FINANCIAL STATEMENTS OF EQUUS RESOURCES, INC.

[pennystockman]

NOTES TO FINANCIAL STATEMENTS OF EQUUS RESOURCES, INC. December 31, 2006 Note 1 – Organization and Nature of Business Equus Resources, Inc. (the “Company”) was originally incorporated in the State of Colorado in 1976 as Cripple Creek Gold Production Corporation. The name of the Company was changed to Hunter Petroleum Corporation in 1986, to Hunter International Trade Corporation in 1987, to Forst Hunter International Trade Corporation in 1997 and to Equus Resources, Inc. in 2004. During 2006, the Company engaged in commercial and residential mortgage brokerage, property and casualty insurance brokerage, and online and onground career training and educational services in Florida and Georgia through the following operating subsidiaries, all incorporated under the laws of the State of Georgia: Equus Mortgage Services, Inc. (“Equus Mortgage”), American International Education, Inc. (“AIE”) and its subsidiary, American International Technical Institute, Inc. (“AI Tech”), and 1 st Metro Insurance, Inc. (“1 st Metro”). Effective November 1, 2006, the Company acquired forty percent (40%) of the equity of Education Partners International, Inc., a Georgia corporation (“EPI”), which ownership interest is represented by 10,000,000 shares of common stock of EPI, in exchange for all of the common stock of AIE and AI Tech and all other components and assets of or related to the career training and educational operations of the Company.The Company's principal place of business is located in Roswell , Georgia . Note 2 – Basis of Presentation The accompanying condensed consolidated financial statements have been prepared on the accrual basis of accounting by management with the assistance of an outside (but not independent) certified public accounting firm and a financial advisor/consultant. The accompanying financial statements include the accounts of the Company and its wholly-owned subsidiaries. Significant inter-company transactions and accounts are eliminated in the consolidation. The accompanying financial statements have not been audited or reviewed by independent auditors, but management believes they present fairly the financial condition of the Company for the periods stated. The preparation of the financial statements required management to make certain estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amount of revenues and expenses during the period reflected. Actual results may differ from those estimates and such differences may be material to the financial statements. Additionally, if and when the accompanying financial statements are subjected to an independent accounting audit, material adjustments and differences may result therefrom. Note 3 – Going Concern The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of certain assets and the satisfaction of indebtedness in the ordinary course of business. Historically, the Company has not demonstrated a consistent ability to generate sufficient cash flow from operations to satisfy its liabilities and sustain operations, and the Company has incurred significant losses from its operations. The cumulative consolidated accounting losses of the Company as of December 31, 2006 was $764,333.79. These factors raise substantial doubt about the Company's ability to continue as a going concern. The Company's continuation as a going concern is dependent upon its ability to generate sufficient income and cash flow to meet its obligations on a timely basis and/or obtain additional financing as may be required. The Company is actively seeking to obtain additional capital and financing. In addition, the Company has taken significant steps to reduce costs and cash outlays and increase operating efficiencies, including significantly reducing its office rent, subleasing the bulk of its office space to EPI, reducing the job of the CFO and Controller from a full-time position to a part-time position, curtailing many of its operations, and retiring certain indebtedness with shares of the Company's common stock in lieu of cash. Although these measures have reduced the Company's expenses and ongoing cash outlays, if the Company is unable to obtain equity or debt financing, it may be unable to continue development of its business and may be forced to curtail or cease operations. The financial statements do not include any adjustments that might be required if the Company is unable to continue as a going concern. Note 4 – Value of EPI Interest As required by the applicable accounting rules, the accompanying financial statements carry the asset value of the Company's ownership interest in EPI at cost. However, EPI has informed the Company that it has sold shares of its common stock in arms' length transactions in 2007 for prices averaging approximately $0.45 per share, which would give the Company a value for its shares of common stock of EPI equal to $4.5 million. In particular, according to information provided to the Company by EPI management, a group of the Company's stockholders converted a $400,000 convertible promissory note into three percent (3%) of the equity ownership of EPI. Further, according to EPI management, as of June 30, 2007 , EPI plans to sell additional shares of EPI common stock at a minimum per share price or value of $0.50. There is, of course, no assurance, that the Company could liquidate its position in EPI for this amount or for any amount or even that EPI will continue as a going concern.