As filed with the Securities and Exchange Commission on April 14, 2003

Registration No. ________

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

                               (Amendment No. 1)

[x]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE ACT OF
     1934

     For the fiscal year ended December 31, 2002.

                                       OR

[ ]  TRANSITION  REPORT  PURSUANT TO SECTION 13 OR 15(D) OF THE  SECURITIES  AND
     EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

                ------------------------------------------------
                         Commission File Number 0-29195


                    NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
                 (Name of Small Business Issuer in Its Charter)

Colorado                            (7310)                   84-1463284
--------------------------------------------------------------------------------
(State or jurisdiction of  (Primary Standard Industrial      (I.R.S. Employer
incorporation or           Classification Code Number)       Identification No.)
organization)

                         200 9th Avenue North, Suite 210
                          Safety Harbor, Florida 34695
                                 (727) 797-6664
                                 --------------
          (Address and Telephone Number of Principal Executive Offices
                        and Principal Place of Business)

                    NEW MILLENNIUM MEDIA INTERNATIONAL, INC.

                            John D. Thatch, President
                    New Millennium Media International, Inc.
                         200 9th Avenue North, Suite 210
                          Safety Harbor, Florida 34695
            (Name, Address and Telephone Number of Agent for Service)

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Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act:  Common Stock

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 for such 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. [X] Yes [ ] No

Check if disclosure  of delinquent  filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure  will be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB. [X]

The issuer's  revenues for its most recent  fiscal year ended  December 31, 2002
were $615,475.

The aggregate  market value of the voting and  non-voting  common equity held by
non-affiliates  computed by reference  to the price at which  common  equity was
sold, or the average bid and asked price of such common  equity,  as of December
31, 2002 was  $2,257,599  (calculated  by  excluding  restricted  shares,  which
includes shares owned beneficially by affiliates,  directors and officers).  See
Item 11. The total number of shares of issuer's common equity  outstanding as of
December 31, 2002 was 10,254,508 shares.

                   (APPLICABLE ONLY TO CORPORATE REGISTRANTS)
State the number of shares outstanding of each of the issuer's classes of common
equity,  as of the  latest  practicable  date.  As of  December  31,  2002,  the
registrant had 10,254,508 shares of common stock outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

The following  documents are  incorporated by reference into the following parts
of this Form 10-KSB:  certain information required in Part I of this Form 10-KSB
is  incorporated  from the issuer's  Registration  Statement for Small  Business
Issuers filed  September 13, 2000, as amended by Post  Effective  Amendment that
was filed March 20, 2002,  2nd amended Form 10-KSB that was filed April 15, 2003
and Form 8-K that was filed November 14, 2003.

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

                                     PART I

ITEM 1.   DESCRIPTION OF BUSINESS

BRIEF HISTORY
New Millennium Media International,  Inc. is a Colorado corporation organized on
April 21, 1998.  NMMI's principal place of business is located at 200 9th Avenue
North, Suite 210, Safety Harbor,  Florida 34695. NMMI is the successor by merger
to  Progressive  Mailer Corp.  (hereafter  "PMC"),  a  corporation  organized in
Florida  on  February  5,  l997.  In March 1997 and April  1998,  PMC  conducted
offerings  of its common  stock  pursuant  to the  exemption  from  registration
afforded  by Rule 504 of  Regulation  D under  the  Securities  Act of l933,  as
amended.  On November 3, l997, PMC received  clearance from the NASD to have its
common stock listed on the OTC Bulletin Board.

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<PAGE>

Effective April 8, 1998,  pursuant to an Asset Purchase  Agreement,  PROGRESSIVE
MAILER CORPORATION, a publicly traded Florida corporation,  in consideration for
six million four  hundred  thousand  (6,400,000)  shares of  Progressive  Mailer
Corporation   common  stock,   purchased  certain  designated  assets  of  LUFAM
TECHNOLOGIES,  INC., a privately  held  California  corporation.  These acquired
assets of Lufam  Technologies  were valued at the net fair market  value that is
not a business combination under SFAS 141 as no exchange of control occurred. On
November 3, 1997 PMC received  clearance  from the NASD to have its common stock
listed  on the OTC  Electronic  Bulletin  Board  pursuant  to PMC's  application
submitted  to the NASD  pursuant  to NASD Rule 6740 and Rule  15c2-11  under the
securities Exchange Act of 1934.

Effective April 27, 1998,  pursuant to a merger  agreement,  PROGRESSIVE  MAILER
CORPORATION, a publicly trading Florida corporation,  merged with NEW MILLENNIUM
MEDIA  INTERNATIONAL,  INC., a privately held Colorado  corporation (NMMI). This
merger  qualified  as a statutory  merger and provided for all of the issued and
outstanding shares of stock in Progressive Mailer Corporation to be converted on
a one for one ratio for common stock of NMMI. It was further  provided that NMMI
would  be the  surviving  entity.  As a part  of this  merger  the  domicile  of
Progressive  Mailer  Corporation  was  authorized  to be changed from Florida to
Colorado.

Effective  August 31, 1999 UNERGI,  INC., a privately  held Nevada  corporation,
merged into NEW MILLENNIUM MEDIA, Inc., a wholly owned subsidiary of NMMI, which
merger  qualified  as a tax free  reorganization  under  section  368(a)  of the
Internal  Revenue  Code  of  1986 as  amended.  The  merger  required  that  New
Millennium,  Inc. be the surviving  entity and all of the issued and outstanding
shares of stock in Unergi,  Inc. be prorata  converted to  16,566,667  shares of
common stock of NMMI.

Effective March 9, 2000 SCOVEL CORPORATION, a Delaware corporation,  merged into
NMMI in a transaction intended to qualify as a reorganization within the meaning
of Section 368(a) of the Internal Revenue Code of 1986 as amended.  Prior to the
merger Scovel Corporation had filed with the Securities and Exchange  Commission
a registration  statement in form 10-SB which became  effective  pursuant to the
Securities  Exchange  Act of 1934 on  February  9,  2000  and was at the time of
merger a reporting company pursuant to Section (g) hereunder. At the time of the
merger,  Scovel  Corporation  had timely  filed and was  current on all  reports
required to be filed by it pursuant to Section 13 of the Securities Exchange Act
of 1934.  NMMI was the surviving  entity  resulting from the merger.  All of the
issued and outstanding  shares of Scovel Corporation were converted into 500,000
shares of restricted  common shares of NMMI.  The  transaction  was treated as a
recapitalization of NMMI.

NMMI is a fully  reporting  company  which  common  stock is  traded  on the OTC
Bulletin Board operated by NASDAQ under the symbol NMMG.

BUSINESS OVERVIEW
For years the  billboard  industry  has seen several  consolidations  with large
corporate  owners  acquiring  smaller  (fewer  than 50  billboards)  independent
operators.  The purpose of these consolidations is to provide a platform for the
corporate owners to attract large regional and national  advertisers.  Billboard
advertising has evolved from painted signs without lights,  to lighted signs, to
vinyl  covered  signs,  to prism  boards  (three sided boards which rotate three
ads), to LED (light emitting  diode) signs.  Presently the plasma signs are used
indoors  and  generally  do not  have a  screen  size  larger  than  48  inches.
Advertisers  soon learned that  rotating  signs attract the attention of viewers
more  effectively  than static signs.  The most prominent LED display sign is in
Times Square in New York City. Despite the effectiveness of

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LED outdoor  advertising,  the  billboard  industry is moving  slowly to the LED
display sign because  most large  companies  have a  substantial  investment  in
static signs. The cost to change a traditional static board to an LED display is
approximately  $1,000,000 to  $2,000,000  depending on the size of the LED sign.
This,  of course,  includes the  electronics  necessary to operate the sign from
remote locations. In many instances, because of the additional weight of the LED
sign, it is necessary to erect an entire new foundation along with  accompanying
supports.  Another  reason is that LED signs may only be  installed  in  certain
traffic areas because many cities and states have  regulations that prohibit LED
and prism  signs on the  basis  that the signs  may be  distracting  to  passing
drivers and may lead to an increase in the number of traffic accidents. NMMI has
targeted markets where this may not be an issue.

There  are  two  reasons  for  the  changes  in  outdoor   advertising.   First,
technological  improvements  have  made the  prism  and LED  boards  affordable.
Second,  moving ads have a much greater  impact on viewers than static ads. In a
digital  society there must be an effective way for advertisers to display their
product in its true form. The competition in indoor advertising is limited. Most
indoor companies sell single poster board  advertisements of different sizes and
place them in theaters, malls, airports and other similar venue locations.

NMMI provides  several types of visual  advertising:  The  Illumisign-Eyecatcher
front-lit movable display boards,  the "EyeCatcher  Powered by Insight" back-lit
scrolling movable display boards, plasma screens and LED display boards. In many
instances  we  retain  ownership  of all  types  of the  machines  and  sell the
advertising space on a monthly basis.

IllumiSign-EyeCatcher Front-Lit
-------------------------------
NMMI  markets,  sells and places  the  IllumiSign-EyeCatcher  front-lit  movable
display boards in the United States at certain host venue locations on a revenue
share basis.  This board is steel encased,  front lighted,  and displays  poster
type ads. These mechanical  devises come in various sizes ranging from 11 inches
by 17 inches to 4 feet by 6 feet.  Each  machine is capable of rotating up to 24
posters at preprogrammed intervals ranging from 3 seconds to one hour.

EyeCatcher Powered by Insight
-----------------------------
Additionally,  NMMI has the  exclusive  distribution  U.S.  rights  to an indoor
backlit advertising board designed and manufactured by AMS Controls, Inc. called
the "EyeCatcher  Powered by Insight".  There are a few minor  exceptions to this
exclusivity  that relate to accounts with which the manufacturer had an existing
business  relationship  at the time of  contracting  with NMMI. We are marketing
this new product as "EyeCatcher Powered by Insight". This is a patented product,
which ranges in poster size from 18" X 24" to 40" X 60". These signs can display
from 10 to 20 scrolling advertising images. Each rotation can be set to run from
three seconds to one hour. Because the poster material in both of these machines
is critical to the  functionality as well as the longevity of the poster,  it is
necessary for the  advertisers to rely on our graphic arts department to develop
and supply the  necessary  posters.  These  motion  displays  are then placed in
various sites in stores,  shopping malls, movie theaters and anywhere else where
indoor  poster  type  advertising  is  feasible.   NMMI  is  the  owner  of  the
registration  of  the  trademark,   "IllumiSign-EyeCatcher"  for  electric  sign
products in the United  States  Department  of  Commerce,  Patent and  Trademark
Office.

Light Emitting Diode (LED)
--------------------------
The LED display  boards are generally  placed out doors either  freestanding  or
affixed  onto the sides of buildings  or located in athletic  stadiums.  The LED
boards  range  in size  from 8 feet by 10  feet to 20 feet by 30 feet  and  even
larger in  customized  designs.  They are capable of  displaying a near infinite
number of stationary or full motion images. Because the images need

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<PAGE>

to be  programmed  into the LED boards,  it is  necessary  that our graphic arts
department be involved in both the design and set up of the intended displays.

NMMI has a strategic  relationship with E-Vision LED, Inc., a U.S. based company
whose  affiliates  manufacture  these high  quality LED units (See  heading Risk
Factors, subheading Strategic Relationships).  E-Vision will sell the LED boards
to NMMI for a less than retail price and will share in the revenues that the LED
boards  produce.  This allows  NMMI to procure  the highest  quality LED display
boards  at a  greatly  reduced  cost.  Because  these  LED  boards  can  run any
commercial format on any sized board, we feel that NMMI has a strong competitive
advantage over other similar display boards for which the visual display must be
reformatted.  Formatting  often takes  weeks.  E-Vision  LED  displays  will run
consistent  color  quality and clarity.  These LED boards have the  potential to
display  countless  images in full color  both  static  and full  motion.  Color
quality  and  clarity  are  very  important  to  national  advertisers  who want
consistency of colors on all boards. E-Vision will assist NMMI with training and
support  from the first  board and with  ongoing  assistance  in all  aspects of
programming,   technical  and  software  support.   Because  of  this  strategic
relationship,  E-Vision and its  affiliates  will supply  NMMI,  free of charge,
software upgrades as they become available.

In  relation  to these  various  types of  display  media,  NMMI is  capable  of
providing  advertisers  with visual  communications  and media  services in both
indoor  and  outdoor  environments.  We offer a  comprehensive  range of  visual
movable  board  solutions  designed to improve  clients'  advertising  needs and
processes  including  professional  services  such as strategic  site  location,
consulting and analysis as well as poster design and  development.  This enables
us to locate boards and sell  advertising  on a national level that will benefit
NMMI in placing boards throughout the United States.

OnScreen
--------
On July 23, 2001, NMMI signed an exclusive licensing agreement with the inventor
of a new  technology  that  allows the  manufacture  of  large-scale  LED (light
emitting   diode)  video  displays  with  dramatic   improvements  in  cost  and
performance  (hereafter referred to as "OnScreen").  Under this agreement,  NMMI
will  continue  to  participate  in the  research  and  development  of this new
technology  and will have the exclusive  worldwide  marketing  rights to sell or
license the technology.  A working  prototype model for this technology has been
completed  and  successful  and the  development  team  has  decided  to  pursue
fabrication  of a  larger,  true-to-scale,  prototype  of the  OnScreen  display
technology.  In further  support of ongoing  research  and  development  of this
innovative  technology,  NMMI  formed  an  OnScreen  Scientific  Advisory  Board
consisting of six nationally  recognized scientific  technologic  individuals in
the field of science  and  technology  headed by David  Pelka,  all of whom have
earned  at least one  Doctor of  Philosophy  degree in a  scientific  discipline
relating to LED.

One of the main  constraints  in  large-scale  outdoor  LED screens has been the
excess heat  generated  by using  enough  power to drive the LED screens to make
them visible in direct  sunlight.  Although boards exist today that provide full
motion video in an outdoor  environment,  the spacing of LED's is fairly wide to
reduce  the heat  buildup.  This  wide  spacing  results  in  lower  resolution-
especially when the display is viewed from close up. The "OnScreen"  designs are
expected  to  dramatically  reduce the heat  impact and as a result  enable much
closer spacing of LED's. In addition to reducing the heat factor, these displays
will  be  lightweight   and  pliable   compared  to  rigid  LED  displays  being
manufactured  using  current  technology.  The  outcome  is  a  vastly  improved
resolution with the brightness necessary for high visibility outdoors.

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This new  technology is expected to create a broad range of products with better
resolution  and  brighter  pictures  that are  visible  in direct  sunlight.  In
addition,  the new LED technology produces an advantage that is not available in
today's  marketplace:  a more  lightweight,  pliable  display  that  can fit any
application.

Employees
---------
NMMI has nine full time  employees.  None of our employees is  represented  by a
labor union. We consider our relations with our employees to be good.  Because a
major portion of our business involves  nationwide site location and procurement
as well as sales and marketing of advertising  space, it is advantageous  for us
to outsource  this  segment of our business  through  strategic  partnering  and
subcontracting distributors. We intend to utilize in-house employees and plan to
add  additional  staff as  needed to handle  all  other  phases of our  business
including graphic arts,  warehousing,  distribution,  purchasing,  distribution,
shipping, accounting and bookkeeping.

ITEM 2.   DESCRIPTION OF PROPERTY

NMMI owns no real  estate.  On March 29,  2001 the  Company  signed a lease with
Safety  Harbor Centre  commencing  May 1, 2001 for five years with an option for
five additional years. The lease became effective August 27, 2001, the date that
the  Company  began  occupancy  of the new  facility.  This  leased  facility is
slightly larger than the prior leased premises and will support a more efficient
use of the floor space as well as additional  space for  expansion.  Many of the
machines will continue to be shipped directly to the site location and for those
machines that require more  detailed  installation  such as the LED boards,  the
machines will be shipped directly to the installer. Machines that are in need of
repair will be repaired on-site whenever  possible.  Those machines that are not
repairable  on-site  will be  repaired  in-house at the Safety  Harbor,  Florida
facility.

ITEM 3.   LEGAL PROCEEDINGS

The Company is presently  negotiating the settlement of an ongoing litigation in
Great Britain with the individual  patent owner who licenses to NMMI the current
manufacture  and  sale of the  front-lit  IllumiSign  EyeCatcher  display.  This
litigation   is  described   as  Maurice   Grosse  and  New   Millennium   Media
International,  Inc.,  Claim  Number  HQ02X01340  in the High Court of  Justice,
Queen's Bench Division. This litigation was initiated as a result of the Company
deciding  to  phase  out  distribution  of the  IllumiSign-EyeCatcher  front-lit
displays in deference to the more modern back-lit displays.

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

There were no matters submitted to security holders for a vote during the course
of the fourth quarter of the last fiscal year.

                                     PART II

ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

NMMI is a fully  reporting  company  which  common  stock is  traded  on the OTC
Bulletin  Board  operated  by NASDAQ  under the symbol  NMMG.  The  shares  have
historically  not been eligible for listing on any securities  exchange or under
the NASDAQ system. As of December 31, 2002, we reported  10,253,508  outstanding
shares of $.001 par value common stock and no

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outstanding   shares  of  preferred  stock.   There  were  in  excess  of  1,000
shareholders  and reported  beneficial  owners of record of the Company's common
stock,  1,000 common shares issuable,  listed by the Company's transfer agent as
of December 31, 2002.

For  additional  information  relating  to  Common  Equity  Matters  please  see
hereafter in this filing Notes to the Financial Statement, December 31, 2002 and
2001, Note 7, Stockholders' Equity.

We have not paid any dividends on our common stock since inception. We expect to
continue to retain all earnings  generated by our operations for the development
and growth of our business and do not  anticipate  paying any cash  dividends to
our shareholders in the foreseeable  future.  The payment of future dividends on
the common stock and the rate of such  dividends,  if any, will be determined by
our Board of Directors in light of our earnings,  financial  condition,  capital
requirements and other factors.

The table  below sets forth the high and low bid prices of our common  stock for
each quarter for the four quarters of 2001 and 2002.  The  quotations  set forth
below  reflect  inter-dealer  prices,   without  retail  mark-up,   markdown  or
commission and may not represent actual transactions.

          Year                 High Bid      Low Bid
          ----                 --------      -------

          2001
          ----
          First Quarter           .400         .380
          Second Quarter         1.700        1.350
          Third Quarter          1.170        1.110
          Fourth Quarter          .580         .470

          2002
          ----
          First Quarter          1.110        1.000
          Second Quarter*         .350         .330
          Third Quarter           .220         .220
          Fourth Quarter          .290         .280

          *Note:  On May 18,2001 the issuer shares split 5:1. The second quarter
          prices reflect the post split prices.

As of  December  31,  2002 there were  outstanding  warrants  to Swartz  Private
Equity,  LLC for the purchase of 242,274 (post split number of shares) shares of
NMMI common stock at a price of $1.50 per share that may be reset every 6 months
thereafter.  As of December 31, 2002 16,796  warrants  were reset to an exercise
price of $0.28 and 25,478  warrants  were reset to an  exercise  price of $0.51.
These warrants were issued to Swartz on March 21, 2000 (200,000  shares),  April
17, 2001 (16,796 shares) and July 17, 2001 (25,478 shares) in  consideration  of
Swartz's commitment to enter into the Investment Agreement.  The warrants expire
on May 25, 2004, April 17, 2006 and July 17, 2006,  respectively.  The shares of
common stock to support  these  warrants  are included in the SB-2  registration
statement filed September 13, 2000 and as amendment filed March 18, 2002. During
2002 the Company  became  obligated to issue  299,284  "additional  warrants" to
Swartz.  Such warrants are issuable with an initial estimated  exercise price of
$0.29 per share and expire December 31, 2007. For a more detailed explanation of
the Swartz Private Equity agreement please see Notes to the Financial Statement,
December  31,  2002 and  2001,  Note 7,  Stockholders'  Equity,  (C)  Investment
Agreement.

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ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

GENERAL
Management's   discussion  and  analysis   contains   various  "forward  looking
statements." Such statements consist of any statement other than a recitation of
historical fact and can be identified by the use of forward-looking  terminology
such as "may,"  "expect,"  "anticipate,"  "estimate,"  or  "continue"  or use of
negative or other variations or comparable terminology.

We caution that these statements are further qualified by important factors that
could cause  actual  results to differ  materially  from those  contained in the
forward-looking   statements,   that  these   forward-looking   statements   are
necessarily  speculative,  and there are certain  risks and  uncertainties  that
could cause actual events or results to differ materially from those referred to
in such forward-looking statements.

OVERVIEW
The Company is no longer a development  stage company as defined in Statement of
Financial  Accounting  Standards No. 7, "Accounting and Reporting by Development
Stage  Enterprises." We have generated our cash needs through equity  financings
and loans from officers and stockholders.  As an operational  company, we devote
substantially  all of our efforts to securing and establishing new business.  We
have  engaged  in  limited  activities  in  the  advertising  business,  but  no
significant  revenues have been generated to date.  The primary  activity of the
Company   currently   involves   several  types  of  visual   advertising:   The
Illumisign-Eyecatcher  front-lit movable display board,  "EyeCatcher  Powered by
Insight" back-lit movable display boards, plasma screens and LED display boards.
In many instances we retain  ownership of all types of the machines and sell the
advertising  space on a monthly basis and also derive  revenue from rental of an
LED truck. We also periodically sell certain display products on a special order
basis.  The Company is  continuing  to devote  substantially  all of its present
efforts  to  implementing  its  operational  and  marketing  plans  designed  to
establish new business accounts for its mobile LED boards and the motion display
boards.  The Company presently  conducts all marketing in-house and continues to
use the EyeCatcherPlus logo, marketing material and website. Using this business
model,  management  feels that there  will be a net effect of  "cutting  out the
middle man" and increasing Company revenues.

CRITICAL ACCOUNTING POLICIES
The U.S. Securities and Exchange Commission defines critical accounting policies
as "those that are both most important to the portrayal of a company's financial
condition and results,  and require  management's most difficult,  subjective or
complex  judgments,  often as a result of the need to make  estimates  about the
effect of matters that are inherently  uncertain".  Preparation of our financial
statements  involves the  application of several such  policies.  These policies
include: Estimates of the allowance for doubtful accounts and other receivables,
estimates  of the  recoverability  and  the  impairment  of long  lived  assets,
estimates of the  valuation  of stock based  compensation,  revenue  recognition
policies, estimates of the valuation allowance on deferred tax assets.

Estimates of the allowance for doubtful accounts and other receivables
----------------------------------------------------------------------
The company  estimates its allowance for doubtful  accounts and  receivables  by
reviewing historical collection  experience and through specific  identification
of doubtful receivables.

Estimates of the recoverability and the impairment of long lived assets
-----------------------------------------------------------------------
The Company reviews long-lived assets and certain identifiable assets related to
those assets for impairment  whenever  circumstances  and situations change such
that there is an indication

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that the carrying amounts may not be recoverable.  If the non-discounted  future
cash flows of the enterprise are less than their carrying amount, their carrying
amounts are reduced to fair value and an impairment loss is recognized.

Estimates of the valuation of stock based compensation
------------------------------------------------------
The Company  accounts for stock options  issued to employees in accordance  with
the  provisions  of  Accounting   Principles   Board  ("APB")  Opinion  No.  25,
"Accounting  for Stock Issued to  Employees,"  and related  interpretations.  As
such,  compensation  cost is  measured on the date of grant as the excess of the
current  market  price of the  underlying  stock over the exercise  price.  Such
compensation  amounts are amortized over the respective  vesting  periods of the
option grant.  The Company  adopted the  disclosure  provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation," which permits entities to provide pro
forma net income (loss) and pro forma earnings (loss) per share  disclosures for
employee stock option grants as if the fair-valued  based method defined in SFAS
No. 123 had been  applied.  The  Company  accounts  for stock  options and stock
issued to  non-employees  for goods or services in accordance  with SFAS 123 and
related interpretations.

Revenue recognition policies
----------------------------
The Company sells EyeCatcher Displays on a special order basis and does not hold
inventory.  Revenue  and  cost of  revenue  from  EyeCatcher  Display  sales  is
recognized when the boards are shipped to the customer.  Advertising  revenue is
recognized  pro-rata over the term of the customer  contract or arrangement  and
customer prepayments received are recorded as a deferred revenue liability until
revenue recognition is proper.  Graphic arts revenue is recognized at completion
of services.  LED Truck rental revenue is recognized pro-rata as earned over the
rental  period  which  generally  does not exceed 14 days.  Territory  fees from
exclusive  distributors  are recorded as a deferred  revenue  liability and then
recognized  over the term of the  distributor  contract.  For all revenue types,
recognition  criteria also includes  assessing whether pervasive  evidence of an
arrangement  exits, the sale price is fixed or determinable,  and collectability
is reasonably assured.

Estimates of the valuation allowance on deferred tax assets
-----------------------------------------------------------
Income taxes are accounted for under the asset and liability method of Statement
of Financial  Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS
109"). Under SFAS 109 deferred tax assets and liabilities are recognized for the
future tax  consequences  attributable  to  differences  between  the  financial
statement  carrying  amounts  of  existing  assets  and  liabilities  and  their
respective  tax bases.  Deferred tax assets and  liabilities  are measured using
enacted  tax rates  expected  to apply to  taxable  income in the years in which
those temporary differences are expected to be recovered or settled.  Under SFAS
109, the effect on deferred tax assets and  liabilities of a change in tax rates
is recognized in income in the period that includes the enactment date.

LIQUIDITY AND CAPITAL RESOURCES
Generally,  the Company has funded our operations  and  investments in equipment
through cash from  operations,  equity  financings  and  borrowing  from private
parties as well as related  parties;  however,  there is no assurance that there
will be proceeds from these sources in the future. For a further  explanation of
these  loan  transactions  please  see  hereafter  in this  filing  Notes to the
Financial Statement, December 31, 2002 and 2001, Note 4, Notes and Loans Payable
and Note 5, Related Party Payables.

The attached  Balance Sheet shows that  Stockholders'  Equity has decreased from
($348,957) to ($1,858,074),  a decrease of $1,509,117 from calendar year 2001 to
year 2002. This is

                                       9
<PAGE>

the  result of a  $411,293  decrease  of assets  and a  $1,097,824  increase  of
liabilities to be discussed as follows.

The Property and Equipment value decreased from $1,461,824 in 2001 to $1,065,870
in  2002.  A large  portion  of  this  $395,954  decrease  is the  result  of an
impairment  loss of  $250,000  relating  to the  second  LED truck that is under
construction  and $173,874  depreciation in 2002 on property and equipment owned
by the company. These amounts are discussed in Notes to the Financial Statement,
December 31, 2002 and 2001, Note 2, Property and Equipment. The Deferred Royalty
Expense in the amount of $75,000 is an OnScreen (See above Business Overview for
a discussion of the OnScreen  product.)  royalty expense to be paid by the third
party as a  deferred  expense  asset to be  recognized  when due in 2003 and the
company  recorded  a  Deferred  Gain on Sale of  Future  Revenues  liability  of
$150,000 as of December 31, 2002 to be recognized as revenues  pro-rata over the
term of the  license.  This  expense and  liability  are  discussed in Financial
Statement, December 31, 2002 and 2001, Note 3, License.

The Cash on hand,  $16,335,  fluctuates from time to time as in any business and
it use varies from paying overhead and salaries to buying operating supplies.

As noted above,  the Company has thus far funded our operations and  investments
in equipment through cash from operations,  equity financings and borrowing from
private parties as well as related parties.  The repayment and interest on these
loan  transactions  are detailed in Financial  Statement,  December 31, 2002 and
2001, Note 4, Notes and Loans Payable and Note 5, Related Party Payables.  It is
noteworthy to mention that  $1,021,655  of these note holders have  contingently
agreed to convert to shares of Series A Convertible Preferred including $237,735
of the  $303,657  obligation  to the  company  president;  please see  Financial
Statement,  December 31, 2002 and 2001, Note 12,  Subsequent  Events and Note 5,
Loans Payable to Related Parties.

Accounts  Payable  decreased  by $70,512,  from  $520,377 in 2001 to $449,865 in
2002.  This 14% decrease is principally  the result of  management's  continuing
effort to reduce operating  expenses while continuing to maintain a high quality
of service and product.

The $83,924  Royalties  Payable  liability is discussed  above herein in Item 3,
Legal  Proceedings as well as Financial  Statement,  December 31, 2002 and 2001,
Note 6, Commitments and Contingencies,  (A) Legal Matters. It is the practice of
management  to  allocate  a  realistic  reserve  for  this  type  of  contingent
liability.

The  Accrued  Expense  liability  in the amount of  $330,707  is a reserve for a
claimed  obligation  claimed to be owed from 1999 for which the  company  has no
records nor  documentation  to support this claim. As a consequence,  management
has  taken the  position  that the claim is not  owed;  however,  a  bookkeeping
reserve is required.

The company president and director of operations continue to accrue a portion of
their  compensation  until  such time as the  company  is better  able to afford
payment.

When the company sell advertising it collects advertising fees several months in
advance of commencement of actually displaying the advertisement.  Because these
collected  fees have not yet been  earned  until the  advertisement  is actually
displayed these fees are accounted for as Deferred  Revenues.  From time to time
company  customers  deposit  money with the  company  for the  purchase of these
products;  these  deposits are  accounted  for as Customer  Deposits.  These two
categories   are   accounted   for  in  the  amounts  of  $41,609  and  $28,500,
respectively.

                                       10
<PAGE>

On May 19, 2000 the Company  entered into an  investment  agreement  with Swartz
Private  Equity,  LLC to raise up to $25  million  through  a series of sales of
common stock.  The dollar  amount of each sale is limited by the trading  volume
and a minimum period of time must occur between  sales.  In order to sell shares
to Swartz,  there must be an effective  registration  statement on file with the
SEC covering  the resale of the shares by Swartz and we must meet certain  other
conditions.  The agreement is for a three-year period ending May 2003. There can
be no assurance  that we will receive  financing  from Swartz,  that we will not
require additional financing or that such additional financing will be available
on terms  acceptable  to us, if at all.  A  detailed  description  of the Swartz
equity line  agreements can be found in the SB-2  Registration  Statement  filed
September 13, 2000 as amended by Post  Effective  Amendment that was filed March
20, 2002.

As  discussed  in  Financial  Statement,  December  31,  2002 and 2001,  Note 7,
Stockholders'  Equity,  (C) Investment  Agreement,  the company  entered into an
investment  agreement with Swartz  Private  Equity,  LLC. A $100,000  semiannual
penalty  attaches for each six months  period that the company does not exercise
its put rights under the agreement. To date the company has not exercise any put
rights to Swartz as detailed in the Note 7 shown above.

Additional Paid in Capital
--------------------------
Additional  Paid in Capital is  recorded in 2002 as  $5,101,664,  an increase of
$3,443,760 over 2001.  This increase is the result of the company  continuing to
fund operations and investments in equipment through cash from equity financings
and borrowing from private  parties as well as related  parties.  As itemized in
Financial Statement, December 31, 2002 and 2001, Note 4, Notes and Loans Payable
and Note 5,  Related  Party  Payables a major  portion of the paid in capital is
through  the  issuance of common and company  preferred  equity in exchange  for
operating capital. Most of the debt settlement is by way of equity issuance, see
Financial Statement,  December 31, 2002 and 2001, Note 7, Stockholders'  Equity,
(B) Common Stock Issuances.

RESULTS OF OPERATIONS
EyeCatcher Display Sales
------------------------
The revenue for the calendar year 2001, $363,802, when compared to calendar year
2002,  $615,475 shows an increase of approximately 69 percent.  This increase is
due  primarily to  EyeCatcher  display  sales,  $285,700.  The company  added an
element to its business plan by selling geographic  distributorships  that grant
to the distributor the exclusive right to purchase  EyeCatcherPlus displays from
the  company  provided  that the  distributor  maintains  yearly  milestones  as
mutually agreed by the company and the distributor.  In these arrangements,  the
company sells the displays to the  distributor.  The $187,300 Cost of EyeCatcher
Display  Sales  accounts  for the  company's  purchase of the sold  displays and
sundry items such as crating and shipping.

Advertising Revenue
-------------------
The  Advertising  Revenue  decreased  slightly in 2002  ($63,629) as compared to
$69,893 in 2001. This decrease is due to the revised business model because more
advertising  revenue is retained by the distributor  while the company  benefits
from the sale of the display.

Graphic Arts Revenue
--------------------
The Graphic Arts Revenue  decreased in year 2002 compared to 2001,  from $39,741
to $38,144.  Graphic arts revenue is the revenue  resulting  from the design and
printing of the posters that are displayed in the EyeCatcherPlus  displays. This
revenue is recognized at

                                       11
<PAGE>

completion of services.  Because the printed posters have a life of no more than
12 months  and the  majority  of  advertising  contracts  are for 6 months,  the
graphic arts revenue  stream is cyclic.  When the cycle begins at the end of the
year (2002) or the beginning of a year (2003)

LED Truck Rental Revenue
------------------------
The LED Truck Rental Revenue declined from $219,253 in 2001 to $190,837 in 2002.
Apparently  because of the 9/11  tragedy  the  economy in the United  States has
declined  which has had an effect on the  advertising  industry  as well as many
other industries.  Currently the LED mobile  advertising seems to have generated
sufficient  interest for competition to have grown in the past year.  Because of
this increased  competition  the daily rental rate has also declined as is to be
expected according to the theory of supply and demand.

Other Revenue
-------------
Other Revenue,  $36,416,  increased  from the 2001 figure of $9,915.  $25,000 of
this 2002 figure was a fee received by the company to convert the payor's  right
of first refusal  regarding future monetary advances for funding future OnScreen
technology  funding.  The payor  shall  receive  an  additional  fee for  future
participation  in  additional  OnScreen  funding not other wise  included in the
original right of first refusal. This issue is discussed in Financial Statement,
December 31, 2002 and 2001, Note 3, License.

Territory Fees
--------------
Territory Fees are the fees paid by distributors  for the contractual  exclusive
right to purchase  EyeCatcherPlus displays for a specific geographic area. These
fees are recorded as deferred  revenue  liability and then  recognized  over the
term of the distributor contract. The $749 for 2002 compared to $25,000 for 2001
is indicative of a distributor  contracting  and paying the distributor fee late
in 2002 which fee is then  prorated  into 2003 as well as for the balance of the
contract term. The current  revised  business model that includes this exclusive
distributor right to purchase displays was initiated late in 2002. Prior to 2002
the  company  granted  distributorships,  but only  with the  right to lease the
displays,  not  purchase  them.  This  current  business  model  gives  business
protection  to the  distributor  and permits  the  distributor  to purchase  the
EyeCatcherPlus  displays  which,  in turn,  provides  additional  revenue to the
company.  The company also continues to provide the  EyeCatcherPlus  displays to
host venues on a profit sharing basis.

Bad Debt
--------
Bad Debt has decreased by $71,823 (47%) when  comparing  2002  ($80,484) to 2001
($152,307).  Approximately  $29,000 is  described as  uncollectable  rent from a
related party subtenant,  see Financial  Statement,  December 31, 2002 and 2001,
Note 8, Related Party Transactions. The balance of the bad debt is primarily due
to inability to collect  receivables  from  advertisers and former  distributors
over the  past two  years.  In an  effort  to  minimize  future  uncollectables,
management  currently  requires  advertisers  to  pay  in  advance  and  current
distributors  are  required  to  purchase  geographic  territories  by paying in
advance  and,  in most  instances,  purchasing  the  EyeCatcherPlus  displays by
payment in full prior to delivery.

Compensation
------------
This item is comprised of stock compensation to the company president  resulting
in an  expense of  $131,431  and  $275,676  in 2002 and 2001  respectively,  see
Financial Statement,  December 31, 2002 and 2001, Note 7, Stockholders'  Equity,
(B) Common Stock  Issuances.  The  remainder  represents  cash  compensation  to
employees.   The  increase  to  $736,855  for  2002  from  $690,519  is  due  to
performances bonuses and cost of living salary increases.

                                       12
<PAGE>

Commitment Expense and Penalties
--------------------------------
This is the expense item of penalties to Swartz  Private  Equity,  LLC. as noted
herein above,  $200,000  penalty for  non-placement  of at least  $1,000,000 put
semiannually,  see  Financial  Statement,  December  31, 2002 and 2001,  Note 6,
Commitments and Contingencies, (A) Legal Matters. Additionally, the value of the
"additional  warrants" to which Swartz is entitled was  calculated to be $61,236
in 2002 and $12,090 in 2001 as noted in Financial  Statement,  December 31, 2002
and 2001, Note 7, Stockholders' Equity, (D) stock Options and Warrants.

Consulting
----------
From time to time the company  contracts  with private  business  consultants to
assist the company with such matters as investment banking,  private placements,
financing,  mergers,  acquisitions,  shareholder relations, investor information
packages,  development of marketing material for the company stock,  advertising
and public  relations.  This $1,373,198  expense  increased from $239,205 and is
paid in company  stock when ever  practicable  under the  circumstances  of each
particular  situation.  The  expensing  of these  share  issuances  are noted at
Financial  Statement,  December  31,  2002 and  2001,  Note 6,  Commitments  and
Contingencies,  (C) Consulting  Agreements;  Note 7,  Stockholders'  Equity, (B)
Common Stock Issuances and (D) Stock Options and Warrants.

Depreciation and Amortization
-----------------------------
The depreciation  schedule shown at Financial  Statement,  December 31, 2002 and
2001, Note 2, Property and Equipment expresses the accumulated  depreciation for
the  personal  property  of  the  company,  2001,  $248,141  and  for  2002  the
accumulated depreciation is $422,015. The depreciation for calendar year 2002 is
$173,874.  The increase in  depreciation is due to increased  personal  property
owned by the company.

General and Administrative
--------------------------
General and  Administrative  expenses increased by $175,136 from its 2001 amount
of $301,116.  The current 2002 amount of $476,252 is  principally  the result of
the Company  continuing to grow after becoming  fully  operational in year 2000.
This line item  includes  all  operational  expenses  other  than  interest  and
depreciation  expenses.  By the Company being fully  operational  this line item
includes such items as contract  labor,  general  office  supplies and printing,
management  fees and  expenses,  telephone,  cell phone,  automobile  and travel
expenses,  Internet service,  office security,  utilities,  transfer agent fees,
legal and accounting fees, insurances, business promotion and entertainment.

Impairment Loss
---------------
This $250,000  expense is the result of the  construction of a second LED mobile
unit.  The  mobile  unit has not yet been put into  service by the  company  and
delivery is behind  schedule.  This issue is detailed  at  Financial  Statement,
December 31, 2002 and 2001, Note 2, Property and Equipment.

Professional Fees
-----------------
This item has increased from $75,549 in 2001 to $105,852 in 2002, an increase of
$30,303. These professional fees, legal and accounting,  increase as the company
grows because of increased  business  exposes the company to more complex issues
for both the attorneys and accountants.

Rent
----
The company leases office and warehouse space in Safety Harbor,  Florida under a
5-year lease  beginning  May 1, 2001.  For  calendar  year 2002 the company paid
$133,183 rent compared to

                                       13
<PAGE>

$135,726 for year 2001. The office rental space from which the company relocated
in May 2001 was a great  deal  smaller  and  lacked  many of the  amenities  and
conveniences that are generally found in current office properties.  The company
up-graded  its offices at no additional  rental fees and  expenses.  The current
rental schedule is outlined at Financial Statement,  December 31, 2002 and 2001,
Note 6, Commitments and Contingencies, (E) Leases.

Royalties
---------
The  $138,943  Royalties  line  item  is made up of two  expenses:  The  company
recorded  $75,000 of the OnScreen  royalty  expense paid by a third party.  This
issue is discussed in Financial  Statement,  December 31, 2002 and 2001, Note 3,
License.  The second expense relates to the $63,943 reserve  regarding a pending
lawsuit.  This matter was discussed above herein in Item 3, Legal Proceedings as
well as Financial Statement, December 31, 2002 and 2001, Note 6, Commitments and
Contingencies, (A) Legal Matters. It is the practice of management to allocate a
realistic reserve for this type of contingent liability.

Loss From Operations
--------------------
Loss from  Operations  has  increased  from the 2001 amount of $1,535,155 to the
current year amount of $3,301,702,  an increase of $1,766,547. As noted from the
discussion  above, the most significant  increases are Consulting and Commitment
Expense  and  Penalties.  Although  these  items  cannot  be  minimized,  it  is
noteworthy to mention that most of these expenses are the result of common stock
and warrant issuances rather than cash outlay.

Gain on Settlement and Loss on Settlement
-----------------------------------------
Financial  Statement,  December 31, 2002 and 2001,  Note 1, Nature of Operations
and  Summary  of  Significant   Accounting   Policies,   (M)  Recent  Accounting
Pronouncements  in the fourth  paragraph  relating to SFAS No. 143 discusses the
settlement  of an  obligation  for its recorded  amount or incurs a gain or loss
upon settlement.  This accounting  principle is applied in various  transactions
notably  discusses in Financial  Statement,  December 31, 2002 and 2001, Note 7,
Stockholders' Equity, (A) Preferred Stock and (B) Common Stock Issuances.  These
transactions involve the  settlement/payment  of company debt and the payment of
current  consulting  fees.  In general  terms,  when the company  obligation  is
settled  by  issuance  of shares of stock,  the shares of stock is valued at the
then  current  trading  value which is compared to the debt  obligation  that is
settled.  The  resulting  difference  is  then  determined  to be a gain of loss
depending on whether the resulting calculation is negative or positive.

Sublease Income
---------------
The company  subleases  office  space to another  company for a monthly  rent of
$4,800  which amount  accrued  during 2002 to the sum of $30,991 as described in
Financial  Statement,  December  31,  2002 and  2001,  Note 6,  Commitments  and
Contingencies,  (E) Leases  and which  amount  was not paid to the  company  and
subsequently reserved as described in Financial Statement, December 31, 2002 and
2001, Note 8, Related Party Transactions. Additionally, the company subleases to
another  individual who is current in monthly rental  payments for calendar year
2002.  Company  management  determined  that in order to have office  space into
which the company  anticipates to grow, it is desirable to have this  additional
office  space  included  in  the  company's  current  lease,  but  sublease  the
additional space until such time as the company grows into the additional space.

                                       14
<PAGE>

Interest Expense
----------------
Interest Expense  decreased by $22,177 from 2001 to 2002 (8%).  Interest expense
relates to  interest  on loans and notes and the value of options  issued  under
default  provisions of certain  notes.  The normal  interest  expense  decreased
primarily  as a result of the  Company  paying off debt  obligations  by issuing
shares of common and preferred stock as total or partial satisfaction of some of
the debt obligations as discussed herein above.

Basic and Fully Diluted Loss Per Common Share
---------------------------------------------
The Basic and Fully Diluted Loss Per Common Share  difference  from 2001 to 2002
calendar years shows a 0.12 increase in net loss per common share.  The loss per
common  share is a function  of net income,  preferred  dividends  and  weighted
number of common  shares  outstanding.  For a more thorough  explanation  of the
"earnings per share" calculations see Financial Statement, December 31, 2002 and
2001,  Note 1,  Nature of  Operations  and  Summary  of  Significant  Accounting
Policies,  (K)  Earnings  Per Share.  The basis for this  increase is  discussed
item-by-item  immediately  above. We are now fully staffed and producing income.
We are  continuing to concentrate  on  establishing  new business and increasing
sales relating to the IllumiSign-EyeCatcher, the "EyeCatcher Powered by Insight"
backlit display board and the LED display sign truck.

Trends and Events
-----------------
In May of  2001  we  changed  our  operations  model  primarily  in that we have
regained the marketing role in-house.  Management  feels that this is a positive
change in that the Company now has total  control of all  marketing  activities.
The Company  continues to allocate  geographical  areas to distributors  who, in
turn, focus on their respective areas.

Prior to 2002 the company  contracted with  distributors that contracted for the
exclusive right to lease EyeCatcherPlus  displays from the company;  however, in
2002 the company  added an element to its  business  plan by selling  geographic
distributorships  that grant to the  distributor the exclusive right to purchase
EyeCatcherPlus displays from the company provided that the distributor maintains
yearly  milestones  as mutually  agreed by the company and the  distributor.  In
these  arrangements,  the company sells the displays to the  distributor and the
distributor   continues  to  exclusively  utilize  the  company  graphic  design
department  for design and printing of the posters for the  purchased  displays.
This revised  business  model thus far is  successful in select  locations.  The
company  currently focuses on target area networks (TAN's) based on demographics
that respond to the EyeCatcherPlus displays. By this "specialized" concentration
of effort  management feels that it is more efficient to sell the  advertisement
posters and ultimately increase revenues.

The "9/11 tragedy" has had an overall effect on the American economy,  including
the  advertising  industry,  as reflected in the Net Loss increase for 2002 over
2001; however, management feels that by revising the business model as described
above,  the  company  should be able to  increase  revenues  without  increasing
expenses.  Although there is no real assurance that this revised  business model
will  generate  the  additional  revenues,  in the  opinion of  management,  the
cumulative  effect of these  revisions  will reflect a positive trend in company
revenues.

ITEM 7.   FINANCIAL STATEMENTS

Financial  Statements are  incorporated  by reference  herein and attached as an
exhibit.

                                       15
<PAGE>

ITEM 8.   CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
          FINANCIAL DISCLOSURE

None.

                                    PART III

ITEM 9.   DIRECTORS,   EXECUTIVE   OFFICERS,   PROMOTERS  AND  CONTROL  PERSONS;
          COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

The following are officers and directors of the Company.

     Name                 Age    Position
     ----                 ---    --------
     John Thatch          41     Chief Executive Officer, President and Director
     Jennifer Freeman     29     Corporate Secretary

All directors hold office until the next annual meeting of  shareholders  of the
Company and until their  successors  are elected and  qualified.  Officers  hold
office until the first  meeting of  directors  following  the annual  meeting of
shareholders  and until their  successors are elected and qualified,  subject to
earlier removal by the Board of Directors.

John "JT" Thatch, President/CEO and Director
Mr. Thatch,  age 41 years, has served as President,  Chief Executive Officer and
Director of New Millennium Media  International  since January 2000. During this
time  he has  overseen  all  functions  of  the  company,  including  day-to-day
operations.  Mr. Thatch has over 15 years of entrepreneurial business experience
that  includes  over 7  years  as the  principal  in Bay  Area  Auto  Sales,  an
automotive dealership,  that specialized in sales of reconditioned  vehicles. He
was the founder and General Partner for Last Chance Finance, Ltd. that owned and
operated over 18 offices specializing in alternative vehicle financing. Over the
past 10 years Mr. Thatch has been President and majority shareholder of Superior
Management of Tampa,  Inc., a privately  owned  company,  that owns property and
commercial  leases.  Other than for nominal time spent on corporate and personal
real estate  holdings that have no business  relationship  with NMMI, Mr. Thatch
dedicates  his best  efforts  to his  current  position.  He brings  leadership,
marketing and strong management skills to the company.

Jennifer H.  Freeman-Goggin  has served as Corporate  Secretary  since August 7,
2001.  During this time she has  prepared,  managed and  maintained as permanent
records of the  corporation,  all official  corporate  minutes  (shareholder and
board of directors  meetings),  official corporate records and contracts as well
as additional  corporate  secretarial duties customarily  performed by corporate
secretaries and as authorized by the corporate by-laws.  As temporary  corporate
duties,   she  presently   oversees  all  corporate   office   management.   Ms.
Freeman-Goggin has 6 years of corporate management experience and three years of
college level business management education.  Prior to being appointed corporate
secretary  by the  Board of  Directors,  Ms.  Freeman-Goggin  managed  a finance
company  that owned and operated  over 18 offices  specializing  in  alternative
vehicle financing.  Ms. Freeman-Goggin devotes full time to her corporate duties
and brings a quality of innovative corporate ideas.

                                       16
<PAGE>

ITEM 10.  EXECUTIVE COMPENSATION

The following  table lists the cash  remuneration  paid or accrued  during 2000,
2001 and 2002 to John Thatch, president and CEO. Except for John Thatch, none of
our executive officers and directors  received  compensation of $100,000 or more
in 2000, 2001 and 2002.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
                                       SUMMARY COMPENSATION TABLE
---------------------------------------------------------------------------------------------------------
                                                             Long Term Compensation
---------------------------------------------------------------------------------------------------------
                           Annual Compensation                  Awards             Payouts
---------------------------------------------------------------------------------------------------------
    (a)        (b)      (c)      (d)          (e)         (f)           (g)          (h)         (i)
---------------------------------------------------------------------------------------------------------
                                                       Restricted    Securities
  Name and                              Other Annual     Stock       Underlying     LTIP      All Other
 Principle            Salary    Bonus   Compensation    Award(s)    Options/SARs   Payouts   Compensation
  Position     Year     ($)      ($)        ($)           ($)           (#)          ($)         ($)
---------------------------------------------------------------------------------------------------------
<S>            <C>    <C>       <C>     <C>            <C>          <C>            <C>       <C>
   John                                 10,000         10% of all   Stock option             Per month:
  Thatch,      2000   140,000           expenses       issued       to be                    500 medical
 Pres./CEO                                             common       determined by            500 car
                                                       stock        Board                    250 celphone
---------------------------------------------------------------------------------------------------------
</TABLE>

Director Compensation
No Director  is  specially  compensated  for the  performance  of duties in that
capacity or for his/her attendance at Director meetings.

Employment Agreements
NMMI has two written employment  agreements,  President and CEO and the Director
of Operations, see Item 12, below and Financial Statement, December 31, 2002 and
2001, Note 6, Commitments and Contingencies, Employment Agreements.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The  following  table  sets  forth  certain  information   regarding  beneficial
ownership  of our  common  stock  as of the  date of this  filing  by:  (i) each
shareholder  known  by us to be  the  beneficial  owner  of 5% or  more  of  the
outstanding common stock, (ii) each of our directors and (iii) all directors and
executive officers as a group.  Except as otherwise  indicated,  we believe that
the  beneficial  owners of the common stock listed below,  based on  information
furnished by such owners,  have sole investment and voting power with respect to
such shares,  subject to community  property  laws where  applicable.  Shares of
common stock  issuable  upon exercise of options and warrants that are currently
exercisable  or  exercisable  within 60 days of filing this  document  have been
included in the table.

Name and Address               Amount and Nature            Percent of Class (1)
of Beneficial                  of Beneficial
Owner                          Ownership
-------------                  ----------------             --------------
John Thatch                    1,333,688                    13%
President/CEO
and Director

(1)  Based upon December 31, 2002 shareholder list,  10,254,508  outstanding and
     issuable shares of common stock.

                                       17
<PAGE>

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Except as set forth below,  none of our directors or officers,  nor any proposed
nominee for election as one of our  directors  or  officers,  nor any person who
beneficially owns, directly or indirectly,  shares carrying more than 10% of the
voting rights attached to our outstanding  shares, nor any relative or spouse of
any of the foregoing persons has any material interest,  direct or indirect,  in
any  transaction  in any  presently  proposed  transaction  which  has  or  will
materially affect the Company.

On November  2, 1999 NMMI  signed an  executive  employment  contract  with John
Thatch  employing that individual as President and Chief  Executive  Officer for
three years with a salary of $140,000  for the first year and  $120,000  for the
second and third  years.  On November  18, 2002 this  employment  agreement  was
extended  for an  additional  three  years  on the same  terms  as the  original
agreement.  The original  agreement included a provision that it was in the best
interest of NMMI to include in the  employment  package a provision  giving John
Thatch  the  option to  purchase,  at a price of par  value,  10% of any and all
additionally  authorized  and issued shares of stock at the  agreement  date and
discretionary  cash or shares as a bonus.  To date John Thatch has been  granted
1,333,688 shares of restricted common stock under the agreement.

ITEM 13.  EXHIBITS AND REPORTS

Indemnification of Directors and Officers
The  Colorado  General  Corporation  Act provides  that each  existing or former
director and officer of a corporation  may be indemnified  in certain  instances
against certain liabilities which he or she may incur,  inclusive of fees, costs
and other expenses incurred in connection with such defense, by virtue of his or
her relationship  with the corporation or with another entity to the extent that
such  latter  relationship  shall  have been  undertaken  at the  request of the
corporation;  and may have advanced such expenses  incurred in defending against
such  liabilities  upon  undertaking  to repay the same in the event an ultimate
determination  is made denying  entitlement  to  indemnification.  The Company's
bylaws incorporate the statutory form of indemnification by specific  reference.
The Company  has never  acquired  or applied  for any policy of  directors'  and
officers'  liability  insurance  as a means of  offsetting  its  obligation  for
indemnity.

Reports to Shareholders
We intend to  voluntarily  send annual reports to our  shareholders,  which will
include  audited  financial  statements.  We are a reporting  company,  and file
reports with the Securities and Exchange  Commission (SEC),  including this Form
10-KSB as well as quarterly  reports under Form 10-QSB.  The public may read and
copy any materials filed with the SEC at the SEC's Public  Reference Room at 450
Fifth Street, N.W., Washington,  D.C. 20549. Information on the operation of the
Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330.  The
company files its reports  electronically and the SEC maintains an Internet site
that contains  reports,  proxy and information  statements and other information
filed by the company  with the SEC  electronically.  The address of that site is
http://www.sec.gov.

                                       18
<PAGE>

The company also maintains an Internet site,  which contains  information  about
the company,  news releases and summary financial data. The address of that site
is http://www.nmmimedia.com.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The  financial  statements  of the  Company,  which are  furnished  herein as of
December 31, 2002,  have been  audited by Salberg & Company,  P.A.,  Boca Raton,
Florida, independent auditors, as described in its reports with respect thereto.

The  following  list sets  forth a brief  description  of each of the  Company's
financial  statements and exhibits being filed as a part of this Form 10-KSB, as
well as the page number on which each statement or exhibit commences:

Audited Fiscal Year End December 31, 2002

         Index to Financial Statements                        F-2

         Independent Auditor's Report - Salberg               F-3
         and Company, P.A.

         Independent Auditors Report - Richard
         J. Fuller, P.A.

         Balance Sheet, December 31, 2002                     F-4

         Statement of Operations for each of
         the years ended December 31, 2001
         and 2002                                             F-5

         Statement of Shareholder's (Deficit) Equity
         For the years ended December 31,
         2002 and 2001                                        F-6

         Statement of Cash Flows for the years
         ended December 31, 2002 and 2001                     F-7

         Notes to Financial Statements                        F-8

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly  caused  this  Report to be signed  on its  behalf by the  undersigned,
thereunto duly authorized.

April 14, 2003                      New Millennium Media International, Inc.


                                   By: /s/____________________________
                                       John "JT" Thatch, President/CEO

                                       19
<PAGE>

                                 CERTIFICATIONS

I,  John  "JT"  Thatch,  as   CEO/President/Director  of  New  Millennium  Media
International, Inc., certify that:

1. I have  reviewed this annual  report on Form 10-KSB of New  Millennium  Media
International, Inc.;

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

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

4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

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

b) Evaluated  the  effectiveness  of the  registrant's  disclosure  controls and
procedures  as of a date  within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and

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

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

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

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

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

Date:    April 14, 2003                 New Millennium Media International, Inc.

                                        By: /s/____________________________
                                        John "JT" Thatch CEO/President/Director

                                       20
<PAGE>

                    NEW MILLENNIUM MEDIA INTERNATIONAL, INC.

                              FINANCIAL STATEMENTS

                        as of year end December 31, 2002

                                      INDEX

Index to Financial Statements................................................F-2

Independent Auditors' Report.................................................F-3

Balance Sheets ..............................................................F-4

Statements of Operations ....................................................F-5

Statements of Stockholders' (Deficit) Equity ................................F-6

Statements of Cash Flows.....................................................F-7

Notes to the Financial Statements............................................F-8

                                       F-2
<PAGE>

                    NEW MILLENNIUM MEDIA INTERNATIONAL, INC.

                              FINANCIAL STATEMENTS

                           DECEMBER 31, 2002 AND 2001

<PAGE>

                    New Millennium Media International, Inc.

                                    Contents
                                    --------


                                                                          Page
                                                                        --------
Independent Auditors' Report                                                1

Balance Sheet                                                               2

Statements of Operations                                                    3

Statement of Changes in Stockholders' Deficiency                            4

Statements of Cash Flows                                                    5

Notes to Financial Statements                                            6 - 21

<PAGE>

                          Independent Auditors' Report
                          ----------------------------

To the Board of Directors of:
    New Millennium Media International, Inc.

We  have  audited  the  accompanying  balance  sheet  of  New  Millennium  Media
International,  Inc. as of  December  31,  2002 and the  related  statements  of
operations, changes in stockholders' deficiency and cash flows for the year 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 audit. The financial  statements as of December 31, 2001
were  audited by other  auditors  whose  report dated March 31, 2002 (except for
Note 10 as to which the date is April 10, 2003) on those statements  included an
explanatory  paragraph describing conditions that raised substantial doubt about
the Company's ability to continue as a going concern.

We conducted our audit 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  audit  provides  a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly in all
material respects, the financial position of New Millennium Media International,
Inc. as of December  31,  2002,  and the results of its  operations,  changes in
stockholders'  deficiency and cash flows for the year 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 11 to the
financial  statements,  the Company  has a net loss of  $3,443,760  in 2002,  an
accumulated  deficit of $6,915,826 at December 31, 2002; cash used in operations
in 2002 of $642,406, and a working capital deficit of $3,020,220 at December 31,
2002. Those matters raise  substantial  doubt about its ability to continue as a
going concern.  Management's  Plan in regards to these matters is also described
in Note 11. The financial  statements do not include any adjustments  that might
result from the outcome of this uncertainty.

SALBERG & COMPANY, P.A.
Boca Raton, Florida
April 11, 2003

<PAGE>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors and Shareholders
New Millennium Media International, Inc.
Safety Harbor, Florida

We have audited the statement of operations,  stockholders' (deficit) equity and
cash  flows for New  Millennium  Media  International,  Inc.  for the year ended
December 31, 2001.  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 audit.

We conducted our audit 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  audit  provides  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  results  of  operations  and cash  flows  for New
Millennium  Media  International,  Inc for the year ended  December 31, 2001, 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 1 to the
financial  statements,  the  Company  has  incurred  losses  for the year  ended
December 31, 2001. This condition raises  substantial doubt about its ability to
continue  as a going  concern.  The  financial  statements  do not  include  any
adjustments that might result from the outcome of this uncertainty.

As discussed in Note 10 to the financial statements,  accompanying  statement of
operations,  stockholders  (deficit)  equity  and cash  flows for the year ended
December 31, 2001 have been restated.


Richard J. Fuller, CPA, PA
Clearwater, Florida
March 31, 2002 (except for Note 10 as to which the date is April 10, 2003)

<PAGE>

                    NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
                                 BALANCE SHEETS
                                December 31, 2002
                                -----------------

<TABLE>
<CAPTION>
                                                                              2002
                                                                          ------------
                                     ASSETS
                                     ------

Current Assets
<S>                                                                       <C>
        Cash                                                              $     16,335
        Accounts receivable                                                      1,006
        Prepaid expenses                                                            --
        Other receivables, net                                                   2,891
                                                                          ------------
             Total Current Assets                                               20,232
                                                                          ------------

Property and Equipment
        Property and Equipment, net                                          1,065,870
                                                                          ------------

Other Assets
        Deferred royalty expense                                                75,000
        Deposits                                                                21,276
                                                                          ------------
             Total Other Assets                                                 96,276
                                                                          ------------

                                                                          $  1,182,378
                                                                          ============

                  LIABILITIES AND STOCKHOLDERS' DEFICIT
                  -------------------------------------

Current Liabilities
        Notes and loans payable                                              1,297,940
        Notes payable, related party                                           303,657
        Accounts payable                                                  $    449,865
        Royalties payable                                                       83,924
        Accrued expenses                                                       330,707
        Accrued compensation                                                   154,250
        Customer deposits                                                       28,500
        Deferred revenues                                                       41,609
        Deferred gain on sale of future revenues                               150,000
        Accrued commitment penalty                                             200,000
                                                                          ------------
             Total Current Liabilities                                       3,040,452
                                                                          ------------

Stockholders' Deficit
        Preferred stock, par value $0.001, 10,000,000 shares authorized
             Convertible Series A, Preferred stock, 5,000,000 shares
                authorized, 12,173 shares issuable                                  12
        Common stock, par value $0.001; 15,000,000 shares
             authorized, 10,253,508 and outstanding                             10,254
        Common stock issuable, at par value (1,000 shares)                           1
        Additional paid in capital                                           5,101,664
        Accumulated deficit                                                 (6,915,826)
                                                                          ------------
                                                                            (1,803,895)
        Less deferred consulting expense                                       (44,104)
        Less subscriptions receivable                                          (10,075)
                                                                          ------------
             Total Stockholders' Deficiency                                 (1,858,074)
                                                                          ------------

                                                                          $  1,182,378
                                                                          ============
</TABLE>

                 See accompanying notes to financial statements

                                      F-2
<PAGE>

                    NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
                            STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
                 ----------------------------------------------

                                                       2002            2001
                                                   ------------    ------------

Revenues
        EyeCatcher Display sales                   $    285,700    $         --
        Advertising revenue                              63,629          69,893
        Graphic arts revenue                             38,144          39,741
        LED truck rental revenue                        190,837         219,253
        Territory fees                                      749          25,000
        Other revenue                                    36,416           9,915
                                                   ------------    ------------
              Total income                              615,475         363,802
                                                   ------------    ------------

Cost of EyeCatcher Display Sales                        187,300              --
                                                   ------------    ------------

Gross profit                                            428,175         363,802
                                                   ------------    ------------

Operating Expense
        Bad debt                                         80,484         152,307
        Compensation                                    736,855         690,519
        Commitment expense and penalties                261,236          12,090
        Consulting                                    1,373,198         239,205
        Depreciation                                    173,874         152,587
        General and administrative                      476,252         301,116
        Impairment loss                                 250,000         100,000
        Professional fees                               105,852          75,549
        Rent                                            133,183         135,726
        Royalites                                       138,943          39,858
                                                   ------------    ------------
              Total operating expense                 3,729,877       1,898,957
                                                   ------------    ------------

Loss from Operations                                 (3,301,702)     (1,535,155)
                                                   ------------    ------------

Other income (expense)
        Gain on settlement                               98,299              --
        Sublease income                                  61,800              --
        Loss on settlement                              (37,235)             --
        Interest expense                               (264,922)       (287,099)
                                                   ------------    ------------
Total other income (expense), net                      (142,058)       (287,099)
                                                   ------------    ------------

Net Loss                                           $ (3,443,760)   $ (1,822,254)
                                                   ============    ============

Basic and Diluted Net Loss Per Common Share        $      (0.39)   $      (0.27)
                                                   ============    ============

Weighted average common shares outstanding            8,848,176       6,650,084
                                                   ============    ============

                 See accompanying notes to financial statements

                                      F-3
<PAGE>

                    NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
             STATEMENT OF CHANGES IN STOCKHOLDERS' (DEFICIT) EQUITY
                     YEARS ENDED DECEMBER 31, 2002 AND 2001
                     --------------------------------------
<TABLE>
<CAPTION>
                                                                                                   COMMON STOCK AND
                                                                           PREFERRED STOCK      COMMON STOCK ISSUABLE    ADDITIONAL
                                                                       ----------------------  ------------------------   PAID-IN
                                                                         SHARES      AMOUNT       SHARES      AMOUNT       CAPITAL
                                                                       -----------  ---------  -----------  -----------  -----------
<S>                                                                    <C>          <C>        <C>          <C>          <C>
Balance, December 31, 2000                                                      --  $      --    5,824,121  $     5,824  $ 1,783,895
    Fair value of 42,274 warrants issued to investment bankers                  --         --           --           --       12,090
    Fair value of stock issued for services                                     --         --      500,926          501      420,276
    Common stock issued for cash and warrants exercise                          --         --    1,100,000        1,100      923,900
    Exercise of common stock options for cash ($500) and other fair
       value of borrowing cost                                                  --         --      150,000          150        7,519
    Fair value of stock issued in settlement of debt in accordance
       with FASB 123                                                            --         --       35,000           35       27,965
    Fair value of warrants issued for services                                  --         --           --           --      211,700
    Fair value of options issued under promissory note
       default provisions                                                       --         --           --           --      211,483
Net loss for the year ended December 31, 2001                                   --         --           --           --           --
                                                                       -----------  ---------  -----------  -----------  -----------
Balance, December 31, 2001                                                      --         --    7,610,047        7,610    3,598,828
    Common stock issued for cash                                                --         --      346,667          347      139,653
    Common stock issued for services of non-employees                           --         --      730,292          730      275,989
    Common stock issued for services of officer                                 --         --      505,502          506      130,925
    Common stock issued as settlement                                           --         --       65,000           65       45,435
    Common stock issued as debt settlement                                      --         --      570,000          570      230,630
    Common stock issued as a forbearance                                        --         --      100,000          100       93,900
    Common stock issued to purchase equipment                                   --         --        1,000            1          399
    Common stock issuable as loan fee                                           --         --        1,000            1        1,249
    Common stock options exercised under promissory notes                       --         --      325,000          325        7,800
    Amortization of deferred consulting                                         --         --           --           --           --
    Payment on subscription receivable with services rendered                   --         --           --           --           --
    Cumulative subscriptions due on warrant exercise                            --         --           --           --           --
    Preferred stock issuable in exchange for debt                           12,173         12           --           --       42,344
    Warrants granted and price reset pursuant to investment
       agreement                                                                --         --           --           --       61,235
    Warrants granted for services                                               --         --           --           --      388,275
    Warrants granted under default provisions of promissory notes               --         --           --           --       85,002
Net loss for the year ended December 31, 2002                                   --         --           --           --           --
                                                                       -----------  ---------  -----------  -----------  -----------
Balance, December 31, 2002                                                  12,173  $      12   10,254,508  $    10,255  $ 5,101,664
                                                                       ===========  =========  ===========  ===========  ===========

<CAPTION>
                                                                                                COMMON        TOTAL
                                                                      ACCUMULATED   DEFERRED     STOCK     STOCKHOLDERS'
                                                                        DEFICIT    CONSULTING  SUBSCRIBED     EQUITY
                                                                       -----------  ---------  -----------  -----------

Balance, December 31, 2000                                              (1,649,812) $      --  $        --  $   139,907
<S>                                                                    <C>          <C>        <C>          <C>
    Fair value of 42,274 warrants issued to investment bankers                  --         --           --       12,090
    Fair value of stock issued for services                                     --         --           --      420,777
    Common stock issued for cash and warrants exercise                          --         --     (333,375)     591,625
    Exercise of common stock options for cash ($500) and other fair
       value of borrowing cost                                                  --         --           --        7,669
    Fair value of stock issued in settlement of debt in accordance
       with FASB 123                                                            --         --           --       28,000
    Fair value of warrants issued for services                                  --   (149,954)          --       61,746
    Fair value of options issued under promissory note
       default provisions                                                       --         --           --      211,483
Net loss for the year ended December 31, 2001                           (1,822,254)        --           --   (1,822,254)
                                                                       -----------  ---------  -----------  -----------
Balance, December 31, 2001                                              (3,472,066)  (149,954)    (333,375) $  (348,957)
    Common stock issued for cash                                                --         --           --      140,000
    Common stock issued for services of non-employees                           --         --           --      276,719
    Common stock issued for services of officer                                 --         --           --      131,431
    Common stock issued as settlement                                           --         --           --       45,500
    Common stock issued as debt settlement                                      --         --           --      231,200
    Common stock issued as a forbearance                                        --         --           --       94,000
    Common stock issued to purchase equipment                                   --         --           --          400
    Common stock issuable as loan fee                                           --         --           --        1,250
    Common stock options exercised under promissory notes                       --         --           --        8,125
    Amortization of deferred consulting                                         --    105,850           --      105,850
    Payment on subscription receivable with services rendered                   --         --      333,375      333,375
    Cumulative subscriptions due on warrant exercise                            --         --      (10,075)     (10,075)
    Preferred stock issuable in exchange for debt                               --         --           --       42,356
    Warrants granted and price reset pursuant to investment
       agreement                                                                --         --           --       61,235
    Warrants granted for services                                               --         --           --      388,275
    Warrants granted under default provisions of promissory notes               --         --           --       85,002
Net loss for the year ended December 31, 2002                           (3,443,760)        --           --   (3,443,760)
                                                                       -----------  ---------  -----------  -----------
Balance, December 31, 2002                                              (6,915,826) $ (44,104) $   (10,075) $(1,858,074)
                                                                       ===========  =========  ===========  ===========
</TABLE>

                 See accompanying notes to financial statements

                                      F-4
<PAGE>
                    NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
                             STATEMENT OF CASH FLOWS
                           DECEMBER 31, 2002 AND 2001
                           --------------------------

<TABLE>
<CAPTION>
                                                                                  2002             2001
                                                                              ------------     ------------
Cash Flows from Operating Activities:
<S>                                                                           <C>              <C>
    Net loss                                                                  $ (3,443,760)    $ (1,822,254)
    Adjustments to reconcile net income (loss) to net
       cash provided by (used in) operating activities:
          Stock and options for services                                         1,091,811          728,266
          Stock based settlement gain, net                                         (61,064)              --
          Bad debt                                                                  80,484               --
          Depreciation                                                             173,874          152,587
          Impairment loss                                                          250,000          100,000
    (Increase) decrease in:
          Accounts receivable                                                      (58,095)          (6,759)
          Other receivables                                                         (2,891)              --
          Prepaid expenses                                                          36,255          (34,876)
          Deferred royalty expense                                                 (75,000)              --
          Deferred compensation                                                    105,850               --
          Deposits                                                                   3,682               --
          Other assets                                                                  --          (13,986)
    Increase (decrease) in:
          Loans payable - compensation                                             125,000               --
          Notes payable - accrued interest                                         107,429               --
          Notes payable, related party - accrued interest                           22,026               --
          Accounts payable                                                         440,403          386,236
          Royalties payable                                                         69,424               --
          Accrued expenses                                                          58,370               --
          Accrued compensation                                                     154,250               --
          Customer deposits                                                         28,500               --
          Deferred revenues                                                        (98,954)              --
          Deferred gain on sale of future revenues                                 150,000               --
          Accrued commitment penalty                                               200,000               --
                                                                              ------------     ------------
              NET CASH USED IN OPERATING ACTIVITIES                               (642,406)        (510,786)
                                                                              ------------     ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
       Purchase of machinery and equipment                                         (27,320)        (690,263)
       Purchase of license                                                              --         (100,000)
                                                                              ------------     ------------
          NET USED IN INVESTING ACTIVITIES                                         (27,320)        (790,263)
                                                                              ------------     ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
       Proceeds from notes and loans                                               497,197          591,719
       Equity proceeds                                                             141,625               --

       Proceeds from notes payable - related parties                                    --          164,444
       Proceeds from common stock transactions                                          --          591,625
       Proceeds from exercise of common stock options                                   --              500
                                                                              ------------     ------------
          NET CASH USED IN FINANCING ACTIVITIES                                    638,822        1,348,288
                                                                              ------------     ------------

Increase (Decrease) in Cash and Cash Equivalents                              $    (30,904)    $     47,239
Cash and Cash Equivalents at Beginning of Year                                      47,239               --
                                                                              ------------     ------------
CASH AND CASH EQUIVALENTS AT END OF YEAR                                      $     16,335     $     47,239
                                                                              ============     ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
    Supplemental  schedule of noncash investing and financing  activities:
       Fairvalue of shares issued (20,000 shares) for amounts previously
          owed to secretary / treasurer                                       $         --     $     13,000
                                                                              ============     ============
       Debt settled with capital stock                                        $    322,446     $         --
                                                                              ============     ============
       Subscription receivable paid with services                             $    333,375     $         --
                                                                              ============     ============
       Common stock paid for equipment (1,000 shares)                         $        400     $         --
                                                                              ============     ============
</TABLE>

                 See accompanying notes to financial statements

                                      F-5
<PAGE>

                    NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001
                           --------------------------

NOTE 1 NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
--------------------------------------------------------------------------

          (A)  NATURE OF OPERATIONS

          New Millennium  Media  International,  Inc. (the Company),  a Colorado
          corporation  organized on April 21, 1998,  is a developer and marketer
          of advertising space in special movable  advertising display machinery
          and  LED  display  boards.   The  Company  is  a  provider  of  visual
          advertising through movable display boards and LED equipment.

          (B)  USE OF ESTIMATES

          The preparation of financial  statements in conformity with accounting
          principles generally accepted in the United States of America requires
          management to make estimates and assumptions  that affect the reported
          amounts of assets and liabilities and disclosure of contingent  assets
          and  liabilities  at the  date  of the  financial  statements  and the
          reported amounts of revenues and expenses during the reporting period.
          Actual results could differ from those estimates.

          (C)  CASH AND CASH EQUIVALENTS

          For purposes of the cash flow  statement,  the Company  considers  all
          highly liquid  investments  with maturities of three months or less at
          the time of purchase to be cash equivalents.

          (D)  CONCENTRATION OF CREDIT RISK

          The Company  maintains its cash in bank deposit  accounts,  which,  at
          times,   exceed  federally   insured  limits.   The  Company  has  not
          experienced any losses in such accounts through December 31, 2002.

          (E)  PROPERTY AND EQUIPMENT

          Property  and   equipment  are  stated  at  cost,   less   accumulated
          depreciation   and   amortization.   Expenditures   for   repairs  and
          maintenance  are  charged  to  expense as  incurred.  Depreciation  is
          provided  using the  straight-line  method over the  estimated  useful
          lives of the related assets of 5 to 7 years.

          (F)  LONG-LIVED ASSETS

          The Company reviews long-lived assets and certain  identifiable assets
          related to those  assets for  impairment  whenever  circumstances  and
          situations  change such that there is an indication  that the carrying
          amounts  may not be  recoverable.  If the  non-discounted  future cash
          flows of the  enterprise are less than their  carrying  amount,  their
          carrying  amounts are reduced to fair value and an impairment  loss is
          recognized.

          (G)  STOCK-BASED COMPENSATION

          The  Company  accounts  for  stock  options  issued  to  employees  in
          accordance with the provisions of Accounting  Principles Board ("APB")
          Opinion No. 25, "Accounting for Stock Issued to

                                      F-6
<PAGE>

                    NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001
                           --------------------------

          Employees," and related interpretations. As such, compensation cost is
          measured  on the date of grant as the  excess  of the  current  market
          price  of  the  underlying   stock  over  the  exercise  price.   Such
          compensation amounts are amortized over the respective vesting periods
          of the option grant. The Company adopted the disclosure  provisions of
          SFAS No. 123, "Accounting for Stock-Based Compensation," which permits
          entities to provide pro forma net income (loss) and pro forma earnings
          (loss) per share  disclosures  for employee  stock option grants as if
          the fair-valued based method defined in SFAS No. 123 had been applied.

          The  Company   accounts   for  stock   options  and  stock  issued  to
          non-employees  for goods or services in  accordance  with SFAS 123 and
          related interpretations.

          (H)  REVENUE RECOGNITION

          The Company  sells  EyeCatcher  Displays on a special  order basis and
          does not hold  inventory.  Revenue and cost of revenue from EyeCatcher
          Display  sales  is  recognized  when the  boards  are  shipped  to the
          customer.

          Advertising  revenue  is  recognized  pro-rata  over  the  term of the
          customer contract or arrangement and customer prepayments received are
          recorded as a deferred revenue liability until revenue  recognition is
          proper.

          Graphic arts revenue is recognized at completion of services.

          LED Truck  rental  revenue is  recognized  pro-rata as earned over the
          rental period which generally does not exceed 14 days.

          Territory fees from exclusive  distributors are recorded as a deferred
          revenue liability and then recognized over the term of the distributor
          contract.

          For all revenue types,  recognition  criteria also includes  assessing
          whether pervasive  evidence of an arrangement exits, the sale price is
          fixed or determinable, and collectability is reasonably assured.

          (I)  ADVERTISING

          In accordance with Accounting  Standards Executive Committee Statement
          of Position  93-7,  ("SOP 93-7")  costs  incurred  for  producing  and
          communicating advertising of the Company, are charged to operations as
          incurred.  Advertising  expense for the years ended  December 31, 2002
          and 2001 was $59,615 and $6,308, respectively.

          (J)  INCOME TAXES

          Income taxes are accounted for under the asset and liability method of
          Statement of Financial  Accounting  Standards No. 109, "Accounting for
          Income  Taxes"  ("SFAS  109").  Under SFAS 109 deferred tax assets and
          liabilities   are   recognized   for  the  future   tax   consequences
          attributable to differences  between the financial  statement carrying
          amounts of existing assets and  liabilities  and their  respective tax
          bases.  Deferred tax assets and liabilities are measured using enacted
          tax rates

                                      F-7
<PAGE>

                    NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001
                           --------------------------

          expected  to apply  to  taxable  income  in the  years in which  those
          temporary  differences are expected to be recovered or settled.  Under
          SFAS 109,  the effect on  deferred  tax assets  and  liabilities  of a
          change  in tax  rates is  recognized  in  income  in the  period  that
          includes the enactment date.

          (K)  EARNINGS PER SHARE

          In accordance with,  Statement of Financial  Accounting  Standards No.
          128  "Earnings  per Share",  basic  earnings  per share is computed by
          dividing the net income less preferred dividends for the period by the
          weighted average number of common shares outstanding. Diluted earnings
          per share is computed by dividing net income less preferred  dividends
          by the weighted average number of common shares outstanding  including
          the effect of common stock equivalents.  For 2002 and 2001 diluted net
          loss per  share  was the same as basic  net loss per  share  since the
          effect of dilutive  instruments was  antidilutive due to the net loss.
          The following table summarizes common stock equivalents outstanding at
          December 31, 2002 which may dilute future earning per share.

          Convertible notes                           13,150,032
          Convertible preferred stock                    528,692
          Warrants                                     2,166,558
                                                   -------------
                                                      15,845,282
                                                   =============

          (L)  FAIR VALUE OF FINANCIAL INSTRUMENTS

          Statement  of Financial  Accounting  Standards  No. 107,  "Disclosures
          about Fair Value of Financial  Instruments,"  requires  disclosures of
          information about the fair value of certain financial  instruments for
          which it is practicable  to estimate that value.  For purposes of this
          disclosure,  the fair value of a financial instrument is the amount at
          which the  instrument  could be  exchanged  in a  current  transaction
          between willing parties, other than in a forced sale or liquidation.

          The   carrying   amounts  of  the   Company's   short-term   financial
          instruments,   including  accounts   receivable,   and  other  current
          liabilities  reflected in the accompanying  balance sheet  approximate
          fair value due to the  relatively  short  period to maturity for these
          instruments.

          (M)  RECENT ACCOUNTING PRONOUNCEMENTS

         The Financial  Accounting  Standards  Board has recently issued several
         new accounting pronouncements which may apply to the Company.

          Statement  No.  141  "Business   Combinations"   establishes   revised
          standards for accounting for business combinations.  Specifically, the
          statement  eliminates  the pooling  method,  provides new guidance for
          recognizing  intangible assets arising in a business combination,  and
          calls for disclosure of considerably more information about a business
          combination.  This  statement is effective  for business  combinations
          initiated on or after July 1, 2001. The adoption of this pronouncement
          on July 1,  2001  did not  have a  material  effect  on the  Company's
          financial position, results of operations or liquidity.

                                      F-8
<PAGE>

                    NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001
                           --------------------------

          Statement No. 142 "Goodwill and Other Intangible  Assets" provides new
          guidance concerning the accounting for the acquisition of intangibles,
          except those acquired in a business  combination,  which is subject to
          SFAS 141, and the manner in which  intangibles  and goodwill should be
          accounted  for  subsequent to their  initial  recognition.  Generally,
          intangible assets with indefinite  lives, and goodwill,  are no longer
          amortized;  they are carried at lower of cost or market and subject to
          annual impairment  evaluation,  or interim impairment evaluation if an
          interim triggering event occurs, using a new fair market value method.
          Intangible  assets with finite lives are  amortized  over those lives,
          with no stipulated  maximum,  and an impairment test is performed only
          when a triggering  event occurs.  This  statement is effective for all
          fiscal years  beginning  after December 15, 2001. The adoption of SFAS
          142 on January 1, 2002 did not have a material effect on the Company's
          financial position, results of operations or liquidity.

          In August 2001,  the FASB issued SFAS No. 143,  "Accounting  for Asset
          Retirement  Obligations." The standard requires entities to record the
          fair value of a liability  for an asset  retirement  obligation in the
          period  in  which it is  incurred.  When the  liability  is  initially
          recorded,  the entity  capitalizes a cost by  increasing  the carrying
          amount of the related  long-lived  asset.  Over time, the liability is
          accreted to its present value each period, and the capitalized cost is
          depreciated over the useful life of the related asset. Upon settlement
          of the  liability,  an entity either  settles the  obligation  for its
          recorded amount or incurs a gain or loss upon settlement. The standard
          is effective  for fiscal  years  beginning  after June 15,  2002.  The
          adoption of SFAS No. 143 is not expected to have a material  impact on
          the Company's financial position, results of operations or liquidity.

          Statement  No. 144  "Accounting  for the  Impairment  or  Disposal  of
          Long-Lived  Assets"  supercedes  Statement No. 121 "Accounting for the
          Impairment  of  Long-Lived  Assets  and for  Long-Lived  Assets  to be
          Disposed of" ("SFAS 121"). Though it retains the basic requirements of
          SFAS 121 regarding  when and how to measure an impairment  loss,  SFAS
          144 provides  additional  implementation  guidance.  SFAS 144 excludes
          goodwill and intangibles  not being amortized among other  exclusions.
          SFAS 144 also  supercedes  the  provisions of APB 30,  "Reporting  the
          Results  of  Operations,"   pertaining  to  discontinued   operations.
          Separate reporting of a discontinued  operation is still required, but
          SFAS 144 expands the presentation to include a component of an entity,
          rather  than  strictly  a  business  segment  as  defined in SFAS 131,
          "Disclosures about Segments of an Enterprise and Related Information."
          SFAS 144 also eliminates the current  exemption to consolidation  when
          control over a subsidiary is likely to be temporary. This statement is
          effective for all fiscal years  beginning after December 15, 2001. The
          adoption of SFAS 144 on January 1, 2002 did not have a material effect
          on  the  Company's  financial  position,   results  of  operations  or
          liquidity.

          Statement No. 145,  "Rescission of FASB  Statements No. 4, 44, and 64,
          Amendment  of FASB  Statement  No.  13,  and  Technical  Corrections,"
          updates, clarifies, and simplifies existing accounting pronouncements.
          Statement No. 145 rescinds  Statement 4, which  required all gains and
          losses from  extinguishment of debt to be aggregated and, if material,
          classified as an extraordinary item, net of related income tax effect.
          As a result,  the  criteria in Opinion 30 will now be used to classify
          those gains and losses.  Statement  64 amended  Statement 4, and is no
          longer necessary because Statement 4 has been rescinded.  Statement 44
          was issued to  establish  accounting  requirements  for the effects of
          transition to the provisions of the motor Carrier Act of 1980. Because
          the  transaction  has  been  completed,  Statement  44  is  no  longer
          necessary.

                                      F-9
<PAGE>

                    NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001
                           --------------------------

          Statement  145 amends  Statement  13 to  require  that  certain  lease
          modifications  that have economic  effects  similar to  sale-leaseback
          transactions  be  accounted  for in the same manner as  sale-leaseback
          transactions.  This amendment is consistent with FASB's goal requiring
          similar  accounting   treatment  for  transaction  that  have  similar
          economic  effects.  This  statement  is  effective  for  fiscal  years
          beginning  after May 15,  2002.  The  adoption  of SFAS No. 145 is not
          expected  to  have  a  material  impact  on  the  Company's  financial
          position, results of operations or liquidity.

          Statement No. 146, "Accounting for Exit or Disposal Activities" ("SFAS
          146") addresses the  recognition,  measurement,  and reporting of cost
          that  are  associated  with  exit  and  disposal  activities  that are
          currently  accounted for pursuant to the  guidelines set forth in EITF
          94-3, "Liability Recognition for Certain Employee Termination Benefits
          and Other Costs to exit an Activity  (including  Certain Cost Incurred
          in a  Restructuring),"  cost related to terminating a contract that is
          not a capital  lease and  one-time  benefit  arrangements  received by
          employees who are  involuntarily  terminated - nullifying the guidance
          under EITF 94-3.  Under SFAS 146, the cost  associated with an exit or
          disposal activity is recognized in the periods in which it is incurred
          rather than at the date the Company  committed to the exit plan.  This
          statement is effective for exit or disposal activities initiated after
          December 31, 2002 with earlier application encouraged. The adoption of
          SFAS 146 is not  expected to have a material  impact on the  Company's
          financial position, results of operations or liquidity.

          Statement  No.  148,   "Accounting  for   Stock-Based   Compensation--
          Transition and Disclosure", amends FASB Statement No. 123, "Accounting
          for  Stock-Based  Compensation."  In response  to a growing  number of
          companies  announcing  plans to record  expenses for the fair value of
          stock  options,   Statement  148  provides   alternative   methods  of
          transition  for a voluntary  change to the fair value based  method of
          accounting  for  stock-based  employee   compensation.   In  addition,
          Statement 148 amends the disclosure  requirements  of Statement 123 to
          require more  prominent  and more  frequent  disclosures  in financial
          statements  about  the  effects  of  stock-based   compensation.   The
          Statement  also  improves  the  timeliness  of  those  disclosures  by
          requiring  that this  information  be  included  in interim as well as
          annual financial  statements.  In the past, companies were required to
          make pro forma  disclosures only in annual financial  statements.  The
          transition guidance and annual disclosure  provisions of Statement 148
          are  effective for fiscal years ending after  December 15, 2002,  with
          earlier application  permitted in certain  circumstances.  The interim
          disclosure  provisions are effective for financial reports  containing
          financial  statements for interim periods beginning after December 15,
          2002. The Company  adopted the disclosure  provisions of Statement 148
          for the year ended  December  31, 2002,  but will  continue to use the
          method under APB 25 in accounting for stock  options.  The adoption of
          the  disclosure  provisions  of Statement  148 did not have a material
          impact on the Company's financial  position,  results of operations or
          liquidity.

          (N)  RECLASSIFICATIONS

          Certain   amounts  in  the  2001   financial   statements   have  been
          reclassified to conform to the 2002 presentation.

                                      F-10
<PAGE>

                    NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001
                           --------------------------

NOTE 2 PROPERTY AND EQUIPMENT
-----------------------------

Property and equipment is summarized as follows:
                                                                   2002
                                                              ----------------
     Boards available for lease                              $       670,483
     Equipment and LED truck                                         505,783
     Graphic equipment                                                22,229
     Furniture & fixtures                                             19,034
     LED Truck (under construction), net of impairment               270,355
                                                              ----------------
                                                                   1,487,885
     Less accumulated depreciation                                  (422,015)
                                                              ----------------
                                                             $     1,065,870
                                                              ================

Depreciation was $173,874 and $152,587 in 2002 and 2001, respectively.

During 2001 and 2002,  the Company  paid and accrued a total of $520,355 for the
development  of a second  LED  Truck to be used to  generate  LED  Truck  rental
revenues.  The development of this second truck experienced  technical  problems
and delays resulting in cost increases.  At December 31, 2002 and as of the date
of the accompanying audit report, the development had not yet been completed and
the truck was not placed in service. Accordingly, no depreciation has been taken
on that truck.  Management  has evaluated the recovery of the recorded value and
determined  that an impairment loss of $250,000 should be recognized at December
31, 2002.

NOTE 3 LICENSE
--------------

During 2001,  the  Company,  under a license  agreement,  purchased an exclusive
license in a patent for the  manufacture,  sale,  and  marketing  of direct view
video  displays.  At the  purchase  date of July 23, 2001 and as of December 31,
2002,  the  product  was in its R&D stages,  and no product  was  available  for
marketing  or sale.  The  license  is valid for the entire  patent  term and was
therefore  to be amortized  over a patent life of 17 years,  from the earlier of
the date the  patent is  granted,  or the  Company  obtains a product  ready for
resale. Accordingly, there was no amortization in 2001. At December 31, 2001 the
Company evaluated the  recoverability of the recorded value of the license,  and
since no product had been available for sale and no positive cash flows could be
accurately  projected,  recognized  an impairment  loss on the $100,000  license
asset.  Under the agreement,  the Company must pay royalties  computed as 25% of
revenues  derived from the sale of products  utilizing the patented  technology.
The agreement requires minimum annual royalty payments,  payable  quarterly,  as
follows; $50,000 in year one of contract,  $100,000 in year two, and $250,000 in
years three and each year thereafter after production of a prototype,  which was
completed in October 2001. Accordingly,  the Company recorded royalty expense of
$75,000 in 2002 and deferred  another $75,000 (see below).  In order the satisfy
the minimum royalty obligation,  in August and December 2002, the Company sold a
total 15% of its  license  rights to a third  party in  exchange  for that third
party  paying  the  first  $150,000  of  royalties.  The  sale was  treated  for
accounting  purposes as a sale of future revenues in accordance with EITF 88-18,
and the  Company  has  recorded a deferred  gain  liability  of  $150,000  as of
December 31, 2002 to be  recognized  as revenues  pro-rata  over the term of the
license. In addition,  the Company recorded $75,000 of the royalty expense to be
paid by the third party as a deferred expense asset to be recognized when due in
2003.  The first  agreement for the sale of future  royalties  also  contained a
provision  whereby the  purchaser  of the future  royalties  obtained a right of
first refusal to  participate  in further cash advances to the licensor.  In the
second  agreement,  the  purchaser  also paid a $25,000  fee to the  Company  to
convert the first right of refusal to an absolute right to participate. This fee
was  recorded as other  income in 2002.  The  purchaser  also agreed to loan the
Company up to

                                      F-11
<PAGE>

                    NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001
                           --------------------------

$200,000  bearing  interest  at 8% only  when the loan is  fully  funded.  As of
December 31, 2002, only $120,000 had been funded (see Notes 4 and 5(B))

NOTE 4 NOTES AND LOANS PAYABLE
------------------------------

Notes and loans payable including accrued interest consist of the following:

                                                                       2002
                                                                    ---------
$250,000  notes  payable,  with  interest  at 5%  and  rights  to   $ 270,869
purchase  50,000  common  shares @ $.025 per share 30 days  after
initial  default and an additional  25,000 common shares each and
every month thereafter  while in default.  In default at December
31, 2002.

Three notes  payable for a total  $22,000,  with  interest at 8%.
One half of notes plus  accrued  interest  converted  to Series A
preferred  Stock as of December 31, 2002.  In default at December
31, 2002.                                                              11,000

Note payable dated July 22, 2002, with interest at 10%,  original
principal of $371,250,  due July 21, 2003,  secured by equipment,
convertible  at  lender  option  into  common  stock at $0.50 per
share.                                                                389,467

Note  payable  dated  August  23,  2002,  with  interest  at  8%,
original  principal of $25,000,  due August 22, 2003,  unsecured,
convertible  at  lender  option  into  common  stock at $0.50 per
share.                                                                 25,252

Note payable dated August 23, 2002 with interest at 8%,  original
principal  of $78,432,  due August 22,  2003,  rights to purchase
5,000  common  shares @ $.025  per  share 30 days  after  initial
default  and an  additional  2,500  common  shares each and every
month thereafter  while in default,  convertible at lender option
into common stock at $0.50 per share                                   80,667

Note  payable  dated August 23,  2002,  with  interest at 8%, due
August 22, 2003,  unsecured,  convertible  at lender  option into
common stock at $0.50 per share.                                       94,380

Loan  payable  for  $120,000,  non-interest  bearing  until fully
funded  at  $200,000,  then  interest  at 8%,  due 6 months  from
receipt  of full  $200,000,  convertible  to  Series A  Preferred
Stock at $1.00 per share                                              120,000

Note  payable  dated  October  31,  2002,  non-interest  bearing,
unsecured, due November 30, 2002, in default at December 31, 2002      50,000

Note  payable  dated April 2, 2002,  interest at 10%,  unsecured,
due April 14, 2002, in default at December 31, 2002                    10,000

Note  payable,  non-interest  bearing,  unsecured,  due on demand
with options to purchase shares if in default                          25,000

                                      F-12
<PAGE>

                    NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001
                           --------------------------

$125,000 convertible note payable,  with interest at 15%, secured
by equipment,  convertible  into common stock at $0.25 per share,
in default at December 31, 2002                                       176,305

Loans payable, non-interest bearing, unsecured                         39,000

Loans payable, non-interest bearing, unsecured                          6,000
                                                                   ----------
                                                                   $1,297,940
                                                                   ==========

NOTE 5 LOANS PAYABLE, RELATED PARTIES
-------------------------------------

Related party loans including accrued interest consist of the following:

                                                                       2000
                                                                    ---------
Notes payable to president at 8% interest,  payable from proceeds   $ 303,657
of Swartz  equity  funding,  convertible  to  preferred  stock at
$0.10 per share,  secured by certain  equipment,  furnishings and
accounts receivable of the Company.
                                                                    ---------

                                                                    $ 303,657
                                                                    =========

NOTE 6 COMMITMENTS AND CONTINGENCIES
------------------------------------

          (A)  LEGAL MATTERS

          A plaintiff  has alleged that he holds a convertible  promissory  note
          for  $234,869  at 8%  interest  accruing  from the note date of August
          1999. The Company believes the note is not valid and intends to defend
          this claim.  However,  as a  contingency,  the  Company  has  recorded
          additional  interest expense in 2002 of $53,897 in addition to accrued
          interest  recorded in prior fiscal years of $14,991 and has  reflected
          $303,757 in accrued expenses at December 31, 2002.

          Under an investment  agreement  allowing the Company to demand ("put")
          the purchase of common shares by the investor,  the Company is subject
          to a penalty  of  $100,000,  less any put  amount,  for each six month
          period after the  registration  statement  effective date that it does
          not  put at  least  $1,000,000  and a  $200,000  penalty  if  the  put
          agreement is terminated  automatically or by the Company.  At December
          31, 2002 the Company was liable for  $400,000 in  penalties,  of which
          $200,000  have been waived by Swartz  Private  Equity (see Note 7(C)).
          Accrued penalties were recorded as $200,000 at December 31, 2002.

          The  Company  was  party to a  license  agreement  underlying  certain
          products  they were  selling.  The  licensor  terminated  the  license
          agreement  in  February  2002 due to  non-payment  of certain  minimum
          royalties by the Company and has  initiated a lawsuit to recover those
          minimum  royalties  plus  damages  totaling  approximately   $533,000.
          Management believes it is not probable that the plaintiff will recover
          the entire  $533,000  and has  therefore  only accrued  $83,924  which
          represents the minimum royalties plus accrued interest due through the
          license termination date.

          (B)  ROYALTY AGREEMENTS

          The  Company  is party to a license  agreement  which is valid for the
          entire  patent  term for the  patent  underlying  the  license.  As of
          December 31, 2002, a patent had not been granted.

                                      F-13
<PAGE>

                    NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001
                           --------------------------

          Accordingly,  the minimum term of the minimum guaranteed royalties due
          under the  agreement  is 17 years from the time the patent is granted.
          Minimum future royalties are due as follows:

          Year Ending December 31,                                   2001
                                                                  -----------

                         2003                                     $   137,500
                         2004 and each year thereafter through
                         expiration of patent                         250,000

          (C)  CONSULTING AGREEMENTS

          In May 2001,  the Company  executed two  consulting  agreements  which
          expire in May 2003. Each consultant  provides  financial and marketing
          advisory services to the Company in exchange for a warrant to purchase
          500,000  common  shares at $0.75 for one  consultant  and a warrant to
          purchase 500,000 common shares at $1.00 to the other consultant. Under
          the  Black-Scholes  option pricing model the value of the warrants was
          computed as $211,700  to be  recognized  over the two year term of the
          agreement. Related consulting expense was $105,850 and $61,746 in 2002
          and 2001,  respectively.  Deferred  consulting  expense  deducted from
          equity at December 31, 2002 was $44,104.  The warrants were  exercised
          in June 2001. (See Note 7)

          (D)  EMPLOYMENT AGREEMENTS

          In  November  1999,   effective  the  Company  executed  a  three-year
          employment agreement with its president.  The agreement provides for a
          base salary of $140,000 in year one and $120,000 per year in years two
          and three, a non-accountable  expense allowance of $10,000 per year, a
          stock  issuance equal to 10% of the  outstanding  common shares at the
          agreement date, and discretionary incentive compensation payments. The
          agreement  was renewed in late 2002 for another  three-year  term with
          the same provisions.

          On May 22, 2002 the Company executed a three-year employment agreement
          with its Director of Operations. The agreement calls for a base salary
          of $75,000,  a  discretionary  bonus,  and an issuance with 2.5 months
          after the close of each fiscal year of $25,000  worth of common  stock
          based on the value as  determined  on  December  31 as  defined in the
          agreement.  In addition the  agreement  provide for a sign-on bonus of
          $125,000  in the form of a  promissory  note at 8%.  On June 18,  2002
          $100,000 of that note was converted to 200,000  shares of common stock
          at a rate of $0.50 per share (see Note 7).  The  Company  accrued  the
          $25,000  share  value as a  liability  at  December  31, 2002 which is
          included in accrued compensation.

          (E)  LEASES

          The Company executed a  non-cancelable  5-year office lease commencing
          May 1, 2001.  Annual rent  escalation is the greater of the CPI or 3%.
          Future minimum lease payments under this lease are as follows:

                                      F-14
<PAGE>

                    NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001
                           --------------------------

          Year Ending December 31,                           2001
                                                      --------------

                            2003                      $      135,874
                            2004                             139,951
                            2005                             144,149
                            2006                              60,800
                                                      --------------
                                                      $      480,774
                                                      ==============

          Rental   expense  was   $133,183   and  $135,726  in  2002  and  2001,
          respectively.

          The Company  subleases  part of its corporate  office space to another
          company,  under  common  management,  for  $4,800  per  month  under a
          one-year lease which expires January 31, 2003. A receivable of $30,991
          due from the tenant was 100%  reserved at December 31, 2002 due to the
          Company's assessment that the tenant does not have the current ability
          to pay.

NOTE 7 STOCKHOLDERS' EQUITY
---------------------------

          (A)  PREFERRED STOCK

          In 2002, the Company designated  5,000,000 share of preferred stock as
          new Series A Convertible Preferred Stock ("Series A"). The Series A is
          convertible to common shares on a four-for-one basis, is due dividends
          at $0.10 per share as authorized by the Board, has a liquidation value
          of $1.00 per share and has  equivalent  voting rights as common shares
          on a share for share  basis.  Although  the Company  granted  Series A
          preferred  stock under  certain  debt  conversions  (see  below),  the
          Company has not filed as an amendment to its articles of incorporation
          for the designation of Series A preferred stock with the State and has
          not issued such shares.  Accordingly,  the shares,  which are issuable
          under various contracts, are reflected as issuable in the accompanying
          consolidated balance sheet at December 31, 2002.

          On May 2,  2002  the  Company  granted  12,173  Series  A  convertible
          preferred  shares in exchange  for $12,173 of  principal  and interest
          payable  on loans to three  individuals.  The  preferred  shares  were
          valued at $3.48 per share  based on the  quoted  trading  price of the
          common stock on May 2, 2002 and the 4-for-1  conversion  ratio for the
          preferred shares which were immediately convertible.  Accordingly, the
          Company recorded a settlement loss of $30,183.

          (B)  COMMON STOCK ISSUANCES

          During June 2001, the Company sold 500,000, 500,000 and 100,000 common
          shares  pursuant to warrant  exercises for cash of $500,000 ($1.00 per
          share),  $375,000  ($0.75 per share),  and $50,000  ($0.50 per share),
          respectively.  The  average  sale  price for the month  was  $0.84.  A
          related  subscription  at December  31, 2001 of $333,375 was paid with
          services in 2002.

          During 2001,  the Company  issued  328,186 common shares to an officer
          and 172,740  shares to others for services  rendered.  The shares were
          valued at the contemporaneous  average private sale price of $0.84 per
          share resulting in a compensation expense of $275,676 and a consulting
          expense of $145,101.

                                      F-15
<PAGE>

                    NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001
                           --------------------------

          During 2001,  the Company  issued 35,000 common shares in exchange for
          debt of  $28,000.  The  stock was  valued  at $0.80  per  share  which
          approximated the contemporaneous private sale price of $0.84 per share
          on the settlement date resulting in no gain or loss on the exchange.

          During 2002,  the Company sold common stock for cash.  In May 2002 the
          Company  sold 80,000  restricted  common  shares for one  investor for
          $40,000  or  $0.50  per  share  pursuant  to a  warrant  exercise.  In
          September  2002 the Company sold 166,667  restricted  common shares at
          $0.30 per  share and  100,000  restricted  common  shares at $0.50 per
          share to one investor as one  transaction  for  aggregate  proceeds of
          $100,000  or an average  price of $0.375  per share.  From May 2002 to
          December 2002 the quoted trading price for freely traded common shares
          was  generally  below the  private  sale price for  restricted  common
          shares and therefore  the Company used the lower quoted  trading price
          as a measure to value non-cash issuances during these dates.

          During 2002,  the Company  issued an aggregate  325,000  common shares
          pursuant to exercises of options granted under the default  provisions
          of certain  promissory  notes (see Note 4). The  issuance  resulted in
          cash proceeds of $1,175 and  subscriptions  receivable of $6,950 for a
          total issuance price of $8,125 or $.025 per share. Total subscriptions
          receivable  related to exercised  options under default  provisions of
          promissory  notes  through  December 31, 2002 were $10,075 at December
          31, 2002.

          During 2002, the Company  issued 730,292 shares for services  rendered
          to various  non-employee  consultants and service  providers valued at
          prices  ranging  from $0.35 to $0.53 based on  contemporaneous  quoted
          trading prices or cash sale prices,  as  applicable,  for an aggregate
          value of  $276,719  charged  to  expense  in 2002.  The  $276,219  was
          allocated to a consulting expense of $299,919 and a settlement gain of
          $23,200 since one of the  transactions has been  contractually  valued
          $23,200 lower than the value of the stock issued.

          In December  2002,  the Company  issued  505,502  common shares to its
          president as a bonus under his employment  agreement.  The shares were
          valued at the $0.26 quoted trading price at the grant date a resulting
          in a  compensation  expense  charged to operations in December 2002 of
          $131,431.

          During  2002,  the  Company  issued  65,000  common  shares  under two
          settlements.  In April 2002 a settlement  for 40,000 common shares was
          valued  at  the  quoted  trading  price  of  $1.00  per  share  at the
          settlement  date;  and in October 2002 a settlement  for 25,000 common
          shares  valued at the quoted  trading  price of $0.22 per share at the
          settlement  date  resulting  in  an  aggregate  settlement  charge  to
          operations of $45,500.

          During 2002,  the Company  settled  various  loans  totaling  $322,046
          through the issuance of 570,000 shares of common stock.  The stock was
          valued at an  aggregate  $231,200  based on the quoted  trading  price
          which  ranged  from $0.21 to $0.56 on each of the  various  settlement
          dates  resulting in a settlement gain of $98,299 and a settlement loss
          of $7,052.

          During  2002,   the  Company   issued   100,000  common  shares  to  a
          vendor/creditor  as a forbearance  to avoid or delay  potential  legal
          action  relating to collection of the debt.  The shares were valued at
          the $0.94 per  share  quoted  trading  price on the  forbearance  date
          resulting in a forbearance  expense of $94,000 included in general and
          administration expense.

                                      F-16
<PAGE>

                    NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001
                           --------------------------

          During 2002,  the Company  issued  1,000 common  shares as part of the
          purchase  price of certain used  equipment.  The shares were valued at
          the $0.40 quoted  trading price on the purchase  date  resulting in an
          asset of $400.

          During April 2002,  the Company agreed to issue 1,000 shares as a loan
          fee. The shares were valued at the $1.25 quoted  trading  price on the
          agreement  date  resulting  in an expense of $1,250.  At December  31,
          2002,  the shares had not been issued and are reflected as issuable in
          the accompanying balance sheet.

          (C)  INVESTMENT AGREEMENT

          A May 19, 2000 agreement ("Agreement") with Swartz Private Equity, LLC
          (Swartz)  provides  the  Company an equity  line of up to  $25,000,000
          during the three year period following the effective date of September
          28, 2000 of the registration  statement covering the Swartz Agreement.
          The  Company may sell its common  stock to Swartz  under a "put right"
          subject  to  individual  put  quantity  limitations  as defined in the
          Agreement,   and  certain   provisions   subject  the  put  rights  to
          termination,   including  periods  when  the  Company's   registration
          statement is not  effective.  The purchase  price of the common shares
          shall be the lesser of (i) the market  price for such put,  less $0.10
          or (ii) 92% of the market price,  but no less than a minimum put share
          price which the Company may designate.  The market price is defined as
          the lowest  closing  bid price for the period of 20 days after the put
          date.  The minimum put share price shall be no greater than 80% of the
          closing bid price on the advance put notice date,  which is from 10 to
          20 days before any intended put date. The Company is also subject to a
          penalty of  $100,000,  less any put amount,  for each six month period
          after the registration  statement  effective date that it does not put
          at least  $1,000,000  and a $200,000  penalty if the put  agreement is
          terminated  automatically or by the Company.  At December 31, 2002 the
          Company  computed  $400,000 in penalties,  of which $200,000 have been
          waived by Swartz  Private  Equity  resulting in an accrued  penalty of
          $200,000 at December  31,  2002.  For all  proceeds  raised under this
          agreement,  the Company shall pay a 7% fee to a placement  agent.  For
          accounting  purposes,  such  fee will be  charged  against  the  gross
          proceeds to additional paid-in capital.

          At the Agreement  date, the Company was required to and issued 200,000
          "commitment  warrants"  exercisable at $1.50 per share, expiring March
          21, 2005. Utilizing the Black Scholes formula, assuming a 5 year life,
          no expected dividends,  volatility of 35% and interest rate of 6%, the
          Company determined that the fair value of "commitment warrants" issued
          to be $57,200 and expensed that value  immediately  as the  commitment
          warrants were fully  vested.  For each put, the Company is required to
          issue and deliver to Swartz  "purchase  warrants" to purchase a number
          of shares of common stock equal to 10% of the common  shares issued to
          Swartz  in  each  applicable  put.  Each  "purchase  warrant"  will be
          exercisable  at a price that will  initially  equal 110% of the market
          price for that put and  thereafter  the exercise  price shall be reset
          every six months. The warrants are immediately  exercisable and have a
          term expiring 5 years thereafter. In addition, at the earlier of March
          15, 2001 or the date of the first put, the Company must start to issue
          "additional  warrants" such that the sum of the "commitment  warrants"
          and  "additional  warrants"  equals at least 4% of the  fully  diluted
          shares of common stock of the Company that are then  outstanding.  The
          additional  warrants  will expire seven years from the issuance  date,
          have reset  provisions  every six months and have an initial  exercise
          price of equal to 110% of the market price as defined. The reset price
          will be the lowest initial or reset price which effectively

                                      F-17
<PAGE>

                    NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001
                           --------------------------

          may lower the exercise  price but may not  increase it. The  Company's
          registration  statement  became  initially  effective on September 28,
          2000 and the Company  exercised  its first put, for 100,000  shares on
          July 17, 2001, the advance notice date. Thus, the triggering event for
          the "additional warrants" provision was the "earlier of" date of March
          15,  2001.  Accordingly,  during  2001 the Company  issued  16,796 and
          25,478  "additional  warrants"  expiring  April 17,  2006 and July 17,
          2006,  respectively,  to  purchase  42,274  additional  shares  of the
          Company's common stock at an initial exercise price of $1.50. The fair
          value of the "additional warrants" issued was $12,090,  using the same
          Black-Scholes  assumptions as for the commitment warrants above, which
          was  charged  to  expense  in 2001.  During  2002 the  Company  became
          obligated to issue 299,284  "additional  warrants."  Such warrants are
          issuable with an initial  estimated  exercise price of $0.51 per share
          and expire  December 31, 2007.  These warrants were valued at $102,555
          using a  Black-Scholes  pricing model with the following  assumptions:
          expected term of 2 years, volatility of 164%, dividends of zero, and a
          discount rate of 2%. (See Note 7(D))

          Due to the Company's  registration statement becoming not effective as
          a result of a post  effective  amendment,  Swartz was not  required to
          purchase  the 100,000 put shares and thus the Company has not recorded
          such shares as outstanding for accounting  purposes in accordance with
          the accounting  rules for contingent  shares under the Emerging Issues
          Task Force Issue Topic D-90 and SFAS 128 "Earning per Share".

          (D)  STOCK OPTIONS AND WARRANTS

          On June 26, 2000,  the  Company's  Board of Directors  adopted the New
          Millennium  Media  International,  Inc.  2000 Stock  Option  Plan (the
          "Plan"). The Plan provides for the issuance of incentive stock options
          (ISO's) to any  individual  who has been employed by the Company for a
          continuous  period of at least six months.  The Plan also provides for
          the issuance of Non Statutory  Options (NSO's) to any employee who has
          been  employed by the Company for a continuous  period of at least six
          months,  any director,  or consultant to the Company.  The Company may
          also issue reload  options as defined in the plan. The total number of
          common  shares of common  stock  authorized  and reserved for issuance
          under the Plan is  3,000,000  shares.  The Board shall  determine  the
          exercise  price  per share in the case of an ISO at the time an option
          is granted and such price shall be not less than the fair market value
          or 110% of fair  market  value in the case of a ten percent or greater
          stockholder.  In the case of an NSO, the  exercise  price shall not be
          less than the fair market  value of one share of stock on the date the
          option is granted. Unless otherwise determined by the Board, ISO's and
          NSO's granted under the Plan have a maximum  duration of 10 years.  As
          of December 31, 2002, no options have been granted under the Plan.

          In May 2001, the Company granted 500,000  warrants at a $0.75 exercise
          price and 500,000  warrants  at a $1.00  exercise  price for  services
          under two year  consulting  agreements.  The  consultants  were  fully
          vested on the grant date thereby  establishing a measurement  date for
          the  consulting   expense.   The  expense  was  determined  using  the
          Black-Scholes  option pricing model  resulting in a value of $211,700.
          During  2001,  $61,746 of this value was  expensed  and  $149,954  was
          reflected  as deferred  expense  deducted  from equity at December 31,
          2001. During 2002, $105,850 was expensed leaving a deferred balance of
          $44,104 at December 31, 2002.  The Black  Scholes  formula,  assumed a
          0.08 year  life,  volatility  of 76%,  no  expected  dividends,  and a
          discount rate of 3.7%. These warrants were exercised in June 2001.

                                      F-18
<PAGE>

                    NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001
                           --------------------------

          During July to December 2001, the Company  granted  175,000 options to
          purchase common stock at $.025 per share under the default  provisions
          of  certain   promissory  notes.  The  options  were  valued  using  a
          Black-Scholes  model  resulting in an interest  expense of $211,483 in
          2001. The Black Scholes formula, assumed a 0.08 year life, no expected
          dividends, volatility of 76% and interest rate of 2.59%. These options
          have been typically  exercised  immediately or within one month. There
          were 25,000 of these options  unexercised at December 31, 2001. During
          2002 the Company granted 300,000 options under the default  provisions
          which were valued at $85,002 and charged to interest expense using the
          Black-Scholes   option  pricing  model  with  a  0.08  expected  life,
          volatility of 164%, zero expected dividends and a discount rate of 2%.
          All of these options were exercised as of December 31, 2002.

          In 2002 and 2001, the Company granted  299,284 and 42,274  "additional
          warrants," respectively, to Swartz. The 299,284 warrants have not been
          issued as of the date of the accompanying audit report.  These options
          to Swartz have  exercise  price  reset  provisions  which  require the
          Company to use variable accounting for expensing these options.  Under
          variable  accounting,  the  Company  estimates  the fair  value of the
          options at each balance sheet date and adjusts the  aggregate  expense
          for all  warrants  granted  under  this  provision  either up or down.
          During 2001 the Company charged $12,090 to commitment expense.  During
          2002 the Company issued the additional 299,284 warrants and priced and
          valued those warrants under the Black-Scholes method based on the year
          end quoted  market price of the common  stock.  The Company also reset
          the exercise price of the prior warrants as follows:  16,796  warrants
          at $0.28;  25,478 at $0.51.  The result under the variable  accounting
          method was a net charge to commitment expense of $61,236 in 2002. (See
          Note 7)

          During  2002 the Company  granted  warrants  to  non-employee  service
          providers to purchase an aggregate 2,124,284 common shares at exercise
          prices ranging from $0.20 to $1.00 The warrants to non-employees  were
          valued at an  aggregate  $388,275  which  was  charged  to  consulting
          expense immediately since the services were considered completed.  The
          warrants were valued under a Black-Scholes  option pricing model using
          the  following  assumptions:  expected  terms  of  2  years,  expected
          volatility of 164%, dividends of zero, and a discount rate of 2%.

          A summary of the options  issued to  non-employees  for services as of
          December  31, 2002 and 2001 and changes  during the years is presented
          below:

<TABLE>
<CAPTION>
                                                                  2002                                    2001
                                                   ------------------------------------    ------------------------------------
                                                     Number of            Weighted           Number of            Weighted
                                                    Options and            Average          Options and            Average
                                                      Warrants         Exercise Price         Warrants         Exercise Price
                                                   ---------------     ----------------    ---------------     ----------------
          <S>                                      <C>              <C>                    <C>              <C>
          Stock Options
          Balance at beginning of period                 367,274    $       1.28                 800,000    $       1.19
          Granted                                      2,124,284    $       0.45               1,167,274    $       0.77
          Exercised                                     (325,000)   $       0.03              (1,100,000)   $       0.80
          Forfeited                                        -        $        -                  (500,000)   $       1.00
                                                   ---------------     ----------------    ---------------     ----------------
          Balance at end of period                     2,166,558    $       0.66                 367,274    $       1.28
                                                   ===============     ================    ===============     ================

          Options exercisable at end of period         2,166,558    $       0.66                 367,274    $       1.28
                                                   ---------------     ----------------    ---------------     ----------------
          Weighted average fair value of options                    $       0.26                            $       0.20
            granted during the period                                  ================                        ================
</TABLE>

                                      F-19
<PAGE>

                    NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001
                           --------------------------

          The  following  table  summarizes   information   about  employee  and
          non-employee  stock options and warrants  outstanding  at December 31,
          2002:

<TABLE>
<CAPTION>
                              Options and Warrants Outstanding                          Options and Warrants Exercisable
          --------------------------------------------------------------------------    ----------------------------------
                                    Weighted
                                      Number            Average          Weighted                              Weighted
                  Range of        Outstanding at       Remaining          Average            Number             Average
                  Exercise         December 31,       Contractual        Exercise        Exercisable at        Exercise
                    Price              2002               Life             Price        December 31, 2002        Price
                --------------    ----------------    -------------     ------------    ------------------    ------------
<S>          <C>                        <C>             <C>          <C>                        <C>        <C>
             $           0.29             299,284       5.00 Years   $         0.29               299,284  $         0.29
                         0.25             100,000       4.88 Years             0.25               100,000            0.25
                         0.20             100,000       4.74 Years             0.20               100,000            0.20
                         0.51              25,478       3.55 Years             0.51                25,478            0.51
                         0.28              16,796       3.30 Years             0.28                16,796            0.28
                  0.35 - 1.00           1,200,000       2.88 Years             0.68             1,200,000            0.68
                         1.50             100,000       2.58 Years             1.50               100,000            1.50
                         1.50             200,000       2.22 Years             1.50               200,000            1.50
                         0.25             100,000       2.00 Years             0.25               100,000            0.25
                         0.75              25,000       0.11 Years             0.75                25,000            0.75
                                  ----------------                      ------------    ------------------    ------------
                                        2,166,558                    $         0.66             2,166,558  $         0.66
                                  ================                      ============    ==================    ============
</TABLE>

NOTE 8 RELATED PARTY TRANSACTIONS
---------------------------------

The Company  subleases  part of its corporate  office space to another  company,
under  common  management,  for $4,800 per month  under a one -year  lease which
expires  January 31, 2003. A receivable  of $30,991 due from the tenant was 100%
reserved at December 31, 2002 due to the  Company's  assessment  that the tenant
does not have the current ability to pay.

The Company  has loans  payable  including  accrued  interest  to its  president
totaling $303,657 at December 31,
2002.  (See Note 5)

NOTE 9 INCOME TAXES
-------------------

There  was no  income  tax  expense  in 2002 and 2001 due to the  Company's  net
losses.

The  Company's  tax  expense  differs  from the  "expected"  tax expense for the
periods  ended  December  31, 2001 and 2000,  (computed  by applying the Federal
Corporate tax rate of 34% to loss before taxes), as follows:

                                                 2002                 2001
                                            ----------------     ---------------
 Computed "expected" tax benefit         $      (1,170,878)           (619,566)
 Change in valuation allowance                     799,663             619,566
 Equity instruments for services                   371,216                -
                                            ----------------     ---------------
                                         $            -       $           -
                                            ================     ===============

                                      F-20
<PAGE>

                    NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001
                           --------------------------

The tax effects of temporary  differences that gave rise to significant portions
of deferred  tax assets and  liabilities  at  December  31, 2001 and 2000 are as
follows:

                                                   2002               2001
                                              ----------------   ---------------
Deferred tax assets:
Net operating loss carry forwards            $      1,980,165   $    1,180,502
Valuation allowance for deferred tax asset         (1,980,165)      (1,180,502)
                                              ----------------   ---------------
                                             $           -      $         -
                                              ================   ===============

After  consideration  of all the evidence  management has determined that a full
valuation allowance is necessary to reduce the deferred tax assets to the amount
that will more likely than not be realized.

At January 1, 2002 the valuation  allowance was $1,180,502.  The increase during
2002 was $799,663.

At December  31,  2002,  the  Company has  available  net  operating  loss carry
forwards of approximately $5,824,015, which expire through 2022.

NOTE 10 CONCENTRATIONS
----------------------

During 2002, 45% of revenues were derived from two customers at 23% and 22%.

NOTE 11 GOING CONCERN
---------------------

As reflected in the  accompanying  financial  statements,  the Company has a net
loss of $3,443,760 in 2002, an accumulated deficit of $6,915,826 at December 31,
2002; cash used in operations in 2002 of $642,406, and a working capital deficit
of $3,020,220 at December 31, 2002.  The ability of the Company to continue as a
going  concern is dependent on the  Company's  ability to further  implement its
business plan, raise capital, and generate revenues.

The Company is working  towards  re-filing  its Form SB-2 with the United States
Securities  and Exchange  Commission  in order for it to become  effective.  The
Swartz  $25,000,000  equity line should then become available for the Company to
obtain the necessary funding to expand its operations.

NOTE 12 SUBSEQUENT EVENTS
-------------------------

In January 2003,  certain creditors,  officers,  and employees agreed to convert
$1,021,655 of notes and accrued compensation to Series A, Convertible  Preferred
Stock at $1.00 per share.  The  conversion is contingent on the Company  raising
$1,000,000 by the sale of Series A, Convertible Preferred Stock by May 15, 2003.
If the  Company  does not  raise  such  funds,  the  creditors  may  cancel  the
conversion  agreement at any time prior to September 25, 2003 by written  notice
to the Company.

                                      F-21
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