted at prices below the current fair market value.  The
vesting  period  is  usually  related  to the length of employment or consulting
contract  period.  In 2001, all stock options granted were converted into common
stock,  and the Company recorded the appropriate amount as compensation expense.

The  fair value of these options and warrants was estimated at the date of grant
using the Black-Scholes option-pricing model with the following weighted-average
assumptions  for  the  years  ended  December  31,  2000:  dividend yield of 0%;
expected  volatility of 300%; risk-free interest rate of 5.3%; and expected life
of  1 to 1.5 years; and 2001: dividend yield of 0%; expected volatility of 400%;
risk-free  interest  rate  of  6.45%;  and  expected  life  of  5  years.

The Black-Scholes option valuation model was developed for use in estimating the
fair  value  of traded options, which have no vesting restrictions and are fully
transferable.  In  addition, option valuation models require the input of highly
subjective  assumptions  including the expected stock price volatility.  Because
the  Company's  employee  stock  options  have  characteristics  significantly
different  from  those  of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion,  the  existing  models  do  not  necessarily  provide a reliable single
measure of the fair value of its stock options.  The weighted-average fair value
of  options  granted during the years ended December 31, 2000 was $0.11, and for
2001,  the  range  was  $0.01  to  $0.15.

The  following  table  summarizes  information  with  respect  to  stock options
outstanding  and  exercisable  at  December  31,  2000:



<TABLE>
<CAPTION>


          Options Outstanding  Options Exercisable
          -------------------  -------------------
                Number              Weighted
              Outstanding            Average         Weighted       Number        Weighted
Range of         as of              Remaining        Average    Exercisable as    Average
Exercise       December            Contractual       Exercise     of December     Exercise
Prices         31, 2000               Life            Price        31, 2000        Price
                               -------------------  ----------  ---------------  ----------

<S>       <C>                  <C>                  <C>         <C>              <C>
0.05          11,700,000             2.25               $0.05      7,200,000        $0.05

0.15               6,667             0.15               $0.15          6,667        $0.15
              ----------         -----------         ---------   -----------      --------
              11,706,667             2.25               $0.04      7,206,667        $0.05
</TABLE>




<TABLE>
<CAPTION>


NOTE  16  -  STOCK  OPTIONS  AND  WARRANTS  (CONTINUED)
              Warrants Outstanding                 Warrants Exercisable
            Number      Weighted
          Outstanding    Average    Weighted       Number        Weighted
Range of     as of      Remaining    Average   Exercisable as    Average
Exercise   December    Contractual  Exercise     of December     Exercise
Prices     31, 2000       Life        Price       31, 2000        Price
                       -----------  ---------  ---------------  ----------
<S>       <C>            <C>       <C>        <C>              <C>

0.01       1,500,000       2.83     $0.05        1,500,000      $0.05

0.15         250,000       0.25     $0.15          250,000      $0.15
           -----------  ---------  ---------     ----------     -----

            1,750,000      2.46     $0.04        1,750,000      $0.06
</TABLE>

The  following  table  summarizes  information  with  respect  to  stock options
outstanding  and  exercisable  at  December  31,  2001:


<TABLE>
<CAPTION>



               Options Outstanding                           Options Exercisable
        -------------------------------------------    ---------------------------
                Number       Weighted                     Number
              Outstanding    Average        Weighted    Exercisable as  Weighted
Range of         as of       Remaining      Average    of December      Average
Exercise       December      Contractual    Exercise     31, 2001       Exercise
Prices         31, 2001       Life          Price                       Price
--------     -----------     -----------   ---------   ------------    ------------
<S>          <C>             <C>          <C>         <C>             <C>
0.05         2,033,333           3.46      $ 0.05      2,033,333        $0.05

0.15             6,667           0.08      $ 0.15          6,667        $0.15

             2,040,000           3.45      $0.06       2,040,000        $0.05
</TABLE>


<TABLE>
<CAPTION>



          Warrants Outstanding  Warrants Exercisable

                 Number               Weighted
              Outstanding             Average         Weighted       Number        Weighted
Range of         as of               Remaining         Average   Exercisable as    Average
Exercise        December            Contractual       Exercise     of December     Exercise
Prices          31, 2001                Life            Price       31, 2001        Price
----------     ----------       --------------------  ---------  ---------------  ----------
<S>          <C>                   <C>                 <C>        <C>              <C>

0.01          1,500,000             2.67               $ 0.05       1,500,000      $0.01

0.03          1,500,000             2.42               $ 0.03       1,500,000      $0.03

0.15          2,500,000             1.91               $ 0.15       2,500,000      $0.15

              5,500,000             2.26               $ 0.05       5,500,000      $0.08
</TABLE>


NOTE  16-  STOCKHOLDERS'  EQUITY  &  STOCK  OPTIONS  (CONTINUED)

Stock  Options  and  Warrants  (continued)
------------------------------------------

The  following  summarizes  the  Company's  stock  option and warrants activity:


<TABLE>
<CAPTION>




                                  Warrants     Weighted
                                    And         Average
                               Stock Options   Exercise
                                Outstanding      Price
                               --------------  ---------
<S>                            <C>             <C>
Outstanding, December 31,1999      1,978,000   $    6.74

Granted . . . . . . . . . . .     29,850,000   $    0.05
Exercised . . . . . . . . . .    (16,908,333)  $    0.10
Expired/Cancelled . . . . . .     (1,463,000)  $    8.52
                               --------------  ---------
Outstanding December 31, 2000     13,456,667   $    0.04

Granted . . . . . . . . . . .     20,650,000   $    0.04
Exercised . . . . . . . . . .    (26,316,666)  $    0.04
Expired/Cancelled . . . . . .       (250,000)  $   45.00
                               --------------  ---------
Outstanding December 31, 2001      7,540,000   $    0.05
                               --------------  ---------
</TABLE>


The  Company has 5,500,000 and 1,750,000 warrants outstanding as of December 31,
2001  and  2000,  respectively.  The exercise prices for the warrants range from
$0.01  to $0.15.  During 2001, the Company issued warrants to purchase 4,000,000
shares  of  its  common  stock  at  an  exercise  price  of  $0.01  to  $0.15.

Certain  warrants  (convertible  into  4,000,000  shares of common stock) have a
clause  that  causes the exercise price to be adjusted down, based on the quoted
share  price for the preceding 10 days measured on the exercise date.  The price
is  110%  of the average quoted market price. The warrants expire 3-5 years from
the  date  of  grant.



NOTE  17  -  EARNINGS  PER  SHARE

Earnings  per  share  have  been calculated using the weighted average number of
shares  outstanding  during  each  period.  Earnings per share-dilutive does not
include  the  effect  of  potentially  dilutive  securities  for the years ended
December  31,  2001 and 2000 respectively.  The loss from operations and the net
loss  for  the  years  ended  December  31,  2001 and 2000 make these securities
anti-dilutive.



<PAGE>
NOTE  18  -  MERGER  AGREEMENTS

Stason  U.  S.  Pharmaceuticals,  Inc.
--------------------------------------

The  Company entered into a letter of intent with Stason U.  S. Pharmaceuticals,
Inc.  (Stason).  Under  the  agreement,  Stason will receive a 17% interest in a
wholly  owned  subsidiary,  YesRx.  Com,  Inc., which was incorporated March 27,
2000.  In  exchange,  Stason  provided  Kaire Holding's subsidiary, YesRx.  Com,
Inc,  with  $175,000  in  working capital.  As of December 31, 2001, the parties
were  still  undecided  about  the  details  of this investment.  This amount is
recorded  as  a  liability,  an  amount due Stason, in the financial statements.

In  addition,  Stason  and  Kaire  merged their laboratory operations into a new
company  called Stason Biotech, Inc. in which Stason and the Company own 60% and
40%, respectively, of the common stock of the newly formed Company.  The Company
accounts  for  this  investment  using  the  equity  method.



NOTE  19  -  CLASSIC  CARE  PHARMACY,  INC.

Acquisition  of  Classic  Care,  Inc.
-------------------------------------

In  May  of  2000, the Company acquired Los Angeles-based Classic Care pharmacy.
Classic  Care  Pharmacy provides specialized prescription medication services to
seniors  living  in  extended care facilities in Southern California.  Under the
merger  agreement,  the  Company  paid  $1,000,000 in cash and issued 15,500,000
shares  of  common  stock  to  acquire  all the outstanding common stock (10,000
shares) of Classic Care Pharmacy.  This agreement required that additional stock
be  issued  if the price of the trading price of the stock on the OTCBB was less
than  $.50  per  share  on  October  31,  2000.

This  agreement  was  amended  on  December  6,  2000 to include additional cash
payments  of  $2,000,000  and to defer the determination date for any additional
shares  to be issued under the merger agreement to October 31, 2001.  The target
price  of  the  acquisition was set at $9,500,000 and the value of public market
valuation  of  the  15,500,000 shares was required to be $6,500,000 or $0.42 per
share  on  or  before  that  date  to  meet  the  target  price  of  $9,500,000.

If  the  price  of  the  stock  was not equal to or greater than $0.42 per share
during  the  period  December  6, 2000 through October 31, 2001, the Company was
required to issue sufficient additional shares of Common Stock or pay additional
cash  to  insure  that  the  total  consideration  paid  for  the acquisition is
$9,500,000.  The  additional stock was to be issued or cash paid by November 30,
2001.

The acquisition was accounted for as a purchase in accordance with provisions of
APB  16.  Under  the  purchase  method  of  accounting,  the  purchase  price is
allocated  to  the  assets  acquired  and  liabilities  assumed  based  on their
estimated  fair  values  at  the  date  of  the  acquisition.


<PAGE>
NOTE  19  -  CLASSIC  CARE  PHARMACY,  INC.  (CONTINUED)

Acquisition  of  Classic  Care,  Inc.  (continued)
--------------------------------------------------

The  purchase price was allocated to the assets acquired and liabilities assumed
based  on  their  estimated  fair  values  as  determined  by  the  Company:


<TABLE>
<CAPTION>




Current assets                $471,960
<S>                          <C>
Fixed assets. . . . . . . .      282,485

Goodwill. . . . . . . . . .    9,728,732
                          --------------
Total assets acquired . . .   10,483,177

Less liabilities assumed. .      733,177
                          --------------
Cost of net assets acquired  $ 9,750,000
                          --------------

</TABLE>


Goodwill will be amortized on a straight-line basis over 20 years.  Amortization
expense  as  of  December  31,  2001 and 2000 amounted to $486,436 and $283,757,
respectively.



<PAGE>
NOTE  19  -  CLASSIC  CARE  PHARMACY,  INC.  (CONTINUED)

Acquisition  of  Classic  Care,  Inc.  (continued)
--------------------------------------------------

The following unaudited pro forma consolidated results of operations give effect
to  the  acquisition  of  Classic  Care  Pharmacy  as  if  it occurred as of the
beginning  of  the  periods  presented  below:


<TABLE>
<CAPTION>


Kaire Holdings Incorporated
CONSOLIDATED BALANCE SHEET (UNAUDITED)
AS OF MAY 31, 2000

                                            5/31/00       5/31/00                                          5/31/00
                                              KAIRE   CLASSIC CARE    Adjust1    Adjust2      Adjust3     Pro forma
<S>                                      <C>             <C>        <C>         <C>          <C>           <C>
Cash. . . . . . . . . . . . . . . . . .  $     565,158   $      -                                          565,158
                                         --------------  ---------  ----------  ------------  ----------  ---------
Accounts Receivable . . . . . . . . . .         19,690    197,376                                          217,066
Inventory . . . . . . . . . . . . . . .              -    263,905                                          263,905
Other current assets. . . . . . . . . .         55,186     10,679                                           65,865
Property and Equip, net . . . . . . . .         13,714    282,485                                          296,199
Other assets. . . . . . . . . . . . . .        505,000          -   9,250,000   (9,750,000)                  5,000
Goodwill. . . . . . . . . . . . . . . .              -          -                9,728,732   (202,681)   9,526,051
                                         --------------  ---------  ----------  ------------  ----------  ---------

Total Assets. . . . . . . . . . . . . .      1,158,748    754,445   9,250,000      (21,268)  (202,681) $10,939,244
                                         --------------  ---------  ----------  ------------  ----------  ---------

Accounts payable. . . . . . . . . . . .        114,338    452,792                                           567,130
Other liab & accrued exp. . . . . . . .        195,576     33,635   2,750,000                             2,979,211
Other long-term liabilities . . . . . .        200,000    246,750                                            446,750
Convertible notes and accrued interest.        289,320          -                                            289,320
Common stock. . . . . . . . . . . . . .        589,193      1,000                   (1,000)                  589,193
Additional paid in capital. . . . . . .     31,548,162    103,439   6,500,000     (103,439)               38,048,162
Retained earnings . . . . . . . . . . .    (31,777,841)   (83,171)                  83,171   (202,681)  (31,980,522)
                                         --------------  ---------  ----------  ------------  ----------  ---------

Total liabilities and Equity. . . . . .      1,158,748    754,445   9,250,000      (21,268)  (202,681)   $10,939,244
                                         --------------  ---------  ----------  ------------  ----------  ---------
                                         --------------  ---------  ----------  ------------  ----------  ---------

</TABLE>


NOTE  19  -  CLASSIC  CARE  PHARMACY,  INC.  (CONTINUED)

Acquisition  of  Classic  Care,  Inc.  (continued)
--------------------------------------------------


<TABLE>
<CAPTION>



KAIRE HOLDINGS INC
CONSOLIDATED STATEMENT OF OPERATIONS (PRO FORMA):
FOR THE 5 MONTHS ENDED 05/31/00

                                                       5/31/00        5/31/00
                                                       KAIRE       CLASSIC CARE     Adjust4    Pro forma
<S>                                                 <C>             <C>          <C>         <C>
 Revenue . . . . . . . . . . . . . . . . . . . . .         77,626    2,199,547                2,277,173
                                                    --------------  -----------  ----------
 Cost of goods . . . . . . . . . . . . . . . . . .         81,594    1,626,319                1,707,913
 Gross profit. . . . . . . . . . . . . . . . . . .         (3,967)     573,228                  569,260
                                                    --------------  -----------  ----------
 Operating expenses. . . . . . . . . . . . . . . .        388,648      713,050    (202,681)     899,017
 Income from operations. . . . . . . . . . . . . .       (392,616)    (139,822)                (329,757)
                                                    --------------  -----------                ----------
 Other expense (income). . . . . . . . . . . . . .        199,544            -                  199,544
 Income before taxes . . . . . . . . . . . . . . .       (592,160)    (139,822)                (529,301)
                                                    --------------  -----------   ----------   ----------
 Income taxes. . . . . . . . . . . . . . . . . . .            400            -                      400
 Net income (Loss) . . . . . . . . . . . . . . . .  $    (592,560)  $ (139,822)   (202,681)    (529,701)
                                                    --------------  -----------  ----------    ---------

 Weighted average shares . . . . . . . . . . . . .    109,193,033       10,000

Earnings (loss) per share. . . . . . . . . . . . .  $      (0.005)  $  (13.982)
</TABLE>

The  pro  forma  adjustments  to the consolidated balance sheets are as follows:

ADJUST1:  To adjust the acquisition price to its actual value as if the business
combination     occurred  at  the  beginning  of  the  period.

ADJUST2:  To  eliminate  the  investment  account,  the  equity  accounts of the
subsidiary     (Classic  Care  pharmacy),  and  record  the  value  of goodwill.

ADJUST3:  To  record  five  (5)  months  amortization  of  goodwill.


The  pro forma adjustments to the consolidated income statements are as follows:

ADJUST4:  To  record  five  (5)  months  of  amortization  expense  of goodwill.

<PAGE>
NOTE  19  -  CLASSIC  CARE  PHARMACY,  INC.  (CONTINUED)

Spin-off  of  Classic  Care
---------------------------

During  2001,  the Company renegotiated with the original owners of Classic Care
for  amounts  due  them  under  the  original  purchase agreement (as amended on
December 6, 2000) of their interests in Classic Care.  The original Classic Care
shareholders  negotiated  a  settlement  with  the  Company due to the Company's
common  stock  not  having  achieved  specified  levels ($0.42 per share) during
designated  periods  subsequent to the acquisition.  The revised settlement with
the  original  Classic  Care  owners  resulted  in  the  Company  increasing its
liability  to  the original Classic Care Shareholders by $6,345,000 and reducing
additional  paid-in  capital  by  an  equivalent  amount.

The  settlement agreement reached with the original Classic Care owners resulted
in  the  Company  having  to  spin  off  Classic  Care.

On  November  1,  2001,  Kaire  Holdings  entered  into a new agreement with the
original owners of Classic Care, which received shareholder approval in February
2002, whereby Kaire will assign approximately fifty-four percent (54%) ownership
of  the  Classic  Care  Pharmacy  ("CC")  back  to the original owners of the CC
pharmacy,  with  Kaire  retaining  approximately  35%  of  the equity in CC.  In
consideration  of  the  assignment,  all amounts due the CC prior owners will be
deemed  satisfied  with  the  exception  of  a one-year 4% convertible note (the
"Note")  in  the  amount  of USD $2,000,000 that the original CC owners agree to
hold.  This note is secured by the 2,000,000 shares of Classic Care common stock
held  by  Kaire.  The  note  will  mature one year from the date of the spin-off
("Maturity  Date"),  and  if  not  paid  when due, Kaire will have the option to
return  2,000,000  of  its  shares  of  Classic Care to the note holders in full
settlement  of the principal and interest related to the note.  Kaire intends to
dividend  to  Kaire  shareholders  approximately  49%  of  its  position  in CC.

Pursuant  to  this  agreement,  the  Company  has increased the note payable and
amounts  due to the original Classic Care shareholders by $6,345,000 and reduced
additional  paid-in capital by an equivalent amount due to the resolution of the
contingency  involved  with  the  original  purchase.

The  following  Proforma balance sheets and income statements give effect to the
proposed  spin-off  of Classic Care as if it occurred as of the beginning of the
periods  presented  below:

<PAGE>



<TABLE>
<CAPTION>



                                         KAIRE HOLDINGS INCORPORATED AND SUBSIDIARIES
                                            BALANCE SHEET AND INCOME STATEMENT
                                                 DECEMBER 31, 2001


                                                                  ELIMINATE
                                                CONSOLIDATED   CLASSIC CARE                                ELIMINATE
                                                   BALANCE          01/01/01-      KAIRE          HAP       GOODWILL AND
                                                  12/31/01       12/31/01      12/31/01       PROGRAM     RECORD DEBT
<S>                                            <C>             <C>            <C>           <C>            <C>
ASSETS
  Cash                                               $62,707         60,576         2,131
Accounts receivable . . . . . . . . . . . . .      1,112,769      1,112,769             -        129,124
Inventory . . . . . . . . . . . . . . . . . .        728,410        728,410             -                            -
Other current assets. . . . . . . . . . . . .        107,560         19,436        88,124
Property and equipment, net . . . . . . . . .        200,952        187,003        13,949
Notes receivable. . . . . . . . . . . . . . .        415,664        415,664             -              -
Investments . . . . . . . . . . . . . . . . .         30,028              -        30,028
Investment in Classic Care. . . . . . . . . .              -              -             -                     3,900,000
Intercompany Receivable . . . . . . . . . . .              -              -             -              -
Other assets. . . . . . . . . . . . . . . . .              -              -             -
Goodwill. . . . . . . . . . . . . . . . . . .      8,958,539              -     8,958,539                     (8,958,539)
                                              --------------     -----------   ----------      ---------    ------------
TOTAL ASSETS. . . . . . . . . . . . . . . . .  $  11,616,629      2,523,858     9,092,771        129,124      (5,058,539)
                                              ==============    ============  ===========  =============   ==============
LIABILITIES AND EQUITY
Accounts payable. . . . . . . . . . . . . . .  $   1,196,389      1,189,997         6,392
Other liabilities and accrued expenses. . . .        714,477         22,501       691,976
Note payable - Classic Care . . . . . . . . .              -              -             -                      2,000,000
Intercompany payable. . . . . . . . . . . . .              -              -             -
Other long-term liabilities . . . . . . . . .      8,338,127        319,863     8,018,264                    (7,419,331)
Convertible notes and accrued interest. . . .        429,964              -       429,964
Common stock. . . . . . . . . . . . . . . . .        277,041          1,000       276,041
Additional paid-in capital. . . . . . . . . .     36,676,339        103,439    36,572,900
Stockholders equity . . . . . . . . . . . . .              -              -             -        341,124
Retained earnings . . . . . . . . . . . . . .    (36,015,708)       887,058   (36,902,766)      (212,000)       360,792
                                              --------------     -----------   ----------      ---------    ------------
TOTAL LIABILITIES AND EQUITY. . . . . . . . .  $  11,616,629      2,523,858     9,092,771        129,124    (5,058,539)
                                              --------------     -----------   ----------      ---------    ------------

                                               ==============  =============  =============  ============   ============
REVENUES. . . . . . . . . . . . . . . . . . .              -
Revenue . . . . . . . . . . . . . . . . . . .  $  15,862,690     15,848,128        14,562      1,122,774
Cost of goods . . . . . . . . . . . . . . . .     13,317,413     13,317,413             -      1,067,136
                                              --------------     -----------   ----------      ---------    ------------
GROSS PROFIT. . . . . . . . . . . . . . . . .      2,545,277      2,530,715        14,562         55,638

EXPENSES
Operating expenses. . . . . . . . . . . . . .      4,743,164      1,851,226     2,891,938        215,926
                                              --------------     -----------   ----------      ---------    ------------
Income (loss) from operations . . . . . . . .     (2,197,887)       679,489    (2,877,376)      (160,288)

Intercompany charges. . . . . . . . . . . . .        419,778       (419,778)     (419,778)
Other expenses (income) . . . . . . . . . . .        200,123        (19,753)      219,876
                                              --------------     -----------   ----------      ---------    ------------
Income before taxes . . . . . . . . . . . . .     (2,398,010)       279,464    (2,677,474)      (160,288)

Income taxes. . . . . . . . . . . . . . . . .          3,200              -         3,200
                                              --------------     -----------   ----------      ---------    ------------
NET INCOME (LOSS) . . . . . . . . . . . . . .  $  (2,401,210)       279,464    (2,680,674)      (160,288)
                                               ==============  ============   ============   ============   ============
Weighted average shares . . . . . . . . . . .    169,827,480
Earnings (loss) per share . . . . . . . . . .         (0.014)


         KAIRE HOLDINGS INCORPORATED AND SUBSIDIARIES
           BALANCE SHEET AND INCOME STATEMENT
                     DECEMBER 31, 2001




                                                 PROFORMA
                                                 BALANCE
                                                ------------
ASSETS
Cash                                                 2,131
<S>                                            <C>
Accounts receivable                                129,124
Inventory                                                -
Other current assets                                88,124
Property and equipment, net                         13,949
Notes receivable                                         -
Investments                                         30,028
Investment in Classic Care                       3,900,000
Intercompany Receivable                                  -
Other assets                                             -
Goodwill                                                 -
                                               ------------
TOTAL ASSETS. . . . . . . . . . . . . . . . .    4,163,356
                                              =============
LIABILITIES AND EQUITY
Accounts payable                                     6,392
Other liabilities and accrued expenses             691,976
Note payable - Classic Care                      2,000,000
Intercompany payable                                     -
Other long-term liabilities                        598,933
Convertible notes and accrued interest             429,964
Common stock                                       276,041
Additional paid-in capital                      36,572,900
Stockholders equity                                341,124
Retained earnings . . . . . . . . . . . . . .  (36,753,974)
                                              ------------

TOTAL LIABILITIES AND EQUITY. . . . . . . . .    4,163,356
                                               ============

REVENUES
Revenue                                          1,137,336
Cost of goods                                    1,067,136
                                              ------------
GROSS PROFIT. . . . . . . . . . . . . . . . .       70,200

EXPENSES
Operating expenses                               3,107,864
                                              -------------
Income (loss) from operations . . . . . . . .   (3,037,664)

Intercompany charges                              (419,778)
Other expenses (income)                            219,876
                                              -------------
Income before taxes . . . . . . . . . . . . .   (2,837,762)

Income taxes                                         3,200

NET INCOME (LOSS) . . . . . . . . . . . . . .   (2,840,962)
                                               ============
Weighted average shares                        169,827,480
Earnings (loss) per share                           (0.019)
</TABLE>





<PAGE>


<TABLE>
<CAPTION>



                                      KAIRE HOLDINGS INCORPORATED AND SUBSIDIARIES
                                           BALANCE SHEET AND INCOME STATEMENT
                                                      DECEMBER 31, 2000


                                                               ELIMINATE
                                                CONSOLIDATED   CLASSIC CARE                                   ELIMINATE
                                                 BALANCE         06-01/00-         KAIRE          HAP       GOODWILL AND
                                                  12/31/00       12/31/00       12/31/00       PROGRAM     RECORD DEBT
<S>                                            <C>             <C>            <C>           <C>            <C>
ASSETS
Cash                                              $311,716        205,424       106,292           -
 Accounts receivable. . . . . . . . . . . . .        714,882      1,046,682      (331,800)        65,596
 Inventory. . . . . . . . . . . . . . . . . .        385,219        385,219             -              -
 Other current assets . . . . . . . . . . . .         95,470         18,929        76,541              -
 Property and equipment, net. . . . . . . . .        278,147        250,684        27,463              -
 Notes receivable . . . . . . . . . . . . . .        612,300        280,500       331,800              -
 Investments. . . . . . . . . . . . . . . . .         35,028              -        35,028              -
 Investment in Classic Care . . . . . . . . .              -              -             -              -     3,900,000
 Goodwill . . . . . . . . . . . . . . . . . .      9,444,975              -     9,444,975              -    (9,444,975)

 TOTAL ASSETS . . . . . . . . . . . . . . . .  $  11,877,737      2,187,438     9,690,299         65,596    (5,544,975)

 LIABILITIES AND EQUITY
 Accounts payable . . . . . . . . . . . . . .  $   1,480,217      1,476,058         4,159              -
 Other liabilities and accrued expenses . . .        996,551         88,739       907,812              -
 Note payable - Classic Care. . . . . . . . .              -              -             -              -     2,000,000
 Other long-term liabilities. . . . . . . . .      1,424,847        (89,391)    1,514,238              -
 Convertible notes and accrued interest . . .        821,000              -       821,000              -
 Common stock . . . . . . . . . . . . . . . .        117,765          1,000       116,765              -
 Additional paid-in capital . . . . . . . . .     40,651,855        103,439    40,548,416              -
 Stockholders equity. . . . . . . . . . . . .              -              -             -         16,576
 Retained earnings. . . . . . . . . . . . . .    (33,614,498)       607,593   (34,222,091)        49,020    (7,544,975)
                                               ------------     ------------  -----------   ------------   -------------
 TOTAL LIABILITIES AND EQUITY . . . . . . . .  $  11,877,737      2,187,438     9,690,299         65,596    (5,544,975)
                                               =============     ===========  ===========    ============   ============

 REVENUES . . . . . . . . . . . . . . . . . .                                          -
 Revenue. . . . . . . . . . . . . . . . . . .  $   5,707,700      5,624,827        82,873        174,922             -
 Cost of goods. . . . . . . . . . . . . . . .      4,042,549      3,761,756       280,793        166,498             -
                                               ------------     ------------  -----------   ------------   -------------
 GROSS PROFIT . . . . . . . . . . . . . . . .      1,665,151      1,863,071      (197,920)         8,424             -

 EXPENSES
 Operating expenses . . . . . . . . . . . . .      4,300,256      1,885,360     2,414,896         25,000             -
                                               ------------     ------------  -----------   ------------   -------------
 Income (loss) from operations. . . . . . . .     (2,635,105)       (22,289)   (2,612,816)       (16,576)            -

 Eliminate goodwill . . . . . . . . . . . . .              -              -             -              -      (283,757)
 Other expenses (income). . . . . . . . . . .       (209,893)             -      (209,893)             -             -
                                               ------------     ------------  -----------   ------------   -------------
 Income before taxes. . . . . . . . . . . . .     (2,425,212)       (22,289)   (2,402,923)       (16,576)      283,757

 Income taxes . . . . . . . . . . . . . . . .          4,000            800         3,200              -             -
                                               ------------     ------------  -----------   ------------   -------------
 NET INCOME (LOSS). . . . . . . . . . . . . .  $  (2,429,212)       (23,089)   (2,406,123)       (16,576)      283,757
                                               =============     ===========  ===========    ============   ============


 Weighted average shares. . . . . . . . . . .    104,953,458
 Earnings (loss) per share. . . . . . . . . .          (0.02)


KAIRE HOLDINGS INCORPORATED AND SUBSIDIARIES
BALANCE SHEET AND INCOME STATEMENT
DECEMBER 31, 2000




                                               PROFORMA
                                               BALANCE
ASSETS
<S>                                            <C>
 Cash                                             106,292
 Accounts receivable                             (266,204)
 Inventory                                              -
 Other current assets                              76,541
 Property and equipment, net                       27,463
 Notes receivable                                 331,800
 Investments     . . . . . . . .                   35,028
 Investment in Classic Care .                   3,900,000
 Goodwill . . . . . . . . . . . . . . . . . .          -
                                               ============
 TOTAL ASSETS . . . . . . . . . . . . . . . .    4,210,920

 LIABILITIES AND EQUITY
 Accounts payable                                    4,159
 Other liabilities and accrued expenses            907,812
 Note payable - Classic Care. . . . . . . . .    2,000,000
 Other long-term liabilities                     1,514,238
 Convertible notes and accrued interest            821,000
 Common stock                                      116,765
 Additional paid-in capital                     40,548,416
 Stockholders equity                                16,576
 Retained earnings. . . . . . . . . . . . . .  (41,718,046)
                                               ------------

 TOTAL LIABILITIES AND EQUITY . . . . . . . .    4,210,920
                                               ============


 REVENUES
 Revenue. . . . . . . . . . . . . . . . . . .      257,795
 Cost of goods. . . . . . . . . . . . . . . .      447,291
                                               ------------
 GROSS PROFIT . . . . . . . . . . . . . . . .     (189,496)

 EXPENSES
 Operating expenses . . . . . . . . . . . . .    2,439,896
                                               ------------
 Income (loss) from operations. . . . . . . .   (2,629,392)

 Eliminate goodwill . . . . . . . . . . . . .     (283,757)
 Other expenses (income). . . . . . . . . . .     (209,893)

 Income before taxes. . . . . . . . . . . . .   (2,135,742)

 Income taxes . . . . . . . . . . . . . . . .        3,200

 NET INCOME (LOSS). . . . . . . . . . . . . .   (2,138,942)
                                               ============
 Weighted average shares                       104,953,458
 Earnings (loss) per share                           (0.02)
</TABLE>




                           KAIRE HOLDINGS INCORPORATED
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000





NOTE  20  -  SUBSEQUENT  EVENTS

At  the  annual meeting in February 2002, shareholders approved and consented to
amend the Company's restated Certificate of Incorporation to increase the number
of  authorized  shares  of  common stock from 400,000,000 to 900,000,000 shares.

The  principal  purpose  of  this  amendment to the Certificate was to authorize
additional  shares of Common Stock that would be available to 1) provide for the
conversion  of  existing  debt, 2) facilitate the possible raising of additional
capital  through  the  sale  of  securities,  3)  grant  options  or other stock
incentives  to the Company's employees, 4) for a possible acquisition of another
company  or  its  business  or  assets,  and  5)  seek  to establish a strategic
relationship  with  a  corporate  partner.

As of the date of this Proxy in February 2002, Kaire had $978,582 of convertible
notes  remaining  on  the  Balance  Sheet.

These  notes bear interest at 8% per annum and are convertible into common stock
at  the  lesser  of:

(a)     $0.0073;  or
(b)     80%  of  the  average of the three lowest closing prices of common stock
for  the  sixty  trading  days  immediately  prior  to  the  conversion  date.


Common  stock  transactions
---------------------------

During the period of January 1 to March 27, 2002, the Company converted $135,822
in  convertible  notes  payable  into  53,021,782  shares  of its commons stock.
During  the period of January 1 to March 27, 2002, the Company converted $11,385
in  convertible  note  interest  into  4,851,212  shares  of  its commons stock.


Stock  options
--------------

During  the  period  January 1, 2001 to March 27, 2001, the Company issued stock
options  to  consultants  allowing  them  to purchase up to 15,000,000 shares of
common  stock  at  an  exercise  price of $0.01 per share. The exercise price is
equivalent  to the market price on the date of the grant. The stock options were
issued  pursuant  to  a  consulting  service  agreement.

The  exercise  period for the options is for 5 years from the date of the grant.







</TEXT>
</DOCUMENT>
