UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549

FORM 10-QSB

(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended: September 30, 2003

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________ to __________

Commission file number: 0-5418

Walker Financial Corporation
(Exact name of small business issuer as specified in its charter)

Delaware 13-2637172
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)

370 Old Country Road
Suite 200
Garden City, New York 11530
(Address of principal executive offices)

(516) 746-4141
(Issuer's telephone number)

Not Applicable

(Former name, former address and
former fiscal year, if changed since last report)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes [X] No [ ]

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: There were a total of 7,501,510
shares of the registrant's common stock, par value $.10 per share, outstanding
as of November 13, 2003.

Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]

Walker Financial Corporation

Quarterly Report on Form 10-QSB
Quarter Ended September 30, 2003

Table of Contents

Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:

Condensed Consolidated Balance Sheet (Unaudited) as of September 30, 2003.............................. 3
Condensed Consolidated Statements of Operations (Unaudited) for the Three and Nine Months Ended
September 30, 2003 and 2002.......................................................................... 4
Condensed Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended
September 30, 2003 and 2002.......................................................................... 5
Notes to Condensed Consolidated Financial Statements................................................... 6
Item 2. Management's Discussion and Analysis or Plan of Operation........................................ 14
Item 3. Controls and Procedures.......................................................................... 19

PART II - OTHER INFORMATION
Item 1. Legal Proceedings................................................................................ 20
Item 2. Changes in Securities............................................................................ 20
Item 3. Defaults Upon Senior Securities.................................................................. 21
Item 4. Submission of Matters to a Vote of Security Holders.............................................. 21
Item 5. Other Information................................................................................ 21
Item 6. Exhibits and Reports on Form 8-K................................................................. 21

SIGNATURES................................................................................................ 22

EXHIBIT INDEX............................................................................................. 23

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

WALKER FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)

September 30, 2003
------------------
ASSETS
Current assets -

Cash and cash equivalents................................................................. $ 331,931
Accounts receivable, net.................................................................. 126,374
Inventories............................................................................... 35,502
Prepaid expenses and other current assets................................................. 30,755
-----------------
Total current assets.................................................................... 524,562
Property and equipment, net.................................................................. 404,374
Other assets -
Intangibles - customer list............................................................... 174,781
Other assets.............................................................................. 16,660
-----------------
Total other assets...................................................................... 191,441
-----------------
Total assets.......................................................................... $ 1,120,377
=================

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities -
Accounts payable and accrued expenses..................................................... $ 150,071
Customer deposits......................................................................... 4,023
Current maturities of long-term debt...................................................... 167,182
Line of credit, bank...................................................................... 136,809
-----------------
Total current liabilities............................................................... 458,085
Other liabilities -
Bridge loan............................................................................... 126,700
-----------------
Total liabilities....................................................................... 584,785
-----------------
Stockholders' equity -
Common stock.............................................................................. 750,151
Additional paid in capital................................................................ 3,381,355
Accumulated deficit....................................................................... (3,479,914)
Deferred compensation..................................................................... (116,000)
-----------------
Total stockholders' equity.............................................................. 535,592
-----------------
Total liabilities and stockholders' equity............................................ $ 1,120,377
=================

See notes to condensed consolidated financial statements

WALKER FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------- -----------------------------
2003 2002 2003 2002
----------------------------- -----------------------------

Net sales.......................................... $ 505,098 $ 563,212 $ 1,486,393 $ 1,391,964
Costs of sales..................................... 132,454 177,771 409,378 373,674
------------- ------------- ------------- --------------
Gross profit.................................... 372,644 385,441 1,077,015 1,018,290
Operating expenses................................. 444,201 458,964 1,507,054 1,308,056
------------- ------------- ------------- --------------
Operating loss.................................. (71,557) (73,523) (430,039) (289,766)
Interest income (expense).......................... (51,519) 460 (55,819) (9,860)
------------- ------------- ------------- --------------
(Loss) income before extraordinary item and
income taxes.................................. (123,076) (73,063) (485,858) (299,626)
Extraordinary item................................. -- -- -- 158,690
------------- ------------- ------------- --------------
(Loss) before income taxes...................... (123,076) (73,063) (485,858) (140,936)
Income tax (expense)............................... -- -- (15,160) --
------------- ------------- ------------- --------------
Net loss...................................... $ (123,076) $ (73,063) $ (501,018) $ (140,936)
============= ============= ============= ==============

Basic and diluted net loss per common share........ $ (0.02) $ (0.01) $ (0.07) $ (0.02)
============= ============= ============= ==============
Weighted average number of common shares
outstanding................................... 7,501,510 6,968,940 7,501,510 5,970,740
============= ============= ============= ==============

See notes to condensed consolidated financial statements

WALKER FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

Nine Months Ended
September 30,
---------------------------------
2003 2002
--------------- ----------------
Cash Flows From Operating Activities:

Net loss..................................................................... $ (501,018) $ (140,936)
--------------- ----------------
Adjustments to reconcile net loss to net cash used in operating activities -
Extraordinary item........................................................ -- (158,690)
Depreciation and amortization............................................. 175,660 86,175
Accrued interest.......................................................... 6,750 9,450
Interest - deferred debt discount......................................... 45,078 --
Stock based compensation.................................................. -- 10,000
Changes in operating assets and liabilities:
Accounts receivable..................................................... (1,321) (8,000)
Inventories............................................................. (2,176) 9,239
Prepaid expense and other current assets................................ 18,332 89,623
Customer deposits....................................................... (2,673) 4,523
Other assets............................................................ -- 14,055
Accounts payable and accrued expenses................................... (15,200) (36,151)
--------------- ----------------
Total adjustments..................................................... 224,450 20,224
--------------- ----------------
Net cash used in operating activities................................. (276,568) (120,712)
--------------- ----------------

Cash Flows from Investing Activities:
Net cash received in merger transaction...................................... -- 472,209
Purchase of property and equipment........................................... (35,235) (70,338)
--------------- ----------------
Net cash (used in) provided by investing activities..................... (35,235) 401,871
--------------- ----------------

Cash Flows from Financing Activities:
Principal repayment of notes payable......................................... -- (175,000)
Net proceeds from line of credit, bank....................................... 136,809 --
Proceeds from bridge loan.................................................... 140,000 --
Proceeds from notes payable.................................................. -- 80,000
Proceeds from sale of common stock........................................... -- 85,000
Repayment of due to stockholder.............................................. -- (17,100)
--------------- ----------------
Net cash provided by (used in) financing activities..................... 276,809 (27,100)
--------------- ----------------

Net (decrease) increase in cash and cash equivalents......................... (34,994) 254,059
Cash and cash equivalents - beginning........................................ 366,925 --
--------------- ----------------
Cash and cash equivalents - ending........................................... $ 331,931 $ 254,059
=============== ================

See notes to condensed consolidated financial statements

WALKER FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003
(Unaudited)

NOTE 1 - Merger and Organization of Entities

On March 19, 2002, effective as of March 1, 2002, Walker Financial Corporation
(formerly known as Walker International Industries, Inc.) and subsidiaries
(collectively, the "Company" or "Walker") (which operates in the film processing
industry through its wholly-owned subsidiary, Kelly Color, Inc. ("Kelly")),
acquired all of the issued and outstanding common stock of American DataSource,
Inc. ("ADS") and National Preplanning, Inc. ("NPI"), through a series of
simultaneous mergers.

In the merger with ADS, the Company issued to James N. Lucas, Sr., the sole
stockholder of ADS, and his assignees a total of 1,839,840 shares of the common
stock, par value $0.10 per share (the "Common Stock"), of the Company and
$325,000 in cash. In addition, the Company issued 18% subordinated promissory
notes to the sole stockholder of ADS and his assignees in the aggregate
principal amount of $500,000 due November 30, 2002. These subordinated notes
were subsequently canceled as a condition to their repayment failed to occur by
a stated date. ADS provides trust administrative services to independent funeral
homes, state master trusts and companies that own funeral homes or cemeteries
for pre-need funeral and cemetery trust accounts.

In the merger with NPI, the Company issued to the stockholders of NPI a total of
2,725,730 shares of Common Stock. In addition, the Company issued 18%
subordinated promissory notes in the aggregate principal amount of $750,000 due
November 30, 2002. These subordinated notes were subsequently canceled as a
condition to their repayment failed to occur by a stated date. Mitchell Segal,
the president, chief executive officer, and the owner of approximately 67.5% of
the outstanding shares of NPI and the current president and chief executive
officer of the Company, received 1,839,670 of the shares of Common Stock and
$506,221 principal amount of the notes issued as the NPI merger consideration.
Mr. Segal also agreed to forego $304,000 of unpaid salary due him from NPI. NPI,
which was a development stage company through February 28, 2002, is a managing
general insurance agency and third party marketer of prearranged death care
services to corporations, unions and affinity groups.

The Company has agreed to register a total of 913,080 shares of Common Stock
that was issued in the ADS and NPI acquisitions for resale by the former
stockholders of ADS and NPI. Such 913,080 shares represent approximately 20% of
the shares of Common Stock that were issued in the two acquisitions.

The mergers were accounted for as purchase transactions, pursuant to the
guidance of Staff Accounting Bulletin Topic 2a issued by the Securities and
Exchange Commission (the "SEC"), whereby NPI, and not Walker, was the accounting
acquirer. The historical financial statements prior to March 1, 2002 are those
of NPI. NPI has established a new basis for Walker and ADS assets and
liabilities based upon an allocation of the fair value of the merger. The
subordinated promissory notes were considered, at the time of their issuance,
contingent consideration and were to be recorded when the contingency was
resolved. These subordinated notes were subsequently canceled as a condition to
their repayment failed to occur by a stated date. The condensed consolidated
financial statements reflect the Company's best estimate at the date of the
mergers. The adjustments to reflect the fair values of the assets and
liabilities of ADS and Walker acquired by NPI in the merger transactions are as
follows:

American DataSource, Inc.
-------------------------
Number of shares of common stock issued.......... 1,839,840
Per share fair value of stock issued............. $ 0.269
----------------
Fair value of common stock ...................... $ 494,917
Cash ............................................ 325,000
----------------
Total purchase price........................ $ 819,917
================

WALKER FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003
(Unaudited)
(Continued)

Fair value of net assets acquired -

Current assets........................................... $ 293,446
Property and equipment................................... 401,933
Intangibles - customer list.............................. 371,597
Liabilities assumed...................................... (247,059)
---------------
Fair value of net assets acquired......................... $ 819,917
===============

Walker Financial Corporation
----------------------------
Number of shares of common stock outstanding [i]....................... 2,282,710
Per share fair value of stock outstanding.............................. $ 0.269
----------------
Fair value of common stock............................................. $ 614,049
Merger costs .......................................................... 55,000
----------------
Total purchase price.............................................. $ 669,049
================

Fair value of net assets acquired -
Current assets........................................... $ 866,110
Property and equipment [ii].............................. --
Other assets [ii]........................................ --
Liabilities assumed...................................... (38,371)
---------------
Fair value of net identifiable assets acquired............ $ 827,739
Negative goodwill [iii]................................... (158,690)
----------------
$ 669,049

- ----------
[i] The number of shares of common stock outstanding is net of 2,495,390
shares of treasury stock which were retired as part of the merger
transactions.
[ii] The excess of fair value of net assets acquired over the purchase price
was allocated first to reduce property and equipment and other assets
to zero, then to negative goodwill.
[iii] Negative goodwill was immediately reflected as an extraordinary gain in
the condensed consolidated financial statements for the three months
ended March 31, 2002.

The pro forma unaudited condensed consolidated results of operations for the
nine months ended September 30, 2002, as if the mergers occurred on January 1,
2002, are as follows:

Pro forma
------------------
Net sales................................................. $ 1,752,511
Cost of sales............................................. 494,264
------------------
Gross profit........................................... 1,258,247
Operating expenses........................................ 1,574,264
------------------
Operating loss......................................... (316,017)
Extraordinary item........................................ 297,068
------------------
Net (loss)............................................. $ (18,949)
==================

Basic and diluted net income per common share............. $ (0.003)
==================
Weighted average number of common shares outstanding...... 6,882,690
==================

This pro forma information does purport to be indicative of what would have
occurred had the mergers been completed as of January 1, 2002 or results which
may occur in the future.

WALKER FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003
(Unaudited)
(Continued)

Subsequent to the mergers, the Company changed its fiscal year end from November
30th to December 31st to correspond with the fiscal year end of NPI.

In December 2002, the Company effectuated a stock dividend, pursuant to which
the holder of each one outstanding share of Common Stock received an additional
nine shares as a dividend. The dividend has been deemed to be a significant
stock dividend and, pursuant to applicable to Delaware General Corporation Law,
was accounted for as in a manner similar to a stock split. As a result of the
stock dividend, the Company has issued approximately 6.7 million shares of
common stock. All share information for the three and nine months ended
September 30, 2003 have been retroactively restated to January 1, 2002.

NOTE 2 - Basis of Presentation

The condensed consolidated financial statements have been prepared by the
Company, without audit, pursuant to the rules and regulations of the SEC.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States have been condensed or omitted pursuant to such rules and
regulations. In the opinion of management of the Company, the accompanying
condensed consolidated financial statements include all adjustments (consisting
of normal, recurring adjustments) necessary to summarize fairly the Company's
financial position and results of operations. The results of operations for the
three and nine months ended September 30, 2003 are not necessarily indicative of
the results of operations for the full year or any other interim period. These
financial statements should be read in conjunction with the audited financial
statements and notes thereto included in the Company's Annual Report on Form
10-KSB for the year ended December 31, 2002.

NOTE 3 - Selected Significant Accounting Policies

Earnings Per Share
- ------------------

The Company adopted the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 128, "Earnings per Share." SFAS No. 128 requires the
presentation of basic and diluted earnings per share ("EPS"). Basic EPS is
computed by dividing income available to common stockholders by the
weighted-average number of common shares outstanding for the period. Diluted EPS
includes the potential dilution that could occur if options or other contracts
to issue common stock were exercised or converted. The effect of the shares
issued in the NPI merger transaction on the Company has been given retroactive
application in the earnings per share calculation. The Company's outstanding
options and warrants are not reflected in diluted earnings per share because
their effects would be anti-dilutive. Accordingly, basic and diluted earnings
per share are identical.

New Accounting Pronouncements
- -----------------------------

Statement of Financial Accounting Standards No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities" ("SFAS 146"), provides guidance on
the recognition and measurement of liabilities for costs associated with exit or
disposal activities. The provisions of SFAS 146 are effective for exit or
disposal activities that are initiated after December 31, 2002. The Company
implemented this standard effective January 1, 2003 with no material impact to
the Company's financial statements.

WALKER FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003
(Unaudited)
(Continued)

On December 31, 2002, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 148, "Accounting for Stock-Based Compensation-Transition and
Disclosure" ("SFAS 148"). SFAS 148 amends SFAS No. 123, "Accounting for Stock
- -Based Compensation" ("SFAS 123"), to provide an alternative method of
transition to SFAS 123's fair value method of accounting for stock-based
employee compensation. SFAS 148 also amends the disclosure provisions of SFAS
123 and Accounting Principles Board ("APB") Opinion No. 28, "Interim Financial
Reporting," to require disclosure in the summary of significant accounting
polices of the effects of an entity's accounting policy with respect to
stock-based employee compensation on reported net income and earnings per share
in annual and interim financial statements. While the statement does not amend
SFAS 123 to require companies to account for employee stock options using the
fair value method, the disclosure provisions of SFAS 148 are applicable to all
companies with stock-based employee compensation, regardless of whether they
account for that compensation using the fair value method of SFAS 123, or the
intrinsic value method of APB Opinion No. 25. The Company will continue to
account for stock based compensation according to APB Opinion No. 25. The
adoption of SFAS 148 did not have a material impact on net income or pro forma
net income applying the fair value method.

In April 2003, FASB issued SFAS No. 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities" ("SFAS 149"), which is effective
for contracts entered into or modified after June 30, 2003. SFAS 149 amends FASB
Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities," to clarify financial accounting and reporting for derivative
instruments, including certain derivative instruments embedded in other
contracts. The effect of the adoption of this new accounting pronouncement on
Company's financial statements has not been significant.

In May 2003, FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of Both Liabilities and Equity" ("SFAS 150"),
which is effective for financial instruments entered into or modified after May
31, 2003, and otherwise is effective at the beginning of the first interim
period beginning after June 15, 2003. SFAS 150 establishes standards for how an
issuer classifies and measures certain financial instruments with
characteristics of both liabilities and equity. It requires that an issuer
classify a financial instrument that is within its scope as a liability. The
adoption of SFAS 150 did not have a material effect on the Company's financial
statements.

In January 2003, FASB issued FASB Interpretation No. 46, "Consolidation of
Variable Interest Entities" ("FIN 46"), an interpretation of Accounting Research
Bulletin No. 51. FIN 46 expands upon and strengthens existing accounting
guidance that addresses when a company should include in its financial
statements the assets, liabilities and activities of another entity. A variable
interest entity is any legal structure used for business purposes that either
does not have equity investors with voting rights or has equity investors that
do not provide sufficient financial resources for the entity to support its
activities. FIN 46 requires a variable interest entity to be consolidated by a
company if that company is subject to a majority of the risk of loss from the
variable interest entity's activities or entitled to receive a majority of the
entity's residual returns or both. The consolidation requirements of FIN 46
apply immediately to variable interest entities created after January 31, 2003.
The consolidation requirements apply to older entities in the first fiscal year
or interim period beginning after June 15, 2003. However, on October 8, 2003,
FASB deferred the latest date by which all public entities must apply FIN 46 to
the first reporting period ended after December 15, 2003. The effect of the
adoption of this new accounting pronouncement on the Company's financial
statements has not been significant.

Intangibles
- -----------

Intangibles consist of a customer list obtained in the merger with ADS. The
customer list was recorded at its estimated fair value at the merger date and is
being amortized using the greater of the income forecast method or straight-line
method over its estimated useful life of three years.

WALKER FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003
(Unaudited)
(Continued)

NOTE 4 - Line of Credit, Bank

In July 2002, the Company entered into a new credit facility with a bank
consisting of a $150,000 secured line of credit (the "Line of Credit"), with
interest payable monthly at the bank's prime rate plus 1.25%, expiring on July
3, 2004. During the nine months ended September 30, 2003, the Company began
drawing on the Line of Credit, and there was $136,809 outstanding under the Line
of Credit as of September 30, 2003. The Line of Credit is collateralized by a
building owned by the Company that is located in North Carolina.

NOTE 5 - Commitment and Contingencies

Litigation
- ----------

The Company is involved in litigation through the normal course of business. The
Company believes that the resolution of these matters will not have a material
adverse effect on the financial position of the Company.

Commitments
- -----------

The Company has entered into an employment agreement with Mitchell Segal to
serve as the Company's president and chief executive officer through December
31, 2005. Under Mr. Segal's employment agreement, the Company will pay Mr. Segal
an annual base salary of $200,000 for 2002, with annual increases of not less
than $10,000, plus a bonus equal to a minimum of 3% to a maximum of 5% of the
gross proceeds received from equity financings and a minimum of 3% to a maximum
of 7.5% of the Company's net income, provided the Company's net income is at
least $500,000. The bonus is payable through 2008, even if Mr. Segal's
employment with the Company is terminated by the Company, except in the event
the termination is for cause. In no event may the bonuses due Mr. Segal exceed
an aggregate of $304,025. Mr. Segal also is entitled to discretionary bonuses,
if any, awarded by the Company's board of directors.

The Company also has entered into an employment agreement with Peter Walker to
serve as president of Kelly through March 18, 2012. Under Mr. Walker's
employment agreement, the Company will pay Mr. Walker an annual base salary of
$100,000, plus a monthly non-accountable expense allowance of $1,000. Mr.
Walker's employment agreement does not require Mr. Walker to devote a minimum
number of hours to the business of Kelly. Mr. Walker's employment agreement does
require the Company to use the Company's best efforts to cause Mr. Walker to be
nominated for election to the Company's board of directors during the term of
Mr. Walker's employment agreement.

NOTE 6 - Segment Reporting

Commencing March 1, 2002, the Company began classifying its operations into two
business segments: (a) the administrative services to independent funeral homes,
state master trusts and companies that own funeral homes or cemeteries for
pre-need funeral and cemetery accounts and (b) film processing. Information
concerning the Company's business segments for the three and nine months ended
September 30, 2003 and 2002 are as follows:

WALKER FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003
(Unaudited)
(Continued)

Three Months Ended September 30, 2003 Three Months Ended September 30, 2002
-------------------------------------------- --------------------------------------------
Segment Segment
---------------------------- ----------------------------
(a) (b) Total (a) (b) Total
------------- ------------- -------------- ------------- ------------- --------------

Revenue $ 334,543 $ 170,555 $ 505,098 $ 339,210 $ 224,002 $ 563,212
============= ============= ============== ============= ============= ==============
Loss before
extraordinary item
and income taxes $ (90,143) $ (32,933) $ (123,076) $ (55,418) $ (17,645) $ (73,063)
============= ============= ============= ============= ============= ==============

Nine Months Ended September 30, 2003 Nine Months Ended September 30, 2002
-------------------------------------------- --------------------------------------------
Segment Segment
---------------------------- ----------------------------
(a) (b) Total (a) (b) Total
------------- ------------- -------------- ------------- ------------- --------------
Revenue $ 974,949 $ 511,444 $ 1,486,393 $ 844,263 $ 547,701 $ 1,391,964
============= ============= ============== ============= ============= ==============
Loss before
extraordinary item
and income taxes $ (353,855) $ (132,003) $ (485,858) $ (263,639) $ (35,987) $ (299,626)
============= ============= ============= ============= ============= ==============

2003 2002
-------------------------------------------- --------------------------------------------
Segment Segment
---------------------------- ----------------------------
(a) (b) Total (a) (b) Total
------------- ------------- -------------- ------------- ------------- --------------
Total identifiable
assets at
September 30 $ 1,116,299 $ 120,078 $ 1,236,377 $ 990,198 $ 252,175 $ 1,242,373
============= ============= ============== ============= ============= ==============

WALKER FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003
(Unaudited)
(Continued)

NOTE 7 - Letter of Intent

The Company has entered into a non-binding letter of intent, dated March 17,
2003, to acquire Ensure Agency, LLC, a licenced insurance brokerage providing
pre-need funeral services. A member of Ensure Agency, LLC is a significant
stockholder and director of the Company. The acquisition contemplated by the
letter of intent is subject to, among other matters, satisfaction of customary
due diligence reviews and the execution of a definitive acquisition agreement.
No assurance can be given that a definitive acquisition agreement will be
entered into by the parties or that the acquisition will be consummated.

NOTE 8 - Issuance of Bridge Note and Warrants

On July 25, 2003, the Company issued to one individual a 11% Secured
Subordinated Promissory Note in the principal amount of $165,000 (the "Bridge
Note") and five year warrants (the "Bridge Warrants") to purchase 25,000 shares
of Common Stock at an exercise price of $0.28 per share. The estimated fair
value of the Bridge Warrants is $9,500, using the Black-Scholes option-pricing
model. The fair value of the Bridge Warrants has been recorded as a deferred
debt discount and interest will accrete over the life of the Bridge Note. The
Bridge Note has a maturity date of January 2, 2005 and is secured by all of the
assets of the Company, senior to all other debt of the Company other than the
mortgage collateralizing the Line of Credit. The Company received gross proceeds
of $165,000 in connection with the issuance of the Bridge Note and paid a
finder's fee to a registered broker-dealer of $21,450 and the issuance of
additional warrants (the "Finder's Bridge Warrants") to purchase 35,000 shares
of Common Stock at an exercise price of $0.28 per share. The estimated fair
value of the Finder's Bridge Warrants is $13,300, using the Black-Scholes
option-pricing model. The fair value of the Finder's Bridge Warrants has been
recorded as a deferred financing cost and will be amortized over the life of the
Bridge Note. The Company incurred other costs related to the issuance of the
Bridge Note, Bridge Warrants and Finder's Bridge Warrants aggregating to
approximately $11,000.

NOTE 9 - Issuance of Warrants and Option

During the three months ended September 30, 2003, the Company issued warrants as
follows:

WALKER FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003
(Unaudited)
(Continued)

(a) The Company issued warrants to purchase 128,550 shares of Common Stock to
the holder of long-term debt of the Company in the principal amount of
$150,000 and accrued interest of $31,875 at September 30, 2003 and repriced
existing warrants to purchase an additional 71,450 shares of Common Stock
previously issued to the holder, all in connection with the holder's
agreement not to demand repayment of such indebtedness prior to November 1,
2003. The newly issued warrants and the repriced warrants entitle the
holder to purchase one share of Common Stock per warrant at any time prior
to March 15, 2006 at a purchase price of $0.15 per share. The estimated
fair value of the newly issued warrants is $38,067, using the Black-Scholes
option-pricing model. The estimated fair value of the of the re-priced
warrants is $20,704, using the Black-Scholes option-pricing model. These
warrants have been recorded as additional deferred debt discount and
interest will accrete over the extended life of the long-term debt.
Interest expense accreted during the three months ended September 30, 2003
was $44,078.

(b) The Company ratified the issuance, as of November 25, 2002, of 31,463
warrants to a consultant for services rendered. These warrants entitle the
holder to purchase one share of Common Stock per warrant at any time prior
to November 25, 2005 at a purchase price of $0.30 per share.

(c) The Company issued 400,000 warrants in connection with the retention of an
investor relations consultant. These warrants entitle the holder to
purchase one share of Common Stock per warrant at any time prior to October
1, 2008 at a purchase price of $0.28 per share. The estimated fair value of
these warrants is $116,000, using the Black-Scholes option-pricing model.
The estimated fair value of these warrants has been recorded as a pre-paid
consulting fee and will be amortized over the life of the consulting
agreement.

(d) The Company issued 15,000 warrants in connection with the retention of a
registered broker-dealer to act as placement agent (the "Placement Agent")
for the private placement of Company securities discussed in Note 10 to
these consolidated financial statements. These warrants entitle the holder
to purchase one share of Common Stock per warrant at any time prior to June
13, 2008 at a purchase price of $0.28 per share. The estimated fair value
of these warrants is $5,700, using the Black-Scholes option-pricing model.
The estimated fair value of these warrants has been recorded as a deferred
financing cost and will be amortized over the life of the Bridge Note. The
Company is required to issue additional warrants to the Placement Agent
upon the successful completion of the private placement.

(e) The Company issued a total of 60,000 Bridge Warrants in connection with the
sale of the Bridge Note discussed in Note 8 to these consolidated financial
statements. The Placement Agent received 35,000 Bridge Warrants as the
finder's fee in connection with the sale of the Bridge Note. Each Bridge
Warrant entitles its holder to purchase one share of Common Stock at any
time prior to July 25, 2008 at a purchase price of $0.28 per share.

(f) The Company granted, under the Company's 2002 Equity Incentive Plan, an
employee an option to purchase 25,000 shares of Common Stock at any time
prior to October 2, 2008 at a purchase price of $0.30 per share.

WALKER FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003
(Unaudited)
(Continued)

NOTE 10 - Private Placement

The Company currently is offering (the "Private Placement") for sale 10% Senior
Subordinated Secured Convertible Promissory Notes (each, a "Private Placement
Note") of the Company. The Private Placement Notes are being offered at face
value, on a $650,000 principal amount minimum, $1,600,000 principal amount
maximum basis. The Company has granted the Placement Agent the right to sell an
additional $240,000 of Private Placement Notes solely to cover over-allotments.
Each Private Placement Note shall bear interest at the rate of 10% per annum,
payable semi-annually, and mature three years from the date of the initial
closing of the Private Placement. The Private Placement Notes shall be secured
by a security interest in all of the assets of the Company. The Private
Placement Notes may be pre-paid, in whole or part, at any time, at the sole
discretion of the Company and shall be subject to mandatory re-payment upon the
occurrence of specified events. Each record holder of a Private Placement Note
shall have the right to convert all or any portion of the amount outstanding
under the Private Placement Note into Common Stock at a conversion price
(subject to adjustment) of $0.71 per share through the second anniversary of the
initial closing date or $1.25 thereafter. In addition, the outstanding amount of
the Private Placement Notes shall be subject to automatic conversion, at the
conversion price then in effect, if the market price of the Common Stock equals
or exceeds $3.00 for any twenty consecutive trading days and certain other
conditions are then in effect. The Placement Agent will be entitled to a cash
fee equal to 10% of the gross proceeds of the Private Placement, as well as a
non-accountable expense allowance equal to 3% of the gross proceeds of the
Private Placement. In addition, the Company shall issue to the Placement Agent
warrants to purchase shares of Common Stock in an amount equal to one warrant
for every $3.20 of gross proceeds received by the Company in the Private
Placement. Each of such warrants entitles its holder to purchase one share of
Common Stock at an exercise price of $0.28 per share. These warrants shall be
exercisable through the third anniversary of the initial closing date.

The Company intends to use the proceeds of the Private Placement, if any, to
cover costs relating to possible acquisitions of death care services companies,
retention of new employees, marketing and sales and general corporate and
working capital purposes.

The foregoing description of the Private Placement should not be deemed, in any
respects, an offer to sell or a solicitation of an offer to purchase any Private
Placement Note. Offers to sell are being made solely to accredited investors
pursuant to a written private placement memorandum.

There can be no assurance given that the Private Placement will be successfully
consummated.

NOTE 11 - Major Customer

In July 2003, a customer informed ADS that the customer will no longer
out-source its trust administration functions to third parties, including ADS.
This customer accounted for approximately 44% of the Company's revenues for the
year ended December 31, 2002. For the three months ended September 30, 2003, the
customer represented 53.6% of the Company's total revenues, compared to 50.6%
for the three months ended September 30, 2002. For the nine months ended
September 30, 2003, the customer represented 53.8% of the Company's total
revenues, compared to 53.7% for the nine months ended September 30, 2002.

Item 2. Management's Discussion and Analysis or Plan of Operation.

Throughout the remainder of this Quarterly Report on Form 10-QSB, the terms the
"Company," "we," "us," "our" and "our company" refers to Walker Financial
Corporation ("Walker") and, unless the context indicates otherwise, includes, on
a consolidated basis, Walker's wholly-owned subsidiaries, National Preplanning,
Inc. ("NPI"), American DataSource, Inc. ("ADS") and Kelly Color, Inc. ("Kelly").

Statements contained in this report include "forward-looking statements" within
the meaning of such term in Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Forward-looking statements
involve known and unknown risks, uncertainties and other factors which could
cause actual financial or operating results, performances or achievements
expressed or implied by such forward-looking statements not to occur or be
realized. Such forward-looking statements generally are based on our best
estimates of future results, performances or achievements, predicated upon
current conditions and the most recent results of the companies involved and
their respective industries. Forward-looking statements may be identified by the
use of forward-looking terminology such as "may," "will," "could," "should,"
"project," "expect," "believe," "estimate," "anticipate," "intend," "continue,"
"potential," "opportunity" or similar terms, variations of those terms or the
negative of those terms or other variations of those terms or comparable words
or expressions. Potential risks and uncertainties include, among other things,
such factors as:

- -- the results our business strategies and future plans of operations,
- -- our ability to integrate the mergers of ADS and NPI into our business and
administrative operations,
- -- general economic conditions in the United States and elsewhere, as well as
the economic conditions affecting the industries in which we operate,
- -- our historical losses,
- -- the rate of decline in sales by our Kelly subsidiary due to the rising use
of digital cameras,
- -- the competitive environments within the funeral home administrative
services, pre-arranged death care services and photographic development
industries,
- -- the success, if any, of the Private Placement referred to in note 10 to the
consolidated financial statements included in this Quarterly Report on Form
10-QSB,
- -- our ability to raise additional capital, if and as needed,
- -- the cost-effectiveness of our product and service development activities,
- -- political and regulatory matters affecting the industries in which we
operate,
- -- our ability to combine our various operations so that they may work
together and grow successfully,
- -- the market acceptance, revenues and profitability of our current and future
products and services,
- -- the extent that our sales network and marketing programs achieve
satisfactory response rates,
- -- our ability to acquire additional companies operating the death care
financial services industry and ability to successfully integrate such
acquirees, if any, into our operations, and
- -- the other risks detailed in this Quarterly Report on Form 10-QSB and, from
time to time, in our other filings with the Securities and Exchange
Commission.

Readers are urged to carefully review and consider the various disclosures made
by us in this Form 10-QSB, our Annual Report on Form 10-KSB for the year ended
December 31, 2002 and our other filings with the SEC. These reports attempt to
advise interested parties of the risks and factors that may affect our business,
financial condition and results of operations and prospects. The forward-looking
statements made in this Form 10-QSB speak only as of the date hereof and we
disclaim any obligation to provide updates, revisions or amendments to any
forward-looking statements to reflect changes in our expectations or future
events.

Financial Condition and Liquidity

We had working capital of $66,477 at September 30, 2003, compared to working
capital of $227,298 at December 31, 2002. The decrease in our working capital
primarily is a result of a long term debt being reclassified as a current
liability.

Net cash used in operating activities was approximately $277,000 for the nine
months ended September 30, 2003, compared to $121,000 for the nine months ended
September 30, 2002. NPI has begun to enter into marketing agreements with
independent agents to sell its products and began to generate revenues during
the third quarter of 2003. Kelly is experiencing a decline in revenues as a
direct result of an industry-wide transition to digital photography. We are
closely monitoring Kelly, and we are looking to cut costs and may curtail some
or all of Kelly's operations. For the nine months ended September 30, 2003, we
incurred a net loss of $501,000, compared to $141,000 in the nine months ended
September 30, 2002. We incurred $176,000 in depreciation and amortization
charges in the current nine-month period, compared to $86,000 in the prior
year's comparable period, primarily due to placing our internally-developed
software into service, resulting in $66,000 of depreciation expense for the nine
months ended September 30, 2003 and amortization relating to deferred financing
costs resulting from our issuances of warrants to a consultant and a registered
broker-dealer. In addition, we incurred a deferred debt discount interest charge
in the nine months ended September 30, 2003 related to our issuance of warrants
and repricing of warrants to the holder of certain indebtedness in connection
with the holder's agreement not to seek repayment of such indebtedness prior to
November 1, 2003. Further, in the prior year's comparable period, we received an
extraordinary benefit of $159,000 and reduced our prepaid expenses and other
current assets by $80,000; while, in the current nine-month period, we did not
have any extraordinary item adjustments and our prepaid expenses and other
current assets was increased by $18,000.

Net cash used in investing activities was approximately $35,000 for the nine
months ended September 30, 2003, resulting from the purchase of equipment, as
compared to net cash provided by investing activities of $402,000 for the nine
months ended September 30, 2002, primarily resulting from the receipt of
$472,000 as a result of the acquisition transactions in March 2002 and offset by
the purchase of equipment of $70,000.

In July 2003, we issued to one individual the Bridge Note in the principal
amount of $165,000 and five year Bridge Warrants to purchase 25,000 shares of
Common Stock at an exercise price of $0.28 per share. The Bridge Note has a
maturity date of January 2, 2005 and is secured by all of the assets of the
Company, senior to all other debt of the Company other than the mortgage
collateralizing the Line of Credit. The Company received gross proceeds of
$165,000 in connection with the issuance of the Bridge Note and paid a finder's
fee to a registered broker-dealer of $21,450 and the issuance of an additional
35,000 Finder's Bridge Warrants. The Company incurred other costs related to the
issuance of the Bridge Note, Bridge Warrants and Finder's Bridge Warrants
aggregating to approximately $11,000.

Net cash provided by financing activities was approximately $277,000 for the
nine months ended September 30, 2003, resulting from the borrowings under the
$150,000 secured line of credit we established in July 2002 that expires in July
2004 and the sale of the Bridge Note in July 2003. We used the monies borrowed
under the line of credit and Bridge Note to fund operations. Net cash used in
financing activities was $27,000 in the nine months ended September 30, 2002,
resulting from the issuance of a promissory note in the principal amount of
$80,000, sales of Common Stock for gross proceeds of $85,000, offset by the
repayment of outstanding notes totaling $175,000 of ADS and repayment of debt
due a stockholder of $17,000.

As a result of these activities, our cash and cash equivalents decreased to
$331,931 as of September 30, 2003 compared to $366,925 as of December 31, 2002
and $254,059 as of September 30, 2002.

The Company currently is conducting the Private Placement of its 10% Senior
Subordinated Secured Convertible Promissory Notes. The Private Placement Notes
are being offered at face value, on a $650,000 principal amount minimum,
$1,600,000 principal amount maximum basis. The Company has granted the Placement
Agent the right to sell an additional $240,000 of Private Placement Notes solely
to cover over-allotments. Each Private Placement Note shall bear interest at the
rate of 10% per annum, payable semi-annually, and mature three years from the
date of the initial closing of the Private Placement. The Private Placement
Notes shall be secured by a security interest in all of the assets of the
Company. The Private Placement Notes may be pre-paid, in whole or part, at any
time, at the sole discretion of the Company and shall be subject to mandatory
re-payment upon the occurrence of specified events. Each record holder of a
Private Placement Note shall have the right to convert all or any portion of the
amount outstanding under the Private Placement Note into Common Stock at a
conversion price (subject to adjustment) of $0.71 per share through the second
anniversary of the initial closing date or $1.25 thereafter. In addition, the
outstanding amount of the Private Placement Notes shall be subject to automatic
conversion, at the conversion price then in effect, if the market price of the
Common Stock equals or exceeds $3.00 for any twenty consecutive trading days and
certain other conditions are then in effect. The Placement Agent will be
entitled to a cash fee equal to 10% of the gross proceeds of the Private
Placement, as well as a non-accountable expense allowance equal to 3% of the
gross proceeds of the Private Placement. In addition, the Company shall issue to
the Placement Agent warrants to purchase shares of Common Stock in an amount
equal to one warrant for every $3.20 of gross proceeds received by the Company
in the Private Placement. Each of such warrants entitles its holder to purchase
one share of Common Stock at an exercise price of $0.28 per share. These
warrants shall be exercisable through the third anniversary of the initial
closing date.

There can be no assurance given that the Private Placement will be successfully
consummated.

Business Strategy

We intend to become a leading financial services company operating in the death
care industry. Through NPI, we anticipate seeking to market and sell
pre-arrangements of death care as a voluntary benefit to corporations, unions,
affinity groups and individuals. Through ADS, we intend to seek to increase the
amount of pre-need trust dollars currently under our administration. We
anticipate continuing to operate our Kelly subsidiary as a non-digital
photographic development laboratory to the photographic profession. However we
are monitoring Kelly's operations closely as sales continue to drop.

NPI is currently developing relationships with various distribution channels in
which to sell pre-arranged death care plans. NPI will seek to earn insurance
commissions and channel trust administration fees to ADS upon the sale of
pre-arrangements. Additionally, NPI may seek to acquire direct third party
marketers of pre-arranged death care which market pre-arranged death care
services primarily by direct mail, as well as run the pre-arrangement office in
many funeral home locations. In March 2003, we entered into a non-binding letter
of intent to acquire Ensure Agency, LLC, a third party marketer for the
prearrangement of death care.

ADS is currently seeking to increase the amount of pre-need trust monies it
currently administrates. Currently, ADS administers approximately $61 million in
trust funds. We anticipate that ADS will seek to administer trust funds held by
various state funeral association trusts, establish and market master trusts to
the independent funeral home community and to acquire existing trust
administration companies. ADS currently is forming a master trust which will be
marketed in New York. During the third quarter of 2003, Service Corporation
International ("SCI") advised us that SCI will no longer outsource its trust
administration functions to third parties. ADS had administered $70 million of
pre-need funds for SCI.

There can be no assurance that we will achieve successful and profitable results
from our distribution and marketing efforts or that we will be able to complete
the acquisition of Ensure Agency, LLC or any other third party marketer segment
of the death care services industry.

We intend any acquisitions to be accomplished through issuances of stock, debt
and cash, or a combination of such forms of consideration. Accordingly, any
future merger or acquisition may have a dilutive effect on our stockholders as
of the time of such mergers and acquisitions. Additionally, our ability to
accomplish any future acquisitions may depend on our cash position, our ability
to raise capital, the stock price of our common stock, and our ability to
service any debt we may incur.

We believe that our operating results may fluctuate greatly quarter to quarter
due to several factors, including the success of our merger and acquisition
strategy and the impact of any increases in our results of operations as we
pursue new business in the death care services industry.

Results of Operations

Three Months Ended September 30, 2003

Net sales for the three months ended September 30, 2003 were approximately
$505,000, of which $170,000 was generated by Walker, $324,000 was generated by
ADS and $11,000 was generated by NPI. In the three months ended September 30,
2002, net sales were $563,000, of which Walker generated $224,000 in revenues
and ADS generated $339,000 in revenues. NPI did not generate any revenues in the
three months ended September 30, 2002. In the current quarter, NPI has caused to
be licensed nine insurance agents to sell pre-need insurance policies
underwritten by a nationally recognized insurance company with whom NPI acts as
a managing general insurance agency and has an additional eighteen agents
seeking to become licensed. NPI expects to cause additional agents to be
licenced and additional revenues to be recognized in the near term. Walker
continues to see a deterioration in its revenues as the professional photography
industry migrates to the use of digital imagery from film. We believe that the
reduction in ADS's revenues can be attributed primarily to SCI's disposition of
a number of funeral homes resulting in a lower amount of pre-need funds
available for administration by ADS. For the three months ended September 30,
2003, SCI represented 53.6% of the Company's total revenues, compared to 50.6%
for the three months ended September 30, 2002.

Cost of sales for the three months ended September 30, 2003 was approximately
$132,000, all of which was incurred by Walker. In the three months ended
September 30, 2002, cost of sales was approximately $178,000, all of which was
incurred by Walker. Costs of sales as a percentage of Walker's net sales was
77.6% in the current three month period, compared to 79.4% in the prior year's
comparable period. A substantial portion of Walker's cost of sales relate to
fixed charges for labor and overhead. This results in cost of sales representing
a higher percentage of sales as sales are reduced. We intend to continue to
monitor Walker's fixed costs and seek means to further reduce these fixed
charges.

Operating expenses for the three months ended September 30, 2003 were
approximately $444,000, of which $133,000 was generated by NPI, $63,000 was
generated by Walker and $248,000 was generated by ADS. The operating expenses
for the three months ended September 30, 2002 were $459,000, of which $81,000
was generated by NPI, $64,000 was generated by Walker and $188,000 was generated
by ADS. We have endeavored to reduce operating expenses, through the reduction
in compensation paid at Walker as its operations are requiring less general and
administrative oversight and expenses and through careful monitoring of expenses
at ADS. However, we have expanded the marketing and personnel costs at NPI in
efforts to begin generating revenues beginning in the third quarter of 2003.

Interest expense for the three months ended September 30, 2003 was approximately
$52,000, as a result of our draw down of a line of credit, the accrual of
interest related to the Bridge Note and another promissory note of the Company
and incurring a deferred debt discount interest charge related to our issuance
of warrants and repricing of warrants to the holder of certain indebtedness in
connection with the holder's agreement not to seek repayment of such
indebtedness prior to November 1, 2003. We had interest income for the three
months ended September 30, 2002 of less than $1,000, as a result of having cash
balances earning interest in excess of interest expense on borrowed funds.

As a result of the foregoing, we incurred a net loss of approximately $123,000
for the three months ended September 30, 2003 or $0.02 per share, compared to a
net loss of $73,000 or $0.01 per share for the three months ended September 30,
2002. Of the loss for the three months ended September 30, 2003, a loss of
$33,000 can be attributable to Walker, a profit of $75,000 can be attributable
to ADS and a loss of $165,000 can be attributable to NPI. Of the loss for the
three months ended September 30, 2002, a loss of $18,000 can be attributable to
Walker, income of $25,000 can be deemed attributable to ADS and a loss of
$81,000 can be attributable to NPI.

Nine Months Ended September 30, 2003

Net sales for the nine months ended September 30, 2003 were approximately
$1,486,000, of which $511,000 was generated by Walker, $964,000 was generated by
ADS and $11,000 was generated by NPI. In the nine months ended September 30,
2002, net sales were $1,392,000, of which Walker generated $548,000 in revenues
and ADS generated $844,000 in revenues. For the 2002 fiscal period, Walker's and
ADS's operations were included for only seven months, as compared to the full
nine months in the 2003 fiscal period. Walker continues to see a deterioration
in its revenues as the professional photography industry migrates to the use of
digital imagery from film. NPI had not generated any revenues through June 30,
2003. In August 2003, NPI caused to be licensed nine insurance agents to sell
pre-need insurance policies underwritten by a nationally recognized insurance
company with whom NPI acts as a managing general insurance agency and has an
additional eighteen agents seeking to become licensed.

Cost of sales for the nine months ended September 30, 2003 was approximately
$409,000, all of which was incurred by Walker. In the nine months ended
September 30, 2002, cost of sales was $374,000, all of which was incurred by
Walker. Costs of sales as a percentage of Walker's net sales was 80.0% in the
current nine month period compared to 68.2% in the prior year's comparable
period. A substantial portion of Walker's cost of sales relate to fixed charges
for labor and overhead. This results in cost of sales representing a higher
percentage of sales as sales are reduced. We intend to continue to monitor
Walker's fixed costs and seek means to further reduce these fixed charges.

Operating expenses for the nine months ended September 30, 2003 were
approximately $1,507,000, of which $363,000 was generated by NPI, $230,000 was
generated by Walker and $913,000 was generated by ADS. The operating expenses
for the nine months ended September 30, 2002 was $1,308,000, of which $299,000
was generated by NPI, $212,000 was generated by Walker and $798,000 was
generated by ADS. For the 2002 fiscal period, Walker's and ADS's operations were
included for only seven months, as compared to the full nine months in the 2003
fiscal period. We have endeavored to reduce operating expenses, through the
reduction in compensation paid at Walker as its operations are requiring less
general and administrative oversight and expenses. However, we have expanded the
marketing and personnel costs at NPI in efforts to begin generating revenues
beginning in the third quarter of 2003.

During the nine months ended September 30, 2002, the Company recorded an
extraordinary gain of $158,690 as a result of the March 2002 mergers. (See note
1 to the condensed consolidated financial statements included elsewhere in this
Quarterly Report on Form 10-QSB.)

Interest expense for the nine months ended September 30, 2003 was approximately
$55,000, as a result of our draw down of a line of credit, the accrual of
interest related to the Bridge Note and another promissory note of the Company
and incurring a deferred debt discount interest charge related to our issuance
of warrants and repricing of warrants to the holder of certain indebtedness in
connection with the holder's agreement not to seek repayment of such
indebtedness prior to November 1, 2003. We had an interest expense for the nine
months ended September 30, 2002 of $10,000, as a result of NPI having incurred
interest charges of $12,000 and Walker having interest income of $2,000.

As a result of the foregoing, we incurred a net loss of approximately $501,000
for the nine months ended September 30, 2003 or $0.07 per share, compared to a
net loss of $141,000 or $0.02 per share for the nine months ended September 30,
2002. Of the loss for the nine months ended September 30, 2003, a loss of
$132,000 can be attributable to Walker, a profit of $46,000 can be attributable
to ADS and a loss of $415,000 can be attributable to NPI. Of the loss for the
nine months ended September 30, 2002, net income of $123,000 can be attributable
to Walker, net income of $47,000 can be deemed attributable to ADS and a net
loss of $310,000 can be attributable to NPI.

Item 3. Controls and Procedures.

An evaluation was performed, as of September 30, 2003, under the supervision and
with the participation of our management, including our President, Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of our disclosure controls and procedures. Based on such
evaluation, our management has concluded that our disclosure controls and
procedures were effective as of September 30, 2003. There have been no
significant changes in our internal controls or in other factors that could
significantly affect our internal controls subsequent to September 30, 2003.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

Reference is hereby made to Item 3 of our Annual Report on Form 10-KSB, for the
fiscal year ended December 31, 2002, filed with the Securities and Exchange
Commission on March 31, 2003 (Commission File No.:0-5418), and to the references
made in such Item, for a discussion of all material pending legal proceedings to
which we or any of our subsidiaries are parties.

Item 2. Changes in Securities.

The Company issued the following unregistered options and warrants which were
not registered under the Securities Act of 1933:

(a) The Company issued 128,550 warrants to the holder of indebtedness of
the Company in the principal amount of $150,000 and repriced an
additional 71,450 warrants previously issued to the holder, all in
connection with the holder's agreement not to demand repayment of such
indebtedness prior to November 1, 2003. These newly issued warrants and
the repriced warrants entitle the holder to purchase one share of
Common Stock per warrant at any time prior to March 15, 2006 at a
purchase price of $0.15 per share. The issuance and repricing of these
warrants was effective October 2, 2003.

(b) On October 2, 2003, the Company ratified the issuance, as of November
25, 2002, of 31,463 warrants to a consultant for services rendered.
These warrants entitle the holder to purchase one share of Common Stock
per warrant at any time prior to November 25, 2005 at a purchase price
of $0.30 per share.

(d) The Company issued 15,000 warrants in connection with the retention of
a registered broker-dealer to act as Placement Agent for the Private
Placement of Company securities discussed in Note 10 to the
consolidated financial statements of the Company contained elsewhere in
this Quarterly Report on Form 10-QSB. These warrants entitle the holder
to purchase one share of Common Stock per warrant at any time prior to
June 13, 2008 at a purchase price of $0.28 per share. The issuance of
these warrants was effective June 14, 2003. The Company is required to
issue additional warrants to the Placement Agent upon the successful
completion of the Private Placement.

(e) The Company issued a total of 60,000 warrants in connection with the
sale of the Bridge Note discussed in Note 8 to these consolidated
financial statements. The Placement Agent received 35,000 warrants as
the finder's fee in connection with the sale of the Bridge Note. Each
of these warrants entitles its holder to purchase one share of Common
Stock at any time prior to July 25, 2008 at a purchase price of $0.28
per share. The issuance of these warrants was effective July 26, 2003.

(f) On October 2, 2003, the Company granted, under the Company's 2002
Equity Incentive Plan, an employee an option to purchase 25,000 shares
of Common Stock at any time prior to October 2, 2008 at a purchase
price of $0.30 per share.

We believe that the issuance of such warrants and granting of such option were
each exempt from the registration requirements of the Securities Act pursuant to
the provisions of Section 4(2) of the Securities Act.

Item 3. Defaults on Senior Securities.

None.

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

None.

Item 5. Other Information.

None.

Item 6. Exhibits and Reports on Form 8-K.

(a) Exhibits.

Set forth below is a list of the exhibits to this Quarterly Report on Form
10-QSB.

Exhibit
Number Description
- --------- -----------

10.1 Loan Agreement, dated as of July 24, 2003, between Walker Financial Corporation and Dr. David
Cohen.*
10.2 11% Secured Subordinated Promissory Note, dated July 25, 2003, in the principal amount of $165,000
and payable to Dr. David Cohen.*
10.3 Security Agreement, dated July 25, 2003, between Walker Financial Corporation and Dr. David Cohen.*
31.1 Certification pursuant to Exchange Act Rule 13a-14(a) of Mitchell S. Segal in his capacity as chief
executive officer and chief financial officer of the registrant.
32.1 Certification pursuant to Section 1350 of the Sarbanes-Oxley Act
of 2002 of Mitchell S. Segal in his capacity as chief executive
officer and chief financial officer of the registrant.
- ----------
* Incorporated by reference. See Exhibit Index on page 23.

(b) Reports on Form 8-K.

None.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

Dated: November 14, 2003 Walker Financial Corporation

By: /s/ Mitchell S. Segal
--------------------------------
Mitchell S. Segal, President

Walker Financial Corporation

Quarterly Report on Form 10-QSB
Quarter Ended September 30, 2003

EXHIBIT INDEX

Exhibit
Number Description
- -------- -----------

10.1 Loan Agreement, dated as of July 24, 2003, between Walker Financial Corporation and Dr. David
Cohen. (Incorporated by reference to exhibit 10.1 to the registrant's Quarterly Report on Form
10-QSB for the quarter ended June 30, 2003 (Commission file number: 0-5418), filed with the SEC
effective April 14, 2003.)
10.2 11% Secured Subordinated Promissory Note, dated July 25, 2003, in
the principal amount of $165,000 and payable to Dr. David Cohen.
(Incorporated by reference to exhibit 10.2 to the registrant's
Quarterly Report on Form 10-QSB for the quarter ended June 30,
2003 (Commission file number:
0-5418), filed with the SEC effective April 14, 2003.)
10.3 Security Agreement, dated July 25, 2003, between Walker Financial Corporation and Dr. David Cohen.
(Incorporated by reference to exhibit 10.4 to the registrant's Quarterly Report on Form 10-QSB for
the quarter ended June 30, 2003 (Commission file number: 0-5418), filed with the SEC effective
April 14, 2003.)
31.1 Certification pursuant to Exchange Act Rule 13a-14(a) of Mitchell
S. Segal in his capacity as chief executive officer and chief
financial officer of the registrant.
32.1 Certification pursuant to Section 1350 of the Sarbanes-Oxley Act
of 2002 of Mitchell S. Segal in his capacity as chief executive
officer and chief financial officer of the registrant.