<PAGE>

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

                                   FORM 10-KSB
(Mark One)

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

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002

                                       OR

 [   ]   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934   (NO FEE REQUIRED)

         For the transition period from _____ to _____

                          Commission File No. 000-24835

                               LEGEND MOBILE, INC.
                               -------------------
                 (Name of Small Business Issuer in its Charter)

           DELAWARE                                       38-3399098
           --------                                       ----------
(State or Other Jurisdiction of             (I.R.S. Employer Identification No.)
 Incorporation or Organization)

                   450 SOUTH WAGNER ROAD, ANN ARBOR, MI 48104
                   ------------------------------------------
                    (Address of Principal Executive Offices)

                                 (734) 327-9556
                                 --------------
                (Issuer's Telephone Number, Including Area Code)

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

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

                          COMMON STOCK, PAR VALUE $.001
                          -----------------------------
                                (Title of Class)

Check whether the issuer: (1) Filed all reports required to be filed by Section
13 or 14(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.
                                  Yes [X] No [ ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B 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]

State issuer's revenues for its most recent fiscal year:  $61,826.

The aggregate market value of the voting stock held by non-affiliates computed
by reference to the average bid and asked prices of such stock on December 31,
2002 was $6,170,974.

The number of shares outstanding of the issuer's common stock as of December 31,
2002 was 8,579,936.

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

<PAGE>

                                     PART I

ITEM 1.  BUSINESS

CAUTIONARY STATEMENT FOR PURPOSES OF "SAFE HARBOR PROVISIONS" OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995.

Certain statements contained in this Annual Report on Securities and Exchange
Commission ("SEC") Form 10-KSB ("Form 10-KSB") constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. These statements involve known and unknown risks, uncertainties and
other factors that may cause our or our industry's actual results, levels of
activity, performance or achievements to be materially different than any
expressed or implied by these forward-looking statements. These statements may
be contained in our filings with the Securities and Exchange Commission, press
releases, and written or oral presentations made by our representatives to
analysts, rating agencies, stockholders, news organizations and others. In some
cases, you can identify forward-looking statements by terminology such as "may,"
"will," "should," "intend", "expects," "plans," "anticipates," "believes,"
"estimates," "predicts," "potential," "continue," or the negative of these terms
or other comparable terminology. Although we believe that the expectations in
the forward-looking statements are reasonable, we cannot guarantee future
results, levels of activity, performance or achievements.

                                  OUR BUSINESS

We are a developer and marketer of mobile accessories such as faceplates for
cellular phones, mobile data services, and mobile applications. We have
licensing agreements with a number of popular licensors including Nelly,
Christina Aguilera, Playboy Enterprises, Rusty Wallace, and the Arena Football
League. We seek to sell our products through traditional retailers, online
retailers, and through direct response channels. Our products are manufactured
by third parties utilizing our designs and licensed trademarks.

                             OUR SOURCES OF REVENUE

SALES OF MOBILE ACCESSORIES

We derive our limited revenues substantially from the sale of covers for mobile
phones. Our suppliers require us to purchase these products and resell them to
consumers and wholesalers. We created products under our licenses from athletes,
entertainers, and popular trademarks.

SALES OF MOBILE GAMES

We also sell mobile games such as "Rapstar Featuring Nelly" and "On Tour with
Christina Aguilera." We also sell SMS trivia games featuring both Nelly and
Christina through an association with Air Games wireless to Tellus Mobility
subscribers in the Canadian market. We are negotiating to market our games to
carriers outside of the United States.

SALES OF MOBILE APPLICATIONS

We sell a Java based application for mobile phones called "Christina
Everywhere." This product is available to Nextel subscribers that have the iDen
services of phones. We have substantially completed the developed of Playboy
Mobile.

                                       2

<PAGE>

We also are seeking to sell mobile application software either via over the air
download or bundled with a particular mobile phone. These applications may be
sold as a subscription or as a single download. We have entered into an
agreement with the American Society of Composers, Authors and Publishers
("ASCAP") for the licensing of ringtones for mobile phones. ASCAP maintains the
rights to 8 million copyrighted musical works.

                             MARKETING AND PROMOTION

We continually evaluate numerous ways to reach our potential customers and to
promote our products. We intend to continue to promote our products through the
following means:

         o        On-site promotions. We are negotiating to sell and promote our
                  Christina Aguilera products as part of her tour merchandising
                  during her upcoming tour. We are also negotiating to sell our
                  NASCAR associated products at stock car races.

         o        Develop co-marketing and co-sales promotions. We are
                  negotiating to sell our mobile accessories through additional
                  carriers similar to our relationships with Nextel and Tellus
                  Mobility.

         o        Advertise our celebrity-branded phones and mobile software
                  through traditional media such as radio, newspapers, magazines
                  and television.

                                 GROWTH STRATEGY

We believe we have a strong collection of licenses to exploit in the fields of
mobile games, mobile accessories, and mobile data. The company is targeting
specific vertical markets such as youth, men, and sports fans. NASCAR is
considered to be one of the fastest growing spectator sports in America with
increasing attendance at its live events and increased viewership of its
television products. Nelly and Christina Aguilera are two of the most popular
recording artists in the United States have sold millions of CDs in the past
several years.

                      RISKS THAT MAY AFFECT FUTURE RESULTS

The following risk factors and other information included in this Annual Report
should be carefully considered. The risks and uncertainties described below are
not the only ones we face. Additional risks and uncertainties not presently
known to us or that we currently deem immaterial also may impair our business
operations. If any of the following risks actually occur, our business,
financial condition and operating results could be materially adversely
affected.

WE HAVE AN ACCUMULATED DEFICIT AND ANTICIPATE FURTHER LOSSES.

We have incurred significant losses since we began doing business. There can be
no assurance that our services and products will ever generate sufficient
revenues or that our operations will ever be profitable. As of December 31,
2002, we had an accumulated deficit of $15,057,468. We expect to incur operating
losses for the foreseeable future due to the significant expenses which we
expect to incur in the continued development and marketing of the business we
conduct. These expenses include substantial advance royalty payments that we
have agreed to make to several models and celebrities in connection with license
agreements.

                                       3

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We have generated extremely limited revenues to date from the business we
conduct and there can be no assurance that we will ever generate revenues from
the business we conduct. We also expect to significantly increase our operating
expenses to expand our sales and marketing operations, to fund greater levels of
product development, and to develop other forms of revenue generating business
and licensing of our proprietary materials to others.

WE RECEIVED AN OPINION FROM OUR ACCOUNTANTS FOR THE PERIOD ENDED DECEMBER 31,
2002 WHICH RAISED DOUBT ABOUT OUR ABILITY TO CONTINUE AFTER SUCH DATE AS A GOING
CONCERN.

Our consolidated financial statements for the year ended December 31, 2002,
which are included in this Form 10-KSB, indicate that there was substantial
doubt as of December 31, 2002 about our ability to continue as a going concern

due to our need to generate cash from operations and obtain additional
financing.

WE NEED TO RAISE ADDITIONAL FUNDS TO FUND OUR BUSINESS OPERATIONS.

We need to raise additional funds because our cash flows have proven to be
insufficient to fund operations, including our obligations to pay minimum
royalties under our licensing agreements. We are currently in default on several
of our licenses including Playboy Enterprises, Christina Aguilera, and several
of our NASCAR drivers Mark Martin, Bill Elliott, and Jeremy Mayfield. There can
be no assurance that additional financing will be available to us on
commercially reasonable terms, or at all. We may raise funds through equity or
debt financings, depending on our opportunities. If we raise additional funds by
issuing equity securities, this will further dilute the interests of our current
stockholders. If we raise additional funds by issuing debt securities, we will
be subject to the risks associated with incurring substantial indebtedness,
including the risks that interest rates may fluctuate and cash flow may be
insufficient to pay principal and interest on any such indebtedness. We have no
current arrangements with respect to, or sources of, additional financing, and
it is not anticipated that our existing stockholders will provide any portion of
our future financing requirements.

WE MAY NOT BE ABLE TO COMPETE SUCCESSFULLY IN THE MOBILE PHONE, MOBILE
ACCESSORY, MOBILE DATA AND GAMING, AND OPERATING SYSTEM SOFTWARE MARKETS. THIS
WOULD HAVE A MATERIAL ADVERSE EFFECT ON OR BUSINESS, RESULTS OF OPERATIONS AND
FINANCIAL CONDITION.

As we attempt to expand into the mobile phone, accessory, and mobile services
software markets, our future growth will depend on the commercial success of our
Nelly, NASCAR associated and Christina Aguilera mobile devices. The markets for
these products and services are highly competitive and we expect competition to
increase in the future. Most of our competitors in this market have
significantly greater financial, technical and marketing resources than we do.
This will make it difficult for us to compete successfully in the hand-held
device and operating system software markets.

THE LOSS OF OUR CHIEF EXECUTIVE OFFICER'S SERVICES WOULD HAVE A MATERIAL ADVERSE
EFFECT ON US.

Our success will be largely dependent on the efforts of Peter Klamka, our
Chairman, President and Chief Executive Officer, and his ability to forge new
relationships with celebrities and to maintain such relationships, as well as to
oversee the development and maintenance of our products. Our success will also
be highly dependent on Mr. Klamka's ability, as well as the ability of others
employed by us, to successful market new products and develop new products. The
loss of his services would have a material adverse effect on our business and
prospects.

We have not entered into an employment agreement with Mr. Klamka and Mr. Klamka
has not entered into any agreement restricting his involvement in a business
which competes with us. As a result, Mr. Klamka is an employee-at-will and has
the right to leave us at any time. Mr. Klamka has informed us that he intends to
devote a substantial portion of his working time to our business and that he
also intends to devote a portion of his time to other business interests that do

                                       4

<PAGE>

not compete with our business. In addition, Mr. Klamka is not restricted from
entering into a competing business after the term of his employment with us;
provided, however, that he would not be permitted to use proprietary information
and trade secrets belonging to us. Our success will also be dependent upon our
ability to hire and retain marketing, financial and other personnel. Competition
for qualified personnel is intense and there can be no assurance that we will be
able to hire or retain additional qualified personnel.

EMPLOYEES

We presently employ two individuals, Peter Klamka, its President and Eric
Joffe. Chris Giordano resigned as of January 2003 as Chief Operating Officer.

ITEM 2.  FACILITIES

We currently maintain our executive offices, consisting of 1,353 square feet of
space, at 450 S. Wagner Road in Ann Arbor, Michigan. The monthly rent is $1,300
plus triple net expenses. The lease expires on February 2004.

ITEM 3.  LEGAL PROCEEDINGS

The Loni Z. Buck Matter

The Company is currently involved in litigation entitled Loni Z. Buck f/s/a Loni
Z. Spurkeland v. PTN Media, Inc. A Summons and Complaint was filed by Loni Z.
Buck on or about May 12, 2001 in the Supreme Court of the State of New York
County of New York seeking $67,750 in damages related to an investment in the
Company. The parties to this action are involved in settlement negotiations at
this time.

Other Litigation

The Company is a defendant in a matter involving the supplier of Palm cases. The
total amount of the claim is $50,000. The Company has defenses due to the
untimely delivery of product and quality issues. The Company is negotiating a
settlement of this claim at this time for a lower amount.

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

No matters were submitted for shareholder approval during the fourth quarter of
the fiscal year covered by this Report.

                                       5

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PART II

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

Our common stock is traded on NASD Electronic Bulletin Board under the symbol
LGMB. Prior to July 5, 2002, it traded under the symbol PTMN. The following
table sets forth the range of high and low bid quotations for each of the prior
nine (9) fiscal quarter. The quotations represent inter-dealer quotations
without adjustment for retail mark-ups, mark-downs or commissions and may not
represent actual transactions.

                                                  High                  Low
         --------------------------------- -------------------- ----------------
         1st Quarter 2001                        $ 4.31                $ 1.13
         --------------------------------- -------------------- ----------------
         2nd Quarter 2001                        $ 3.80                $ 1.38
         --------------------------------- -------------------- ----------------
         3rd Quarter 2001                        $ 2.75                $ 1.15
         --------------------------------- -------------------- ----------------
         4th Quarter 2001                        $ 1.80                $ 1.01
         --------------------------------- -------------------- ----------------
         1st Quarter 2002                        $ 1.70                $ 1.30
         --------------------------------- -------------------- ----------------
         2nd Quarter 2002                        $ 1.45                $ 0.76
         --------------------------------- -------------------- ----------------
         3rd Quarter 2002                        $ 1.05                $ 0.54
         --------------------------------- -------------------- ----------------
         4th Quarter 2002                        $ 1.20                $ 0.60
         --------------------------------- -------------------- ----------------
         1st Quarter 2003                        $ 1.11                $ 0.12
         --------------------------------- -------------------- ----------------

As of December 31, 2002, there were 88 shareholders of record of our common
stock. This does not include shares held in street names.

We have never declared dividends or paid any cash dividends on our capital stock
and currently intend to retain all future earnings, if any, for use in the
operation and development of our business. Therefore, you should not expect us
to declare or pay any cash dividends on our Common Stock in the foreseeable
future.

In 2002, the Company issued 1,215,750 shares of common stock in a private
placement offering that resulted in gross proceeds of $1,215,750 less $178,500
in fees and commissions.

In addition, on September 1, 2002, the Company issued a note payable in the
amount of $400,000 that accrues interest at 10% per annum. The principal and
accrued interest is to be repaid one-half on February 28, 2003 and the remaining
balance on May 31, 2003.

                                       6

<PAGE>

EQUITY COMPENSATION PLANS

There were no stock options issued in 2002.

ITEM 6.  MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL  CONDITION

FORWARD LOOKING STATEMENTS

This Annual Report on Form 10-KSB and the documents incorporated herein by
reference contain forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. This Act provides a "safe harbor" for
forward looking statements to encourage companies to provide prospective forward
looking information about themselves so long as they identify these statements
as forward looking and provide meaningful cautionary statements identifying
important factors that could cause actual results to differ from the projected
results. All statements other than statements of historical fact made in this
Annual Report on Form 10-KSB are forward looking. In particular, the statements
herein regarding industry prospects and future results of operations or
financial position are forward-looking statements. Forward-looking statements
reflect management's current expectations and are inherently uncertain. Our
actual results may differ significantly from management's expectations.

GENERAL

The following discussion and analysis should be read in conjunction with the
Company's Consolidated Financial Statements and the Notes thereto included
elsewhere in this document. The discussion of results, causes and trends should
not be construed to imply any conclusion that such results or trends will
necessarily continue in the future.

We were incorporated in Delaware on January 13, 1998 and are the successor to
Interactive Entertainment Studio, Inc. (IES). IES was incorporated in the State
of Nevada on May 27, 1997 and was merged into us in March 1998 for the sole
purpose of changing the domicile of the company to Delaware. This merger was
retroactively reflected in the December 31, 1997 financial statements. On June
27, 2002 we changed our name to Legend Mobile, Inc.

We are a developer and marketer of mobile accessories such as faceplates for
cellular phones, mobile data services, and mobile applications. We signed a
supply and distribution agreement as of February 25, 2002 with Motorola Inc. to
supply mobile accessories and mobile applications using our rights to Christina
Aguilera. Motorola has indicated it has interest in working with additional
properties that we have under license including multi-platinum recording artist,
Nelly. There can be no assurance that any such agreement regarding additional
licensed properties will be concluded between Motorola and us. We are seeking
additional licenses in the area of mobile phones and mobile applications. We
have secured the services of three developers of mobile applications to provide
the design services necessary. In addition to Tony Stewart, we have concluded
license agreements with five additional NASCAR drivers including, Rusty Wallace,
Mark Martin, Jeff Burton, Matt Kenseth and Kurt Busch for mobile phones, mobile
accessories and mobile software. We recently signed a three year license
agreement with Playboy that provides for us to sell Playboy images, games and
editorial content for mobile phones with color displays, handheld computers and
wireless e-mail devices.

                                       7

<PAGE>

Since our inception, we have incurred net losses of $15,057,468 and at December
31, 2002 current liabilities exceeded current assets by $1,758,124. In addition,
we are delinquent in certain payments due for license fees and notes payable. We
may be unable to continue in existence unless we are able to arrange additional
financing and achieve profitable operations. We plan to raise additional capital
and expect to generate cash from the sale of products in 2003.

On December 29, 2000, we entered into a three-year license agreement with
Michael Jordan, the National Basketball Association player, granting us the
right to use Mr. Jordan's name, likeness and image in connection with the
proposed advertisement, promotion and sale of certain branded Palm Inc.
products, including the Palm Pilot series. In addition to the standard features
of Palm products, we planned that the Michael Jordan edition include branding,
identification and software applications that will appeal to the market segment
associated with Mr. Jordan. On June 27, 2002, Michael Jordan and us entered into
a settlement agreement pursuant to the aforementioned three year agreement. The
settlement calls for us to pay Mr. Jordan $468,750, discontinue making any
reference to Jordan's name, image, likeness and endorsement, and returning any
products associated with Mr. Jordan's name. As a result of this settlement
agreement, we have recognized a gain of $111,662 which is recorded in general
and administrative expenses in the accompanying statement of operations. This
gain resulted by removing the remaining license fee payable of $625,000, offset
by the $468,750 accrual to settle the agreement and the return of $44,588 in
inventory. The amount due to Mr. Jordan was to be paid $234,375 in October 2002
and the remaining $234,375 in January 2003. We have not made the payment due in
October 2002 or the payment due in January 2003.

Our business model is to grow in the area of mobile handsets and mobile
applications. This business model includes seeking to obtain licenses with
well-known motorsports and entertainment figures, develop large promotional
programs that permit us to market our products more effectively and develop
other distribution channels. We recently signed a three year license agreement
with Playboy that provides for us to sell Playboy images, games and editorial
content for mobile phones with color displays, handheld computers and wireless
e-mail devices.

SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES

Management's Discussion and Analysis of Financial Condition and Results of
Operations discusses the Company's consolidated financial statements, which have
been prepared in accordance with accounting principles generally accepted in the
United States of America. The preparation of these financial statements requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. On an on-going
basis, management evaluates its estimates and judgments, including those related
to reserves and financing operations. Management bases its estimates and
judgments on historical experiences and on various other factors that are
believed to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying value of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions. The most significant
accounting estimates inherent in the preparation of the Company's financial
statements include estimates as to the appropriate carrying value of certain
assets and liabilities which are not readily apparent from other sources,
primarily allowance for doubtful accounts. These accounting policies are
described at relevant sections in this discussion and analysis and in the notes
to the consolidated financial statements included elsewhere in this Annual
Report on Form l0-KSB.

                                       8

<PAGE>

RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 2002 VS. DECEMBER 31, 2001

Revenue for the year ended December 31, 2002 decreased by $215,899 or 77.7% from
$277,725 for the year ended December 31, 2001 to $61,826 for the same period in
2002. During the year ended December 31, 2001, we began selling the Claudia
Schiffer edition of the Palm. Revenue for the year ended December 31, 2002 was
principally from the sale of the Michael Jordan edition of the Palm and the sale
of face plates for cellular phones. As a result of a settlement agreement with
Mr. Jordan, we have returned all our inventory of the Michael Jordan edition of
the Palm and have discontinue selling any products using the Michael Jordan
name, likeness or image. All future sales are expected to be mobile handsets and
mobile applications.

Cost of revenue for the year ended December 31, 2002 decreased by $140,325 or
59.9% from $234,375 for the year ended December 31, 2001 to $94,050 for the same
period in 2002. The decrease is a direct result of the decrease in revenue. Cost
of revenue as a percentage of revenue was 152.1% and 84.4%, for the years ended
December 31, 2002 and 2001, respectively. During June 2002, we sold 500 Michael
Jordan edition Palms at a price substantially below our cost that has resulted
in negative gross margin.

Product development costs for the year ended December 31, 2002 decreased by
$1,463,736 or 89.4% from $1,637,142 for the year ended December 31, 2001 to
$173,406 for the same period in 2002. The significant decrease in product
development costs is a result of us spending less money on the development of
our websites, producing content for our radio shows, royalties and license fees.

General and administrative expenses for the year ended December 31, 2002
decreased by $565,090 or 32.4% from $1,743,268 for the year ended December 31,
2001 to $1,178,178 for the same period in 2002. The decrease is due to a
decrease in legal fees associated with the Tyra Banks litigation in 2001 and the
gain recognized on the settlement agreement with Michael Jordan of $111,662 in
2002 and less salary and general overhead in 2002 due to the reduction in our
revenue.

Interest expense and financing costs for the year ended December 31, 2002
decreased by $203,388 or 30.0% from $676,234 for the year ended December 31,
2001 to $472,846 for the same period in 2002. In addition, to the interest we
accrued on the outstanding notes payable, we also took a charge to financing
costs of $71,250 related to the issuance of 45,000 shares of common stock to
investors for not registering their shares in a timely manner, the issuance of
300,000 warrants valued at $244,701 issued to an investor who converted a
$300,000 note payable into shares of common stock and a charge to financing
costs of $80,870 related to the value of 90,000 warrants we issued to an
investor as a penalty for not repaying a note payable on its due date. In 2001
interest expense included interest on the $1,000,000 promissory note issued by
us in November 2000 that was subsequently converted into a royalty participation
certificate in 2001, the financing charge associated with the issuance of
200,000 warrants issued in connection with the conversion of this promissory
note into a profit participation certificate, and the financing charge
associated with the issuance of 80,000 warrants in connection with the $400,000
in notes payable issued in August 2001.

LIQUIDITY AND CAPITAL RESOURCES

In 2001, we raised net proceeds of $1,371,700 in private placement offerings of
our common stock. During the year ended December 31, 2002, we raised net
proceeds of $1,037,250 in a private placement offering of our common stock.

We have incurred net losses since our inception of $15,057,468. In order for us
to continue in existence, we will have to raise additional capital through the
sale of equity or debt or generate sufficient profits from operations, or a
combination of both.

                                       9

<PAGE>

ITEM 7.  FINANCIAL STATEMENTS

SEE "INDEX TO CONSOLIDATED FINANCIAL STATEMENTS" BEGINNING ON PAGE F-1.

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

None.

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

DIRECTORS AND EXECUTIVE OFFICERS

         Our directors and executive officers as follows:

     Name                         Age        Positions Held
     ----                         ---        --------------

     Peter Klamka                34         Chairman of the Board,
                                              CEO, Treasurer & Secretary

The business experience, principal occupations and employment, as well as the
periods of service, of each of our directors and executive officers during the
last five years are set forth below.

Peter Klamka has been our Chairman of the Board and Chief Executive Officer
since our inception in May 1997. In 1994, Mr. Klamka founded Wilshire Fragrance,
a company that developed and marketed men's fragrance products. Mr. Klamka was
the chief executive officer of Wilshire Fragrance from 1994 through 1996. In
connection with his fragrance business, in 1996, Mr. Klamka developed, what he
believes to have been one of the first authorized celebrity web sites, featuring
Anna Nicole Smith promoting fragrances for Wilshire Fragrance. Mr. Klamka
continued working on this web site until early 1997. Mr. Klamka received his
Bachelor of Arts degree from the University of Michigan.

Employment and Consulting Agreements

We have no employment or other written agreement with Peter Klamka, our
President and Chief Executive Officer. Mr. Klamka has an oral agreement with the
Company to receive a base salary of $100,000 per year and such other
compensation as the Board of Directors shall designate. The Company believes
that Mr. Klamka will continue to waive a portion of the base salary for the
foreseeable future, although no assurance thereof can be given.

Mr. Klamka is involved in other business ventures, including the ownership and
management other private businesses.

We have no employment or other written agreement with Mr. Klamka.

                                       10

<PAGE>

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires our officers,
directors, and persons who beneficially own more than 10% of our common stock to
file reports of securities ownership and changes in such ownership with the
Securities and Exchange Commission ("SEC"). Officers, directors and others who
own greater than 10% beneficial owners are also required by rules promulgated by
the SEC to furnish us with copies of all Section 16(a) forms they file.

Based solely upon a review of the copies of such forms furnished to us, or
written representations that no Form 5 filings were required, we believe that
during the fiscal year ended December 31, 2002, there was compliance with all
Section 16(a) filing requirements applicable to our officers, directors and
other with greater than 10% beneficial owners.

ITEM 10: EXECUTIVE COMPENSATION

The following table sets forth information the remuneration of our chief
executive officers and our four most highly compensated executive officers who
earned in excess of $100,000 per annum during any part of our last three fiscal
years:

<TABLE>
<CAPTION>
                                              SUMMARY COMPENSATION TABLE

                                                                             LONG TERM COMPENSATION
                                                                    -------------------------------------
                               ANNUAL COMPENSATION                          AWARDS             PAYOUTS
------------------------------------------------------------------ ------------------------- ------------
                                                         OTHER       RESTRICTED  SECURITIES
  NAME AND                                               ANNUAL        STOCK     UNDERLYING      LTIP
  PRINCIPAL         FISCAL                            COMPENSATION    AWARD(S)    OPTIONS/      PAYOUTS    ALL OTHER
  POSITION           YEAR    SALARY ($)    BONUS ($)       ($)          ($)       SARS (#)        ($)     COMPENSATION($)
------------------ -------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
<S>                 <C>       <C>            <C>          <C>          <C>          <C>          <C>           <C>
  Peter Klamka,     2002      110,000                     -0-          -0-          -0-          -0-           -
 Chairman, CEO,     2001        -0-          -0-          -0-          -0-        384,500        -0-
   Treasurer &      2000        -0-          -0-          -0-          -0-          -0-          -0-
    Secretary
------------------ -------- ------------ ------------ ------------ ------------ ------------ ------------ ------------

                                        OPTION/SAR GRANTS IN LAST FISCAL YEAR
----------------------------------------------------------------------------------------------------------------------

                                                  INDIVIDUAL GRANTS
----------------------------------------------------------------------------------------------------------------------
                             NUMBER OF SECURITIES      PERCENT OF TOTAL
                                  UNDERLYING         OPTIONS/SARS GRANTED
                             OPTIONS/SARS GRANTED      TO EMPLOYEES IN         EXERCISE OR BASE
           NAME                      (#)                 FISCAL YEAR             PRICE ($/SH)        EXPIRATION DATE
--------------------------- ----------------------- ----------------------- ----------------------- ------------------
       Peter Klamka                   -                       -%                      $-                    -
--------------------------- ----------------------- ----------------------- ----------------------- ------------------

                    AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
----------------------------------------------------------------------------------------------------------------------
                                                                        NUMBER OF SECURITIES
                                                                             UNDERLYING         VALUE OF UNEXERCISED
                                                                            UNEXERCISED             IN-THE-MONEY
                                                                          OPTIONS/SARS AT         OPTIONS/SARS AT
                                                                        FISCAL YEAR END (#)     FISCAL YEAR END ($)
                                                                       ----------------------- -----------------------
                         SHARES ACQUIRED ON                                  EXERCISABLE/            EXERCISABLE/
        NAME                EXERCISE (#)        VALUE REALIZED ($)          UNEXERCISABLE           UNEXERCISABLE
------------------------ ---------------------- ---------------------- ----------------------- -----------------------
     Peter Klamka                 -0-                    -0-                750,000/-0-               -0-/-0-
------------------------ ---------------------- ---------------------- ----------------------- -----------------------

</TABLE>

STOCK OPTION PLANS

The Company adopted the 1998 Stock Option Plan and the Year 2000 Stock Option
Plan (the Plans), which provides for the grant of options to purchase up to
1,250,000 shares of the Company's common stock. Under these Plans incentive
stock options may be granted to employees and non-statutory stock options may be
granted to employees and non-employees. No additional options were granted in
2002.

                                       11

<PAGE>

ITEM 11: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding our Common Stock
beneficially owned on December 31, 2002 (i) each person who is known by us to
own beneficially or exercise voting or dispositive control over 5% or more of
our Common Stock, (ii) each Director and (iii) all executive officers and
Directors as a group. Except as otherwise indicated, all stockholders have sole
voting and investment power with respect to the shares listed as beneficially
owned by them, subject to the rights of spouses under applicable community
property laws.

<TABLE>
<CAPTION>

   Name and Address                            Number of Shares
  of Beneficial Owner                           of Common Stock                    Percentage of
   Identity of Group                          Beneficially Owned             Beneficial Ownership (1)
   -----------------                          ------------------             ------------------------
<S>                                              <C>                                  <C>
Peter Klamka (2)                                 2,834,174 (3)                        30.38%

Chris Giordano (2)                                943,240 (4)                         10.36%

American Nortel (5)                                 730,000                            8.51%

All directors and officers as a group.             2,834,174                          30.38%
(1 person)

</TABLE>
------------------
(1) Based on 8,579,936 shares outstanding as of December 31, 2002.

(2) Mr. Klamka's and Mr. Giordano's address is the same as that of the Company.

(3) Includes 750,000 currently exercisable options to purchase 750,000 shares of
the Company's common stock, and 115,500 currently exercisable warrants to
purchase 115,500 shares of the Company's common stock.

(4) Includes 509,500 currently exercisable options to purchase 509,500 shares of
the Company's common stock, and 115,500 currently exercisable warrants to
purchase 115,500 shares of the Company's common stock.

(5) American Nortel's address is 7201 East Camelback Road, Suite 320,
Scottsdale, Arizona 85251.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS.

In June 1997, Mr. Klamka purchased 2,117,008 shares of our Common Stock for an
aggregate purchase price, paid by delivery of a promissory note of $2,117.01. In
June 1997 Chris Giordano purchased 540,340 shares of our Common Stock for an
aggregate purchase price, paid by delivery of a promissory note, of $540.34. In
June 1997 Michael Giordano purchased 300,000 shares of our Common Stock for an
aggregate purchase price, paid by delivery of a promissory note, of $300.00. All
three promissory notes have been paid in full. Messrs. Klamka, Chris Giordano
and Michael Giordano are each deemed to be founders and promoters of the
Company.

In April 1998, Mr. Klamka provided the Company with a revolving credit line with
a maximum of $500,000 available. In September 1998, the Board of Directors of
the Company authorized an increase in this line to $610,000, and in November and
December 1998, further increases to $1,000,000 were authorized. Loans drawn on
the credit line bear interest at a rate of 9% per annum from the date they are
made and are payable by May 2001. Monies loaned were used to make certain
payments to Niki Taylor's company, to provide a payment required under the
Calendar Agreement with Claudia Schiffer, and for working capital. In January
2000 the current balance of $548,500 owed to Mr. Klamka was converted into
110,000 shares of Common Stock.

                                       12

<PAGE>

During the years ended December 31, 2002, 2001 and 2000, the Company paid
Birchwood Capital Advisors Group, Inc. $0, $103,000 and 62,500, respectively, in
commissions in connection with monies raised for the Company and for investor
relations. Chris Giordano, our Chief Operating Officer, is an officer of
Birchwood Capital Advisors Group, Inc.

During the year ended December 31, 2000, Mr. Giordano exercised 100,000 options
to purchase the Company's common stock and executed a note payable in favor of
the Company with a principal amount of $156,300.

PART IV

ITEM 13. EXHIBITS LIST

(a)               The following exhibits are submitted herewith:

3.1(1)            Certificate of Incorporation of PTN Media, Inc. dated as of
                  January 13, 1998.

3.2(1)            By-Laws of PTN Media, Inc.

4.2(2)            PTN Media, Inc. 2000 Stock Option Plan

10.1(3)           Amendment to Palm, Inc. and PTN Media, Inc. Agreement of
                  October 5, 2000

10.2(3)           License Agreement dated February 19, 2001 between 3 Wishes
                  Production f/s/o Christina Aguilera and PTN Media, Inc.

10.3(4)           General Agreement dated July 28, 2000, between PTN Media, Inc.
                  and NeoHand, Inc.

10.4(4)           Partnering Agreement dated October 27, 2000, between PTN
                  Media, Inc. and TWEC.com, LLC

10.5(4)           Palm, Inc. OEM Partner Agreement dated October 5, 200, between
                  PTN Media, Inc. and Palm, Inc.

10.6(4)           Merchant and Partner Network Agreement dated May 8, 2000,
                  between PTN Media, Inc. and Dynamic Trade Inc.

10.7(5)           License Agreement dated January 4, 2001 between PTN Media,
                  Inc. and Michael Jordan

10.8(6)           License Supply and Distributor Agreement between PTN Media,
                  Inc. and Motorola, Inc. dated February 25, 2002

10.9(6)           License Amendment between PTN Media, Inc. and Christina
                  Aguilera

21.1(7)           List of PTN Media, Inc. Subsidiaries

23.1(7)           Consent of Independent Certified Public Accountants
------------------

                                       13

<PAGE>

(1) Incorporated by reference from the Company's Registration Statement on Form
SB-2 (File #333-51933).

(2) Incorporated by reference from the Company's Definitive Proxy Statement
filed on July 24, 2000.

(3) Incorporated by reference from the Company's Form 10-KSB for the fiscal year
ended December 31, 2000.

(4) Incorporated by reference from the Company's Registration Statement on Form
S-3 filed on December 11, 2000.

(5) Incorporated by reference from the Company's Form 8-K filed January 9, 2001.

(6) Incorporated by reference from the Company's Form 10KSB filed April 16, 2002

(6) Filed herewith.

(b) Reports on Form 8-K.

None.

ITEM 14. CONTROLS AND PROCEDURES

         Under the supervision and with the participation of our management,
including our Chief Executive Officer and Chief Financial Officer, we conducted
an evaluation of the effectiveness of our disclosure controls and procedures as
defined in Rule 13a-14(c) promulgated under the Securities Exchange Act of 1934
within 90 days of the filing date of this report. Based on their evaluation, our
Chief Executive Officer and Chief Financial Officer concluded that the design
and operation of our disclosure controls and procedures were effective as of the
date of the evaluation.

There have been no significant changes (including corrective actions with regard
to significant deficiencies or material weaknesses) in our internal controls or
in other factors that could significantly affect these controls subsequent to
the date of the evaluation referenced in the preceding paragraph.

                                       14

<PAGE>

                                   SIGNATURES

         In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

                                           LEGEND MOBILE, INC.

Date:  May 20, 2003                        By: /S/ Peter Klamka
                                              ----------------------------------
                                              Peter Klamka, Chairman, President,
                                              Secretary and CEO

In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.

SIGNATURE                     TITLE                                  DATE
---------                     -----                                  ----

                              Chairman, President,
                              Secretary and
/S/ Peter Klamka              Chief Executive Officer
-------------------------     (Principal Executive
Peter Klamka                  and Accounting Officer)           May 20, 2003

                                       15

<PAGE>

                                 CERTIFICATIONS

I, Peter Klamka, Chairman and CEO of Legend Mobile, Inc. certify that:

1.       I have reviewed this annual report on Form 10-KSB of Legend Mobile,
         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.       I am responsible for establishing and maintaining disclosure controls
         and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for
         the registrant and have:

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

         b)       evaluated the effectiveness of the registrant's disclosure
                  controls and procedures as of a date within 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.       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 functions):

         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.       I have indicated in this annual report whether 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: May 20, 2003

                                             /S/ Peter Klamka
                                             -----------------------------------
                                             Chairman, Secretary, President and
                                              Chief Executive Officer (Principal
                                              Accounting Officer)

                                       16

<PAGE>

                      LEGEND MOBILE, INC. AND SUBSIDIARIES
                      ------------------------------------

                                      INDEX

                                                                         PAGE(S)
                                                                         -------

INDEPENDENT AUDITORS' REPORT

     Report on consolidated financial statements for the years ended
     December 31, 2002 and 2001                                              F-2

FINANCIAL STATEMENTS

     Consolidated Balance Sheet as of December 31, 2002                      F-3

     Consolidated Statements of Operations for the Years Ended
       December 31, 2002 and 2001                                            F-4

     Consolidated Statements of Changes in Shareholders' Deficit for the
       two years ended December 31, 2002                                     F-5

     Consolidated Statements of Cash Flows for Years Ended
        December 31, 2002 and 2001                                           F-6

     Notes to Consolidated Financial Statements                       F-8 - F-23

                                      F-1

<PAGE>

                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------

To the Board of Directors and Shareholders
Legend Mobile, Inc. (formerly PTN Media, Inc.)

We have audited the accompanying consolidated balance sheet of Legend Mobile,
Inc. (formerly PTN Media, Inc.) and subsidiaries as of December 31, 2002, and
the related statements of operations, shareholders' deficit, and cash flows for
the years ended December 31, 2002 and 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 audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Legend
Mobile, Inc. and subsidiaries as of December 31, 2002, and the consolidated
results of their operations and their consolidated cash flows for the years
ended December 31, 2002 and 2001 in conformity with accounting principles
generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1, the
Company has incurred net losses since its inception and has experienced severe
liquidity problems. These conditions raise substantial doubt about the Company's
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 1. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.

                                           /s/ STONEFIELD JOSEPHSON, INC.
                                           ------------------------------
                                           STONEFIELD JOSEPHSON, INC.
                                           Certified Public Accountants

Santa Monica, California
May 16, 2003

                                      F-2

<PAGE>

                      LEGEND MOBILE, INC. AND SUBSIDIARIES
                           (FORMERLY PTN MEDIA, INC.)
                           CONSOLIDATED BALANCE SHEET

                                   - ASSETS -

                                                                   December 31,
                                                                       2002
                                                                   -------------
CURRENT ASSETS:
     Other receivables                                             $     30,610
                                                                   -------------
TOTAL CURRENT ASSETS                                                     30,610

FIXED ASSETS - NET                                                        7,357
OTHER ASSETS                                                              2,226
                                                                   -------------
TOTAL ASSETS                                                       $     40,193
                                                                   =============

                    - LIABILITIES AND SHAREHOLDERS' DEFICIT -

CURRENT LIABILITIES:
     Bank overdraft                                                $        131
     Accounts payable                                                   206,883
     Accrued expenses                                                   604,514
     Accrued interest                                                   120,956
     License fee payable                                                200,000
     Notes payable                                                      656,250
                                                                   -------------
TOTAL CURRENT LIABILITIES                                             1,788,734
                                                                   -------------

PROFIT PARTICIPATION OBLIGATION                                       1,000,000

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' DEFICIT:
     Preferred stock, $0.01 par value;
         1,000,000 shares authorized,
         2,350 shares issued and outstanding                                 24
     Common stock, $0.001 par value;
         10,000,000 shares authorized,
         8,579,936 shares issued and outstanding                          8,580
     Additional paid-in capital                                      12,456,623
     Shareholder receivable                                            (156,300)
     Accumulated deficit                                            (15,057,468)
                                                                   -------------
TOTAL SHAREHOLDERS' DEFICIT                                          (2,748,541)
                                                                   -------------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT                        $     40,193
                                                                   =============

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

                                      F-3

<PAGE>

                      LEGEND MOBILE, INC. AND SUBSIDIARIES
                           (FORMERLY PTN MEDIA, INC.)
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                      Year Ended December 31,
                                                      2002              2001
                                                  ------------      ------------

REVENUE                                           $    61,826       $   277,725

COST OF REVENUE                                        94,050           234,375
                                                  ------------      ------------

GROSS PROFIT (LOSS)                                   (32,224)           43,350
                                                  ------------      ------------

OPERATING EXPENSES:
   Product development                                173,406         1,637,142
   General and administrative expenses              1,178,178         1,743,268
                                                  ------------      ------------

TOTAL OPERATING EXPENSES                            1,351,584         3,380,410
                                                  ------------      ------------

LOSS FROM OPERATIONS                               (1,383,808)       (3,337,060)
                                                  ------------      ------------

INTEREST EXPENSE AND FINANCING COSTS                 (472,846)         (676,234)
                                                  ------------      ------------

LOSS BEFORE PROVISION FOR INCOME TAXES             (1,856,654)       (4,013,294)

PROVISION FOR INCOME TAXES                                 --                --
                                                  ------------      ------------

NET LOSS                                          $(1,856,654)      $(4,013,294)
                                                  ============      ============

BASIC AND DILUTED
   LOSS PER COMMON SHARE                          $     (0.24)      $     (0.72)
                                                  ============      ============

WEIGHTED AVERAGE COMMON
   SHARES OUTSTANDING - BASIC AND DILUTED           7,684,358         5,563,580
                                                  ============      ============

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

                                      F-4

<PAGE>
<TABLE>

                                                      LEGEND MOBILE, INC. AND SUBSIDIARIES
                                                          (FORMERLY PTN MEDIA, INC.)
                                           CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' DEFICIT
<CAPTION>

                                             Preferred Stock      Common Stock   Additional
                                              --------------  ------------------   Paid-in   Shareholder  Accumulated      Total
                                              Shares  Amount    Shares   Amount    Capital    Receivable    Deficit      (Deficit)
                                              ------  ------  ---------  ------- ----------- -----------  -----------  -----------

<S>                                            <C>    <C>     <C>       <C>     <C>          <C>        <C>           <C>
Balance, December 31, 2000                     2,350      24  4,632,962   4,633   7,319,471          -    (9,187,520)  (1,863,392)

Shares issued in exchange for accrued interest                   25,000      25      53,933                                53,958
Shares issued in payment of professional fees                   115,000     115     213,635                               213,750
Shares issued in payment of license fees                         40,000      40      70,510                                70,550
Exercise of options for note receivable                         100,000     100     156,200   (156,300)                         -
Shares issued in exchange for Fragrancedirect
  stock                                                         173,999     174        (174)                                    -

Waiver of compensation payable                                                      100,000                               100,000
Shares issued in private placements, net                      1,437,200   1,437   1,370,263                             1,371,700
Fair value of warrants issued in
  connection with notes payable                                                      99,317                                99,317
Fair value of warrants issued in connection
  with conversion of promissory note to
  profit participation obligation                                                   491,331                               491,331
Fair value of warrants issued in
  connection with professional services                                             407,000                               407,000
Net loss for year                                                                                         (4,013,294)  (4,013,294)
                                              ------  ------  ---------  ------- ----------- -----------  -----------  -----------

Balance, December 31, 2001                     2,350      24  6,524,161   6,524  10,281,486   (156,300)  (13,200,814)  (3,069,080)
Shares issued in payment of professional fees                   445,667     446     337,121                               337,567
Shares issued in exchange for
  Fragrancedirect stock                                           1,000       1          (1)                                    -
Shares issued in private placements, net                      1,215,750   1,216   1,036,034                             1,037,250
Shares issued for financing costs                                45,000      45      71,205                                71,250
Shares issued in connection with conversion
   of note payable                                              348,358     348     348,010                               348,358
Fair value of warrants issued in
  connection with conversion of notes payable                                       244,701                               244,701
Fair value of warrants issued as penalty                                             80,870                                80,870
Fair value of warrants issued in
  connection with professional services                                              57,197                                57,197
Net loss for year                                                                                         (1,856,654)  (1,856,654)
                                              ------  ------  ---------  ------- ----------- -----------  -----------  -----------

BALANCE, DECEMBER 31, 2002                     2,350  $   24  8,579,936 $ 8,580 $12,456,623  $(156,300) $(15,057,468) $(2,748,541)
                                              ======  ======  ========= ======= ===========  ===========  ============= ============
</TABLE>

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

                                                               F-5

<PAGE>
<TABLE>

                                LEGEND MOBILE, INC. AND SUBSIDIARIES
                                     (FORMERLY PTN MEDIA, INC.)
                                CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>

                                                                              Year Ended December 31,
                                                                              2002              2001
                                                                          ------------      ------------
<S>                                                                       <C>               <C>
Cash flows from operating activities:
   Net loss                                                               $(1,856,654)      $(4,013,294)
   Adjustments to reconcile net loss to net cash
     used in operating activities:
       Depreciation of fixed assets                                            10,255            14,272
       Warrants and shares issued for professional and
         legal fees and financing costs                                        57,197           620,750
       Waiver of compensation payable                                              --           100,000
       Shares issued for services, license fees and production costs          337,567            70,550
       Shares and warrants  issued for financing costs                        152,120                --
       Fair value of warrants issued in connection with
         promissory note                                                      244,701            99,317
       Fair value of warrants issued in connection with
         conversion of promissory note to profit
         participation obligation                                                  --           491,331
       Gain on settlement agreement                                          (111,662)               --
       Write off of advances to officers                                       50,000                --
       Write down of other receivable                                          14,966                --
   Changes in operating assets and liabilities:
     Increase (decrease) in receivables                                        13,203           (58,779)
     Increase (decrease) in inventory                                          88,160          (132,748)
     Decrease in deposits and prepaid expenses                                 14,726            97,289
     Increase in accounts payable and accrued expenses                        163,818           134,998
     Increase (decrease) in license fees payable                             (625,000)          367,500
                                                                          ------------      ------------

NET CASH USED IN OPERATING ACTIVITIES                                      (1,446,603)       (2,208,814)
                                                                          ------------      ------------
Cash flows from investing activities:
   Purchase of fixed assets                                                    (4,800)           (2,500)
   Advance to officers                                                             --           (50,000)
                                                                          ------------      ------------

NET CASH USED IN INVESTING ACTIVITIES                                          (4,800)          (52,500)
                                                                          ------------      ------------
Cash flows from financing activities:
   Cash overdraft                                                                 131                --
   Proceeds from notes payable                                                400,000           400,000
   Proceeds from sale of common and preferred stock, net                    1,037,250         1,371,700
                                                                          ------------      ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                   1,437,381         1,771,700
                                                                          ------------      ------------
DECREASE IN CASH                                                              (14,022)         (489,614)

CASH, BEGINNING OF PERIOD                                                      14,022           503,636
                                                                          ------------      ------------

CASH, END OF PERIOD                                                       $        --       $    14,022
                                                                          ============      ============
</TABLE>

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

                                                F-6

<PAGE>
<TABLE>

                      LEGEND MOBILE, INC. AND SUBSIDIARIES
                           (FORMERLY PTN MEDIA, INC.)
                CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED

<CAPTION>

                                                            Year Ended December 31,
                                                               2002              2001
                                                          ---------------  ----------------
<S>                                                       <C>              <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

       Interest paid                                      $            -   $             -
                                                          ===============  ================

       Income taxes paid                                  $            -   $             -
                                                          ===============  ================
</TABLE>

SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES

     During 2001, (i) the Company converted $53,958 of accrued interest in
     exchange for 25,000 shares of common stock, (ii) the Company issued 115,000
     shares of common stock for legal and professional services valued at
     $213,750, (iii) the Company issued 40,000 shares of common stock for
     license fees valued at $70,550, (iv) the Company issued 173,999 shares of
     common stock in exchange for 173,999 shares of Fragrancedirect.com, Inc.
     common stock valued resulting in Legends ownership increasing from 83% to
     89%, (v) the Company issued 80,000 warrants in connection with two notes
     payable whose fair value is estimated to be $99,317, (vi) the Company
     issued 400,000 warrants in connection with professional services whose fair
     value is estimated to be $407,000, (vii) the Company issued 200,000
     warrants in connection with the conversion of a $1,000,000 promissory note
     into a profit participation obligation whose fair value is estimated to be
     $491,331, (viii) the Company recognized additional paid in capital of
     $100,000 related to the waiver of payment of compensation by the Company's
     CEO, and (ix) the Company issued 100,000 shares of common stock pursuant to
     the exercise of an employee stock option in exchange for a note receivable
     of $156,300.

     During 2002, (i) the Company issued 445,667 shares of common stock for
     professional services valued at $337,567, (ii) the Company issued 1,000
     shares of common stock in exchange for 1,000 shares of Fragrancedirect.com,
     Inc. common stock valued resulting in Legend's ownership increasing from
     89% to 90%, (iii) the Company issued 45,000 shares of common stock for
     financing costs valued at $71,250, (iv) the Company issued 300,000 warrants
     in connection the conversion a notes payable into equity whose fair value
     is estimated to be $244,701, (v) the Company issued 50,000 warrants in
     connection with professional services whose fair value is estimated to be
     $57,197, (vi) the Company issued 348,358 shares of common stock in
     connection with the conversion of $348,358 of notes payable into equity,
     and (vii) the Company issued 90,000 warrants to an investor as a penalty
     for paying the note on its due date valued at $80,870.

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

                                      F-7

<PAGE>

                      LEGEND MOBILE, INC. AND SUBSIDIARIES
                           (FORMERLY PTN MEDIA, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001

NOTE   1   -     DESCRIPTION OF COMPANY AND GOING CONCERN UNCERTAINTY:

                 Legend Mobile, Inc., formerly, PTN Media, Inc. (the "Company"),
                 was incorporated in Delaware on January 13, 1998 and is the
                 successor to Interactive Entertainment Studio, Inc. (IES). IES
                 was incorporated in the State of Nevada on May 27, 1997 and was
                 merged into the Company in March 1998 for the sole purpose of
                 changing the domicile of the Company to Delaware. This merger
                 was retroactively reflected in the December 31, 1997 financial
                 statements. The Company was in the development stage in
                 accordance with Statement of Financial Accounting Standards
                 ("SFAS") No. 7 since its inception to December 31, 2000 and had
                 accumulated a deficit while in the development stage of
                 $9,187,520. Effective January 1, 2001, the Company was no
                 longer considered to be in the development stage as it began
                 selling its Claudia Schiffer edition of the Palm. On June 27,
                 2002, the Company filed a Certificate of Amendment to its
                 Certificate of Incorporation to amend the Company's Certificate
                 of Incorporation name from PTN Media, Inc. to Legend Mobile,
                 Inc

                 The Company is a developer and marketer of mobile accessories
                 such as faceplates for cellular phones, mobile data services,
                 and mobile applications. The Company has licensing agreements
                 with a number of popular licensors including Nelly, Christina
                 Aguilera, Playboy Enterprises, Rusty Wallace, and the Arena
                 Football League. The Company seeks to sell our products through
                 traditional retailers, online retailers, and through direct
                 response channels. The Company's products are manufactured by
                 third parties utilizing our designs and licensed trademarks.

                 In July 1999, the Company formed, FragranceDirect.com, Inc.
                 ("Fragrance"), a majority owned subsidiary. Through this
                 entity, the Company sells fragrance products over the Internet.

                 In February 2001, the Company formed a new wholly owned
                 subsidiary, PTN Wireless, Inc. There was no activity in this
                 subsidiary during the year ended December 31, 2001.

                 The Company, since its inception, has incurred net losses of
                 $15,057,468 and at December 31, 2002 current liabilities
                 exceeded current assets by $1,758,124. In addition, the Company
                 is delinquent in certain payments due for license fees and
                 notes payable. The Company also raised $1,000,000 in 2000 by
                 issuing a promissory note. In 2001, the Company raised net
                 proceeds of $1,371,700 in private placement offerings of its
                 common stock. In addition, in 2002, the Company raised net
                 proceeds of $1,037,250 in private placement offerings of its
                 common stock. The Company may be unable to continue in
                 existence unless it is able to arrange additional financing and
                 achieve profitable operations. Management plans to raise
                 additional capital and expects to generate cash from the sale
                 of products in 2003.

                 The financial statements do not include any adjustments
                 relating to the recoverability of assets that might be
                 necessary in the event the Company cannot continue in
                 existence.

                                      F-8

<PAGE>

                      LEGEND MOBILE, INC. AND SUBSIDIARIES
                           (FORMERLY PTN MEDIA, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001

NOTE   2   -     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

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

                 The accompanying financial statements include the accounts of
                 the Company and its majority owned subsidiary, Fragrance and
                 wholly owned subsidiary PTN Wireless, Inc. All intercompany
                 accounts and transactions have been eliminated.

                 Estimates:
                 ----------

                 In preparing financial statements in conformity with accounting
                 principles generally accepted in the United States of America,
                 management makes estimates and assumptions that affect the
                 reported amounts of assets and liabilities and disclosures of
                 contingent assets and liabilities at the date of the financial
                 statements, as well as the reported amounts of revenues and
                 expenses during the reporting period. Actual results could
                 differ from those estimates.

                 Statements of Cash Flows:
                 -------------------------

                 For purposes of the statements of cash flows, the Company
                 considers all highly liquid investments purchased with a
                 remaining maturity of three months or less to be cash
                 equivalents.

                 Fixed Assets:
                 -------------

                 Furniture and equipment are recorded at cost. Depreciation is
                 provided on a straight-line basis over estimated useful lives
                 of the assets as follows:

                  Computer equipment                                3 years
                  Furniture and fixtures                            5 years

                 Expenditures for maintenance and repairs are charged to
                 operations as incurred while renewals and betterments are
                 capitalized. Gains and losses on disposals are included in the
                 results of operations.

                 Revenue Recognition:
                 --------------------

                 The Company generates revenue from the sale of products on its
                 web sites and through other channels. The Company recognizes
                 revenue for these product sales when the product is shipped to
                 the customer. Shipping and handling costs are recorded as
                 revenue and related costs are charged to cost of sales.

                                      F-9

<PAGE>

                      LEGEND MOBILE, INC. AND SUBSIDIARIES
                           (FORMERLY PTN MEDIA, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001

NOTE   2   -     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:

                 Royalties/License Fees:
                 -----------------------

                 Royalties/license fees paid under the terms of license
                 agreements entered into are charged to expense in accordance
                 with the terms of the agreements. Any guaranteed minimum
                 payments will be amortized over the period of the license
                 agreement.

                 The Company has expensed the guaranteed minimum royalties upon
                 execution of the license agreements since there is no assurance
                 that the Company will be able to derive significant revenues
                 such that the royalties due will exceed the minimum annual
                 royalty payment. See also Note 4.

                 Income Taxes:
                 -------------

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

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

                 SFAS No. 123, "Accounting for Stock-Based Compensation,"
                 establishes and encourages the use of the fair value based
                 method of accounting for stock-based compensation arrangements
                 under which compensation cost is determined using the fair
                 value of stock-based compensation determined as of the date of
                 grant and is recognized over the periods in which the related
                 services are rendered. The statement also permits companies to
                 elect to continue using the current intrinsic value accounting
                 method specified in Accounting Principles Board ("APB") Opinion
                 No. 25, "Accounting for Stock Issued to Employees," to account
                 for stock-based compensation to employees. The Company has
                 elected to use the intrinsic value based method and has
                 disclosed the pro forma effect of using the fair value based
                 method to account for its stock-based compensation to
                 employees. The Company uses the fair value method for options
                 granted to non-employees.

                                      F-10

<PAGE>

                      LEGEND MOBILE, INC. AND SUBSIDIARIES
                           (FORMERLY PTN MEDIA, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001

NOTE   2   -     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:

                 Earnings (Loss) Per Share:
                 --------------------------

                 The Company reports earnings (loss) per share in accordance
                 with SFAS No. 128, "Earnings per Share." Basic earnings (loss)
                 per share is computed by dividing income (loss) available to
                 common shareholders by the weighted average number of common
                 shares available. Diluted earnings (loss) per share is computed
                 similar to basic earnings (loss) per share except that the
                 denominator is increased to include the number of additional
                 common shares that would have been outstanding if the potential
                 common shares had been issued and if the additional common
                 shares were dilutive. Diluted earnings (loss) per share has not
                 been presented since the effect of the assumed conversion of
                 options and warrants to purchase common shares would have an
                 anti-dilutive effect. The following potential common shares
                 have been excluded from the computation of diluted net loss per
                 share for the year ended December 31, 2002 and 2001 because the
                 effect would have been anti-dilutive:
<TABLE>
<CAPTION>
                                                                               2002          2001
                                                                         ------------  -------------
                  <S>                                                       <C>            <C>
                  Conversion of Series A preferred stock                       47,000         47,000
                  Stock options issued to employees and consultants
                      under the Company's stock option plan                 1,150,000      1,150,000
                  Stock options issued outside of plan                         25,000         25,000
                  Warrants issued with Series A preferred                           -              -
                  Warrants issued to officers                                 231,000        231,000
                  Warrants issued for services                                650,000        600,000
                  Warrants issued with notes                                  180,000        235,000
                  Warrants issued for penalty                                  90,000              -
                  Warrants issued with note conversion                        500,000        200,000
                                                                         ------------  -------------
                                                                            2,873,000      2,488,000
                                                                         ============  =============
</TABLE>

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

                 The Company measures its financial assets and liabilities in
                 accordance with accounting principles generally accepted in the
                 United States of America. For certain of the Company's
                 financial instruments, including cash, other receivables,
                 accounts payable and accrued expenses, and license fees
                 payable, the carrying amounts approximate fair value due to
                 their short maturities. The amounts shown for short-term loans
                 also approximate fair value because current interest rates
                 offered to the Company for debt of similar maturities are
                 substantially the same.

                                      F-11

<PAGE>

                      LEGEND MOBILE, INC. AND SUBSIDIARIES
                           (FORMERLY PTN MEDIA, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001

NOTE   2   -     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:

                 Comprehensive Income:
                 ---------------------


                 Comprehensive income is not presented in the Company's
                 financial statements since the Company did not have any of the
                 items of other comprehensive income in any period presented.

                 Recently Issued Accounting Pronouncements:
                 ------------------------------------------

                 In June 2001, the FASB issued SFAS No. 141, "Business
                 Combinations." SFAS No. 141 requires that the purchase method
                 of accounting be used for all business combinations initiated
                 after June 30, 2001. Goodwill and certain intangible assets
                 will remain on the balance sheet and not be amortized. On an
                 annual basis, and when there is reason to suspect that their
                 values have been diminished or impaired, these assets must be
                 tested for impairment, and writedowns may be necessary. The
                 Company adopted SFAS No. 141 on July 1, 2001, which had no
                 impact its financial position or results of operations.

                 In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other
                 Intangible Assets." SFAS No. 142 changes the accounting for
                 goodwill from an amortization method to an impairment-only
                 approach. Amortization of goodwill, including goodwill recorded
                 in past business combinations, will cease upon adoption of this
                 statement. The Company adoptedSFAS No. 142 on January 1, 2002,
                 which had no material impact on its financial position or
                 results of operations.

                 In October 2001, the FASB issued SFAS No. 143, "Accounting for
                 Asset Retirement Obligations," which requires companies to
                 record the fair value of a liability for asset retirement
                 obligations in the period in which they are incurred. The
                 statement applies to a company's legal obligations associated
                 with the retirement of a tangible long-lived asset that results
                 from the acquisition, construction, and development or through
                 the normal operation of a long-lived asset. When a liability is
                 initially recorded, the company would capitalize the cost,
                 thereby increasing the carrying amount of the related asset.
                 The capitalized asset retirement cost is depreciated over the
                 life of the respective asset while the liability is accreted to
                 its present value. Upon settlement of the liability, the
                 obligation is settled at its recorded amount or the company
                 incurs a gain or loss. The statement is effective for fiscal
                 years beginning after June 30, 2002. The Company adopted SFAS
                 No. 143, which had no material impact to the Company's
                 financial position or results of operations.

                                      F-12

<PAGE>

                      LEGEND MOBILE, INC. AND SUBSIDIARIES
                           (FORMERLY PTN MEDIA, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001

NOTE   2   -     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:

                 Recently Issued Accounting Pronouncements, continued
                 ----------------------------------------------------

                 In October 2001, the FASB issued SFAS No. 144, "Accounting for
                 the Impairment or Disposal of Long-Lived Assets". Statement 144
                 addresses the accounting and reporting for the impairment or
                 disposal of long-lived assets. The statement provides a single
                 accounting model for long-lived assets to be disposed of. New
                 criteria must be met to classify the asset as an asset
                 held-for-sale. This statement also focuses on reporting the
                 effects of a disposal of a segment of a business. This
                 statement is effective for fiscal years beginning after
                 December 15, 2001. The Company adopted SFAS No. 143, which had
                 no material impact to the Company's financial position or
                 results of operations as the Company has not engaged in either
                 of these activities.

                 In April 2002, the FASB issued Statement No. 145, "Rescission
                 of FASB Statements No. 4, 44, and 64, Amendment of FASB
                 Statement No. 13, and Technical Corrections." This Statement
                 rescinds FASB Statement No. 4, "Reporting Gains and Losses from
                 Extinguishment of Debt," and an amendment of that Statement,
                 FASB Statement No. 64, "Extinguishments of Debt Made to Satisfy
                 Sinking-Fund Requirements" and FASB Statement No. 44,
                 "Accounting for Intangible Assets of Motor Carriers." This
                 Statement amends FASB Statement No. 13, "Accounting for
                 Leases," to eliminate an inconsistency between the required
                 accounting for sale-leaseback transactions and the required
                 accounting for certain lease modifications that have economic
                 effects that are similar to sale-leaseback transactions. The
                 Company adopted SFAS No. 145, which had no material impact to
                 the Company's financial position or results of operations as
                 the Company has not engaged in these activities.

                 In June 2002, the FASB issued Statement No. 146, "Accounting
                 for Costs Associated with Exit or Disposal Activities." This
                 Statement addresses financial accounting and reporting for
                 costs associated with exit or disposal activities and nullifies
                 Emerging Issues Task Force ("EITF") Issue No. 94-3, "Liability
                 Recognition for Certain Employee Termination Benefits and Other
                 Costs to Exit an Activity (including Certain Costs Incurred in
                 a Restructuring)." The provisions of this Statement are
                 effective for exit or disposal activities that are initiated
                 after December 31, 2002, with early application encouraged. The
                 Company does not expect the adoption to have a material impact
                 to the Company's financial position or results of operations.

                 In October 2002, the FASB issued Statement No. 147,
                 "Acquisitions of Certain Financial Institutions-an amendment of
                 FASB Statements No. 72 and 144 and FASB Interpretation No. 9,"
                 which removes acquisitions of financial institutions from the
                 scope of both Statement 72 and Interpretation 9 and requires
                 that those transactions be accounted for in accordance with
                 Statements No. 141, Business Combinations, and No. 142,
                 Goodwill and Other Intangible Assets. In addition, this
                 Statement amends SFAS No. 144, Accounting for the Impairment or
                 Disposal of Long-Lived Assets, to include in its scope
                 long-term customer-relationship intangible assets of financial
                 institutions such as depositor- and borrower-relationship
                 intangible assets and credit cardholder intangible assets. The
                 requirements relating to acquisitions of financial institutions
                 are effective for acquisitions for which the date of
                 acquisition is on or after October 1, 2002. The provisions
                 related to accounting for the impairment or disposal of certain
                 long-term customer-relationship intangible assets are effective
                 on October 1, 2002. The adoption of this Statement did not have
                 a material impact to the Company's financial position or
                 results of operations as the Company has not engaged in either
                 of these activities.

                                      F-13

<PAGE>

                      LEGEND MOBILE, INC. AND SUBSIDIARIES
                           (FORMERLY PTN MEDIA, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001

NOTE   2   -     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:

                 Recently Issued Accounting Pronouncements, continued
                 ----------------------------------------------------

                 In December 2002, the FASB issued Statement No. 148,
                 "Accounting for Stock-Based Compensation-Transition and
                 Disclosure," which amends FASB Statement No. 123, Accounting
                 for Stock-Based Compensation, to provide alternative methods of
                 transition for a voluntary change to the fair value based
                 method of accounting for stock-based employee compensation. In
                 addition, this Statement amends the disclosure requirements of
                 Statement 123 to require prominent disclosures in both annual
                 and interim financial statements about the method of accounting
                 for stock-based employee compensation and the effect of the
                 method used on reported results. 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 adoption of this statement did not
                 have a material impact on the Company's financial position or
                 results of operations as the Company has not elected to change
                 to the fair value based method of accounting for stock-based
                 employee compensation.

                 In May 2000, the Emerging Issues Task Force (EITF) issued EITF
                 Issue No. 00-14, "Accounting for Certain Sales Incentives."
                 EITF Issue No. 00-14 addresses the recognition, measurement,
                 and income statement classification for sales incentives that a
                 vendor voluntarily offers to customers (without charge), which
                 the customer can use in, or exercise as a result of, a single
                 exchange transaction. Sales incentives that fall within the
                 scope of EITF Issue No. 00-14 include offers that a customer
                 can use to receive a reduction in the price of a product or
                 service at the point of sale. The EITF changed the transition
                 date for Issue 00-14, concluding that a company should apply
                 this consensus no later than the company's annual or interim
                 financial statements for the periods beginning after December
                 15, 2001. In June 2001, the EITF issued EITF Issue No. 00-25,
                 "Vendor Income Statement Characterization of Consideration Paid
                 to a Reseller of the Vendor's Products," effective for periods
                 beginning after December 15, 2001. EITF Issue No. 00-25
                 addresses whether consideration from a vendor to a reseller is
                 (a) an adjustment of the selling prices of the vendor's
                 products and, therefore, should be deducted from revenue when
                 recognized in the vendor's statement of operations or (b) a
                 cost incurred by the vendor for assets or services received
                 from the reseller and, therefore, should be included as a cost
                 or expense when recognized in the vendor's statement of
                 operations. Upon application of these EITFs, financial
                 statements for prior periods presented for comparative purposes
                 should be reclassified to comply with the income statement
                 display requirements under these Issues. In September of 2001,
                 the EITF issued EITF Issue No. 01-09, "Accounting for
                 Consideration Given by Vendor to a Customer or a Reseller of
                 the Vendor's Products," which is a codification of EITF Issues
                 No. 00-14, No. 00-25 and No. 00-22 "Accounting for Points and
                 Certain Other Time-or Volume-Based Sales Incentive Offers and
                 Offers for Free Products or Services to be Delivered in the
                 Future." The Company has adopted these issues in 2002, which
                 did not have a material impact on the Company's financial
                 statements.

                                      F-14

<PAGE>

                      LEGEND MOBILE, INC. AND SUBSIDIARIES
                           (FORMERLY PTN MEDIA, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001

NOTE   2   -     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:

                 Recently Issued Accounting Pronouncements, continued
                 ----------------------------------------------------

                 In January 2003, the FASB issued Interpretation No. 46,
                 "Consolidation of Variable Interest Entities." Interpretation
                 46 changes the criteria by which one company includes another
                 entity in its consolidated financial statements. Previously,
                 the criteria were based on control through voting interest.
                 Interpretation 46 requires a variable interest entity to be
                 consolidated by a company if that company is subject to a
                 majority of the risk of loss from the variable interest
                 entity's activities or entitled to receive a majority of the
                 entity's residual returns or both. A company that consolidates
                 a variable interest entity is called the primary beneficiary of
                 that entity. The consolidation requirements of Interpretation
                 46 apply immediately to variable interest entities created
                 after January 31, 2003. The consolidation requirements apply to
                 older entities in the first fiscal year or interim period
                 beginning after June 15, 2003. Certain of the disclosure
                 requirements apply in all financial statements issued after
                 January 31, 2003, regardless of when the variable interest
                 entity was established. The Company does not expect the
                 adoption to have a material impact to the Company's financial
                 position or results of operations.

                 Minority Interest:
                 ------------------

                 Minority interest represents the minority shareholders'
                 proportionate share of the equity of Fragrance. During the year
                 ended December 31, 2000, the Company sold 410,000 or 17% of the
                 common stock of Fragrance. Fragrance, on a stand-alone basis,
                 had a shareholders' deficit. As a result, the Company's
                 investment in Fragrance had a negative carrying value. The
                 increase in capitalization of Fragrance resulting from the sale
                 of 410,000 shares of common stock to outside investors
                 benefited the Company in that it reduced the negative carrying
                 value of the Company's investment in Fragrance. Accordingly,
                 the Company has accounted for the change in its proportionate
                 share of Fragrance's equity resulting from the issuance of
                 stock to outside investors as an increase in shareholders'
                 equity and a reduction in minority interest liability in the
                 consolidated financial statements. During 2001, three of the
                 Fragrance shareholders exchanged 173,999 shares of Fragrance
                 common stock for 173,999 shares of the Company's common stock.
                 During 2002, one of the Fragrance shareholders exchanged 1,000
                 shares of Fragrance common stock for 1,000 shares of the
                 Company's common stock. The accompanying consolidated financial
                 statements do not reflect a minority interest liability as of
                 December 31, 2002 as Fragrance, on a stand-alone basis, had a
                 shareholders' deficit as of such date. The accompanying
                 consolidated statements of operations for the years ended
                 December 31, 2002 and 2001 do not reflect the minority
                 interest's share of Fragrance's losses for said years as the
                 related accrual would result in the Company's recordation of a
                 minority interest receivable.

                 Concentration of Credit Risk:
                 -----------------------------

                 Financial instruments, which potentially subject the Company to
                 concentrations of credit risk, consist of cash and accounts
                 receivables. The Company places its cash with high-credit,
                 quality financial institutions. At times, such amounts may be
                 in excess of the Federal Deposit Insurance Corporation limit.
                 As of December 31, 2002, there were no uninsured portions of
                 the balances held at these financial institutions. The Company
                 has not experienced any losses in such accounts and believes it
                 is not exposed to any significant credit risk on cash and cash
                 equivalents. The Company extends credit based on an evaluation
                 of the customer's financial condition, generally without
                 collateral. Exposure to losses on receivables is principally
                 dependent on each customer's financial condition.

                                      F-15

<PAGE>

                      LEGEND MOBILE, INC. AND SUBSIDIARIES
                           (FORMERLY PTN MEDIA, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001

NOTE   3   -     FIXED ASSETS:

                 Fixed assets at December 31, 2002 consisted of the following:

                                                                      2002
                                                                   ----------
                  Computer equipment                               $   46,794
                  Furniture and fixtures                                3,452
                                                                   ----------
                                                                       50,246
                      Less accumulated depreciation                    42,889
                                                                   ----------
                           Total                                   $    7,357
                                                                   ==========

                  Depreciation expense for the years ended December 31, 2002 and
                  2001 was $10,255 and $14,272, respectively.

NOTE   4   -     LICENSE FEES PAYABLE:

                  A summary of the guaranteed minimum payments as of December
                  31, 2002, is as follows:
<TABLE>
<CAPTION>
                                                                                             Balance
                                                       Guaranteed             Less          Owed as of
                                                         Minimum            Amounts          December
                                                        Royalties             Paid          31, 2002
                                                     ----------------    --------------   --------------
<S>                                                  <C>                 <C>              <C>
                 Tyra Banks Web Site                 $        100,000    $    (100,000)   $           -
                 Tyra Banks Calendar                          100,000         (100,000)               -
                 Claudia Schiffer Web Site                  1,200,000       (1,000,000)          200,000
                 Chely Wright Web Site                        125,550         (125,550)               -
                 Mandy Moore Web Site                         137,500         (137,500)               -
                 Daisy Fuentes Host Agreement                  75,000          (75,000)               -
                 Michael Jordan Palm License                2,500,000       (1,875,000)               (1)
                 Christina Aguilera License                   150,000         (150,000)                -
                                                     ----------------    --------------   --------------
                                                     $      4,388,050    $  (3,563,050)   $      200,000
                                                     ================    ==============   ==============
</TABLE>

                  (1)      On June 27, 2002, the Company and Michael Jordan
                           entered into a settlement agreement pursuant to a
                           three year agreement between the Company and Mr.
                           Jordan dated December 27, 2000. The settlement calls
                           for the Company to pay Mr. Jordan $468,750,
                           discontinue making any reference to Jordan's name,
                           image, likeness and endorsement, and returning any
                           products associated with Mr. Jordan's name. As a
                           result of this settlement agreement, the Company has
                           recognized a gain of $111,662 which is recorded in
                           general and administrative expenses in the
                           accompanying statement of operations. This gain
                           resulted by removing the remaining license fee
                           payable of $625,000, offset by the $468,750 accrual
                           to settle the agreement and the return of $44,588 in
                           inventory. The amount due to Mr. Jordan was to be
                           paid $234,375 in October 2002 and the remaining
                           $234,375 in January 2003. The Company has not made
                           the payment due in October 2002 nor the payment due
                           in January 2003. Since the Company is in default on
                           the amounts due to Mr. Jordan, it has accrued
                           interest in accordance with the terms of the
                           contract.

                                      F-16

<PAGE>

                      LEGEND MOBILE, INC. AND SUBSIDIARIES
                           (FORMERLY PTN MEDIA, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001

NOTE   5   -     NOTES PAYABLE:

                 In July and August 1997, the Company received $56,250 through
                 the issuance of 8% promissory notes and common stock purchase
                 warrants to acquire Company stock. The 45,000 warrants issued,
                 which expired in July 2001, entitle the holders to purchase
                 45,000 shares of common stock at an exercise price of $3.00 per
                 share, the deemed fair value of the warrants at the time of
                 issuance. The notes and accrued interest are payable one year
                 from the date of issuance or the closing of an equity funding
                 of the Company of a minimum of $500,000, whichever is sooner.
                 In 1999, one of the note holders converted $25,000 of principal
                 and $5,500 of accrued interest into 6,100 shares of the
                 Company's common stock. The remainder of the notes, which
                 amounts to $31,250 continues to be outstanding notwithstanding
                 the fact that payments owed by the Company thereunder are now
                 past due. Interest accrued as of December 31, 2002 aggregated
                 to $11,000.

                 In July and August of 1999, the Company's subsidiary, Fragrance
                 issued 10% promissory notes aggregating to $160,000. The notes
                 are due the earlier of one year or the completion of an initial
                 public offering of Fragrance common stock. In addition,
                 Fragrance issued to the note holders an aggregate of 96,000
                 two-year stock purchase warrants to purchase Fragrance common
                 stock at $3.50 per share. During the year ended December 31,
                 2002, two note holders converted principal and accrued interest
                 of $35,000 and $13,358 into 48,358 shares of the Company's
                 common stock. As of December 31, 2002, $125,000 of these notes
                 and accrued interest of $42,709 are still outstanding. These
                 notes are in default at December 31, 2002.

                 In August 2001, the Company issued two notes payable totaling
                 $400,000. One of the notes was payable in 60 days and the other
                 was payable in 14 days. These notes have not been repaid. In
                 connection with the issuance of these two notes, the Company
                 granted the note holders an aggregate of 80,000 warrants to
                 purchase the Company's common stock at $1 per share. The
                 Company has determined that the fair value of these warrants to
                 be $99,317 and has recognized the expense in the accompanying
                 statement of operations. The Company used the Black-Scholes
                 model to determine the fair value of these warrants with the
                 following assumptions: (i) dividend yield of 0%, (ii) expected
                 volatility of 118%, (iii) weighed-average risk-free interest
                 rate of approximately 4.0%, and (iv) expected life of 3 years.
                 In July 2002, the Company converted one of these notes totaling
                 $300,000 into 300,000 shares of its common stock and issued
                 300,000 warrants to purchase the Company's common stock at $1
                 per share. The value of the warrants issued of $244,701 was
                 determined using the Black-Scholes model and this amount has
                 been recorded as financing costs in the accompanying statement
                 of operations. The assumptions were used to determine the fair
                 value of these 300,000 warrants: (i) dividend yield of 0%, (ii)
                 expected volatility of 129%, (iii) weighed-average risk-free
                 interest rate of approximately 3.5%, and (iv) expected life of
                 5 years. The Company did not repay the $100,000 note on its due
                 date (and has not yet repaid the note) and issued the investor
                 90,000 warrants as a penalty valued at $80,870.

                 In addition, on September 1, 2002, the Company issued a note
                 payable in the amount of $400,000 that accrues interest at 10%
                 per annum. The principal and accrued interest is to be repaid
                 one-half on February 28, 2003 and the remaining balance on May
                 31, 2003. The Company has not made the February 28, 2003
                 payment. Interest accrued as of December 31, 2002 amounted to
                 $13,333.

                                      F-17

<PAGE>

                      LEGEND MOBILE, INC. AND SUBSIDIARIES
                           (FORMERLY PTN MEDIA, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001

NOTE   6   -     ADVANCE TO OFFICERS:

                 The Company also advanced $50,000 to a company that the
                 Company's officers have an ownership interest. The advance is
                 non-interest bearing. The advance was forgiven in 2002 and was
                 expensed as compensation to the officer.

NOTE   7   -     PROFIT PARTICIPATION OBLIGATION:

                 On November 22, 2000 the Company issued a promissory note to an
                 investor in the amount of $1,000,000. The note bore interest at
                 9.25% and was due on April 1, 2001. The holder of the note had
                 the option of converting the note to a royalty participation
                 certificate or converting into shares of the Company's common
                 stock at a 20% discount. In addition, the holder of the note
                 was issued a two-year warrant to purchase 100,000 shares of the
                 Company's common stock at $3.00 per share. The Company, in
                 2000, took a charge to earnings of $138,000 that represents the
                 fair value of the warrants issued in connection with the
                 promissory note. The Company used the Black Scholes model to
                 estimate the fair value of the warrants with the following
                 assumptions: (i) dividend yield of 0%, (ii) expected volatility
                 of 118%, (iii) weighed-average risk-free interest rate of
                 approximately 5.5%, and (iv) expected life of 2 years.

                 During 2001, the note holder converted the full amount of the
                 note into a profit participation obligation that provides for
                 the holder to receive 7.5% of the profits from the sale of the
                 Claudia Schiffer Palm Pilot, the Michael Jordan Palm Pilot and
                 any other celebrity branded Palm Pilot that the Company sells.
                 In connection with this conversion, the Company issued the
                 holder a warrant to purchase 200,000 shares of the Company's
                 common stock at $1.50. The warrant expires three years from the
                 date of grant. The Company has estimated the fair value of
                 these warrants to be $491,331 using the Black-Scholes pricing
                 model with the following assumptions: (i) dividend yield of 0%,
                 (ii) expected volatility of 118%, (iii) weighed-average
                 risk-free interest rate of approximately 4.0%, and (iv)
                 expected life of 3 years. The $1,000,000 profit participation
                 obligation will be reduced as profits payments are made to the
                 holder. In addition, the accrued interest on the note of
                 $53,958 was converted into 25,000 shares of the Company's
                 common stock.

                                      F-18

<PAGE>
                      LEGEND MOBILE, INC. AND SUBSIDIARIES
                           (FORMERLY PTN MEDIA, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001

NOTE   8   -     SHAREHOLDERS' EQUITY:

                 The Company's authorized capital consists of 1,000,000 shares
                 of preferred stock, $.01 par value and 10,000,000 shares of
                 common stock, $.001 par value.

                 In 2001 the Company issued 115,000 shares of common stock for
                 professional services valued at $213,750. The value was
                 determined using the market value of the Company's stock at the
                 date of issuance. Also in 2001, the Company issued 40,000
                 shares of common stock for license fees valued at $70,550. The
                 value was determined using the market value of the Company's
                 stock at the date of issuance.

                 In 2001 the Company issued 1,437,200 shares of its common stock
                 in connection with private placement offerings for net proceeds
                 of $1,371,700.

                 In 2002, the Company issued 1,215,750 shares of common stock in
                 a private placement offering that resulted in gross proceeds of
                 $1,215,750 less $178,500 in fees and commissions.

                 In February 2002, the Company issued 45,000 shares of common
                 stock for financing costs valued at $71,250 as the Company did
                 not register certain shares of stock sold in a private
                 placement offering in accordance with a stock purchase
                 agreement. The value was determined using the market value of
                 the Company's stock at the date the shares were issued.

                 In March 2002, the Company issued 4,000 shares of common stock
                 for services valued at $6,400. The value was determined using
                 the market value of the Company's stock at the date the shares
                 were issued.

                 In April 2002, the Company issued 16,667 shares of common stock
                 in connection with a prior licensing agreement valued at
                 $21,667. The value was determined using the market value of the
                 Company's stock at the date the shares were issued.

                 In May 2002, the Company issued 50,000 warrants to purchase
                 shares of common stock for $1 per share in connection with
                 professional services rendered to the Company. The value of the
                 warrants issued of $57,197 was determined using the
                 Black-Scholes model.

                 In June 2002, the Company issued 50,000 shares of common stock
                 for services valued at $50,000. The value was determined using
                 the market value of the Company's stock at the date the shares
                 were issued.

                 In July 2002, the Company converted a $300,000 note payable
                 into 300,000 shares of its common stock and issued 300,000
                 warrants to purchase the Company's common stock at $1 per
                 share. The value of the warrants issued of $244,701 was
                 determined using the Black-Scholes model and this amount has
                 been recorded as financing costs in the accompanying statement
                 of operations.

                                      F-19

<PAGE>

                      LEGEND MOBILE, INC. AND SUBSIDIARIES
                           (FORMERLY PTN MEDIA, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001

NOTE   8   -     SHAREHOLDERS' EQUITY, CONTINUED:

                 In August 2002, the Company issued 15,000 shares of common
                 stock for services valued at $9,000. The value was determined
                 using the market value of the Company's stock at the date the
                 shares were issued.

NOTE   9   -     STOCK OPTIONS:

                 The Company adopted the 1998 Stock Option Plan and the Year
                 2000 Stock Option Plan (the Plans), which provides for the
                 grant of options to purchase up to 1,250,000 shares of the
                 Company's common stock. Under these Plans incentive stock
                 options may be granted to employees and non-statutory stock
                 options may be granted to employees and non-employees.

                 The Company has adopted only the disclosure provisions of SFAS
                 No. 123, "Accounting for Stock-Based Compensation" for stock
                 options issued to employees It applies Accounting Principles
                 Bulletin ("APB") Opinion No. 25, "Accounting for Stock Issued
                 to Employees," and related interpretations in accounting for
                 its Stock Option Plan and does not recognize compensation
                 expense for its Stock Option Plan other than for restricted
                 stock and options issued to outside third parties. If the
                 Company had elected to recognize compensation expense based
                 upon the fair value at the grant date for awards under the
                 Stock Option Plan consistent with the methodology prescribed by
                 SFAS No. 123, the Company's net income and earnings per share
                 would be reduced to the pro forma amounts indicated below for
                 the years ended December 31, 2002 and 2001 (For the years ended
                 December 31, 2002 and 2001, the Company had no stock based
                 employee compensation expense included in net loss.


<TABLE>
<CAPTION>
                                                                        2002             2001
                                                                 ---------------  ----------------
                  Net loss
<S>                                                              <C>              <C>
                      As reported                                $   (1,856,654)  $     (4,013,294)
                      Pro forma                                  $   (1,856,654)  $     (5,110,059)

                  Basic and diluted loss per common share
                      As reported                                $        (0.24)  $         (0.72)
                      Pro forma                                  $        (0.24)  $         (0.92)
</TABLE>



                 For purposes of computing the pro forma disclosures required by
                 SFAS No. 123, the fair value of each option granted to
                 employees and directors is estimated using the Black-Scholes
                 option-pricing model. The fair value is computed as of the date
                 of grant using the following assumptions for grants in 2001:
                 (i) dividend yield of 0%, (ii) expected volatility of 118%,
                 (iii) weighed-average risk-free interest rate of approximately
                 4.0, and (iv) expected life of 5 years.

                                      F-20

<PAGE>

                      LEGEND MOBILE, INC. AND SUBSIDIARIES
                           (FORMERLY PTN MEDIA, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001

NOTE   9   -     STOCK OPTIONS, CONTINUED:

                 Stock Option Plan, continued
                 ----------------------------

                 The following is table summarizes the options and warrants
                 outstanding:
<TABLE>
<CAPTION>
                                                                  Weighted-                          Weighted-
                                                    Stock          Average                             Average
                                                   Option          Exercise                            Exercise
                                                     Plan             Price           Warrants            Price
                                               ---------------  ----------------  ---------------  ----------------
<S>                                                  <C>        <C>                     <C>        <C>
                  Balance, December 31,
                    2000                               506,000  $           3.82          551,534  $           4.00
                    Granted                            769,000  $           1.26          911,000  $           2.02
                    Exercised                         (100,000) $           1.56                -  $              -
                    Canceled                                 -  $              -         (196,534)  $           4.54
                                               ---------------                    ---------------

                  Balance, December 31,
                    2001                             1,175,000  $           2.34        1,266,000  $           2.49
                    Granted                                  -  $              -                -  $              -
                    Exercised                                -  $              -                -  $              -
                    Canceled                                 -  $              -                -  $              -
                                               ---------------                    ---------------

                  Balance, December 31,
                    2002                             1,175,000  $           2.34        1,266,000  $           2.49
                                               ===============                    ===============

                  Exercisable, December
                    31, 2002                         1,175,000  $           2.34        1,266,000  $           2.49
                                               ===============                    ===============
</TABLE>

                 There were no options available for future grant at December
                 31, 2002 under the Company's Plans.

                 The weighted average remaining contractual life of options
                 outstanding issued under the Plans is 6.48 years at December
                 31, 2002. The exercise price for the options outstanding under
                 the Stock Option Plan at December 31, 2002 ranged from $1.125
                 to $4.50. No compensation expense was recognized as a result of
                 the issuance of stock options during the year ended December
                 31, 2002.

                 For options granted during the year ended December 31, 2002
                 where the exercise price equaled the stock price at the date of
                 the grant, the weighted-average fair value of such options was
                 $0.79 and the weighted-average exercise price of such options
                 was $1.27. For options granted during the year ended December
                 31, 2001 where the exercise price was greater than the stock
                 price at the date of the grant, the weighted-average fair value
                 of such options was $0.82 and the weighted-average exercise
                 price of such options was $1.24.

                                      F-21

<PAGE>

                      LEGEND MOBILE, INC. AND SUBSIDIARIES
                           (FORMERLY PTN MEDIA, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001

NOTE  10  -      INCOME TAXES

                 No provision for Federal and state income taxes has been
                 recorded since the Company has incurred losses for the period
                 from inception through December 31, 2002. Deferred tax assets
                 at December 31, 2002 and 2001 consist primarily of the tax
                 effect of a net operating loss carry forwards which amount to
                 approximately $4,788,000 and $4,046,000, respectively. The net
                 operating loss carryforwards begin to expire in 2012. The
                 Company has provided a 100% valuation allowance on the deferred
                 tax assets at December 31, 2002 to reduce such asset to zero,
                 since there is no assurance that the Company will generate
                 future taxable income to utilize such asset. Management will
                 review this valuation allowance requirement periodically and
                 make adjustments as warranted.

                  The reconciliation of the effective income tax rate to the
                  federal statutory rate for the years ended December 31, 2002
                  and 2001 is as follows:
<TABLE>
<CAPTION>
                                                                 2002              2001
                                                            ---------------  ----------------
<S>                                                                  <C>               <C>
                      Federal income tax rate                        (34.0%)           (34.0%)
                      State tax, net of federal benefit               (6.0%)            (6.0%)
                      Increase in valuation allowance                 40.0%             40.0%
                                                            ---------------  ----------------

                      Effective income tax rate                        0.0%              0.0%
                                                            ===============  ================
</TABLE>

NOTE  11   -     COMMITMENTS AND CONTINGENCIES:

                 Operating Leases:
                 -----------------

                 Effective January 2003, the Company entered into a one-year
                 lease for office space. Annual lease commitments for the next
                 two years and in the aggregate are:

                                       2003                            14,300
                                       2004                             1,300
                                                                   ----------
                                                                   $   15,600
                                                                   ==========

                 Rent expense for the years ended December 31, 2002 and 2001
                 aggregated to $31,965 and $23,029, respectively.

                 Employment Agreements:
                 ----------------------

                 The Chairman/President of the Company is entitled to receive an
                 annual base salary of $100,000 from the Company. In
                 2002 this amount was included in accrued liabilities.  In 2001
                 and  this individual did  not received payment of his
                 salary in the amounts of $100,000
                 and, accordingly, such amount has been presented as a
                 contribution to the Company's additional paid-in capital.

                                      F-22

<PAGE>

                      LEGEND MOBILE, INC. AND SUBSIDIARIES
                           (FORMERLY PTN MEDIA, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001

NOTE  11   -     COMMITMENTS AND CONTINGENCIES, CONTINUED:

                 Legal Proceedings
                 -----------------

                 The Company is currently involved in litigation entitled Loni
                 Z. Buck f/s/a Loni Z. Spurkeland v. PTN Media, Inc. A Summons
                 and Complaint was filed by Loni Z. Buck on or about May 12,
                 2001 in the Supreme Court of the State of New York County of
                 New York seeking $67,750 in damages related to an investment in
                 the Company. The parties to this action are involved in
                 settlement negotiations at this time.

                 The Company is a defendant in a matter involving the supplier
                 of Palm cases. The total amount of the claim is $50,000. The
                 Company has defenses due to the untimely delivery of product
                 and quality issues. The Company is negotiating a settlement of
                 this claim at this time for a lower amount.

NOTE  12   -     RELATED PARTY TRANSACTIONS:

                 During the years ended December 31, 2002 and 2001, the Company
                 paid $0 and $103,000 to a firm that the Company's former Chief
                 Operating Officer is an owner. The payments were for investor
                 relations and assistance with raising debt and equity capital.

                                      F-23