<PAGE>

                                  UNITED STATES
                       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 For the fiscal year ended December 31, 2003

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

                        Commission file number: 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)

          777 EISENHOWER PARKWAY, SUITE 102, ANN ARBOR, MICHIGAN 48108
               (Address of principal executive offices) (Zip Code)

                    Issuer's telephone number: (734) 389-0270

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

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

                         COMMON STOCK, $0.001 PAR VALUE
                                (Title of class)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or 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 no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is 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:  $7,525

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked price of such common equity, as of a
specified date within the past 60 days: $4,855,655 AS OF MARCH 31, 2004

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 15,663,403 AS OF MARCH 31, 2004

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


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                                     PART I

ITEM 1.  DESCRIPTION OF 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 branded mobile phone products
including faceplates, phone accessories, SMS services, and mobile data
applications. Through our subsidiary Legend Credit, Inc. (which we own 40%), we
also develop and market stored value cards including gift cards bearing the Visa
and Mastercard logo. Legend Credit sold $248,584 worth of Visa branded gift
cards in the last quarter of 2003. Legend Credit intends to develop and market
branded consumer payment products including debit cards, gift cards, and credit
cards. Through our 91% subsidiary, Legend Studios, Inc., (formerly
Fragrancedirect.com Inc.), we have entered into a non-binding letter of intent
to purchase seven radio stations in Virginia, West Virginia, and Missouri. Those
radio stations reported unaudited revenue in 2003 of $1,000,000. Legend Studios
intends to acquire, develop, and operate radio and television stations.

                             OUR SOURCES OF REVENUE

SALES OF MOBILE PRODUCTS

         We derive limited revenues 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. We also sell a NASCAR-themed, SMS-based
text messaging service called "Racemobile.com". 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.

SALES OF STORED VALUE CARDS

         Through Legend Credit, we offer branded stored value cards directly to
consumers. According a recent study by the American Bankers Association, the
market for stored value cards is estimated at $300 billion annually. We market a
Visa gift card bearing the trademarks of popular teen entertainer Hilary Duff.

         We recently entered into a, two year license agreement with Sanrio Inc.
for the rights to the popular trademark Hello Kitty for debit cards, prepaid
credit cards, and gift cards. Sanrio develops, distributes and licenses a unique
collection of over 12,000 gift, stationery and fashion accessory items for women
of all ages. Today there are over 300 Sanrio boutiques throughout the Western
Hemisphere with 120 in the United States. In addition, Sanrio character products
including Hello Kitty are sold in over 10,000 U.S. locations including
department, specialty stores and national chain stores.

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         We are in discussions with other well known brands and personalities
for licenses for stored value cards. Our President and Chief Executive Officer,
Peter Klamka, created the popular KISS Visa card in 1996. To obtain new
licenses, we make royalty payments to licensors such as celebrities or other
well recognized brands who grant us the right to use their trademarks on our
stored value card products. These agreements have a term of one or more years.
The compensation paid is generally based on a percentage of sales, a fee for
each card sold, fee income collected, and breakage returned to us. We may have
to advance future compensation to a licensor as part of an agreement.

         We recently entered into a contract with Bankfirst in which Bankfirst
has agreed to service future stored value card programs. Bankfirst has over $900
million in assets and approximately 1,000 employees. Additionally, we were
recently approved by Mastercard International as a Member Service Provider. We
entered into a contract with US Benefits to provide processing services for our
stored value card products. We intend to offer single use gift cards, reloadable
debit cards, and secured credit cards.

         Card revenue is generated by a fee for each card sold, a percentage of
the fees charged to consumers for activities such as balance inquiries, cash
advances and ATM withdrawals, interchange fees, lost and stolen card fees, card
load fees, and monthly maintenance fees. Each card program depending on the
target audience, requirements of the licensor, and product type has some or all
of these fees.

         In addition to the gift market, there are approximately 60 million
Americans who do not have traditional bank accounts and consequently are
potential customers for prepaid products. We are also directing our products
towards the teen audience who do not have access to traditional credit card
products.

         In addition to card based products, we are also exploring other branded
consumer finance products including auto loans.

SALES OF RADIO ADVERTISING

         Upon consummation of the acquisition of the seven radio stations, if it
occurs, Legend Studio's primary source of revenue would be from the sale of
advertising for broadcast on its stations. Depending on the format of a
particular radio station, there are a predetermined number of advertisements
broadcast each hour. While there may be shifts from time to time in the number
of advertisements broadcast during a particular time of the day, the total
number of advertisements broadcast on a particular station generally does not
vary significantly from year to year. Any change in our revenue, with the
exception of those instances where stations are acquired or sold, is generally
the result of pricing adjustments, which are made to ensure that the station
efficiently utilizes available inventory.

         Advertising rates charged by radio stations are based primarily on a
station's ability to attract audiences in the demographic groups targeted by
advertisers, the number of stations in the market competing for the same
demographic group, the supply of and demand for radio advertising time, and
other qualitative factors including rates charged by competing radio stations
within a given market. Radio rates are generally highest during morning and
afternoon drive-time hours. Most advertising contracts are short-term, generally
running for only a few weeks.


RADIO ACQUISITION

         We recently changed the name of our 91% owned subsidiary,
Fragrancedirect.com, Inc. to Legend Studios, Inc. Legend Studios has entered
into a letter of intent to purchase the assets of seven, operating radio
stations from Quorum Radio Partners. The stations are located in Virginia, West
Virginia, and Missouri and consist of 3 AM and 4 FM stations. Upon consummation
of the acquisition, Legend Studios would own:


               KELE 1360 AM                Mt. Grove, Missouri

               KELE 92.5 FM                Mt. Grove, Missouri

               KOZX 98.1 FM                Mt. Grove, Missouri

               WIQO  100.9 FM              White Sulfur Springs, West Virginia

               WKEY 1340 AM                White Sulfur Springs, West Virginia

               WSLW 1320 AM                White Sulfur Springs, West Virginia

               WKCT 103.1 FM               Covington, Virginia.

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         It is expected that the acquisition would be funded through a
combination of cash, Legend Studios' common stock, and assumption by Legend
Studios of certain debt of the seller. The letter of intent does not, represent
a binding commitment of the parties. It is possible that the transaction will
not be consummated.



                MARKETING AND PROMOTION OF MOBILE PHONE PRODUCTS

         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:

         1.       On-site promotions. We are also negotiating to sell our NASCAR
                  associated products at stock car races.

         2.       Develop co-marketing and co-sales promotions. We are
                  negotiating to sell our mobile accessories through mobile
                  phone carriers, mobile phone retailers and distributors,

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

                  MARKETING AND PROMOTION OF STORED VALUE CARDS

         We evaluate numerous ways to reach potential customers to promote our
stored value products. We intend to continue to promote our products through a
number of avenues including:

         1.       Affinity relationships. We seek to develop products under
                  license by recognized personalities, brands, or affinity
                  groups that have a large base of customers to market to. Our
                  card products are designed to appeal to a specific segment of
                  the market with customized designs, promotions, and fee
                  schedules.

         2.       Co-marketing with brand partners. We marketed the Hilary Duff
                  Visa Gift card with Hollywood Records through an insert in the
                  Hilary Duff CD entitled "Metamorphosis" which reached
                  approximately one million consumers. We are currently
                  exploring co-marketing opportunities with Sanrio and other
                  licensees for the Hello Kitty brand. Co-marketing allows us to
                  reach a significant number of consumers interested in the
                  brand cost effectively.

         3.       Public Relations. We adopt a very aggressive posture towards
                  public relations for the launch of our card products. For the
                  Hilary Duff brand, we employed a leading entertainment PR
                  firm, Girlie Action to secure media coverage of the card
                  product. The card appeared on numerous television programs
                  including the Today Show, VH-1, and in popular magazines
                  including Money, People, Teen People,

         4.       Internet Marketing. We employ from time to time employ a firm
                  to promote the card products through the Internet on popular
                  web site related to the particular brand.

         5.       Gift with Purchase. We recently entered into a promotional
                  agreement with a leading publisher of magazines that will
                  allow us offer our cardholders and potential cardholders a
                  year long subscription to popular magazines with the purchase
                  of one of our stored value cards.

         6.       Contests. We bartered cards with specific dollar amounts in
                  exchange for advertising time on television, radio, and on
                  popular teen sites.

         7.       Event Marketing. We look for opportunities to drive sales of
                  our card products at live events including concerts, shopping
                  malls, and celebrity appearances.

                                       4

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                      GROWTH STRATEGY-MOBILE PHONE PRODUCTS

         We believe we have a strong collection of licenses to exploit in the
fields of mobile games, mobile accessories, and mobile data. We are 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.

                          GROWTH STRATEGY-LEGEND CREDIT

         We expect to continue to license leading brands and celebrities with
strong affinity bases. The market for stored value cards is expected to grow by
an estimated twenty percent (20%) in 2004. Legend will continue to offer
competitive products that appeal to specific segments of the card buying public.
We will also look to grow our business by offering previous buyers of Legend
Credit card products new offers such as reloadable cards, new card designs, and
secured cards.

         We also believe that we can offer other consumer loan and payment
products featuring popular brands to our card customers as well as to other
customer groups in general.

                         GROWTH STRATEGY-LEGEND STUDIOS

         We intend to focus on small market radio for the foreseeable future. We
expect to secure and maintain positions in smaller markets where we can achieve
market dominance. Through consolidation of radio stations into clusters
(multiple formats and radio stations in a market) we can become a more efficient
and cost effective supplier of marketing channels to local advertisers.

         We will seek acquisitions by evaluating the opportunity to build the
leading radio cluster in the market over time and by evaluating the competitive
landscape in the market and surrounding area.

         We may also explore the acquisition of small market television stations
or business related to broadcast or entertainment content.



                      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, 2003, we had an accumulated deficit of $16,536,713. We expect to
incur operating losses for the near future until we can generate sufficient
sales to cover our operating expenses.

         We have generated limited revenues to date from the business we conduct
and there can be no assurance that we will ever generate sufficient revenues
from the business we conduct to cover all of our operating expenses. 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,
2003 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,
2003, which are included in this Form 10-KSB, indicate that there was
substantial doubt as of December 31, 2003 about our ability to continue as a
going concern due to our need to generate cash from operations and obtain
additional financing. We have had a going concern opinion from our auditors
since our inception in 1997.

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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 our
license with the Arena Football League. We are also negotiating the termination
of our license with Playboy Enterprises. Additionally, we have several mobile
phone licenses which may require additional payments. Several of our trade
creditors and licensors have outstanding balances and may elect to sue to
recover their amounts owed. Management feels that these can be defended or
settled on favorable terms. 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 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

         As of March 31, 2004, we employed a total of 2 persons both of which
are full-time. None of our employees is covered by a collective bargaining
agreement.

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ITEM 2.  DESCRIPTION OF PROPERTY.

         We currently maintain our executive offices, consisting of 709 square
feet of space, at 777 Eisenhower Parkway, Suite 102 in Ann Arbor, Michigan. The
monthly rent is $1,300. The lease expires on January 31, 2006.


ITEM 3.  LEGAL PROCEEDINGS.

         None


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

         None.

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

MARKET INFORMATION

         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 eight (8) fiscal quarters. The quotations represent inter-dealer
quotations without adjustment for retail mark-ups, mark-downs or commissions and
may not represent actual transactions.


         FISCAL QUARTER ENDING                      HIGH BID          LOW BID

         March 31, 2002.......................       $   1.70         $   1.30
         June 30, 2002........................       $   1.45         $   0.76
         September 30, 2002...................       $   1.05         $   0.54
         December 31, 2002....................       $   1.20         $   0.60

         March 31, 2003.......................       $   1.11         $   0.12
         June 30, 2003........................       $   0.35         $   0.10
         September 30, 2003...................       $   0.44         $   0.20
         December 31, 2003....................       $   0.36         $   0.23

         On March 31, 2004, the closing bid price for the common stock on the
OTC Bulletin Board was $0.31.

HOLDERS

         As of March 31, 2004 there were 133 record holders of our common stock.
This does not include shares held in street names.

DIVIDENDS

         Since our inception, no cash dividends have been declared on our common
stock.

SALES OF UNREGISTERED SECURITIES

         During the three months ended December 31, 2003, the Company issued
1,579,670 shares of common stock for consulting services as follows:

         o        on October 30, 2003, we issued a total of 521,920 shares of
                  common stock to five individuals for consulting services;

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         o        on December 3, 2003, we issued 500,000 shares of common stock
                  to one individual for consulting services; and

         o        on December 5, 2003, we issued a total of 557,750 shares of
                  common stock to three individuals for consulting services.

         The securities issued were exempt under the Securities Act of 1933, as
amended, in reliance on Regulation D promulgated thereunder.


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

FORWARD LOOKING STATEMENTS

         This report contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Shareholders are
cautioned that all forward-looking statements involve risks and uncertainty,
including without limitation, our ability to fully establish our proposed
websites and our ability to conduct business with Palm, Inc. and be successful
in selling products. Although we believe the assumptions underlying the
forward-looking statements contained herein are reasonable, any of the
assumptions could be inaccurate, and therefore, there can be no assurance that
the forward-looking statements contained in the report will prove to be
accurate.

GENERAL

         The following discussion and analysis should be read in conjunction
with our consolidated financial statements and related footnotes for the year
ended December 31, 2003 elsewhere in this Annual Report on Form 10-KSB. 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 branded mobile phone products
including faceplates, phone accessories, SMS services, and mobile data
applications. Through our subsidiary Legend Credit, Inc. (which we own 40%), we
also develop and market stored value cards including gift cards bearing the Visa
and Mastercard logo. We derive limited revenues 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. We also sell a NASCAR-themed,
SMS-based text messaging service called "Racemobile.com". 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 for the licensing of ringtones for
mobile phones. ASCAP maintains the rights to 8 million copyrighted musical
works.

         Since our inception, we have incurred net losses of $16,536,713 and at
December 31, 2003 current liabilities exceeded current assets by $2,096,928. 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 Hilary Duff Visa
gift card through Legend Credit, Inc.

         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


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<PAGE>

associated with Mr. Jordan. On June 27, 2002, we entered into a settlement
agreement with Michael Jordan 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 was included
in selling, general and administrative expenses in the statement of operations
for the year ended December 31, 2002. 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. Since we are in default on the amounts due to Mr. Jordan,
we have accrued interest in accordance with the terms of the contract.

         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 motor sports 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.

         On October 1, 2003, Legend Credit launched its Hilary Duff Visa gift
card at www.hilarycard.com. We have a 40% minority interest in Legend Credit,
Inc., which is accounted for using the equity method. During the second quarter
of 2003, Mr. Peter Klamka, our CEO and 60% owner of Legend Credit, intends to
contribute 10% of his ownership interest in Legend Credit to us which will bring
our ownership in Legend Credit to 50%.

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.
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 relate to the 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 in this Annual Report on Form l0-KSB for the year
ended December 31, 2003.

Results of Operations
---------------------

Year ended December 31, 2003 vs. December 31, 2002

         Revenue for the year ended December 31, 2003 decreased by $54,301 or
87.8% from $61,826 for the year ended December 31, 2002 to $7,525 for the year
ended December 31, 2003. 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 faceplates for cellular phones. These sales principally took place during the
first half of 2002. As a result of a settlement agreement with Mr. Jordan, we
discontinued selling any products using the Michael Jordan name, likeness or
image effective July 1, 2002. Revenue for the year ended December 31, 2003 was
from the sale of faceplates for cellular phones.

         Cost of revenue for the year ended December 31, 2003 decreased by
$92,553 or 98.4% from $94,050 for the year ended December 31, 2002 to $1,497 for
the year ended December 31, 2003. The decrease is a direct result of the
decrease in revenue. Cost of revenue as a percentage of revenue was 19.9% and
152.1% for the year ended December 31, 2003 and 2002, respectively. The
faceplates have a much higher gross margin than did the Michael Jordan edition
of the Palm. During June 2002, we sold 500 Michael Jordan edition Palms at a
price substantially below our cost that has resulted in negative gross margin.

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         Product development costs for the year ended December 31, 2003
decreased by $173,406 or 100% from $173,406 for the year ended December 31, 2002
to $0 for the year ended December 31, 2003. We did not have any money to spend
on product development during the year ended December 31, 2003.

         Selling, general and administrative expenses for the year ended
December 31, 2003 increased by $76,838 or 6.5% from $1,178,178 for the year
ended December 31, 2002 to $1,255,016 for the year ended December 31, 2003. A
majority of selling, general and administrative expenses in 2003 are related to
professional and consulting fees paid with shares of our common stock.

         Interest expense and financing costs for the year ended December 31,
2003 decreased by $250,591 or 53.0% from $472,846 for the year ended December
31, 2002 to $222,255 for the year ended December 31, 2003. The difference is
principally due to a charge taken of $244,701 in the 3rd quarter of 2002 related
to a warrant issued to an investor that converted his $300,000 note payable into
shares of common stock.

         Equity loss in Legend Credit, Inc. was $8,002 for the year ended
December 31, 2003. We own a 40% interest in Legend Credit, who started selling
Hilary Duff Visa gift card in October 2003. We account for Legend Credit using
the equity method and have recorded 40% of Legend Credits loss in our
consolidated statements of operations.

LIQUIDITY AND CAPITAL RESOURCES

         In 2002, we raised net proceeds of $1,037,250 in a private placement
offering of our common stock and have been able to raise $37,000 from the sale
of our common stock in 2003.

         We have incurred net losses since our inception of $16,536,713. 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.


ITEM 7.  FINANCIAL STATEMENTS.

         See pages beginning with page F-1.


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

         None

ITEM 8A. CONTROLS AND PROCEDURES.

         As required by SEC rules, we have evaluated the effectiveness of the
design and operation of our disclosure controls and procedures at the end of the
period covered by this report. This evaluation was carried out under the
supervision and with the participation of our principal executive officer, who
is also our principal financial officer. Based on this evaluation, we have
concluded that the design and operation of our disclosure controls and
procedures are effective. There were no changes in our internal control over
financial reporting or in other factors that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.

         Disclosure controls and procedures are our controls and other
procedures that are designed to ensure that information required to be disclosed
by us in the reports that we file or submit under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the
SEC's rules and forms. Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that information required
to be disclosed by us in the reports that we file under the Exchange Act is
accumulated and communicated to our management, including principal executive
officer and principal financial officer, as appropriate, to allow timely
decisions regarding required disclosure.

                                       10



<PAGE>

                                    PART III

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

DIRECTORS AND EXECUTIVE OFFICERS

         Our executive officers and directors are:

         NAME                 AGE     POSITION
         ----                 ---     --------

         Peter Klamka          35     Chairman of the Board, CEO, President,
                                      Treasurer & Secretary

         The business experience, principal occupations and employment, as well
as the periods of service, of our sole director and executive officer 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.

AUDIT COMMITTEE FINANCIAL EXPERT
--------------------------------

         We do not have an audit committee financial expert, as defined under
Section 228.401, because we do not have an audit committee and we are not
required to have an audit committee because we are not a listed security as
defined in Section 240.10A-3.


CODE OF ETHICS

         We have not yet adopted a code of ethics that applies to our principal
executive officers, principal financial officer, principal accounting officer or
controller, or persons performing similar functions, since we have been focusing
our efforts on obtaining financing for the company. We expect to adopt a code by
the end of the current fiscal year.

                                       11



<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 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, 2003, there was compliance with all
Section 16(a) filing requirements applicable to our officers, directors and
greater than 10% beneficial owners.


ITEM 10. EXECUTIVE COMPENSATION.

         The following table sets forth information the remuneration of our
chief executive officer:

<TABLE>
<CAPTION>
                                               SUMMARY COMPENSATION TABLE
----------------------------------------------------------------------------------------------------------------------
    NAME AND
    PRINCIPAL
    POSITION                    ANNUAL COMPENSATION                       LONG TERM COMPENSATION
------------------ ----------------------------------------------- --------------------------------------
                                                                            AWARDS             PAYOUTS
                                                                  ------------------------- ------------
                                                        OTHER      RESTRICTED   SECURITIES
                                                        ANNUAL       STOCK      UNDERLYING      LTIP        ALL OTHER
                   FISCAL                            COMPENSATION   AWARD(S)     OPTIONS/      PAYOUTS    COMPENSATION
                    YEAR    SALARY ($)    BONUS ($)       ($)          ($)       SARS (#)        ($)           ($)
------------------ -------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
<S>                 <C>      <C>             <C>          <C>          <C>        <C>            <C>          <C>
Peter Klamka, CEO   2003     $100,000 (1)    -0-          -0-          -0-        490,500        -0-          -0-
                    2002     $110,000        -0-          -0-          -0-          -0-          -0-          -0-
------------------ -------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
</TABLE>

--------------
(1)      In 2003, Mr. Klamka was only paid $11,080 of his salary, the remaining
         $88,920 has been accrued.

<TABLE>
<CAPTION>
                                        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
--------------------------- ----------------------- ----------------------- ----------------------- ------------------
<S>                                <C>                       <C>                    <C>                  <C>
       Peter Klamka                490,500                   95%                    $0.10                4/30/03
--------------------------- ----------------------- ----------------------- ----------------------- ------------------
</TABLE>
<TABLE>
<CAPTION>
                  AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
------------------------ ---------------------- ---------------------- ----------------------- -----------------------
                                                                      NUMBER OF SECURITIES
                                                                             UNDERLYING         VALUE OF UNEXERCISED
                                                                            UNEXERCISED             IN-THE-MONEY
                                                                          OPTIONS/SARS AT         OPTIONS/SARS AT
                                                                         FISCAL YEAR END (#)     FISCAL YEAR END ($)
                                                                      ----------------------- -----------------------
                          SHARES ACQUIRED ON                                  EXERCISABLE/            EXERCISABLE/
       NAME                 EXERCISE (#)          VALUE REALIZED ($)         UNEXERCISABLE           UNEXERCISABLE
------------------------ ---------------------- ---------------------- ----------------------- -----------------------
<S>                               <C>                    <C>               <C>                      <C>
     Peter Klamka                 -0-                    -0-               1,240,500/-0-            260,505/-0-
------------------------ ---------------------- ---------------------- ----------------------- -----------------------
</TABLE>

COMPENSATION OF DIRECTORS

         Directors do not receive compensation but are reimbursed for their
expenses for each meeting of the board that they attend.

                                       12



<PAGE>

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. During the year ended December 31, 2003,
515,500 options were granted under this plan.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

         The following table sets forth certain information regarding our Common
Stock beneficially owned on March 31, 2004 (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>
----------------------------------- ------------------- -------------------- ------------------- ---------------------
                                     Number of Shares
                                       of Series B
         Name and Address              Convertible         Percentage of     Number of Shares      Percentage of
       of Beneficial Owner           Preferred Stock        Beneficial        of Common Stock        Beneficial
        Identity of Group           Beneficially Owned     Ownership (1)     Beneficially Owned     Ownership (1)
----------------------------------- ------------------- -------------------- ------------------- ---------------------
<S>                                      <C>                  <C>              <C>                      <C>
Peter Klamka (2)                         850,000              100.00%          1,240,500 (3)            7.34%
----------------------------------- ------------------- -------------------- ------------------- ---------------------
American Nortel (4)                         -                    -                730,000               4.66%
----------------------------------- ------------------- -------------------- ------------------- ---------------------
All directors and officers as a          850,000              100.00%            1,240,500              7.34%
group (1 person)

</TABLE>

(1) Based on 15,663,403 shares outstanding as of March 31, 2004.

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

(3) Includes 1,125,000 currently exercisable options to purchase 1,125,000,000
shares of the Company's common stock, and 115,500 currently exercisable warrants
to purchase 115,500 shares of the Company's common stock. The number of common
shares beneficially owned does not included 1,884,174 shares transferred by Mr.
Klamka to a limited liability company owned and controlled by members of Mr.
Klamka's family.

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

                                       13



<PAGE>

EQUITY COMPENSATION PLANS

         As of December 31, 2003, our equity compensation plans were as follows:
<TABLE>
<CAPTION>

------------------------------- ---------------------------- ---------------------------- ----------------------------
                                NUMBER OF SECURITIES TO BE    WEIGHTED AVERAGE EXERCISE
                                  ISSUED UPON EXERCISE OF       PRICE OF OUTSTANDING         NUMBER OF SECURITIES
                                   OUTSTANDING OPTIONS,         OPTIONS, WARRANTS AND       REMAINING AVAILABLE FOR
        PLAN CATEGORY               WARRANTS AND RIGHTS                RIGHTS                   FUTURE ISSUANCE
------------------------------- ---------------------------- ---------------------------- ----------------------------
<S>                                      <C>                            <C>                          <C>
Equity compensation plans
approved by security holders             1,150,000                      $0.10                        None
------------------------------- ---------------------------- ---------------------------- ----------------------------

Equity compensation plans not
approved by security holders               None                          N/A                         None
------------------------------- ---------------------------- ---------------------------- ----------------------------

Total                                    1,150,000                      $0.10                        None
------------------------------- ---------------------------- ---------------------------- ----------------------------
</TABLE>


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         In June 1997, Mr. Klamka, the Company's Chief Executive Officer,
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,
the Company's former Chief Operating Officer, 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, the brother of Mr. Chris
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 then current balance of $548,500 owed to Mr. Klamka was
converted into 110,000 shares of Common Stock.

         During the years ended December 31, 2003, 2002, 2001 and 2000, the
Company paid Birchwood Capital Advisors Group, Inc. $0, $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. Mr. Giordano resigned
as an officer of the Company in 2003.


                                       14



<PAGE>

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.

(a) Exhibits to this Form 10-KSB:

<TABLE>
<CAPTION>

    REGULATION                                                   EXHIBIT
    S-B NUMBER
------------------- --------------------------------------------------------------------------------------------------
       <S>           <C>
       3.1          Certificate of Incorporation of PTN Media, Inc. dated as of January 13, 1998 (1)
------------------- --------------------------------------------------------------------------------------------------
       3.2          By-Laws of PTN Media, Inc. (1)
------------------- --------------------------------------------------------------------------------------------------
       4.2          PTN Media, Inc. 2000 Stock Option Plan (2)
------------------- --------------------------------------------------------------------------------------------------
       10.1         Amendment to Palm, Inc. and PTN Media, Inc. Agreement of October 5, 2000 (3)
------------------- --------------------------------------------------------------------------------------------------
       10.2         License Agreement dated February 19, 2001 between 3 Wishes Production f/s/o Christina Aguilera
                    and PTN Media, Inc. (3)
------------------- --------------------------------------------------------------------------------------------------
       10.3         General Agreement dated July 28, 2000, between PTN Media, Inc. and NeoHand, Inc. (4)
------------------- --------------------------------------------------------------------------------------------------
       10.4         Partnering Agreement dated October 27, 2000, between PTN Media, Inc. and TWEC.com, LLC (4)
------------------- --------------------------------------------------------------------------------------------------
       10.5         Palm, Inc. OEM Partner Agreement dated October 5, 200, between PTN Media, Inc. and Palm, Inc. (4)
------------------- --------------------------------------------------------------------------------------------------
       10.6         Merchant and Partner Network Agreement dated May 8, 2000, between PTN Media, Inc.
                    and Dynamic Trade Inc. (4)
------------------- --------------------------------------------------------------------------------------------------
       10.7         License Agreement dated January 4, 2001 between PTN Media, Inc. and Michael Jordan (5)
------------------- --------------------------------------------------------------------------------------------------
       10.8         License Supply and Distributor Agreement between PTN Media, Inc. and Motorola, Inc. dated
                    February 25, 2002 (6)
------------------- --------------------------------------------------------------------------------------------------
       10.9         License Amendment between PTN Media, Inc. and Christina Aguilera (6)
------------------- --------------------------------------------------------------------------------------------------
       21.1         List of Legend Mobile Subsidiaries (7)
------------------- --------------------------------------------------------------------------------------------------
       23.1         Consent of Independent Certified Public Accountants (7)
------------------- --------------------------------------------------------------------------------------------------
       31.1         Rule 13a-14(a) Certification of Chief Executive Officer and Chief Financial Officer (7)
------------------- --------------------------------------------------------------------------------------------------
       32.1         Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
                    Sarbanes-Oxley Act of 2002 of Chief Executive Officer and Chief Financial Officer (7)
------------------- --------------------------------------------------------------------------------------------------
</TABLE>

---------------
(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 10-KSB filed April 16,
2002

(7) Filed herewith.

(b) Reports on Form 8-K

None

                                       15



<PAGE>


ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

AUDIT FEES

         For the audited fiscal years ended December 31, 2003 and 2002, our
principal accountants have billed approximately $40,000 and approximately
$35,000, respectively, for the audit of our annual financial statements and Form
10-KSB and review of financial statements included in our Form 10-QSB filings.

AUDIT-RELATED FEES

         There were no fees billed for services reasonably related to the
performance of the audit or review of our financial statements outside of those
fees disclosed above under "Audit Fees" for fiscal years 2003 and 2002.

TAX FEES

         There were not fees billed for the fiscal years ended December 31, 2003
and 2002, for tax compliance, tax advice, and tax planning services.

ALL OTHER FEES

         There were no fees billed for services by our principal accountant,
other than those disclosed above.

PRE-APPROVAL POLICIES AND PROCEDURES

         Prior to engaging our accountants to perform a particular service, our
board of directors obtains an estimate for the service to be performed.


                                       16



<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:   April 14, 2004             By:      /s/ Peter Klamka
                                      ------------------------------------------
                                         Peter Klamka, Chairman, President,
                                         Secretary and Chief Executive Officer

         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
                                Chief Executive Officer
/s/ Peter Klamka                (Principal Executive
----------------------------    and Accounting Officer)         April  14, 2004
Peter Klamka


                                       17




<PAGE>

                       LEGEND MOBILE, INC. AND SUBSIDIARY
                        CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2003 AND 2002



                                    CONTENTS

                                                                         Page
                                                                         ----

INDEPENDENT AUDITORS' REPORT:
     Report on Audited Consolidated Financial Statements                 F-1

FINANCIAL STATEMENTS:
     Consolidated Balance Sheet as of December 31, 2003                  F-2
     Consolidated Statements of Operations for the years ended
        December 31, 2003 and 2002                                       F-3
     Consolidated Statement of Stockholders' Deficit for the
        years ended December 31, 2003 and 2002                           F-4
     Consolidated Statements of Cash Flows for the years ended
        December 31, 2003 and 2002                                    F-5 - F-6
     Notes to Consolidated Financial Statements                      F-7 - F-23




<PAGE>

                          INDEPENDENT AUDITORS' REPORT


To The Board of Directors and Stockholders of
Legend Mobile, Inc.

We have audited the accompanying consolidated balance sheet of Legend Mobile,
Inc. and subsidiary as of December 31, 2003, and the related consolidated
statements of operations, shareholders' deficit, and cash flows for the years
ended December 31, 2003 and 2002. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated 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 subsidiary as of December 31, 2003, and the consolidated
results of their operations and their consolidated cash flows for the years
ended December 31, 2003 and 2002 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. In addition, the Company generates minimal revenue from its
operations and is in default on the payment of note payable and license fee
payable obligations. 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 consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.



/s/ Stonefield Josephson, Inc.
CERTIFIED PUBLIC ACCOUNTANTS

Santa Monica, California
April 10, 2004

                                      F-1



<PAGE>

<TABLE>
                            LEGEND MOBILE, INC. AND SUBSIDIARY

                                CONSOLIDATED BALANCE SHEET
<CAPTION>

                                                                             December 31,
                                                                                 2003
                                                                            -------------
<S>                                                                         <C>

                                        ASSETS

CURRENT ASSETS:
     Cash                                                                   $        659

                                                                            -------------
TOTAL CURRENT ASSETS                                                                 659
                                                                            -------------

FIXED ASSETS, NET                                                                  2,492
INVESTMENT IN LEGEND CREDIT, INC                                                   6,798
                                                                            -------------
TOTAL ASSETS                                                                $      9,949
                                                                            =============


                        LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
     Accounts payable                                                            171,267
     Accrued expenses                                                            806,707
     Accrued interest                                                            199,955
     Due to related party                                                          2,932
     Advances from officer                                                        40,476
     License fees payable                                                        200,000
     Notes payable                                                               676,250

                                                                            -------------
TOTAL CURRENT LIABILITIES                                                      2,097,587
                                                                            -------------

PROFIT PARTICIPATION OBLIGATION                                                1,000,000

                                                                            -------------
TOTAL LIABILITIES                                                              3,097,587
                                                                            -------------

COMMITMENTS AND CONTINGENCIES (Note 11)                                               --

MINORITY INTEREST (Note 1)                                                            --

STOCKHOLDERS' DEFICIT
     Series A Preferred Stock; $0.001 par value; 1,000,000 shares
       authorized; 2,225 shares issued and outstanding                                22
     Series B Convertible Preferred Stock, $0.01 par value; 850,000
       shares authorized; 850,000 shares issued and outstanding                    8,500
     Common stock; $0.001 par value; 20,000,000 shares
       authorized; 12,042,229 shares issued and outstanding                       12,042
     Additional paid-in capital                                               13,584,811
     Stock subscription receivable                                              (156,300)
     Accumulated deficit                                                     (16,536,713)

                                                                            -------------
TOTAL STOCKHOLDERS' DEFICIT                                                   (3,087,638)
                                                                            -------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                                 $      9,949
                                                                            =============

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

                                           F-2
</TABLE>



<PAGE>
<TABLE>
                            LEGEND MOBILE, INC. AND SUBSIDIARY

                          CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>

                                                                     Year Ended
                                                          -------------------------------
                                                          December 31,       December 31,
                                                              2003               2002
                                                          ------------       ------------
<S>                                                       <C>                <C>
REVENUE                                                   $     7,525        $    61,826

COST OF REVENUE                                                 1,497             94,050

                                                          ------------       ------------
GROSS PROFIT (LOSS)                                             6,028            (32,224)
                                                          ------------       ------------

EXPENSES:
      Product development                                          --            173,406
      Selling, general and administrative                   1,255,016          1,178,178

                                                          ------------       ------------
TOTAL EXPENSES                                              1,255,016          1,351,584
                                                          ------------       ------------

LOSS FROM OPERATIONS                                       (1,248,988)        (1,383,808)

OTHER EXPENSES:
      Interest expense and financing costs                   (222,255)          (472,846)
      Equity loss in Legend Credit, Inc.                       (8,002)                --

                                                          ------------       ------------
TOTAL OTHER EXPENSES                                         (230,257)          (472,846)
                                                          ------------       ------------

NET LOSS                                                  $(1,479,245)       $(1,856,654)
                                                          ============       ============

BASIC AND DILUTED LOSS PER
  COMMON SHARE                                            $     (0.15)       $     (0.24)
                                                          ============       ============

WEIGHTED AVERAGE NUMBER OF
  COMMON SHARES OUTSTANDING -
  BASIC AND DILUTED                                         9,557,805          7,684,358
                                                          ============       ============

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

                                           F-3
</TABLE>



<PAGE>
<TABLE>
                                                 LEGEND MOBILE, INC. AND SUBSIDIARY

                                           CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT

                                           FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
<CAPTION>

                                Preferred Stock                               Additional
                         Series A          Series B          Common Stock       Paid-in     Shareholder   Accumulated
                      Shares   Amount    Shares  Amount    Shares     Amount    Capital      Receivable     Deficit        Total
                      ------   ------    ------  ------    ------     ------    -------      ----------     -------        -----
<S>                   <C>     <C>       <C>      <C>     <C>          <C>     <C>            <C>         <C>            <C>
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 Legend
  Studios, Inc.
  common stock           --        --        --      --       1,000        1            (1)         --             --            --
Shares issued in
  private placement,
  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 notes
  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                 --        --        --      --          --       --            --          --     (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)

Shares issued in
  payment of
  professional fees      --        --        --      --   3,264,670    3,264       962,273          --             --       965,537
Shares issued in
  private placement,
  net                    --        --        --      --     126,250      126        36,874          --             --        37,000
Shares issued for
  financing costs        --        --        --      --      68,873       69        15,083          --             --        15,152
Conversion of Series
  A preferred stock
  to common stock      (125)       (2)       --      --       2,500        3            (1)         --             --            --
Issuance of Series B
  preferred stock for
  contribution of
  assets to Legend
  Credit, Inc.           --        --   850,000   8,500          --       --         6,300          --             --        14,800
Fair value of
  warrants issued in
  connection with
  notes payable          --        --        --      --          --       --        24,890          --             --        24,890
Fair value of
  warrants issued as
  penalty                --        --        --      --          --       --        13,685          --             --        13,685
Fair value of
  warrants issued in
  connection with
  professional
  services               --        --        --      --          --       --         2,429          --             --         2,429
Repricing of vested
  options and
  warrants               --        --        --      --          --       --        66,655          --             --        66,655
Net loss                 --        --        --      --          --       --            --          --     (1,479,245)   (1,479,245)

                     -----------------  ---------------- -------------------- -------------------------  ---------------------------
Balance,
  December 31, 2003   2,225   $    22   850,000  $8,500  12,042,229   12,042  $ 13,584,811   $(156,300)  $(16,536,713)  $(3,087,638)
                     =================  ================ ==================== =========================  ===========================

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

                                                                F-4
</TABLE>



<PAGE>
<TABLE>
                                    LEGEND MOBILE, INC. AND SUBSIDIARY

                                  CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>

                                                                                     Year Ended
                                                                            -----------------------------
                                                                            December 31,     December 31,
                                                                                2003             2002
                                                                            ------------     ------------
<S>                                                                         <C>              <C>
CASH FLOW FROM OPERATING ACTIVITIES:
   Net loss                                                                 $(1,479,245)     $(1,856,654)
   Adjustment to reconcile net loss to net cash
     used in operating activities:
       Depreciation                                                               4,865           10,255
       Issuance of shares for license fees/services                             965,537          337,567
       Issuance of shares for financing costs                                    15,152          152,120
       Issuance of warrants for services/financing costs                         41,004           57,197
       Repricing of options and warrants                                         66,655               --
       Gain on settlement agreement                                                  --         (111,662)
       Fair value of warrants issued in connection with promissory note              --          244,701
       Write off of advances to officers                                             --           50,000
       Write down of other receivable                                                --           14,966
       Equity loss in Legend Credit, Inc.                                         8,002               --
   Changes in operating assets and liabilities:
     Accounts receivable                                                             --           13,203
     Inventory                                                                       --           88,160
     Deposits and prepaid expenses                                                2,226           14,726
     Other receivables                                                           30,610               --
     Accounts payable                                                           (35,616)          21,241
     Accrued expenses                                                           202,193           98,701
     Accrued interest                                                            78,999           43,876
     License fees payable                                                            --         (625,000)

                                                                            ------------     ------------
Net cash used in operating activities                                           (99,618)      (1,446,603)
                                                                            ------------     ------------

CASH FLOW FROM INVESTING ACTIVITIES:
   Purchase of fixed assets                                                          --           (4,800)

                                                                            ------------     ------------
Net cash used in investing activities                                                --           (4,800)
                                                                            ------------     ------------

CASH FLOW FROM FINANCING ACTIVITIES:
   Change in cash overdraft                                                        (131)             131
   Advances from officer, net                                                    40,476               --
   Advances from related party                                                    2,932               --
   Repurchase of shares                                                              --          (15,000)
   Proceeds from issuance of notes payable                                       20,000          400,000
   Proceeds from private placement offerings of common stock                     37,000        1,052,250

                                                                            ------------     ------------
Net cash provided by financing activities                                       100,277        1,437,381
                                                                            ------------     ------------

INCREASE (DECREASE) IN CASH                                                         659          (14,022)

CASH, Beginning of year                                                              --           14,022
                                                                            ------------     ------------

CASH, End of year                                                           $       659      $        --
                                                                            ============     ============

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

                                                   F-5
</TABLE>


<PAGE>

                       LEGEND MOBILE, INC. AND SUBSIDIARY

                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)


SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

         During 2003, (i) the Company issued 3,264,670 shares of common stock
         for professional services valued at $965,537, (ii) the Company issued
         2,500 shares of common stock in exchange for 125 shares of Series A
         Preferred Stock, (iii) the Company issued 68,873 shares of common stock
         for financing costs valued at $15,083, (iv) the Company issued 100,000
         warrants as interest on a 45 day note payable whose fair value is
         estimated to be $24,890, (v) the Company issued 72,000 warrants to an
         investor as a penalty for paying the note on its due date valued at
         $13,685, (vi) the Company issued 25,000 warrants for professional
         services valued at $2,429, (vii) the Company repriced 800,000 option
         and warrants and took a charge to earnings of $66,655 as a result of
         this repricing, and (viii) the Company issued 850,000 shares of Series
         B convertible preferred stock valued at $14,800 to the Company's CEO in
         exchange for the contribution of certain assets to Legend Credit, Inc.

         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 Legend Studios,
         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-6



<PAGE>

                       LEGEND MOBILE, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

         Organization and Lines of Business
         ----------------------------------

         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. 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 branded mobile phone
         products including faceplates, phone accessories, SMS services, and
         mobile data applications. Through the Company 40% owned subsidiary
         Legend Credit, Inc., the Company also develops and markets stored value
         cards including gift cards bearing the Visa and Mastercard logo. The
         Company derives limited revenues from the sale of covers for mobile
         phones. The Company's suppliers require it to purchase these products
         and resell them to consumers and wholesalers. The Company created
         products under its licenses from athletes, entertainers, and popular
         trademarks. The Company also sells a NASCAR-themed, SMS-based text
         messaging service called "Racemobile.com". The Company also is 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. The Company has entered into
         an agreement with the American Society of Composers, Authors and
         Publishers for the licensing of ringtones for mobile phones. ASCAP
         maintains the rights to 8 million copyrighted musical works.

         In July 1999, the Company formed, Legend Studios, Inc. (formerly
         FragranceDirect.com, Inc.) ("Legend Studios"), a majority owned
         subsidiary. Through this entity, the Company sold fragrance products
         over the Internet and is currently looking to buy radio and television
         stations.

         In February 2001, the Company formed a wholly owned subsidiary, Legend
         Credit, Inc. (formerly PTN Wireless, Inc.) ("Legend Credit"). On April
         1, 2003, Mr. Peter Klamka, CEO of the Company, contributed the rights
         to an affinity credit card business valued at $37,000 to Legend Credit.
         Mr. Klamka's contribution has been determined pursuant to Accounting
         Principles Board Opinion No. 29, "Nonmonetary Transactions," using his
         cost basis in the investment, which is the most readily determinable
         cost. In exchange for this contribution, Legend Credit issued to Mr.
         Peter Klamka, 60% of the issued and outstanding shares of common stock
         and the Company issued to Mr. Klamka 850,000 shares of Series B
         convertible preferred stock that were valued at $22,200 and $14,800,
         respectively. The Company retains a 40% minority interest in Legend
         Credit which is accounted for using the equity method.

                                      F-7



<PAGE>

                       LEGEND MOBILE, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


         Basis of Presentation
         ---------------------

         The accompanying consolidated financial statements have been prepared
         in conformity with accounting principles generally accepted in the
         United States of America, which contemplate continuation of the Company
         as a going concern. The Company incurred a net loss for the year ended
         December 31, 2003 of $1,479,245 and at December 31, 2003, had an
         accumulated deficit of $16,536,713 and a working capital deficit of
         $2,096,928. In addition, the Company generates minimal revenue from its
         operations and is in default on the payment of note payable and license
         fee payable obligations. These conditions raise substantial doubt as to
         the Company's ability to continue as a going concern. These
         consolidated financial statements do not include any adjustments that
         might result from the outcome of this uncertainty. These consolidated
         financial statements do not include any adjustments relating to the
         recoverability and classification of recorded asset amounts, or amounts
         and classification of liabilities that might be necessary should the
         Company be unable to continue as a going concern.

         The Company plans to take the following steps that it believes will be
         sufficient to provide the Company with the ability to continue in
         existence. The Company is currently negotiating the purchase of certain
         radio stations through its subsidiary, Legend Studios, Inc. and Legend
         Credit, Inc., which is 40% owned by the Company, continues to sell
         branded debit cards. The Company is also seeking additional equity
         capital to expand its cellular phones faceplates, mobile data services,
         and mobile applications business.

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

         The accompanying consolidated financial statements include the accounts
         of the Company and its 91%-owned subsidiary, Legend Studios. All
         intercompany accounts and transactions have been eliminated. The
         Company also owns a 40% interest in Legend Credit which is accounted
         for under the equity method.

         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. 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 issued to
         employees. For options granted to employees where the exercise price is
         less than the fair value of the stock at the date of grant, the Company
         recognizes an expense in accordance with APB 25. For non-employee stock
         based compensation the Company recognizes an expense in accordance with
         SFAS No. 123 and values the equity securities based on the fair value
         of the security on the date of grant. For stock-based awards the value
         is based on the market value for the stock on the date of grant and if

                                      F-8



<PAGE>

                       LEGEND MOBILE, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


         the stock has restrictions as to transferability a discount is provided
         for lack of tradability. Stock option awards are valued using the
         Black-Scholes option-pricing model.

         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 loss and loss per share would be reduced to the pro forma
         amounts indicated below for the year ended December 31, 2003 and 2002:

                                                        2003             2002
                                                    ------------    ------------
         Net loss
           As reported                              $(1,479,245)    $(1,856,654)
           Compensation recognized under APB 25          66,655              --
           Compensation recognized under SFAS 123      (103,965)             --
                                                    ------------    ------------
                      Pro forma                     $(1,516,555)    $(1,856,654)
                                                    ============    ============

         Basic and diluted loss per common share:
           As reported                              $     (0.15)    $     (0.24)
           Pro forma                                $     (0.16)    $     (0.24)

         The fair value for these options was estimated at the date of grant
         using a Black-Scholes option pricing model with the following
         weighted-average assumptions for 2003: risk-free interest rate of 3.5
         %; dividend yields of 0%; volatility factors of the expected market
         price of the Company's common stock of 134%; and a weighted average
         expected life of the option of 3 years. In 2003, the Company recognized
         an expense of $2,429 related to options issued to non-employees.

         Use of Estimates
         ----------------

         The preparation of consolidated financial statements in conformity with
         accounting principles generally accepted in the United States of
         America requires management to make estimates and assumptions that
         affect the reported amounts of assets and liabilities and disclosures
         of contingent assets and liabilities at the date of the consolidated
         financial statements and the reported amounts of revenue and expenses
         during the reporting periods. As of December 31, 2003, the Company used
         estimates in determining the value of common stock issued to
         consultants for services. Actual results could differ from these
         estimates.

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

         For certain of the Company's financial instruments, including cash,
         accounts payable, accrued expenses, accrued interest, due to related
         party, license fee payable and advances from officer, the carrying
         amounts approximate fair value due to their short maturities. The
         amounts shown for notes payable also approximate fair value because
         current interest rates and terms offered to the Company for similar
         debt are substantially the same.

                                      F-9



<PAGE>

                       LEGEND MOBILE, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


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

         For purposes of the statements of cash flows, the Company defines cash
         equivalents as all highly liquid debt instruments purchased with a
         maturity of three months or less, plus all certificates of deposit.

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

         Financial instruments, which potentially subject the Company to
         concentrations of credit risk, consist of cash. The Company places its
         cash with high quality financial institutions and at times may exceed
         the FDIC $100,000 insurance limit. 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. The Company monitors its
         exposure for credit losses and maintains allowances for anticipated
         losses, as required.

         Fixed Assets
         ------------

         Fixed assets 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.

         Impairment of Long-Lived Assets
         -------------------------------

         Long-lived assets to be held and used are analyzed for impairment
         whenever events or changes in circumstances indicate that the related
         carrying amounts may not be recoverable. The Company evaluates at each
         balance sheet date whether events and circumstances have occurred that
         indicate possible impairment. If there are indications of impairment,
         the Company will use future undiscounted cash flows of the related
         asset or asset grouping over the remaining life in measuring whether
         the assets are recoverable. In the event such cash flows are not
         expected to be sufficient to recover the recorded asset values, the
         assets will be written down to their estimated fair value. Long-lived
         assets to be disposed of are reported at the lower of carrying amount
         or fair value of the asset less cost to sell.

                                      F-10



<PAGE>

                       LEGEND MOBILE, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


         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.

         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 accounts for income taxes in accordance with SFAS No. 109,
         "Accounting for Income Taxes." Deferred taxes are provided on the
         liability method whereby deferred tax assets are recognized for
         deductible temporary differences, and deferred tax liabilities are
         recognized for taxable temporary differences. Temporary differences are
         the differences between the reported amounts of assets and liabilities
         and their tax bases. Deferred tax assets are reduced by a valuation
         allowance when, in the opinion of management, it is more likely than
         not that some portion or all of the deferred tax assets will be
         realized. Deferred tax assets and liabilities are adjusted for the
         effects of changes in tax laws and rates on the date of enactment.

         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, 2003 and 2002 because the effect would have been
         anti-dilutive:

                                      F-11



<PAGE>

                       LEGEND MOBILE, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


<TABLE>
<CAPTION>
                                                                                          2003           2002
                                                                                     -------------  -------------
<S>                                                                                    <C>             <C>
                  Conversion of Series A preferred stock                                   44,500         47,000
                  Conversion of Series B convertible preferred stock                    8,500,000             --
                  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
                  Warrants issued to officers                                             231,000        231,000
                  Warrants issued for services                                            450,000        650,000
                  Warrants issued with notes                                               80,000        180,000
                  Warrants issued for penalty/interest                                    262,000         90,000
                  Warrants issued with note conversion                                    500,000        500,000
                                                                                     -------------  -------------
                                                                                       11,217,500      2,873,000
                                                                                     =============  =============
</TABLE>

         Comprehensive Loss
         ------------------

         SFAS No. 130, "Reporting Comprehensive Loss," establishes standards for
         the reporting and display of comprehensive income and its components in
         the financial statements. For the year ended December 31, 2003 and
         2002, the Company does not have items that represented other
         comprehensive income and, accordingly, has not included in the
         statement of stockholders' equity the change in comprehensive loss.

         Minority Interest
         -----------------

         Minority interest represents the minority shareholders' proportionate
         share of the equity of Legend Studios. During the year ended December
         31, 2000, the Company sold 410,000 or 17% of the common stock of Legend
         Studios. Legend Studios, on a stand-alone basis, had a shareholders'
         deficit. As a result, the Company's investment in Legend Studios had a
         negative carrying value. The increase in capitalization of Legend
         Studios 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 Legend Studios.
         Accordingly, the Company has accounted for the change in its
         proportionate share of Legend Studios' 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 Legend
         Studios shareholders exchanged 173,999 shares of Legend Studios common
         stock for 173,999 shares of the Company's common stock. During 2002,
         one of the Legend Studios shareholders exchanged 1,000 shares of Legend
         Studios 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, 2003 as Legend Studios,
         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, 2003 and 2002 do not reflect the minority interest's
         share of Legend Studios' losses for said years as the related accrual
         would result in the Company's recordation of a minority interest
         receivable.

                                      F-12



<PAGE>

                       LEGEND MOBILE, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


         Reclassification
         ----------------

         Certain reclassifications have been made to the 2002 balances to
         conform to the 2003 presentation.

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

         During April 2003, the FASB issued SFAS 149 - "Amendment of Statement
         133 on Derivative Instruments and Hedging Activities", effective for
         contracts entered into or modified after September 30, 2003, except as
         stated below and for hedging relationships designated after September
         30, 2003. In addition, except as stated below, all provisions of this
         Statement were applied prospectively. The provisions of this Statement
         that relate to Statement 133 Implementation Issues that were effective
         for fiscal quarters that began prior to June 15, 2003, were applied in
         accordance with their respective effective dates. In addition,
         paragraphs 7(a) and 23(a), which relate to forward purchases or sales
         of when-issued securities or other securities that do not yet exist,
         should be applied to both existing contracts and new contracts entered
         into after September 30, 2003. The Company does not participate in such
         transactions and accordingly, the adoption of FASB 149 did not have an
         impact on the Company's consolidated financial statements.

         During May 2003, the FASB issued SFAS 150 - "Accounting for Certain
         Financial Instruments with Characteristics of both Liabilities and
         Equity", effective for financial instruments entered into or modified
         after May 31, 2003, and otherwise is effective for public entities at
         the beginning of the first interim period beginning after June 15,
         2003. This Statement establishes standards for how an issuer classifies
         and measures certain financial instruments with characteristics of both
         liabilities and equity. It requires that an issuer classify a
         freestanding financial instrument that is within its scope as a
         liability (or an asset in some circumstances). Many of those
         instruments were previously classified as equity. Some of the
         provisions of this Statement are consistent with the current definition
         of liabilities in FASB Concepts Statement No. 6, Elements of Financial
         Statements. The Company has adopted FASB 150 which did not have an
         impact on the Company's consolidated financial statements.

         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 other entities in the first fiscal year or
         interim period beginning after December 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. In December 2003, the FASB concluded to revise certain
         elements of FIN 46, which will be issued shortly. The FASB also
         modified the effective date of FIN 46. For all entities that were
         previously considered special purpose entities, FIN 46 should be

                                      F-13



<PAGE>

                       LEGEND MOBILE, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


         applied in periods ending after December 15, 2003. Otherwise, FIN 46 is
         to be applied for registrants who file under Regulation SX in periods
         ending after March 15, 2004, and for registrants who file under
         Regulation SB, in periods ending after December 15, 2004. The Company
         does not expect the adoption to have a material impact on the Company's
         consolidated financial position or results of operations.

         In December 2003, the FASB issued a revised SFAS No. 132, "Employers'
         Disclosures about Pensions and Other Postretirement Benefits" which
         replaces the previously issued Statement. The revised Statement
         increases the existing disclosures for defined benefit pension plans
         and other defined benefit postretirement plans. However, it does not
         change the measurement or recognition of those plans as required under
         SFAS No. 87, "Employers' Accounting for Pensions," SFAS No. 88,
         "Employers' Accounting for Settlements and Curtailments of Defined
         Benefit Pension Plans and for Termination Benefits," and SFAS No. 106,
         "Employers' Accounting for Postretirement Benefits Other Than
         Pensions." Specifically, the revised Statement requires companies to
         provide additional disclosures about pension plan assets, benefit
         obligations, cash flows, and benefit costs of defined benefit pension
         plans and other defined benefit postretirement plans. Also, companies
         are required to provide a breakdown of plan assets by category, such as
         debt, equity and real estate, and to provide certain expected rates of
         return and target allocation percentages for these asset categories.
         The Company has implemented this pronouncement and has concluded that
         the adoption has no material impact to the consolidated financial
         statements.


NOTE 2 - FIXED ASSETS

        Fixed assets at December 31, 2003 consisted of the following:

                                                                       2003

                  Computer equipment                              $      46,794
                  Furniture and fixtures                                  3,452
                                                                  -------------
                                                                         50,246
                  Less accumulated depreciation                         (47,754)
                                                                  --------------

                           Total                                  $       2,492
                                                                  ==============

         Depreciation expense for the years ended December 31, 2003 and 2002 was
         $4,865 and $10,255, respectively.


NOTE 3 - INVESTMENT IN LEGEND CREDIT, INC.

         On April 1, 2003, the Company's CEO, Mr. Peter Klamka, contributed the
         rights to an affinity credit card business at his historical cost basis
         of $37,000 to Legend Credit. Mr. Klamka's contribution has been
         determined pursuant to Accounting Principles Board Opinion No. 29,
         "Nonmonetary Transactions," using his cost basis in the investment,
         which is the most readily determinable cost. In exchange for this
         contribution, Legend Credit issued to Mr. Peter Klamka, 60% of the
         issued and outstanding shares of common stock and the Company issued to

                                      F-14

<PAGE>

                       LEGEND MOBILE, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


         Mr. Klamka 850,000 shares of Series B convertible preferred stock that
         were valued at $22,200 and $14,800, respectively, pro rata based on the
         percentage of interest owned. The Company retains a 40% minority
         interest in Legend Credit which is accounted for using the equity
         method. Summary financial information of Legend Credit as of and for
         the year ended December 31, 2003 is below:

                  Cash                                       $         11,824
                  Total current assets                       $         47,093
                  Total assets                               $         47,616
                  Total current liabilities                  $         30,622
                  Total stockholders' equity                 $         16,994

                  Revenue                                    $        248,584
                  Gross profit                               $         51,859
                  Net loss                                   $        (20,006)


NOTE 4 - LICENSE FEES PAYABLE

         A summary of the guaranteed minimum payments as of December 31, 2003,
         is as follows:

<TABLE>
<CAPTION>
                                                                                             Balance
                                                        Guaranteed           Less           Owed as of
                                                         Minimum            Amounts          December
                                                         Royalties        Paid/Settled       31, 2003
                                                     -----------------   --------------   ---------------
<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 for the year ended
                 December 31, 2002. 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

                                      F-15



<PAGE>

                       LEGEND MOBILE, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


                 amounts due to Mr. Jordan, it has accrued interest in
                 accordance with the terms of the contract. As of December 31,
                 2003, the total amount due to Mr. Jordan, including accrued
                 interest, is $576,601, which is included in accrued expenses in
                 the accompanying consolidated balance sheet.


NOTE 5 - ACCRUED EXPENSES

         Accrued expenses at December 31, 2003, consist of the following:

               Michael Jordan settlement                       $    576,601
               Accrued salaries                                     188,920
               Accrued legal judgment                                31,000
               Other accrued expenses                                10,186
                                                               -------------
                                                               $    806,707
                                                               =============


NOTE 6 - 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 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, 2003
         aggregated to $13,500.

         In July and August of 1999, the Company's subsidiary, Legend Studios
         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 Legend Studios common stock. In addition, Legend Studios issued to
         the note holders an aggregate of 96,000 two-year stock purchase
         warrants to purchase Legend Studios 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, 2003, $125,000
         of these notes and accrued interest of $55,209 are still outstanding.
         These notes are in default at December 31, 2003.

         In August 2001, the Company issued notes payable for $100,000 and
         $300,000 which were due in 60 days and 14 days, respectively. In
         connection with the issuance of the $300,000 note, 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 during the year
         ended December 31, 2001. 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) weight-average risk-free interest rate of approximately
         4.0%, and (iv) expected life of 3 years. In July 2002, the Company
         converted the $300,000 note into 300,000 shares of its common stock and
         issued 300,000 warrants to purchase the Company's common stock at $1

                                      F-16



<PAGE>

                       LEGEND MOBILE, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


         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 during the
         year ended December 31, 2002. The following assumptions were used to
         determine the fair value of these 300,000 warrants: (i) dividend yield
         of 0%, (ii) expected volatility of 129%, (iii) weight-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 during the years ended
         December 31, 2003 and 2002, respectively, 72,000 and 90,000 warrants as
         a penalty valued at $13,685 and $80,870, respectively.

         In September 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 nor the May 31, 2003 payments. Interest accrued as of
         December 31, 2003 amounted to $53,333.

         In October 2003, the Company issued a note payable in the amount of
         $20,000. The note was due 45 days after issuance. This note has not
         currently been repaid. There is no stated interest rate on the note,
         but the Company did issue to the investor 100,000 warrants to purchase
         shares of the Company's common stock for $0.35 per share. The Company
         used the Black-Scholes model to determine the fair value of these
         100,000 warrants with the following assumptions: (i) dividend yield of
         0%, (ii) expected volatility of 118%, (iii) weighted-average risk-free
         interest rate of approximately 3.5%, and (iv) expected life of 3 years.
         The value of these warrants of $24,890 was has been recorded as
         interest expense in the accompany consolidated statements of operations
         during the year ended December 31, 2003.


NOTE 7 - ADVANCES TO/FROM RELATED PARTIES

         In 2001, the Company advanced $50,000 to a company that the Company's
         CEO have an ownership interest. The advance was forgiven in 2002 and
         was expensed as compensation to the officer.

         In 2003, the Company's CEO advanced $40,476 to the Company. These
         advances are non-interest bearing and are payable upon demand. In
         addition, in 2003 the Company's minority owned subsidiary, Legend
         Credit advanced $2,932 to the Company. These advances are also
         non-interest bearing and payable upon demand.


NOTE 8 - 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.

                                      F-17



<PAGE>

                       LEGEND MOBILE, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


         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.

         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 $1,000,000 profit participation obligation
         will be reduced as profits payments are made to the holder.

         As of December 31, 2003, due to the lack of communication with the
         holder of this profit participation obligation, the Company continues
         to show this obligation on its consolidated balance sheet. As the
         Company has discontinued the sale of Palm products and does not expect
         to sell them in the future, the Company is attempting to determine how
         this obligation will be settled. Until such time as this matter is
         resolved, the Company will continue to show this obligation on its
         consolidated balance sheet.


NOTE 9 - STOCKHOLDERS' DEFICIT

         Series A Preferred Stock
         ------------------------

         The Company has 1,000,000 shares of $0.001 par value Series A Preferred
         Stock ("Series A") authorized of which 2,225 shares are issued and
         outstanding at December 31, 2003. Each share of Series A can be
         converted into 20 shares of common stock.

         Series B Convertible Preferred Stock
         ------------------------------------

         The Company has 850,000 shares of $0.01 par value Series B Convertible
         Preferred Stock authorized of which 850,000 shares are issued and
         outstanding at December 31, 2003.

         In the event of a voluntary or involuntary liquidation, dissolution or
         winding up of the Company, prior to the time the Series B becomes
         convertible into common shares, the holders of Series B shall be
         entitled to $0.01 per share. In the event of a voluntary or involuntary
         liquidation, dissolution or winding up of the Company after the time
         the Series B becomes convertible into common shares, the holders of
         Series B shall be entitled to share with the holders of common stock
         pari passu in the assets of the Company, on an as converted basis,
         whether such assets are capital or surplus of any nature. The Series B
         shall be convertible upon the earlier to occur of: (i) the date the
         Company generates net profits in any two consecutive fiscal quarters or
         (ii) April 1, 2006.

         The conversion of Series B shall be on the basis of ten shares of
         common stock for one Series B share, as may be adjusted from time to
         time. Upon conversion, the holder of the Series B will be required to
         pay to the Company a conversion price for each share of common stock
         equal to $0.10.

         The holders of the Series B shall vote on all matters with the holders
         of the common stock (and not as a separate class) on a ten votes per
         share basis. The holders of the Series B shall be entitled to receive
         all notices relating to voting as are required to be given to the
         holders of the common stock.

                                      F-18



<PAGE>

                       LEGEND MOBILE, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


         During 2003, the Company issued to Mr. Peter Klamka, the Company's CEO,
         850,000 shares of Series B as consideration for the contribution of an
         affinity credit card business to Legend Credit. (See Note 3)

         Common Stock
         ------------

         Effective January 12, 2004, the Company increased its authorized $0.001
         par value common stock from 10,000,000 to 20,000,000 shares.

         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 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.

         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.

         In December 2002, the Company issued 410,000 shares of common stock for
         services valued at $300,500. The value was determined using the market
         value of the Company's stock at the date the shares were issued.

         In January 2003, the Company issued 20,000 shares of common stock in a
         private placement offering that resulted in gross proceeds of $20,000.
         Also, in January 2003, the Company issued 25,000 shares of common stock
         as payment for services valued at $20,166. The value was determined
         using the market value of the Company's stock at the date the shares
         were issued.

                                      F-19



<PAGE>

                       LEGEND MOBILE, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


         In February 2003, the Company issued 2,500 shares of common stock for
         the conversion of 125 shares of Series A.

         In May 2003, the Company issued 100,000 shares of common stock as
         payment for services valued at $16,000. The value was determined using
         the market value of the Company's stock at the date the shares were
         issued.

         In June 2003, the Company issued 106,250 shares of common stock in a
         private placement offering that resulted in gross proceeds of $17,000.

         In July 2003, the Company issued 68,873 shares of common stock for
         financing costs valued at $15,152. The value was determined using the
         market value of the Company's stock at the date the shares were issued.

         In July, August and September 2003, the Company issued 1,560,000 shares
         of common stock for services valued at $477,700. The value was based in
         the market value of the Company's common stock on the date of issuance.

         In October and December 2003, the Company issued 1,579,670 shares of
         common stock for services valued at $451,671. The value was based in
         the market value of the Company's common stock on the date of issuance.

         Stock Option Plan
         -----------------

         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.

                                      F-20



<PAGE>

                       LEGEND MOBILE, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


         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>        <C>
                  Balance, December 31,
                    2001                             1,175,000  $           2.34        1,266,000  $           2.49
                    Granted                                  -  $              -          440,000  $           1.00
                    Exercised                                -  $              -                -  $              -
                    Canceled                                 -  $              -         (55,000)  $           7.50
                                               ---------------                    ---------------

                  Balance, December 31,
                    2002                             1,175,000  $           2.34        1,651,000  $           1.93
                    Granted                            515,500  $           0.10          172,000  $           0.62
                    Exercised                                -  $              -                -  $              -
                    Canceled                         (540,500)  $           2.10        (300,000)  $           3.00
                                               ---------------                    ---------------

                  Balance, December 31,
                    2003                             1,150,000  $           2.34        1,523,000  $           1.46
                                               ===============                    ===============

                  Exercisable, December
                    31, 2003                         1,150,000  $           0.10        1,523,000  $           1.46
                                               ===============                    ===============
</TABLE>

         The weighted average remaining contractual life of options outstanding
         issued under the Plans is 7.32 years at December 31, 2003. The exercise
         price for all options outstanding under the Stock Option Plan at
         December 31, 2003 is $0.10. In April 2003, the Company re-priced
         800,000 vested option and warrants and took a charge to earnings of
         $66,655 as a result of this re-pricing No compensation expense was
         recognized as a result of the issuance of stock options during the year
         ended December 31, 2003.

         For options granted during the year ended December 31, 2003 where the
         exercise price equaled the stock price at the date of the grant, the
         weighted-average fair value of such options was $0.08 and the
         weighted-average exercise price of such options was $0.10. For the year
         ended December 31, 2003, there were no options granted where the
         exercise price was greater than the stock price at the date of grant or
         where the exercise price was less than the stock price at the date of
         grant.

         The weighted average remaining contractual life of warrants outstanding
         is 1.60 years at December 31, 2003. The exercise price for the warrants
         outstanding at December 31, 2003 range from $0.10 to $3.00.

                                      F-21



<PAGE>

                       LEGEND MOBILE, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


NOTE 10 - INCOME TAXES

         Deferred income taxes reflect the net tax effects of temporary
         differences between the carrying amounts of assets and liabilities for
         financial statement purposes and the amounts used for income tax
         purposes. Significant components of the Company's deferred tax
         liabilities and assets as of December 31, 2003 are as follows:

               Deferred tax assets:
                     Federal net operating loss                    $  4,866,000
                     State net operating loss                           255,000
                     Equity instruments issued for compensation         368,000
                                                                   -------------

               Total deferred tax assets                              5,489,000
                     Less valuation allowance                        (5,489,000)
                                                                   -------------

                                                                   $         --
                                                                   =============

         At December 31, 2003, the Company had federal and state net operating
         loss ("NOL") carryforwards of approximately $14,312,000 and
         $12,773,000, respectively. Federal NOLs could, if unused, expire in
         varying amounts in the years 2012 through 2018. State NOLs, if unused,
         could expire in varying amounts from 2012 through 2018.

         The valuation allowance increased by $701,000 during 2003. The Company
         has provided a 100% valuation allowance on the deferred tax assets at
         December 31, 2003 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, 2003 and 2002 is as
         follows:

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

               Federal income tax rate                     (34.0%)      (34.0%)
               State tax, net of federal benefit            (2.0%)       (2.0%)
               Equity instruments issued for
                 compensation                               23.5%         6.5%
               Increase in valuation allowance              12.5%        29.5%
                                                      ------------- ------------

               Effective income tax rate                     0.0%         0.0%
                                                      ============= ============


NOTE 11 - COMMITMENTS AND CONTINGENCIES

         Leases
         ------

         The following is a schedule by years of future minimum rental payments
         required under operating leases that have non-cancelable lease terms in
         excess of one year as of December 31, 2003:

                                      F-22



<PAGE>

                       LEGEND MOBILE, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


                           Year ending December 31,
                               2004                            $       15,600
                               2005                                    15,600
                               2006                                     1,300
                                                               ---------------

                                                               $       32,500
                                                               ===============

         Rent expense amounted to $8,147 and $31,965 for the years ended
         December 31, 2003 and 2002

         Litigation
         ----------

         In the ordinary course of business, the Company is generally subject to
         claims, complaints, and legal actions. At December 31, 2003, management
         believes that the Company is not a party to any action which would have
         a material impact on its financial condition, operations, or cash
         flows.


NOTE 13 - SUBSEQUENT EVENTS

         On March 11, 2004, the Company through its 91%-owned subsidiary, Legend
         Studios, signed a letter of intent to acquire a group of seven
         operating radio stations consisting of 3 AM stations and 4 FM stations.
         The radio stations are located in Virginia, West Virginia and Missouri.
         It is expected that the acquisition will be funded through a
         combination of cash, Legend Studios common stock, and assumption by
         Legend Studios of certain debt of the seller The Company expects the
         acquisition to close in the second quarter of 2004. The letter of
         intent does not, however, represent a binding commitment of the
         parties. It is possible that the transaction will not be consummated.

         During the second quarter of 2003, Mr. Peter Klamka, the Company's CEO
         and 60% owner of Legend Credit, intends to contribute 10% of his
         ownership interest in Legend Credit to Legend Mobile which will bring
         Legend Mobile's ownership in Legend Credit to 50%.

                                      F-23