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

                                  FORM 10-KSB/A
                               Amendment Number 1

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

       For the fiscal year ended September 30, 2003

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

       For the transition period from __________________ to __________________

Commission file number: 000-30405

                      Universal Communication Systems, Inc.
                    ----------------------------------------
                 (Name of small business issuer in its charter)

               Nevada                                 860887822
               ------                                 ---------
   (State or other jurisdiction of        (I.R.S. Employer Identification No.)
   incorporation or organization)

407 Lincoln Road, Ste 12F, Miami Beach, Florida                         33139
-------------------------------------------                             -----
   (Address of principal executive offices)                          (Zip Code)

407 Lincoln Road, Ste 6K, Miami Beach, Florida                          33139
------------------------------------------------                        -----
   (Address of former principal executive offices)                   (Zip Code)

Issuer's telephone number: (305) 672-6344

Name of each exchange on which registered:  OTC Bulletin Board under the trading
                                            symbol UCSY

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

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

                     Common Stock, $.001 par value per share
                                (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 disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]

Issuer's revenues for its most recent fiscal year:  $0

Aggregate market value of voting stock held by non-affiliates of the issuer as
of December 30, 2002: $5,670,640

State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date. 103,123,070 shares of common
stock as of December 30, 2003.

Documents incorporated by reference:        None.

Transitional Small Business Disclosure Format:  Yes [ ]  No  [X]
<PAGE>

                      Universal Communication Systems, Inc.

                                 Index to Annual
                              Report on Form 10-KSB
                  For The Fiscal Year Ended September 30, 2003

                                                                            Page

ITEM 1.    DESCRIPTION OF BUSINESS.............................................3

ITEM 2.    DESCRIPTION OF PROPERTY.............................................6

ITEM 3.    LEGAL MATTERS.......................................................7

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.................7

ITEM 5.    MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS............8

ITEM 6.    MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.........11

ITEM 7.    FINANCIAL STATEMENTS...............................................16

ITEM 8.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
             AND FINANCIAL DISCLOSURE.............. ..........................16

ITEM 8A.    CONTROLS AND PROCEDURES...........................................16

ITEM 9.    DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
             COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT ...............17

ITEM 10.   EXECUTIVE COMPENSATION.............................................19

ITEM 11.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.....19

ITEM 12.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.....................20

ITEM 13.   EXHIBITS AND REPORTS ON FORM 8-K...................................21

ITEM 14.   PRINCIPAL ACCOUNTANT FEES AND SERVICES.............................22

SIGNATURES....................................................................23

                                       -2-

<PAGE>

                                     PART I

Introductory Statement
----------------------
 All statements contained herein that are not historical facts, including but
not limited to, statements regarding the Company's current business strategy,
the Company's projected sources and uses of cash, and the Company's plans for
future development and operations, are based upon current expectations. These
statements are forward-looking in nature and involve a number of risks and
uncertainties. Actual results may differ materially. Among the factors that
could cause actual results to differ materially are the following: the
availability of sufficient capital to finance our business plans on terms
satisfactory to us; competitive factors; changes in labor, equipment and capital
costs; changes in regulations affecting our business; future acquisitions or
strategic partnerships; general business and economic conditions; and factors
described from time to time in the reports filed by us with the Securities and
Exchange Commission. Readers are cautioned not to place undue reliance on any
such forward-looking statements, which statements are made pursuant to the
Private Litigation Reform Act of 1995 and, as a result, are pertinent only as of
the date made.

         All of the share price information presented herein has been adjusted
to reflect the 1 for 1,000 reverse split of our outstanding common stock
effective August 23, 2002.

ITEM 1.  DESCRIPTION OF BUSINESS

Introduction


For the past two fiscal years we have had minimal revenues. We have a history of
losses, and an accumulated shareholder deficit of $31,833,598. Because of our
recurring losses, our independent auditors have expressed doubt as to our
ability to continue as a going concern.

We will require short-term outside investment on a continuing basis to finance
our current operations and capital expenditures. If we do not obtain short term
financing we may not be able to continue as a viable concern. We do not have a
bank line of credit, although our subsidiary has a checking account overdraft
facility, and there can be no assurance that any required or desired financing
will be available through bank borrowings, debt, or equity offerings, or
otherwise, on acceptable terms. If future financing requirements are satisfied
through the issuance of equity securities, investors may experience significant
dilution in the net book value per share of common stock.

We currently have three channels of activity, each conducted by a wholly owned
subsidiary. Air Water Corporation, ("AirWater") a Florida corporation formed in
March, 2003, has been established to design, manufacture (utilizing contract
manufacturing organizations) and market systems that perform water extraction
from air. Millennium Electric T.O.U. Ltd., ("Millenium") an Israeli company,
acquired September, 2003, specializes in the development and installation of
solar power systems worldwide, primarily to government and industrial users.
Solar One, Inc., ("Solar One") a Florida corporation, formed in July, 2003,
manufactures (subcontracted to third parties) and markets portable photovoltaic
cells in leather cases for consumer electronic products. Solar One was formed to
source the manufacturing and to market the product line of photovoltaic consumer
energy panel products designed by Solar Style, Ltd., an Israeli company 50%
owned by us. We have recently combined the technology of the photovoltaic system
of Millenium and the water extraction systems of Air Water and developed a self
powered air water machine.

We are focusing our sales efforts in the European, African, Middle Eastern and
Asian government and industrial markets for Air Water and Millenium product and
service offerings. Solar One is targeting the North American and European
consumer markets. We have discontinued, effective January, 2003, our previous
telecommunication and wireless broad band business activities to focus on the
water extraction and photovoltaic technology.


                                       -3-
<PAGE>

History

In February of 1997, Worldwide Wireless, Inc., a Nevada corporation, was formed
to coordinate the operations of TSI Technologies, Inc., a Nevada corporation,
and National Micro Vision Systems, Inc., a Nevada corporation. Its purpose was
to complete the development of its patented advanced distributed wireless
telephone and network designs and to finance, manufacture, and market these
units and systems. TSI Technologies, Inc. was the research and development
company formed for the purpose of creating and developing the distributed
wireless call processing system. National Micro Vision Systems, Inc. was formed
to operate a network of wireless Internet sites. In April of 1998, Worldwide
Wireless, Inc., TSI Technologies, Inc. and National Micro Vision Systems, Inc.
acquired Upland Properties, Inc., a Nevada corporation, for stock and
transferred their assets to Upland Properties, Inc. Upland Properties, Inc. then
changed its name to World Wide Wireless Communications, Inc. and began trading
on the OTC Bulletin Board (OTC:BB)under the symbol WLGS.


On February 10, 2000 we acquired all of the shares of Digital Way, S.A., a
Peruvian telecommunications company. In June of 2001, we received a notice of
default from the sellers of Digital Way, claiming a breach of the terms of our
purchase agreement. On May 10, 2002, we executed a settlement agreement with
those sellers. Under the terms of the agreement, we re-aligned the stock
ownership of Digital Way, by returning 73% of the common shares owned by us to
the former owners. In addition, we retained a 50% interest in the first $6.2
million of equity value of Digital Way, in the event of a sale or other
disposition. Any value beyond the first $6.2 million will be divided based on
shareholdings. Our chairman, Michael Zwebner, remains on the Board of Directors
of Digital Way, S. A. The settlement agreement fully cancels all debts, claims
and counter claims between us and the sellers, and allows for future co-
operation in the ongoing development or sale of Digital Way. Although we have
reached this settlement, management of Digital Way has not provided the
necessary financial information for Digital Way to be included in our financial
reporting, and the results of the Company's investment in Digital Way is unclear
at this time. The Company has fully impaired this investment. Management is now
actively seeking a third party buyer for our 27% interest in Digital Way SA.

On November 1, 2001, current management took control of the company. During the
fiscal year ended September 30, 2002, we moved our offices from Oakland,
California to Miami Beach, Florida and changed our name to Universal
Communication Systems, Inc. We then changed our symbol to UCSI. Following our
one for one thousand reverse stock split on August 23, 2002, our symbol was
changed to UCSY.

In January, 2003, we identified a new business venture, abandoned the
telecommunication and wireless business and adopted a new business plan. We
formed a wholly owned subsidiary, AirWater Corporation, whose purpose and
mission is to design, build and market machines that produce drinkable water
from the air. The first step in the endeavor was to obtain licensing rights to
the technology. To that end, we acquired the rights to four patents by an
agreement dated March 24, 2003, relating to this technology from J. J. Reidy
Company of Holden, Massachusetts. AirWater Patents Corporation was formed to
hold our acquired licensed patent rights. Under the terms of the agreement, we
paid $300,000, and we are obligated to pay a royalty payment of between 5 to
7.5% on all sales of equipment which uses the patented technology. Of the
$300,000 purchase price, the company paid $100,000 in cash, and the balance of
$200,000 was settled by issuing 4,000,000 restricted common shares.

Beginning in March 2003 we pursued various consulting, marketing and sales
agreements. The activities covered by these agreements include, product design,
electrical and mechanical engineering, systems integration, research and
development, conceptual designs, global contacts, mergers and acquisitions,
product and company publicity, marketing, sales and general business consulting.
Key agreements include the following:

- We entered into a commission based agreement with Natra Advanced Technologies
(1995) Ltd. an Israeli company, for the marketing of our Air Water Products.
- We engaged the services of an Israeli business consulting company, Otzarot
Tarshish Nechasim Limited for general business development, covering possible
mergers and potential acquisitions. The terms of this agreement called for a
cash payment of 10% of the value of any closed transaction, along with five year
warrants at the closing price of the transaction, in total value equal to 10% of
the transaction value.
- We entered into a services agreement with Perfect Securities Limited, of Ramat
Gan, Israel, for Investor Relations, and to actively promote the company and
publicize its new products and services. - We signed a General Marketing
Agreement with AirWater Afrique, a company established in Paris, France, who
will market both our Air Water and PV Solar Energy products mainly in the
continent of Africa and some countries in the middle east on a sales commission
basis.

On April 30, 2003 we executed a letter of intent to acquire CinemaElectric,
Inc., a Los Angeles based multimedia messaging service company for a purchase
price of $10 million. On August 12th, 2003, and by mutual agreement, we withdrew
from this Letter Of Intent. We withdrew our letter of intent so that Brenex Oil
Corporation could issue their letter of intent to acquire CinemaElectric, Inc.,
which they did on August 12, 2003. Under the proposed transaction, we will
receive 10% of the entity resulting from the acquisition of CinemaElectric by
Brenex Oil Corporation. Our Board of Directors is evaluating distributing these
shares to our shareholders.

We completed an agreement to purchase all of the stock of Millennium on
September 29, 2003. As part of the Millenium acquisition, we acquired 50% of
Solar Style, Ltd. ("Solar"). Solar is an inactive Israeli company that holds
certain rights to manufacture and market solar power products. In connection
with the Millenium / Solar acquisitions, a new U. S. subsidiary, Solar One
Corporation, was formed to market solar power products and systems.

Millenium and its president, Mr. Ami Elazari, operate in the forefront of the
high technology field of solar energy, solar panels, and solar powered consumer
products. The Company and Mr. Elazari are the holders of more than 21
international patents relating to both Photo Voltaic ("PV") and solar energy
systems and products.


Our strategy


Under the auspices of new management, we have made considerable progress in
restructuring prior obligations and removing debt. We have concentrated our
activities, as previously mentioned, on the Air-Water product and the photo
voltaic product lines. We have withdrawn from the wireless internet market,
disposed of assets for cash and we continue our negotiations with creditors to
compromise, extend, convert and/or forgive debt owed by the company prior to the
new management.


                                  -4-
<PAGE>


For the six months prior to year end, we have worked to design, research and
develop as well as source the manufacture of our AirWater machines. The result
of this search has lead to the final stage of negotiating manufacturing and
licensing agreements with entities in Israel and Brazil, and more recently in
Australia. Our next step is to embark on a worldwide sales and marketing
program, focusing on the markets listed above.


Air-Water technology and competition


The applications for the Air-Water System technology are extensive. It is our
belief that the initial product should be the model that offers the easiest
entry into the marketplace, gains the quickest exposure, and generates a
substantial cash flow. To this end, we believe that a residential
5-gallon-per-day model would best fit this goal.
Our reasoning is as follows:

o        The bottled water market is approximately a $7.1+ billion marketplace
         with projected growth in excess of 10% per year. Its cost to the
         consumer, inconvenience and logistical aggravation and the fluctuation
         in the quality of the water make bottled water vulnerable to an
         alternative, Air-Water Products for example, which is cheaper per
         gallon on the order of 1-2 kW per gallon, has consistent quality and is
         convenient.
o        It is the easiest model to take to market thus maximizing its exposure.
o        It would be readily accepted by foreign customers, where size is often
         very important.
o        It would create a very lucrative aftermarket sector for serviceable
         parts such as water filters, containers and ultra-violet light bulbs.

We believe that the global market for Air Water machines is largely untapped and
undeveloped. The Air Water technology and system is very new, and much of the
initial sales efforts that we are currently engaged in are dedicated to
education, and the detailed explanation of the machines, the built in safety
systems and their general operation.

Operational safety and computer managed user maintenance is built into every
Air~Water System by the use of a patented, inexpensive, programmable chip. The
water filtration industry is reliant upon voluntary user discipline in the
important issue of safety, and the periodic changing of the machine filters.

The Air~Water System knows when an air filter needs cleaning, or is missing,
when the UV bulb becomes ineffective, when the water filter needs changing and
if the user accidentally tries to use an expired water filter. The Air~Water
System will not operate if any of those factors exist and displays to the user
the reason on a small electronic display panel.

Management further believes that there are a number of specific market segments
that the Air Water Products can be introduced to and marketed to.

First is the home consumer product market, to which the company is addressing a
Small Office / Home Office ("SOHO") styled product. Next is the commercial
market, for such users as small hospitals, local field clinics, small farms,
factories and so on. And then there is the larger customer such as International
Aid Agencies, Governments, The United Nations, The Red Cross, Local Towns and
Villages, and Military Forces worldwide all in areas and countries where water
is scarce, or difficult to transport.

At this time, the company is aware of very limited competition. The company has
identified a Dallas Texas based company, called Electric Gas & Technologies Inc,
and World Wide Water Inc., of Los Angeles California. In addition, the company
has seen a similar product sold in the US Market, made or offered for sale by a
company called Liquid Air Inc, also based in California. Almost in all cases,
these companies are in various stages of "start up" mode, having been in the
Water from Air business less than a year, and just starting to offer machines to
customers.

We believe that as the Air Water products and Systems become more engrained in
the global marketplace, and are more publicized and accepted, that there will be
additional companies entering this industry, thus creating increased
competition. We further believe that our patents and intellectual property
rights will place us at a competitive advantage.

In certain global areas where electricity and or gas power sources are either
not available or in short supply, there is a need for a power alternative to
conventional sources. Our subsidiary, Millennium, has designed the system to
fulfill this technological need of providing Photo Voltaic (PV) Electric Energy
to provide the necessary power to the air water units.

Following our acquisition, Millennium's management is currently primarily
focused on re-organizing the company. This included moving to new offices,
purchasing new computer systems, the addition of several new personnel for key
positions including operations officer, marketing manager and regional marketing
manager . Millennium is also conducting educational seminars for potential
clients, by targeting architects, elected officials and military personnel.

Millennium's Strategic vision for sales is to create a group of international
independent sales consultants to provide a more extensive marketing and
networking program than that which could be achieved by an employee based sales
force.

Solar Style Inc. USA, ("Solar") formed as part of Solar One, Inc. with offices
in Baltimore as well as a new warehouse, will form the basis of the planned
North American Distribution network of the Solar Style (Israel) product line.

We acquired 50% of Solar Style Limited (an Israeli Company) upon the completion
of the acquisition of Millennium. We are currently in negotiations to acquire
the remaining 50% equity of Solar Style Ltd. There can be no assurance that we
will be successful in our current negotiations to conclude this transaction.

Solar is offering PV Solar Chargers for a wide range of products, including
Laptop computers, Palms, Walkmans and Discmans, as well as a wide range of
cellular phones. The PV Solar Chargers negate the need for consumer electronic
products to be connected to the electric grid, in order to charge or recharge
the appliance. Solar Style (Israel) has a manufacturing agreement with a Hong
Kong firm. The products are targeted at the portable consumer electronic market.
Solar Style's technology converts solar energy into electricity in a packaged
solution that recharges mobile electronic devices by a small portable
photovoltaic solar panel, which is specially designed to fit in an elegant
leather case.

Solar Style manufactures the panels and carrying-cases, which are then assembled
and sold as a unit. The panels can easily be plugged in to solar cells and
charged outdoors by sunlight and indoors by electric light. The photovoltaic
cells act as battery chargers allowing a non-dependant use of the mobile device,
making batteries / battery-chargers unnecessary.

Solar's value proposition spans two levels:

The practical and the environmental. On the practical level, Solar Style's
products enable consumers to use their mobile devices without having to worry
about plugs and connectors. On the Environmental level, in today's "green-aware"
world, where environmental concerns have come to be very important to consumers,
Solar Style offers mobile device users a reliable environmentally friendly power
source.

We plan to establish distribution and sales channels for the existing products,
and to continue research and development of improvements on existing and
creation of new products, concurrent with ongoing sales. Solar is already in the
process of various negotiations regarding its products, and is considering two
basic modes of operation:

                 A "traditional" manufacturer-distributor value chain, by which
it will have control over manufacturing and distribution, and sell its products
through large distributors.

                 A licensing option, limited by time and dependant on results,
by which its involvement at the manufacturing stage will be minimal (just enough
to preserve unique knowledge and enable further product development), while
distribution, promotion, and sales management are left to a licensee /business
partner.

            Solar will choose its preferred course of action according to
potential partnerships and customers. Its initial product line has already been
developed. Initial marketing activities are in process, so once negotiations are
finalized and funding is secured, it can start operations. Management favors the
distribution model over the licensing model, as under the distribution model the
company will have greater sales potential.

                                       -5-
<PAGE>

Pending Acquisition

On September 17, 2003, we announced that we have entered into a letter of intent
to acquire a 51% interest in GiraSOLAR, BV, a Dutch company that operates and
specializes in the photo voltaic solar energy industry. This Dutch group is made
up of two separate operating subsidiaries. As of December 30, 2003, both parties
are conducting due diligence in connection with this acquisition.

We anticipate acquiring the stock of GiraSolar BV, with a combination of our
restricted common stock and cash. At this time, the amount of shares and the
amount of cash to be paid, are still under negotiation pending completion of the
due diligence process. We will have to obtain an equity investment to fund the
cash required for this acquisition. We may not be able to raise the required
equity investment and accordingly may not be able to consumate this transaction.


Patents/Intellectual Property


We currently hold a patent for our distributed wireless call processing system.
As we have exited this business, we are looking to license this technology to a
third party developer in order to potentially create a royalty stream of income.
However, we cannot guarantee that we will enter into such an agreement.

As previously mentioned, we hold the exclusive global patent and licensing
rights to four air to water patents under an agreement with J.J. Reidy Company,
relating to atmospheric extraction of water and its purification process. These
patents, numbered: 05106512-00, 05149446-00, 05203989-00, and 05366705-00, were
issued by the US Government Patent Office. Two of these licenses were issued in
1992 and the other two in 1993 respectively. These patents relate to the Air
Water Products not only in the USA, but in countries covered by the PCT global
agreements.

The Patent Cooperation Treaty (PCT) simplifies and reduces the cost of obtaining
international patent protection and facilitates public access to a wealth of
technical information relating to inventions. By filing one international patent
application under the PCT you can simultaneously seek protection for an
invention in over one hundred countries, including developing countries
throughout the world. The Patent Cooperation Treaty (PCT) has over the past
three decades emerged as a major international filing system for seeking patent
protection worldwide in a cost effective and efficient manner. In addition,
through the dissemination of latest technical information contained in published
PCT applications, the PCT system has been actively contributing to the
development of science and technology.

The company fully intends to utilize the patents and intellectual property
rights in its pursuit and ongoing development of the business.

Further, through our Millenium subsidiary, we own 21 international patents in
the photo voltaic solar power and energy system area.


Employees


As of September 30, 2003, we had four employees, all located in our Millenium
office in Israel. As of December 31, 2003, we had no full time employees in the
United States. No employee is represented by a labor union and the company
believes its employee relations to be good.


ITEM 2.  DESCRIPTION OF PROPERTY

We own no real estate. Effective February 1, 2002, we leased a 1400 square foot
corporate and administrative office facility at 407 Lincoln Road, Suite 6K,
Miami Beach, FL 33139. The lease provides for a three-year term. The lease
provided for cancellation with ninety days notice after the first year. On
November 1, 2002 we exercised this provision and rented on a month to month
basis with the landlord at the same address. On October 1, 2003 we moved our
office to suite 12F in the same building.

Millenium Electric T.O.U., Ltd., rents administration and manufacturing offices
in the Herzliah Industrial zone in Israel under a lease which ends in 2005. The
minimum remaining payments under this lease are $60,180 for 2004 and $55,165 for
2005.

                                       -6-
<PAGE>

ITEM 3.  LEGAL MATTERS

On August 26, 1999, we filed suit against Credit Bancorp, in U.S. District Court
in San Francisco, regarding improprieties on the part of Credit Bancorp relating
to a loan. The case was settled on October 11, 1999. As part of the settlement
agreement, Credit Bancorp agreed to convert the original loans granted to us to
a convertible debenture in the amount of $740,000. On October 11, 1999, we
issued a convertible unsecured debenture for $740,000 to Credit Bancorp in
settlement of this obligation. The terms of this convertible unsecured debenture
are 7% interest per annum payable, semiannually on the last day of February and
September, with the principal due September 30, 2002. All amounts of unpaid
principal and accrued interest of this debenture are convertible at any time at
the conversion price of $1,600 per share of unregistered, restricted shares of
our common stock. Credit Bancorp has agreed to convert principal and accrued
interest owing on the debenture into 483 shares of our common stock.

In November 1999, the SEC filed suit against Credit Bancorp alleging violations
of various securities laws in connection with its actions in relation to us and
others, and seeking various forms of relief including disgorgement of its
illegal gains. A receiver has been appointed to administer the affairs of Credit
Bancorp. We have been informed that the appointed receiver denies that such a
conversion request was made and that the principal amount and accrued interest
of the debenture are due. We currently carry the 483 share obligation in our
equity under escrowed shares.


On August 7, 2003, Electric Gas & Technology of Dallas, Texas ("ELGT"),
published a press announcement claiming that a complaint and $60 million lawsuit
had been filed (Federal District Court, Northern District of Texas, Dallas
Division). Their press release stated that we had infringed on their patents.
Counsel has advised us that the claims lack substance. On November 24, 2003, the
court granted our motion for dismissal due to lack of Texas jurisdiction. ELGT
has similar suits filed against other companies in the same industry. We have
filed counter claims in the US District Court of Southern Florida, disputing
ELGT's claims of patent infringement and as a result of statements made by ELGT,
we have filed a claim for $118 million in damages for false, defamatory and
libelous statements. Our counter claims and damage lawsuits are still ongoing.



Although we initiated negotiations with businesses in Puerto Rico and Portugal
in 1999, no further negotiations or affiliations are currently pending in those
areas. On July 20, 2001, WSI, Inc., a Puerto Rican corporation, and its
principal officer and shareholder Howard Hager, filed suit against the Company
in the U.S. District Court in Puerto Rico for breach of contract and damages in
the amount of $4,675,000. The claims arise out of an alleged agreement on the
part of the Company to acquire WSI and provide it with substantial financing. A
default judgment was entered in WSI's favor. On November 26, 2002 a settlement
agreement was reached with Mr. Hager and the trustee in bankruptcy for WSI.
Under the agreement, we issued $200,000 in value of shares of common stock. In
addition to the stock, $50,000 was paid to the trustee of WSI and a two year
consulting contract, valued at $120,000, was executed with Mr. Hager. The
settlement had a total cost of $370,000 and is included in our general and
administrative expense for the fiscal year ended September 30, 2003.


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

No matters were submitted during the fourth quarter of the fiscal year covered
by this report to a vote of the security holders through the solicitation of
proxies or otherwise.

                                       -7-

<PAGE>

                                     PART II


ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Prior to April 3, 2002, our common stock was traded on the over the counter
Bulletin Board market under the symbol "WLGS". From April 4, 2002 through August
22, 2002 our common stock was traded on the over the counter Bulletin Board
market under the symbol "UCSI". From August 23, 2002 to the present, our common
stock is trading on the over the counter Bulletin Board market under the symbol
"UCSY".

The following table sets forth the range of high and low closing bid prices for
each period indicated as reported by the National Association of Securities
Dealers composite feed or other qualified interdealer quotation medium. The
quotations provided reflect inter-dealer prices, without retail mark-up,
mark-down or commission and may not represent actual transactions. All of the
share price information presented below has been adjusted to reflect the 1 for
1,000 reverse split of our outstanding common stock effective August 23, 2002.

Price Range for Common Stock
----------------------------

FISCAL YEAR SEPT 30, 2004           High                Low
                                  --------           --------
   First Quarter                   $ 0.115             $0.060

FISCAL YEAR SEPT 30, 2003           High                Low
                                  --------           --------
   First Quarter                   $ 0.170             $0.100
   Second Quarter                    0.100              0.045
   Third Quarter                     0.230              0.030
   Fourth Quarter                    0.115              0.060

FISCAL YEAR SEPT 30, 2002           High                Low
                                  --------           --------
   First Quarter                   $21.000             $5.599
   Second Quarter                   14.000              2.000
   Third Quarter                    10.000              0.799
   Fourth Quarter                    2.700              0.100

                                       -8-

<PAGE>

Since our shares began trading on the OTC Bulletin Board in 1997, the prices for
our shares have fluctuated widely. There may be many factors which may explain
these variations, but we believe that the following are some of these factors:

         o        the demand for our common stock;

         o        the number of market makers for our common stock;

         o        developments in the market for broadband Internet access and
                  wireless transmission in particular; and

         o        changes in the performance of the stock market in general.

In recent years, the stock market has experienced extreme price and volume
fluctuations that have had a substantial effect on the market prices for many
telecommunications, Internet and emerging growth companies such as ours, which
may be unrelated to the operating performances of the specific companies.
Companies that have experienced volatility in the market price of their stock
have been the object of securities class action litigation. If we become the
object of securities class action litigation, it could result in substantial
costs and a diversion of our management's attention and resources and have an
adverse effect on our business, financial condition and results of operations.
In addition, holders of shares of our common stock could suffer substantial
losses as a result of fluctuations and declines in the stock price.

There are approximately 495 holders of record and an estimated 8,000 holders in
street name of our common stock as of September 30, 2003.

The trading of our shares is subject to limitations set forth in Rule 15g-9 of
the Securities Exchange Act. This rule imposes sales practice requirements on
broker-dealers who sell so-called penny stocks to persons other than established
customers, accredited investors or institutional investors. Accredited investors
are generally defined to include individuals with a net worth in excess of
$1,000,000 or annual income exceeding $200,000 or $300,000 together with their
spouses during the previous two years and expected annual income of that amount
during the current year. For sales of shares to other persons, broker-dealers
must make special suitability determinations, and obtain the written consent of
the purchaser to the sale prior to consummating the sale and are generally
prohibited from making cold-calls or other unsolicited inquiries to purchasers
without complying with these rules. These rules may adversely affect the ability
of broker-dealers and others to sell our shares or to sell shares in the
secondary market.

No cash dividends have been declared to date on our Company's common stock. We
expect that all earnings, if any, will be retained to finance the growth of our
Company and that no cash dividends will be paid for the foreseeable future.

On May 21, 2002, stockholders approved a measure to increase the number of
authorized common shares from 300 million to 800 million.




EQUITY COMPENSATION PLAN INFORMATION
------------------------------------

<TABLE>
<CAPTION>
                                               Number of            Weighted-          Number of securities
                                            securities to be     average exercise    remaining available for
                                              issued upon           price of          future issuance under
                                              exercise of         outstanding          equity compensation
                                              outstanding           options,             plans (excluding
                                           options, warrants      warrants and       securities reflected in
Plan Category                                  and rights            rights                column (a))
------------------------------------------------------------------------------------------------------------
                                                  (a) (b) (c)
------------------------------------------------------------------------------------------------------------
<S>                                                <C>               <C>                       <C>
Equity compensation plans approved by              0                   n/a                     0
security holders
------------------------------------------------------------------------------------------------------------
Equity compensation plans not approved by        257,250             $0.095                6,706,917 (1)
security holders
------------------------------------------------------------------------------------------------------------
Total                                            257,250             $0.095                6,706,917
------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Pursuant to form S-8, dated 12/27/03. Submitted under plan, 11,000,000
shares, issued, 4,293,083.


Description of Equity Compensation


Options issued were issued pursuant to the 2001 Stock Option Plan and also
provided as motivation and incentives to individuals considered important to the
Company's success. The 2001 plan was approved by our board of directors, but not
submitted to a vote of stockholders.

The total number of options granted and outstanding at September 31, 2003, and
the average exercise price and expiration dates for each year are as follows:

                 Total    Exercise
        Year    Options   Price      Expiration Date
        ----    -------   --------   -----------------
        2001    251,150     $0.095    December 31, 2006
                  6,100   $602.00     December 31, 2006
               --------
       Total    257,250


                                       -9-

<PAGE>

Sales of Unregistered Securities
--------------------------------


We have issued and sold unregistered securities that have not previously been
reported as set forth below. An underwriter was not utilized in any of these
transactions. The recipients of securities in each transaction represented their
intention to acquire the securities without a view to distribution. All the
issued securities were restricted securities under Rule 144, Reg. D or Reg. S
regulations, and appropriate restrictive legends were affixed to the securities
in each transaction. All sales of securities were to accredited investors in
private placements, and accordingly all of the sales complied with Section 4(2)
as well as 4(6) of the Securities Act of 1933.


On April 9 - 11, 2003, we issued 4,253,847 shares of common stock under private
placement subscriptions at $0.04 per share, based on the average closing price
for the three days prior to April 8, 2003, at a 25 percent discount. These
securities were issued in transactions exempt from registration under the
Securities Act of 1933 in reliance on Sections 4(2) and 4(6) of the Securities
Act of 1933.

On April 11, 2003, we issued 575,000 shares of common stock under private
placement subscriptions at $0.035 per share. These securities were issued in a
transaction exempt from registration under the Securities Act of 1933 in
reliance on Sections 4(2) and 4(6) of the Securities Act of 1933.


On July 3, 2003, we issued 2,350,043 shares of common stock under private
placement subscriptions at prices ranging from $0.028 per share to $0.055 per
share. These securities were issued in transactions exempt from registration
under the Securities Act of 1933 in reliance on Sections 4(2) and 4(6) of the
Securities Act of 1933. We paid a 10% commission in connection with this private
placement.

On July 7, 2003, we issued 1,905,625 shares of common stock under private
placement subscriptions at prices ranging from $0.042 per share to $0.05 per
share. These securities were issued in transactions exempt from registration
under the Securities Act of 1933 in reliance on Sections 4(2) and 4(6) of the
Securities Act of 1933. We paid a 10% commission in connection with this private
placement.

On July 9, 2003, we issued 1,410,647 shares of common stock under private
placement subscriptions at prices ranging from $0.042 per share to $0.055 per
share. These securities were issued in transactions exempt from registration
under the Securities Act of 1933 in reliance on Sections 4(2) and 4(6) of the
Securities Act of 1933. We paid a 10% commission in connection with this private
placement.

On July 10, 2003, we issued 525,577 shares of common stock under private
placement subscriptions at prices ranging from $0.026 per share to $0.05 per
share. These securities were issued in transactions exempt from registration
under the Securities Act of 1933 in reliance on Sections 4(2) and 4(6) of the
Securities Act of 1933. We paid a 10% commission in connection with this private
placement.

On July 15, 2003, we issued 714,096 shares of common stock under private
placement subscriptions at prices ranging from $0.042 per share to $0.05 per
share. These securities were issued in transactions exempt from registration
under the Securities Act of 1933 in reliance on Sections 4(2) and 4(6) of the
Securities Act of 1933. We paid a 10% commission in connection with this private
placement.

On July 18, 2003, we issued 2,304,944 shares of common stock under private
placement subscriptions at prices ranging from $0.026 per share to $0.055 per
share. These securities were issued in transactions exempt from registration
under the Securities Act of 1933 in reliance on Sections 4(2) and 4(6) of the
Securities Act of 1933. We paid a 10% commission in connection with this private
placement.

On July 23, 2003, we issued 172,591 shares of common stock under private
placement subscriptions at prices ranging from $0.05 per share to $0.055 per
share. These securities were issued in transactions exempt from registration
under the Securities Act of 1933 in reliance on Sections 4(2) and 4(6) of the
Securities Act of 1933. We paid a 10% commission in connection with this private
placement.


                                      -10-

<PAGE>


On August 13, 2003, we issued 155,000 shares of common stock under a private
placement subscription at a price of $0.045 per share. These securities were
issued in transactions exempt from registration under the Securities Act of 1933
in reliance on Sections 4(2) and 4(6) of the Securities Act of 1933. We paid a
10% commission in connection with this private placement.


On August 14, 2003, we issued 1,600,000 shares of common stock under a private
placement subscription at a price of $0.10 per share. These securities were
issued in transactions exempt from registration under the Securities Act of 1933
in reliance on Sections 4(2) and 4(6) of the Securities Act of 1933.

On September 3, 2003, we issued 1,000,000 shares of common stock under a private
placement subscription at a price of $0.10 per share. These securities were
issued in transactions exempt from registration under the Securities Act of 1933
in reliance on Sections 4(2) and 4(6) of the Securities Act of 1933.


Other Securities Transactions
-----------------------------

Pursuant to the April 14, 2000 Securities Purchase Agreement (the 4% convertible
debentures), the investors converted $769,094 of debentures into 23,486,734 of
the Company's common stock on various dates between March 3 and September 24,
2003, at various prices ranging from $0.0253 per common share to $0.1275 per
common share.


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


         The following should be read in conjunction with the "Risk Factors,"
"Introductory Statement" contained in Part I and the "Financial Statements" and
the Notes thereto.


New Business Activities and Plan of Operations
----------------------------------------------


The business of AirWater Corporation is that of extracting (drinkable) water
from the air, the manufacturing of the machines and systems that facilitate
this, and the global marketing and distribution of the patented technology,
systems and products. We will pursue these activities with a focus on large
scale government sales of the water from air technology and through Millenium,
the sale of the technology and consulting on the implementation and utilization
of Photovoltaic solar systems.

Since February, 2003 we have pursued the design, manufacture, sale, licensing
and distribution of equipment that extracts and purifies water from the
atmosphere. Although we have received letters and purchase orders for our
equipment, we have not recorded any sales during this reporting period, as we
have only manufactured and shipped demonstration units.


The availability and safety of drinking water has become a global problem, in
the United States as well as countless other areas of the world. Current
attempts to meet this need have created a $7.1+ billion bottled water market, a
$60+ Billion point-of-use water treatment industry, and wherever practical,
incredibly expensive desalination plants with huge infrastructures and severe
geographical restrictions. All of these methods require traditional sources of
water and each has inherent weaknesses and disadvantages. Even existing
municipal water systems experience repeated shortages and contamination
problems.

At any given moment the earth's atmosphere contains 4,000 cubic miles of water,
which is just .000012% of the 344 million cubic miles of water on earth. Nature
maintains this ratio by accelerating or retarding the rates of evaporation and
condensation (the Hydrologic Cycle), irrespective of the activities of man. It
is the sole source and means of regenerating wholesome water for all forms of
life on earth.

                                      -11-

<PAGE>

Man has been extracting water vapor from the air for generations. Most often it
is intentional and the water collected is treated as wastewater, such as with
dehumidifiers and air conditioners. The common mechanics include traditional
refrigerant systems, but other technologies are available such as
thermo-electrics (Peltier) and thermo acoustics.

While all these technologies are used for extracting water vapor from the air
and are common knowledge, the subsequent methods employed to produce potable
water from tapping into nature's hydrologic cycle are unique and are patented in
the USA and in other nations. The technology used in the AirWater Series of
variously sized models is the result of 13 years of research and field-testing
and involves many United States and a number of international patents.

The AirWater System, regardless of the model size, sterilizes each drop of water
within 5-6 seconds of its formation by exposure to ultra-violet light. UV light
waves fracture the DNA strands within bacteria, virus, and other microorganisms,
which kills them instantly.

This sterilized water is then passed through a unique patented 1-micron
activated carbon water filter. (The average size of bacteria is 5 microns). This
filter removes any possible solid particles, toxic chemicals, volatile organics,
and other contaminates as well as any odors, taste, or discoloration. This
filtration is followed by a 2nd UV exposure and sterilization.

The same bulb bathes the exit port, also patented, in UV light creating a
sterile exit. The AirWater System maintains an enclosed sterile environment
throughout its water treatment, from the first drop in to the last drop out --
into a water tank or removable container. It is imperative to any marketing
success that this water be handled safely and aesthetically, which no other
method can do.

We have coupled this water extraction system with the photo voltaic systems
developed by our wholly owned subsidiary, Millenium Electric T.O.U., Ltd., to
create a self sustaining system. Our equipment, by combining these two
technologies, has been of great interest to governmental and humanitarian
organizations. Further, we have developed a unit specifically aimed at the
boating and recreational vehicle industry.


Millennium Electric TOU Inc., one of Israel's high technology companies, is an
enterprise focusing on practical applications of solar energy. Millennium is
well versed in designing, developing, installing and providing solar energy
related products and services. The sophisticated solar energy devices are
economical, clean and an environment friendly source of energy/power with a wide
variety of practical applications in many fields. Millennium's skills encompass
planning, design, construction and installation services and applications not
connected to the electric power grid. Millennium's fully computerized systems
serve remote housing, villages, street lighting installations, computerized
irrigation, communication and various military systems. The company's total
system capabilities have been proven in large-scale projects performed for
Israel's Ministries of Energy, Housing and Defense. The company's mission is to
continue to design and establish solar systems for communities on a worldwide
basis, based on the "MSS," a unique patented system that utilizes advanced
photovoltaic and storage technology combined with flat-plate solar water


                                      -12-
<PAGE>


collectors to provide electricity and hot air/water and air-conditioning for
residential and industrial buildings. Being modular, the average basic system
can provide from 1kw up to 100 Megawatt of useful power utilizing solar energy
products and services, for a more economical, cleaner, and safer environment.


Plan of Operation for the next 12 months
----------------------------------------

Our current cash position is only sufficient to carry us for about three months
based upon our current cash needs. However, our Chairman, in connection with
Port Universal Ltd., a company in which he owns a one third interest, has agreed
to provide funding as needed until our sales activities are sufficient to cover
our cash flow needs. This agreement by our Chairman and Port Universal is not a
binding obligation; we have no assurances that this funding will continue beyond
the short term.

With the acquisition of Millenium and the company's new business focus, we have
been able to obtain private placement funding to finance our activities in these
fields. We anticipate continuing to receive operating funds from these private
placements until such time as sales are sufficient to support the organization,
however no assurances can be made that we will be able to find willing
investors. We are also relying upon the same private placement funding to
provide the cash required to consumate the proposed GiroSolar acquisition
described earlier.

Except for the GiroSolar acquisition, we do not have any major expenditures
planned, nor do we anticipate the purchase or sale of plant and / or significant
equipment. Our plan calls for the use of third party contract manufacturers,
thus avoiding the allocation of our resources into manufacturing operations. We
anticipate funding any sizeable orders for either AirWater equipment or
Photovoltaic installations, through deposits and advances from customers. We do
not anticipate any significant changes in the number of employees in the near
term for our existing operations.

On January 14, 2001, we entered into a settlement agreement with our systems
integrator, Andrew Corporation. At that time, we owed Andrew Corporation
$1,400,000 for their services and equipment. Under the agreement, we paid an
initial $100,000 and we were obligated to pay $100,000 per month until the
balance was paid. We did not make any of the scheduled payments. On September 3,
2002, we reached a settlement agreement for all amounts due, by issuing a note
in the amount of $300,000 which is due April 30, 2004. We secured this note with
300,000 shares of our common stock. If we are not able to pay the $300,000 on
April 30, 2004, the obligation will revert to the balance due of $1,300,000. We
do not have sufficient cash to meet this obligation at September 30, 2003. We
will rely upon additional sales of our common stock under private placement
transactions to satisfy this obligation. We have no assurances that we will be
able to obtain this funding.

Millenium has several potential sizeable contracts in the sales process. Should
these contracts be awarded, we will need to raise additional equity or arrange
for financing vehicles to fund those contracts. Any equity raised could result
in dilution of existing shareholders. Additionally, we are uncertain as to the
availability of sufficient financing on acceptable terms.

To date, we have not incurred any production costs as we have only produced
prototypes.



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

We did not generate any revenues during fiscal 2003 and 2002. However, our
Peruvian subsidiary had revenues which are not reported as a result of a lack of
cooperation from our subsidiary's management.


General and administrative expenses totaled $1,785,431 in the fiscal year ended
September 30, 2003 and $807,033 in the fiscal year ended September 30, 2002. The
increase in expenses resulted from activities associated with the entrance into
the air-water technology industry.


General and administrative expenses for the fiscal years ended September 30,
2003 and 2002 were comprised of the following items:


                                                  2003             2002
                                              ----------        ----------

Abandoned acquisitions and fees               $  171,397        $        -
Consultants and outside services                 609,977           484,843
Depreciation                                       5,690            22,036
FCC licensing and site expenses                        -             1,338
Financing costs and fund raising expense         120,804             5,501
Legal expense                                    228,661            85,059
Miscellaneous and other expenses                  42,478            33,568
Professional fees                                136,154            91,570
Rent                                              27,650            37,462
Salaries                                               -            14,614
Travel                                            72,620            31,042
Settlement loss - WSI, Inc.                      370,000                 -
                                              ----------        ----------
                                              $1,785,431        $  807,033
                                              ==========        ==========


Liquidity and Capital Resources
-------------------------------

As of September 30, 2003 our total working capital was deficient in the amount
of $1,390,556. This represents a $760,729 decrease over our September 30, 2002
deficiency of $2,151,285. Until revenues commence from the sale of our AirWater
equipment, we will need to obtain funding from external sources to finance our
current operations. We anticipate revenues in the second quarter of fiscal year
September 30, 2004.

                                      -13-

Since we began operations, we have generated minor revenues and have incurred
substantial expenditures and operating losses. In view of this fact, our
auditors have stated in their report for the fiscal year ended September 30,
2003 and 2002 that there is substantial doubt about our ability to continue as a
going concern, dependent upon our ability to meet our future financing
requirements, and the success of our future operations, the outcome of which
cannot be determined at this time. In order to finance our working capital
requirements, we have and continue to negotiate equity investments with several
sophisticated investors, but there can be no assurance that we will obtain this
capital in the future, or that it will be obtained on terms favorable to us. If
we do not obtain short term financing we may not be able to continue as a viable
concern. We do not have a bank line of credit, although Millenium does have a
bank overdraft facility, and there can be no assurance that any required or
desired financing will be available through bank borrowings, debt, or equity
offerings, or otherwise, on acceptable terms.


If future financing requirements are satisfied through the issuance of equity
securities, investors may experience significant dilution in the net book value
per share of common stock.

On June 6, 2003, we defaulted on the January 6, 2003 12% notes with a principal
value of $60,000, which came due on that date. The holders of the Notes, who
also hold a portion of our 4% convertible debentures, did not take action to
foreclose on the Notes. These notes have been included in a proposed negotiated
settlement whereby the notes and the debentures will be converted into shares of
common stock at a fixed conversion price.

We are entirely dependent on equity investments at this time and recognize that
without these investments we would not be able to continue as a going concern.
We have negative cash flows and do not anticipate any significant revenues in
the short term. We do not have sufficient resources to meet current obligations
without continuing equity investments. Prior financing arrangements, as
disclosed on our SB-2 filed March 15, 2001, are no longer in effect. We must
obtain approval from our current debenture holders to place additional debt
against our assets. There are no assurances that we would be able to secure that
approval, if we did have the opportunity to secure additional debt. We are
attempting to negotiate with trade creditors to convert existing obligations,
including any accrued interest, to common stock in satisfaction of those
obligations. We have received agreement from our current debenture holders to
convert their existing debt to equity, but there are no requirements for the
debt holders to adhere to that consent.


During the fiscal years ended September 30, 2003 and 2002, we received equity
investments and advances of $1,054,577 and $383,291 respectively. These
investments and advances were in the form of issuance of our common stock in
various private placements.


Our long term debt is composed of the following debt obligations:

4% subordinated convertible debentures, issued April 14, 2000,
maturing April 14, 2005. These debentures are convertible at 85%
of the average of the three lowest bid prices for the 22 trading
days prior to the date of conversion                                $3,380,548

8% senior secured convertible debentures, issued March 29, 2001,
maturing March 29, 2005. These debentures are convertible at 85%
of the average of the three lowest bid prices for the 22 trading
days prior to the date of conversion                                $1,066,449
                                                                    ----------
        Total                                                       $4,446,997


Commitments

We do not have any material commitments for capital expenditures, although we
recognize that should we receive substantial orders which are currently in our
sales process, we will need to establish material commitments in order to
complete these orders. We anticipate contracting our production requirements to
third parties, as we do not have any facilities of our own.


                                      -14-

<PAGE>

Risk Factors
------------

-We will require additional capital in the short term to remain a going concern
 We will require short term outside investment on a continuing basis to finance
our current operations and any expansion of activities. Since we began
operations, we have generated virtually no revenues and have incurred
substantial expenditures. We expect to continue to experience losses from
operations while we develop our new revenue source, consummate acquisitions and
develop other technologies. In view of this fact, our auditors have stated in
their report for the period ended September 30, 2003 that our ability to meet
our future financing requirements, and the success of our future operations,
cannot be determined at this time. In order to finance our working capital
requirements we are negotiating existing equity investments and new investments,
but there can be no assurance that we will obtain this capital or that it will
be obtained on terms favorable to us. If we do not obtain short term financing
we may not be able to continue as a viable concern. We do not have a bank line
of credit and there can be no assurance that any required or desired financing
will be available through bank borrowings, debt, or equity offerings, or
otherwise, on acceptable terms. If future financing requirements are satisfied
through the issuance of equity securities, investors may experience significant
dilution in the net book value per share of common stock.

-We are dependent on the services of key individuals and the loss of any of
these individuals could significantly affect our ability to operate our business


-We may be unable to protect our intellectual property rights
 Our success depends in part on our ability to protect our proprietary
technologies. We rely on a combination of patent, copyright and trademark laws,
trade secrets and confidentiality and other contractual provisions to establish
and protect our proprietary rights. However, our patents may not be of
sufficient scope or strength, others may independently develop similar
technologies or products, duplicate any of our products or design around our
patents, and the patents may not provide us competitive advantages. Litigation,
which could result in substantial costs and diversion of effort by us, may also
be necessary to enforce any patents issued or licensed to us or to determine the
scope and validity of third-party proprietary rights. Any such litigation,
regardless of outcome, could be expensive and time consuming, and adverse
determinations in any such litigation could seriously harm our business.

-We may not be able to successfully market and develop the air from water
systems required by the market we are focusing our sales efforts on. Governments
and humanitarian organizations are subject to political influences which can
change without notice. Needs, as defined by these groups, may also change. If we
cannot design, build and modify the systems to meet these changes, our marketing
efforts may not be productive.

-We may not be able to successfully defend against Credit Bancorp receiver's
assertions.
As more fully described in Item 3. Legal Matters, the Receiver for Credit
Bancorp denies that a conversion request was made with respect to a convertible,
unsecured debenture we issued October 11, 1999, in the amount of $740,000. If we
are unsuccessful in defending against the Receiver's position, we may have to
pay the unpaid principal and accrued interest.


                                      -15-

<PAGE>

-Other risk issues
 We have pursued, are currently pursuing and, in the future may pursue, new
technologies and businesses internally and through acquisitions and combinations
which involve significant risks. Any such acquisition or combination may
involve, among other things, the issuance of equity securities, the payment of
cash, the incurrence of contingent liabilities and the amortization of expenses
related to goodwill and other intangible assets, and transaction costs, which
have adversely affected, or may adversely affect, our business' results of
operations and financial condition. Our ability to integrate and organize any
new businesses and/or products, whether internally developed or obtained by
acquisition or combination, will likely require significant expansion of our
operations. There is no assurance that we will have or be able to obtain the
necessary resources to satisfactorily effect such expansion, and the failure to
do so could have a material adverse effect on our business, financial condition
and results of operations. In addition future acquisitions and or combinations
by the Company involve risks of, among other things, entering markets or
segments in which we have no or limited prior experience, the potential loss of
key employees of the acquired company and/or difficulty, delay or failure in the
integration of the operations, management, personnel and business of any such
new business with our business and operating and financial difficulties of any
new or newly combined operations, any of which could have a materially adverse
effect on our business, financial condition and results of operations. Moreover,
there can be no assurance that the anticipated benefits of any specific
acquisition or of any internally developed new business segment or business
combination will be realized.

Other Matters
-------------
 Subsequent to September 30, 2003, a majority of the debenture holders have
tentatively agreed to convert their holdings into shares of common stock at
various amounts and under various terms. It is our intention to reach agreements
with the debenture holders in order to equitize the outstanding debentures and
associated interest on those debentures.


ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         See Index to Financial Statements on page F-1.

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

 There have been no changes in or disagreements with our independent auditors
regarding accounting and financial disclosure required to be reported under this
item.

ITEM 8A. CONTROLS AND PROCEDURES

 Our management carried out an evaluation pursuant to Rule 13a-15 of the
Securities Exchange Act of 1934, as amended, under the supervision and with the
participation of our chief executive officer and chief financial officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act)
as of the end of the period covered by this Report. Based upon that evaluation,
our chief executive officer and chief financial officer concluded that our
disclosure controls and procedures are effective to ensure that information
required to be disclosed by us in reports that we file or furnish under the
Exchange Act are recorded, processed, summarized and reported within the time
periods specified in Securities and Exchange Commission rules and forms.

         During the period covered by this report on Form 10-KSB, there has been
no change in our internal control over financial reporting that has materially
affected, or is reasonably likely to materially affect, our internal control
over financial reporting.

                                      -16-

<PAGE>

                                    PART III



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

         Our executive officers and directors and their ages as of December 30,
2003 are as follows:

Name                       Age   Position                  Period of Service
-----                      ---   --------                  -----------------

Michael J. Zwebner......   51    Chairman of the Board     November 2001-present
                                     and CEO
Curtis Orgil...........    51    CFO and Director          November 2001-present
Ramsey Sweis............   37    Director                  May 1998-present
Alexander Walker, Jr. ..   76    Director                  November 2001-present
Ami R. Elazari..........   51    Director                  October 2003-present


 Certain biographical information concerning the Directors and executive
officers of the Company as of December 30, 2003 is set forth below. Such
information was furnished by them to the Company.


Michael Zwebner has served as a Director since November, 2001 and is the
Chairman of the Board of Directors. He is the founder of Talk Visual Corporation
and has served as a Director and its Chairman of the Board of Directors since
September, 1998 until March, 2002. Mr. Zwebner is the President of Card
Universal Corporation, a privately held Florida corporation which we
had issued a letter of intent to acquire. Card Universal has ceased operations
and we have withdrawn and abandoned our letter of intent to acquire. From 1974
to 1986, Mr. Zwebner founded and ran a travel and tourism company and a charter
airline, specializing in the areas of air charter travel, wholesale ticketing
and general business and tourist travel. From 1986 to 1990, Mr. Zwebner owned
and operated several real estate companies as well as managed a chain of five
family restaurants and related catering services in England. From 1991 to 1997,
Mr. Zwebner founded and served as Vice-President of Cardcall International
Holdings Inc. (USA) and Operating Manager of Cardcall (UK) Ltd. for which he
designed and developed telecommunications and marketing concepts and organized
the prepaid phone card operations. Mr. Zwebner also coordinated corporate
finance activities for Cardcall.


Mr. Walker has served as a Director of the Company since November, 2001. Mr.
Walker has served as Chairman of the Board of the Nevada Agency and Trust
Company in Reno, Nevada, a licensed and registered trust company and transfer
agent in business since 1903. He received his B.A. from Waynesburg College in
1950 and his J.D. from the University of Pittsburgh School of Law in 1952. From
1956 to date, he has maintained a private practice as an attorney.

Curtis A. Orgil has served as a Director of the Company since November, 2001. He
received his Bachelor of Science degree in 1974 from Brigham Young University.
He worked for Deloitte Haskins & Sells in Salt Lake City, Utah. Later he
transferred to Reno, Nevada where he helped establish their new office. While in
Reno, Mr. Orgil was the Partner-in-Charge of the tax department there and was
the senior tax partner in the state of Nevada. While with Deloitte, Mr. Orgil
was on its National Industry Teams for Qualified Retirement Plans and
Agribusiness. Since 1995, he has been a principal with Bartig, Basler & Ray,
CPA's, Inc., a regional accounting firm with headquarters in Sacramento,

                                      -17-

<PAGE>

California. He is the treasurer of the Northern Nevada International Center and
of the BYU Management Society of Northern Nevada. He has chaired the Taxation
Committee for the Nevada Society of Certified Public Accountants. He is a former
treasurer and board member of the Nevada Museum of Art, the American Lung
Association of Reno, the Economic Development Authority of Western Nevada, and
the Northern Nevada Development Authority. He was a founding board member of the
Nevada World Trade Council and was a member of the Advisory Council for the
University of Nevada, Reno College of Business.

Ramsey Sweis has served as a Director since May, 1998. He has had extensive
experience in management and in the product design industry. He has been a
leader and developer of high performance teams by enabling, training and
motivating team members. In the recent past he has provided computer and
engineering services to General Motors and Chrysler Corporation. In connection
with those activities Mr. Sweis has developed designs between engineering,
prototype models, tooling and vendor sources. Mr. Sweis resides in Roseville,
Michigan. He currently operates a financial services company. From 1997 to 1999
Mr. Sweis served as a designer for Computer and Engineering Services of Auburn
Hills, Michigan. From 1991 to 1997, Mr. Sweis was a design leader for Megatech
Engineering of Warren, Michigan, contracted to General Motors of Warren,
Michigan.


Ami R. Elazari, is the founder, President and CEO of Millennium Electric T.O.U.
Ltd. He is a Lt. Col. (Res.) in the Israeli army and served in the IDF
Intelligence special unit. Mr. Elazari is an energy and computer engineer and
holds a BA in Psychology and an MBA with honors. He is the Vice Chairman of the
Israel Export Institute Environmental Technology Center and the Vice Chairman of
the Israel Export Institute Start-Up Company Center. Mr. Elazari represents
Israel in the IEA and holds a number of world patents in his name, mainly in
renewable energy. Between 1990-1995 Mr. Elazari managed Amitec Energy and
Computer Industries, from 1995-1999 he managed the PV division of Chromagen
Solar Systems. He is a member of the Israeli Financial forum, High tech forum
and has published numerous articles in his field of expertise.




Director Compensation
 Directors do not have a plan of compensation for serving as directors, except
that the following common stock grants were issued for the fiscal year ended
September 30, 2003:

                         Number of
                           Shares
Name                      Granted
---------------       ---------------
Alex Walker, Jr.           500,000 - for legal services
Curtis Orgil               200,000 - for financial services


Limitation of Liability and Indemnification Matters

Our Bylaws provide that we may indemnify any director, officer, agent or
employee against all expenses and liabilities, including counsel fees,
reasonably incurred by or imposed upon them in connection with any proceeding in
which they may become involved by reason of their being or having been a
director, officer, employee or agent of our Company. Moreover, our Bylaws
provide that we shall have the right to purchase and maintain insurance on
behalf of any such persons whether or not we would have the power to indemnify
such person against the liability insured against. Insofar as indemnification
may be afforded for liabilities arising under the Securities Act, we have been
informed that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.

                                      -18-

<PAGE>

Compliance with Section 16(a) of the Securities Exchange Act of 1934

Section 16(a) of the Securities Exchange Act of 1934 requires our Company's
officers and directors, and persons who own more than 10% of a registered class
of our Company's equity securities, to file reports of ownership and changes in
ownership with respect to the securities of our Company with the SEC and to
furnish copies of these reports to our Company. We believe that during fiscal
year 2003, Alex Walker, Ramsey Sweis and Curtis Orgil have not filed the
required Form 4s.

ITEM 10. EXECUTIVE COMPENSATION

Employment Agreements

         There are no employment agreements in force at September 30, 2003.


 The Company entered into a three year consulting agreement with Overseas
Communications Limited on November 2, 2001, for the management and business
advisory services provided by Mr. Michael Zwebner, Chairman and CEO of the
Company. The Agreement calls for annual payments of $240,000, payable in cash or
the Company's common stock. For the fiscal year ended September 30, 2003, the
Company paid $80,000 in cash and issued 3,160,742 shares of common stock under
this agreement.


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth certain information regarding beneficial
ownership of our common stock as of December 30, 2003, by:

         o        each person who is known by us to own beneficially more than
                  5% of the outstanding shares of our common stock;

         o        each of our directors; and

         o        all our directors and executive officers as a group.

 Applicable ownership is based on 106,123,070 shares of common stock outstanding
as of December 30, 2003. Beneficial ownership is determined in accordance with
the rules of the SEC. Shares of common stock subject to options or warrants that
are presently exercisable or exercisable within 60 days of December 30, 2003 are
deemed outstanding for the purpose of computing the percentage ownership of the
person or entity holding options or warrants, but are not treated as outstanding
for the purpose of computing the percentage ownership of any other person or
entity.

         The persons listed below have sole voting and investment power with
respect to all shares of common stock shown as being beneficially owned by them,
subject to community property laws, where applicable. The number of shares
column in the table includes shares issuable upon exercise of options and
warrants exercisable within 60 days of December 30, 2003. The number of options

                                      -19-

<PAGE>

and warrants exercisable within 60 days of December 30, 2003 are listed in the
shares issuable upon exercise of options or warrants column.

<TABLE>
<CAPTION>
                                                                          Shares Issuable
Name of Named Executive Officer,           Number of     Percentage       Upon Exercise of
Director, or Beneficial Owner               Shares       Ownership      Options or Warrants
------------------------------               ------       ---------      -------------------

<S>                <C>                     <C>               <C>                    <C>
Michael J. Zwebner (3)                     4,977,910 (1)     4.7%                   0

Alexander Walker, Jr. (3)                    557,000           *                    0

Ramsey Sweis (3)                           1,723,970         1.6%               500,000

Curtis Orgil (3)                             251,000           *                    0

Ami R. Elazari   (3)                       2,200,000         2.1%

Executive Officers and Directors           9,709,880         9.1%
 as a Group - 5 individuals

Endeavour Capital                         10,506,184         9.9%              7,992,654 (2)
c/o Endeavour Advisors, Ltd.
P.O.B. 57116
Jerusalem 91570


Amro International S. A.                  10,506,184         9.9%              8,200,276 (2)
Grossmuenster Platz 26
Zurich, Switzerland CH8022

Esquire Trade & Finance Inc.               5,635,114         5.3%              4,500,114 (2)
Trident Chambers, Road Town
Tortola, BVI

Celeste Trust Reg                          3,028,530         2.9%              3,009,843 (2)
Trevisa-Treuhand-Anstalt
Landstrasse 8, 9496 Furstentums
Balzers, Liechtenstein
</TABLE>


-------------------------------------------
* Less than 1%

(1)  Includes 23 shares beneficially held by Overseas Communications Limited,
     534,014 shares beneficially held by Overseas Development Holdings Limited
     and 204,167 shares beneficially held by Port Universal.


(2)  Represents shares convertible under the 4%, due April 14, 2005, $3,380,548
     and 8%, due March 29, 2005, $1,066,449 convertible debentures held, but not
     more than 9.9% of total outstanding, as per the provision of the
     debentures.


(3)  The address of each such person is c/o the Company, 407 Lincoln Rd., Ste
     12F, Miami Beach, FL 33139


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Commencing November 1, 2001, we engaged the services of the Chairman Michael
Zwebner under a consulting agreement through Overseas Development Holdings
Corporation, a foreign corporation. The annual payment is $240,000. Overseas
Development Holdings Corporation is 33% owned by our Chairman.

Alexander Walker, Jr., a Director and the Secretary of our company, is Chairman
of the Board and a shareholder of Nevada Agency and Trust Company, our transfer
agent since November 6, 2001. During the fiscal year ended September 30, 2003,
we incurred fees aggregating $6,963 to Nevada Agency and Trust Company. In
addition, 500,000 shares of common stock were issued to Mr. Walker as payment
for legal services.

                                      -20-

<PAGE>

         Curtis Orgil, a Director and the Chief Financial Officer of our
company, received 200,000 shares of common stock for his financial services.


ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

         (a)  Exhibits

   ITEM (601)                    DOCUMENT
   ----------                    --------
 (i)   3.1    Articles of Incorporation.

 (i)   3.2    Amendment to Articles of Incorporation

 (i)   3.3    Amendment to Articles of Incorporation.

 (i)   3.4    By-laws.

 (iv)  3.5    Amendment to Articles of Incorporation.

 (i)   4.1    Form of Certificate Evidencing shares of Common Stock of
              Universal Communication Systems, Inc.

 (i)   4.2    Convertible Unsecured Debenture for $740,000 issued by World
              Wide Wireless Communications, Inc. to Credit Bancorp.


 (v)   10.1   Stock Purchase Agreement dated November 30, 1999 Between
              Infotel Argentina S.A. and Universal Communication Systems, Inc.

 (v)   10.3   Security Purchase Agreement Among World Wide Wireless
              Communications, Inc. and the Purchasers Named Therein.

 (v)   10.4   Registration Rights Agreements Among World Wide Wireless
              Communications, Inc. and the Purchasers Named Therein.

 (v)   10.5   Escrow Agreement Among the Purchasers Named Therein, the
              Representative of the Purchasers and the Escrow Agent.

 (v)   10.6   Form of Debenture of Universal Communication Systems, Inc.
              with Respect to the 4% Convertible Debenture Due 2005.

 (v)   10.7   Form of Warrant to Purchase Shares of World Wide Communications,
              Inc. Issued in the Offering.

 (vi)  10.8   Amendment to the Securities Purchase Agreement entered into
              between World Wide Wireless Communications and the selling
              shareholders named therein.

 (ii)  10.9   Second Amendment to the Securities Purchase Agreement
              entered into between World Wide Wireless Communications and
              the selling shareholders name therein.


 (ii)  10.11  World Wide Communications, Inc. Incentive Stock Option Plan

 (iii) 10.12  Agreement between Overseas Communication Limited and World
              Wide Wireless Communications, Inc.


 (vii) 10.13  Stock Purchase Agreement by Universal Communication Systems, Inc.
              and Ami R. Elazari and Caltan Development, Ltd., dated
              August 22, 2003.

       10.14  Consulting Agreement - Dorit Elazari

       10.15  Consulting Agreement - Joseph Moore

       10.16  Consulting Agreement - Otzarot Nechasim Vehashkaot, Ltd.


       21.1   Subsidiaries

       31.1   Certification Pursuant to 18 USC Section 302
              for Michael Zwebner.

       31.2   Certification Pursuant to 18 USC Section 302
              for Curtis Orgil.

       32.1   Certification Pursuant to 18 USC Section 1350 as adopted pursuant
              to Section 906 of Sarbanes- Oxley Act of 2002 for Michael Zwebner.

       32.2   Certification Pursuant to 18 USC Section 1350 as adopted pursuant
              to Section 906 of Sarbanes- Oxley Act of 2002 for Curtis Orgil.

------------------

          (i) Filed with the registration statement on Form SB-2 with the
              Securities and Exchange Commission on May 31, 2000.

                                      -21-

<PAGE>

         (ii) Filed with the registration statement on Form SB-2 with the
              Securities and Exchange Commission on December 15, 2000.

        (iii) Filed with Form 10-KSB for the period September 30, 2002.

         (iv) Filed with Form DEF14A on April 25, 2002.


          (v) Filed with the registration statement on Form SB-2 with the
              Securities and Exchange Commission on May 31, 2000.

         (vi) Filed with Form 10-KSB for the period September 30, 2000.

        (vii) Filed with Form 8-K on October 14, 2003.



    (b) The following Form 8-K was filed during the fourth quarter.

         September 29, 2003, Item 2. Acquisition or Disposition of Assets.
         Reporting the completion of the acquisition of Millenium Electric
         T.O.U., Ltd, pursuant to a stock purchase agreement dated August 22,
         2003.


ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

         Pursuant to SEC Release No. 33-8183 (as corrected by Release No.
33-8183A), the disclosure requirements of this Item are not effective until our
Annual Report on Form 10-KSB for our first fiscal year ending after December 15,
2003.


                                      -22-

<PAGE>


                                   SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the Registrant caused this amendment to the report to be signed on its behalf by
the undersigned, thereunto duly authorized, on June 29, 2004.


                                      Universal Communication Systems, Inc.


                                      By:   /s/ MICHAEL ZWEBNER
                                            -------------------
                                            Michael J. Zwebner
                                            Chief Executive Officer


In accordance with the requirements of the Securities Exchange Act of 1934,
this amendment to the report has been signed below by the following persons on
behalf of the Registrant in the capacities indicated on June 29, 2004:


Signature                             Title                              Date
---------                             -----                              ----


/s/ MICHAEL J. ZWEBNER      Director, Chief Executive Officer,     June 29, 2004
----------------------      and Chairman of the Board
Michael J. Zwebner

/s/ ALEXANDER WALKER JR     Director and Secretary                 June 29, 2004
-----------------------
Alexander Walker, Jr.

/s/ RAMSEY SWEIS            Director                               June 29, 2004
-----------------------
Ramsey Sweis

/s/ CURTIS ORGIL            Director and Chief Financial Officer   June 29, 2004
-----------------------     (Principal Financial and Accounting
Curtis Orgil                 Officer)

/s/ AMI R. ELAZARI          Director                               June 29, 2004
-----------------------
Ami R. Elazari



                                      -23-


<PAGE>

                          INDEX TO FINANCIAL STATEMENTS

                                                                      Page
                                                                      ----

Report of Independent Auditor                                          F-2

Consolidated Balance Sheet                                             F-3

Consolidated Statements of Operations                                  F-4

Statements of Stockholders' Deficit                                    F-5

Consolidated Statements of Cash Flows                                F-6-F-7

Notes to the Consolidated Financial Statements                       F-8-F-24


                                      F-1


<PAGE>
<TABLE>
<S>                                   <C>                              <C>
                                           REUBEN E. PRICE & CO.
REUBEN E. PRICE, C.P.A. (1904-1986)   PUBLIC ACCOUNTANCY CORPORATION            MEMBERS
       -------                                 FOUNDED 1942               AMERICAN INSTITUTE OF
RICHARD A. PRICE, C.P.A.                                               CERTIFIED PUBLIC ACCOUNTANT
                                            703 MARKET STREET                    ------
                                         SAN FRANCISCO, CA 94103          SECURITIES AND EXCHANGE
                                              -------------            COMMISSION PRACTICE SECTION
                                             (415) 982-3556            OF THE AMERICAN INSTITUTE OF
                                         FAX (415) 957-1178            CERTIFIED PUBLIC ACCOUNTANTS
                                                                                 ------
                                                                           CALIFORNIA SOCIETY OF
                                                                       CERTIFIED PUBLIC ACCOUNTANTS
</TABLE>
                          INDEPENDENT AUDITOR'S REPORT

Board of Directors
Universal Communication Systems, Inc.

We have audited the accompanying consolidated balance sheet of Universal
Communication Systems, Inc. and subsidiaries (the Company), as of September 30,
2003, and the related consolidated statements of operations, stockholders'
deficit and cash flows, for the years ended September 30, 2003 and 2002. The
consolidated financial statements of Universal Communication Systems, Inc. and
subsidiaries are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with The Standards of the Public Company
Accounting Oversight Board (United States). 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 financial position of Universal
Communication Systems, Inc. and subsidiaries, as of September 30, 2003 and the
results of their operations and their cash flows for the years ended September
30, 2003 and 2002, in conformity with accounting principles generally accepted
in the United States.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 3, the
Companys current liabilities exceed current assets by nearly $1.4 million, and
it has suffered recurring losses that raise substantial doubt about its ability
to continue as a going concern. Realization of a major portion of the assets is
dependent upon the Company's ability to meet its future financing requirements,
and the success of future operations, the outcome of which cannot be determined
at this time. Management's plans in regard to these matters are also described
in Note 3. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

Reuben E. Price & Co.
June 2, 2004

                                      F-2

<PAGE>
Part I.  FINANCIAL INFORMATION
Item 1.  FINANCIAL STATEMENTS

              UNIVERSAL COMMUNICATION SYSTEMS, INC. & SUBSIDIARIES
                           Consolidated Balance Sheet


                                                                   September 30,
                                                                        2003
                                                                   -------------
                         ASSETS
Current Assets:
   Cash & cash equivalents                                         $    144,682
   Accounts receivable, net                                             105,859
   Note receivable                                                      116,782
   Inventory, finished goods                                              4,900
   Prepaid expenses                                                      35,185
                                                                   ------------
        Total Current Assets                                            407,408
                                                                   ------------
Property, Plant and Equipment:
   Furniture and equipment                                               64,838
   Less: Accumulated depreciation                                        21,579
                                                                   ------------
        Total Fixed Assets, Net                                          43,259
                                                                   ------------
Other Assets:
   Patents, net                                                         606,714
   Deposits                                                               4,600
                                                                   ------------
       Total Other Assets                                               611,314
                                                                   ------------
            Total Assets                                           $  1,061,981
                                                                   ============

                  LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
   Bank overdraft advances                                         $     25,721
   Accounts payable, trade                                              195,538
   Accrued expenses                                                     360,805
   Notes payable                                                        344,746
   Liabilities of discontinued operations                               946,794
   Due to related parties                                                93,308
   Due to officer                                                        11,368
                                                                   ------------
       Total Current Liabilities                                      1,978,280
Long-term Liabilities:
    Convertible debentures                                            4,446,996
                                                                   ------------
            Total Liabilities                                         6,425,276
                                                                   ------------
Commitments and Contingencies                                                --
Stockholders' Deficit:
   Preferred stock, par value $.001 per share , 10,000,000 shares
       authorized, no shares Issued and outstanding                          --
   Common stock, par value $.001 per share,
      800,000,000 shares authorized, 81,223,246 shares
       issued and outstanding                                            81,223
   Additional paid-in capital                                        26,482,580
   Accumulated deficit                                              (31,833,598)
   Account receivable, stockholder                                      (93,500)
                                                                   ------------
       Total Stockholders' Deficit                                   (5,363,295)
                                                                   ------------
             Total Liabilities and Stockholders' Deficit           $  1,061,981
                                                                   ============


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

                                      F-3
<PAGE>


              UNIVERSAL COMMUNICATION SYSTEMS, INC. & SUBSIDIARIES
                      Consolidated Statements of Operations
<TABLE>
<CAPTION>
                                                           For the Year Ended
                                                              September 30,

                                                            2003         2002
                                                        -----------   -----------
<S>                                                     <C>           <C>
Operating Expenses:
    Sales and marketing                                 $   151,804   $        --
    Research and developmen                                  62,333            --
    General and administrative                            1,785,431       807,033
    Impairment losses                                            --       128,706
                                                        -----------   -----------
        Total Operating Expenses                          1,999,568       935,739
Other Expense:
    Interest expense                                        285,572       334,953
                                                        -----------   -----------
Net Loss                                                $ 2,285,140   $ 1,270,692
                                                        ===========   ===========

Basic and Diluted Net Loss per Common Share             $      0.09   $      5.54
                                                        ===========   ===========

Basic and Diluted Weighted Average Shares Outstanding    26,758,511       229,239
                                                        ===========   ===========
</TABLE>


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

                                      F-4
<PAGE>

              UNIVERSAL COMMUNICATIONS SYSTEMS, INC. & SUBSIDIARIES
                       Statements of Stockholders' Deficit
                 For the Years Ended September 30, 2003 and 2002
<TABLE>
<CAPTION>

                                                                                                 Accumulated
                                         Common Stock             Additional                        Other
                                   ---------------------------      Paid-in       Accumulated    Comprehensive       Total
                                       Shares       Amount          Capital         Deficit         Income          Deficit
                                   ------------   ------------   ------------    ------------    ------------    ------------
<S>                                     <C>       <C>            <C>             <C>             <C>             <C>
Balance, September 30, 2001             137,993   $        137   $ 19,713,954    $(28,158,732)   $   (119,034)   $ (8,563,675)
Eliminate foreign currency
adjustment                                   --             --             --        (119,034)        119,034              --
Capital Stock Subscriptions
---------------------------
Common stock issued in private
    Placement between $3.00
    and $5.00 per share                  45,254             45        173,455              --              --         173,500
Conversion of debentures
    for common stock between
    $0.50 and $4.00 per share         4,898,636          4,899      2,611,537              --              --       2,616,436
Common stock issued for services
    at $0.20 and $15.00
    per share                           584,011            584        572,903              --              --         573,487
One for one thousand  reverse
    Split, Fractional shares
    Adjustment                            2,096              3             (3)             --              --              --
Common stock issued in escrow
    to secure debt                      300,000            300           (300)             --              --              --
Net loss for the fiscal year
    Ended, September 30, 2002                --             --             --      (1,270,692)             --      (1,270,692)
                                   ------------   ------------   ------------    ------------    ------------    ------------
Balance, September 30, 2002           5,967,990          5,968     23,071,546     (29,548,458)             --      (6,470,944)
Common stock issued in private
    placements between $0. 026
    and $1.00 per share              22,742,301         22,742      1,192,087              --              --       1,214,829
Conversions of debentures
    for common stock between
    $0.0253 and $0.1275
    per share                        23,486,734         23,487        693,578              --              --         717,065
Common stock issued for services
    between $0.04 and $ 0.12
    per share                        18,008,770         18,009      1,086,386              --              --       1,104,395
Common stock issued for purchase
    of subsidiary at $.05
    per share                         5,000,000          5,000        245,000              --              --         250,000
Common stock issued for
    non-cash Investments
    in patent rights
    at of $0.05 per share             4,000,000          4,000        196,000              --              --         200,000
Common stock issued between
    $0.033 and $1.00 per share
    in escrow, not paid               2,017,451          2,017         (2,017)             --              --              --
Account receivable, stockholder              --             --             --              --         (93,500)        (93,500)
Net loss for the fiscal year
    ended, September 30, 2003                --             --             --      (2,285,140)             --      (2,285,140)
                                   ------------   ------------   ------------    ------------    ------------    ------------
Balance, September 30, 2003          81,223,246   $     81,223   $ 26,482,580    $(31,833,598)   $    (93,500)   $ (5,363,295)
                                   ============   ============   ============    ============    ============    ============
</TABLE>


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

                                      F-5
<PAGE>

              UNIVERSAL COMMUNICATION SYSTEMS, INC. & SUBSIDIARIES
                     Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
                                                                      For the Year Ended
                                                                         September 30,
                                                                      2003           2002
                                                                  -----------    -----------
<S>                                                               <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net Loss                                                      $(2,285,140)   $(1,270,692)
    Adjustments to reconcile net loss from operations
      to net cash used by operating activities:
     Common stock issued for services                               1,104,395        573,485
     Impairment loss                                                       --        128,706
     Depreciation expense                                               5,690         22,036
     Interest payable added to principal of debentures                239,513        246,341
      Loss on write down of assets                                         --        190,066
            Interest payable added to principal of note payable        30,509             --
    Changes in operating assets and liabilities:
     (Increase) in inventory                                           (4,900)        48,991
     (Increase) in accounts receivable                               (105,859)            --
     (Increase) in prepaid and other                                  (85,249)        (4,600)
     Increase (Decrease) in accrued expenses and
     accounts payable                                                 181,902       (343,459)
                                                                  -----------    -----------

     Net Cash (Used) by Operating Activities                         (919,139)      (409,126)
                                                                  -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchase of patent rights                                       (100,000)            --
     Purchase of property, plant and equipment                        (37,662)        (1,917)
     Note receivable                                                 (116,782)            --
     (Increase) Decrease in advances to related parties               (46,676)       (35,456)
                                                                  -----------    -----------

     Net Cash (Used) by Investing Activities                         (301,120)       (37,373)
                                                                  -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
      Proceeds of short term notes                                     60,000             --
      Proceeds of line of credit                                       25,721             --
      Proceeds from the issuance of senior secured
          convertible debentures, net                                      --        240,000
      Proceeds from issuance of common stock                        1,214,829        173,500
           Increase (Decrease) in advances from related parties        63,517         29,791
                                                                  -----------    -----------

     Net Cash Provided by Financing Activities                      1,364,067        443,291
                                                                  -----------    -----------

NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS                                                           143,808         (3,208)

CASH AND CASH EQUIVALENTS
    AT BEGINNING OF PERIOD                                                874          4,082
                                                                  -----------    -----------

CASH AND CASH EQUIVALENTS
    AT END OF YEAR                                                $   144,682    $       874
                                                                  ===========    ===========
</TABLE>


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

                                      F-6
<PAGE>

              UNIVERSAL COMMUNICATION SYSTEMS, INC. & SUBSIDIARIES
                     Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>

                                                                     For the Year Ended
                                                                        September 30,
                                                                      2003           2002
                                                                  -----------    -----------
CONTINUED:
<S>                                                               <C>            <C>
SUPPLEMENTAL DISCLOSURES OF CASH:
     Interest paid                                                $        --    $        --
     Income taxes paid                                            $        --    $        --
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
     Interest accrued on debentures, added to
         the principal of the debentures                          $   239,852    $   246,341
     Interest accrued on note payable added
         to the principal of the note                             $    30,509    $        --
     Debentures converted to capital stock                        $   717,065    $ 2,616,436
     Capital stock issued in acquisition of subsidiary            $   250,000    $        --
     Capital stock issued in acquisition of patent rights         $   200,000    $        --
</TABLE>


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


                                      F-7
<PAGE>
             Universal Communication Systems, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               September 30, 2003

NOTE 1 - BACKGROUND, ACQUISITIONS AND SUBSIDIARIES

         Background
         ----------

         The Company and its subsidiaries are actively engaged in developing and
         marketing solar energy systems, as well as systems for the extraction
         of drinkable water from the air. Consolidated subsidiaries include
         wholly-owned subsidiaries AirWater Corp, AirWater Patents Corp,
         Millennium Electric T.O.U. Ltd, Solar Style Inc (USA), and Solar One
         Inc, and majority-owned subsidiaries Millennium USA and Solar Style
         Ltd.

         Digital Way, Peru
         -----------------

         The Company owns 27% of Digital Way, S.A., a Peruvian
         telecommunications company. The Company treats Digital Way as an
         unconsolidated investment. Pursuant to APB 18, par 17, absent evidence
         to the contrary, and investor is presumed to have the ability to
         significantly influence an investee if it owns 20% or more of the
         investee's voting stock and the equity method of accounting is
         required. Because the majority ownership is concentrated among a small
         group of shareholders who operate Digital Way without regard to the
         views of Universal and the financial information necessary to apply the
         equity method of accounting is not being made available, Universal is
         unable to apply the equity method. Because significant doubt exists as
         to the recovery from this investment, the investment is fully impaired.

         Hard Disc Cafe, Inc.
         --------------------

         During fiscal 2002, the Company advanced $147,794 and signed a non-
         binding letter of intent to acquire Hard Disc Cafe, Inc. (HDC), a
         Florida corporation, majority-owned by an officer of the Company. HDC
         intended to develop and license themed internet cafes. During 2002, HDC
         ceased all operations and returned $10,699 to the Company. As a result,
         the Company recognized a loss of $110,698 in fiscal 2002, and $26,397
         in fiscal 2003.

         Card Universal Corporation, Inc.
         --------------------------------

         During fiscal 2003, the Company entered into a non-binding letter of
         intent to acquire Card Universal Corporation, Inc.(CUC), a privately
         held development stage Florida corporation of which an officer of the
         Company was CEO and a major shareholder. CUC intended to provide and
         market prepaid "Stored Money Cards". CUC has ceased its development
         activities, is currently inactive, and the acquisition has been
         abandoned.

         CinemaElectric
         ---------------

         During fiscal 2003, the Company agreed to acquire CinemaElectric, a Los
         Angeles based multimedia messaging service company. On August 12, 2003,
         the Company released CinemaElectric from the agreement in exchange for
         10% of CinemaElectric's stock, which was not received as of September
         30, 2003.

                                      F-8
<PAGE>

             Universal Communication Systems, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               September 30, 2003

NOTE 1 - BACKGROUND, ACQUISITIONS AND SUBSIDIARIES (continued)

         AirWater Systems
         ----------------

         On March 21, 2003, the Company licensed worldwide rights to patents
         held by J.J. Reidy & Co, relating to a water production/generation
         system, for a period of not less than 10 years. In connection with the
         licensing, the Company created two wholly-owned subsidiaries: AirWater
         Corp, to produce and market the systems, and AirWater Patents Corp, to
         hold the Company's licensed patent rights. The Company paid $100,000
         cash and 4 million shares of Company stock valued at $200,000.
         Additionally, the license agreement requires royalty payments of 5-7%
         of gross water system sales, with minimum royalty payments of $10,000
         monthly beginning November 2003.

         The $300,000 acquisition cost is included in Patents. As discussed in
         Note 12, no amortization or impairment has been recognized.

         Millennium Solar Systems
         ------------------------

         On September 29, 2003, the Company completed an agreement to purchase
         100% of the stock of Millennium Electric T.O.U. Ltd (Millennium), an
         Israeli company specializing in the development and installation of
         solar power systems worldwide. Terms included an initial transfer of 5
         million shares of Company stock, valued at $250,000, with options for
         the sellers to purchase an additional 22 million shares at various
         exercise prices, ranging from $0.05 to $0.39 per share, to be granted
         under various conditions related to certain future events and future
         Company performance standards.

         The Company's purchase cost plus net liabilities assumed, resulted in
         $300,064 of intangibles in the form of patent costs, which is included
         in Patents. As discussed in Note 12, no amortization or impairment has
         been recognized.

         Two new wholly-owned US subsidiaries, Solar One Inc and Solar Style Inc
         (USA), were created by the Company to market the solar systems. As of
         September 30, 2003, they were inactive, with no assets or liabilities.

         Millennium has two subsidiaries: 65%-owned Millennium USA, and 50%-
         owned Solar Style Ltd. Both are inactive, with no assets or
         liabilities.

         Millennium's assets and liabilities are included in the Company's
         consolidated balance sheet at September 30, 2003. However, Millennium's
         results are not included in the Company's consolidated statements of
         operations, stockholders' deficit, or cash flows.

                                      F-9
<PAGE>
             Universal Communication Systems, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               September 30, 2003

NOTE 1 - BACKGROUND, ACQUISITIONS AND SUBSIDIARIES (continued)

         Millennium Solar Systems (continued)
         ------------------------------------

         The following pro forma data is presented on a combined basis, as if
         Millennium had been acquired as of October 1, 2001:

         For the years ended September 30:      2003            2002
                                            -----------      -----------
         Revenues                           $   162,066      $   136,814
         Expenses                             2,477,052        1,364,838
                                            -----------      -----------
         Net (Loss)                         ($2,314,986)     ($1,228,024)
                                            ===========      ===========
         Basic & Diluted Loss per Share     ($     0.09)     ($     0.26)
                                            ===========      ===========

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Reverse Stock Split
         -------------------

         The Company completed a one-for-one-thousand reverse stock split on
         August 23, 2002. All share and per share information reflects this
         reverse stock split.

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

         The consolidated financial statements include the accounts of all
         majority-owned subsidiaries. Investments in which the Company has the
         ability to exercise significant influence, but not control, are
         accounted for by the equity method. All other investments are carried
         at the lower of cost or fair value. Intercompany transactions are
         eliminated.

         Basic and Diluted Net Loss Per Share
         ------------------------------------

         The calculation of basic and diluted net loss per share is in
         accordance with Statement of Financial Accounting Standards No. 128,
         "Earnings Per Share". Net loss per common share, basic and diluted, has
         been computed using weighted average common shares outstanding. The
         effect of outstanding stock options and warrants totaling 28,071 in
         fiscal 2002 and 27,521 in 2003 has been excluded from the dilutive
         computation, as their inclusion would be anti-dilutive.

                                      F-10
<PAGE>
             Universal Communication Systems, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               September 30, 2003

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

                                                         Fiscal Year Ended
                                                           September 30,
                                                       2003            2002
                                                    -----------     -----------
         Net loss                                   $(2,285,140)    $(1,270,692)
                                                    ===========     ===========

         Weighted average number of common shares    26,758,511         229,239
                                                    ===========     ===========
         Basic and diluted loss per share           $     (0.09)    $     (5.54)
                                                    ===========     ===========

         Cash Equivalents
         ----------------

         The Company considers all highly liquid investments with an original
         maturity of three months or less to be cash equivalents. Balances in
         bank accounts may, from time to time, exceed federal insured limits.

         Inventory
         ---------

         Inventory is stated at the lower of cost (determined using the "first-
         in, first-out" method) or market. Inventory write-offs are provided to
         cover risks arising from slow-moving items or obsolescence.

         Property, Plant and Equipment
         -----------------------------

         Furniture, fixtures and equipment are depreciated over their estimated
         useful lives of 3 to 15 years, using the straight-line method of
         depreciation.

         Long-Lived Assets
         -----------------

         The Company reviews its long-lived assets on a quarterly basis to
         determine any impairment in accordance with Statement of Financial
         Accounting Standards (SFAS) No. 144. This statement provides a single
         accounting model for long-lived assets to be disposed of and
         significantly changes the criteria that would have to be met to
         classify an asset as held-for-sale. Classification as held-for-sale is
         an important distinction since such assets are not depreciated and are
         stated at the lower of fair value and carrying amount. This statement
         also requires expected future operating losses from discontinued
         operations to be displayed in the period(s) in which the losses are
         incurred, rather than as of the measurement date as previously
         required.

                                      F-11
<PAGE>

             Universal Communication Systems, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               September 30, 2003

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

         Estimates
         ---------

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

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

         For cash, cash equivalents, other assets, accounts payable, and accrued
         expenses, the carrying amounts represent their fair market value. The
         carrying amount of the debentures payable approximates fair value
         because of similar current rates at which the Company could borrow
         funds with consistent remaining maturities.

         Investments
         -----------

         The Company has adopted SFAS No. 115, "Accounting for Certain
         Investments in Debt and Equity Securities". Under this standard,
         management determines the appropriate classifications of debt
         securities at the time of acquisition, and reevaluates such designation
         as of each balance sheet date.

         Revenue Recognition
         -------------------

         Revenues from the sales of products are recognized in accordance with
         Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial
         Statements", when persuasive evidence of an arrangement exists and
         delivery of the product has occurred, provided that the collection of
         the resulting receivable is probable, the price is fixed or
         determinable, and no significant obligation exists. The Company does
         not grant any right of return.

         Because the Company's acquisition of Millennium occurred only one day
         before its fiscal year-end, no Millennium revenue has been recognized
         in the Company's consolidated statement of operation for the year ended
         9/30/03.

         Segment Information
         -------------------

         The Company adopted Statement of Financial Accounting Standards No.
         131, "Disclosures about Segments of an Enterprise and Related
         Information" (SFAS No. 131) in 1999. This statement establishes
         standards for the reporting of information about operating segments in
         annual and interim financial statements and requires restatement of
         prior year information. The Company has no reportable operating
         segments for the years ended September 30, 2003 and 2002.

         Comprehensive Income and Foreign Currency Translation
         -----------------------------------------------------

         The Company has adopted FASB Statement No. 130, Reporting Comprehensive
         Income. The financial statements of the Company's foreign subsidiaries
         are measured using the U.S. dollar as the functional currency. Where
         there are foreign currency transactions, assets and liabilities are
         translated at exchange rates as of the balance sheet date and revenues
         and expenses were translated at average rates of exchange in effect
         during the year. Any cumulative translation adjustments are recorded as
         a separate component of stockholders' equity.

         Recent Accounting Pronouncements
         --------------------------------

         In October 2001, the Financial Accounting Standards Board issued
         Statement of Financial Accounting Standards No. 143, "Accounting for
         Asset Retirement Obligations" ("SFAS No. 143"). SFAS No. 143
         establishes guidelines related to the retirement of tangible

                                      F-12
<PAGE>
             Universal Communication Systems, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               September 30, 2003

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

         Recent Accounting Pronouncements (continued)
         --------------------------------------------

         long-lived assets of the Company and the associated retirement costs.
         This statement requires that the fair value of a liability for an asset
         retirement obligation be recognized in the period in which it is
         incurred if a reasonable estimate of fair value can be made. The
         associated asset retirement costs are capitalized as part of the
         carrying amount of the long-lived assets. This statement is effective
         for financial statements issued for the fiscal years beginning after
         June 15, 2002 and with earlier application encouraged. The Company
         adopted SFAS No. 143 and the adoption did not have a material impact on
         the financial statements of the Company at September 30, 2003.

         In October 2001, the Financial Accounting Standards Board issued SFAS
         No. 144, "Accounting for the Impairment or Disposal of Long-Lived
         Assets" ("SFAS No. 144"). SFAS No. 144 replaces SFAS No. 121,
         "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
         Assets to Be Disposed of." This standard establishes a single
         accounting model for long-lived assets to be disposed of by sale,
         including discontinued operations. SFAS No. 144 requires that these
         long-lived assets be measured at the lower of carrying amount or fair
         value less cost to sell, whether reported in continuing operations or
         discontinued operations. This statement is effective beginning for
         fiscal years after December 15, 2001, with earlier application
         encouraged. The Company adopted SFAS No. 144 and the adoption did not
         have a material impact on the financial statements of the Company at
         September 30, 2003.

         In April 2002, the Financial Accounting Standards Board issued SFAS No.
         145, "Rescission of FASB Statements No. 44, 4 and 64, Amendment of FASB
         Statement No. 13, and Technical Corrections" ("SFAS No. 145"), which
         updates, clarifies and simplifies existing accounting pronouncements.
         FASB No. 4, which required all gains and losses from the extinguishment
         of debt to be aggregated and, if material, classified as an
         extraordinary item, net of related tax effect was rescinded. As a
         result, FASB No. 64, which amended FASB No. 4, was rescinded as it was
         no longer necessary. SFAS No. 44, "Accounting for Intangible Assets of
         Motor Carriers", established the accounting requirements for the
         effects of transition to the provisions of the Motor Carrier Act of
         1980. Since the transition has been completed, SFAS No. 44 is no longer
         necessary and has been rescinded. SFAS No. 145 amended SFAS No. 13 to
         eliminate an inconsistency between the required accounting for sale-
         leaseback transactions and the required accounting for certain lease
         modifications that have economic effects that are similar to sale-
         leaseback transactions. The Company adopted SFAS No. 145, which has not
         had a material effect on the Company's financial statements.

                                      F-13
<PAGE>
             Universal Communication Systems, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               September 30, 2003

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

         Recent Accounting Pronouncements (continued)
         --------------------------------------------

         In June 2002, the Financial Accounting Standards Board issued SFAS No.
         146, "Accounting for Costs Associated with Exit or Disposal Activities"
         ("SFAS No. 146"). SFAS No. 146 addresses significant issues regarding
         the recognition, measurement, and reporting of costs associated with
         exit and disposal activities, including restructuring activities. SFAS
         No. 146 also addresses recognition of certain costs related to
         terminating a contract that is not a capital lease, costs to
         consolidate facilities or relocate employees, and termination benefits
         provided to employees that are involuntarily terminated under the terms
         of a one-time benefit arrangement that is not an ongoing benefit
         arrangement or an individual deferred-compensation contract. SFAS No.
         146 was issued in June 2002, effective December 31, 2002 with early
         adoption encouraged. There has been no impact on the Company's
         financial position or results of operations from adopting SFAS No. 146.

         In April 2003, the Financial Accounting Standards Board issued SFAS No.
         149, "Amendment of Statement 133 on Derivative Instruments and Hedging
         Activities" (hereinafter "SFAS No. 149"). SFAS No. 149 amends and
         clarifies the accounting for derivative instruments, including certain
         derivative instruments embedded in other contracts, and for hedging
         activities under SFAS No. 133, "Accounting for Derivative Instruments
         and Hedging Activities". This statement is effective for contracts
         entered into or modified after June 30, 2003 and for hedging
         relationships designated after June 30, 2003. The adoption of SFAS No.
         149 did not have a material impact on the financial position or results
         of operations of the Company.

         In May 2003, the Financial Accounting Standards Board issued Statement
         of Financial Accounting Standards No. 150, "Accounting for Certain
         Financial Instruments with Characteristics of Both Liabilities and
         Equity" (hereinafter "SFAS No. 150"). SFAS No. 150 establishes
         standards for classifying and measuring certain financial instruments
         with characteristics of both liabilities and equity and requires that
         those instruments be classified as liabilities in statements of
         financial position. Previously, many of those instruments were
         classified as equity. SFAS No. 150 is effective for financial
         instruments entered into or modified after May 31, 2003 and otherwise
         is effective at the beginning of the first interim period beginning
         after June 15, 2003. The Company has determined that there was no
         impact on the Company's financial statements from the adoption of this
         statement.

         In January 2003, the Financial Accounting Standards Board issued FASB
         Interpretation No. (FIN)46 "Consolidation of Variable Interest
         Entities, an Interpretation of ARB No. 51" (hereinafter "FIN 46"). FIN
         46 requires certain variable interest entities to be consolidated by
         the primary beneficiary of the entity if the equity investors in the
         entity do not have the characteristics of a controlling financial

                                      F-14
<PAGE>
             Universal Communication Systems, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               September 30, 2003

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

         Recent Accounting Pronouncements (continued)
         --------------------------------------------

         interest or do not have sufficient equity at risk for the entity to
         finance its activities without additional subordinated financial
         support from other parties. FIN 46 is effective for all new variable
         interest entities created or acquired after January 31, 2003. The
         provisions of FIN 46 must be applied for the first interim or annual
         period beginning after June 15, 2003. The Company does not have any
         entities that require disclosure or new consolidation as a result of
         adopting the provisions of FIN 46.

         In November 2002, the Financial Accounting Standards Board issued FIN
         45 "Guarantor's Accounting and Disclosure Requirements for Guarantees,
         including Indirect Guarantees of Indebtedness of Others." FIN 45
         requires a company, at the time it issues a guarantee, to recognize an
         initial liability for the fair value of obligations assumed under the
         guarantee and elaborates on existing disclosure requirements related to
         guarantees and warranties. The initial recognition requirements of FIN
         45 are effective for guarantees issued or modified after December 31,
         2002 and do not have an impact on the financial statements of the
         Company. The Company does not anticipate issuing any guarantees which
         would be required to be recognized as a liability under the provisions
         of FIN 45 and thus does not expect the adoption of this interpretation
         to have an impact on its results of operations or financial position.

NOTE 3 - GOING CONCERN AND SIGNIFICANT RISKS AND UNCERTAINTIES

         The Company's financial statements are prepared using generally
         accepted accounting principles applicable to a going concern which
         contemplates the realization of assets and liquidation of liabilities
         in the normal course of business. The Company's current liabilities
         exceed current assets by over $1.5 million, has experienced losses
         since inception, and had an accumulated deficit of $31,833,598 at
         September 30, 2003. Net losses are expected for the foreseeable future.
         As such, there is substantial doubt as to the Company's ability to
         continue as a going concern. Management has modified its business plan
         and is currently focusing its operations on the design, manufacture and
         sale of water production and generation systems along with solar power
         systems. The Company needs to secure additional capital through sales
         of common stock. There is no assurance that management will be
         successful in its efforts to raise additional capital.

NOTE 4 - COMMITMENTS AND CONTINGENCIES

         Litigation
         ----------

         In November 1998, the Company and its predecessor affiliates filed an
         action against the lessor of its leases for the Concord and San Marcos,


                                      F-15
<PAGE>
             Universal Communication Systems, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               September 30, 2003

NOTE 4 - COMMITMENTS AND CONTINGENCIES (continued)

         Litigation (continued)
         ----------------------

         California multipoint distribution service channels. Thereafter, the
         lessor cross-complained against the Company and its predecessors,
         alleging breach of contract. On December 9, 1999, a settlement
         agreement was signed. Under terms of the settlement agreement, the
         Company had an option to purchase the Concord and San Marcos leases for
         a price of $250,000 each, less lease payments already made. The Company
         elected to exercise the option to purchase the Concord lease, and the
         appropriate transfer procedure has been initiated with the U.S. Federal
         Communications Commission (FCC) which is still pending. The Company
         believes that under current FCC regulations it is not required to pay
         the $250,000 purchase price until such time as the FCC has approved the
         transfer of the license, and has made no payment. Management has
         abandoned the pursuit of these leases and licenses.

         During 1999, the Company borrowed $740,000 from Credit Bancorp. Also in
         1999, the Company filed suit against Credit Bancorp in US District
         Court in San Francisco, regarding improprieties. The case was settled
         in 1999, with the $740,000 loan converting to a $740,000 convertible
         debenture. In 2000, Credit Bancorp's receiver agreed to convert the
         debenture into 462 shares of the Company's stock. A new receiver has
         been appointed to administer the affairs of Credit Bancorp. The Company
         has been informed that the appointed receiver denies that such a
         conversion request was made, and the Company may be liable for the
         principal plus accrued interest. As of September 30, 2003, no shares
         had been issued. Management believes that the receiver's claim lacks an
         authoritative basis, and that the resolution of these matters will not
         have a material effect on the Company's financial statements.

         On April 19, 2001, the Company was served with a complaint alleging
         unjust enrichment and a violation of California Business and
         Professions Code by Broad Horizons, Inc., a Florida corporation. The
         complaint stems from allegations that the Company improperly received
         monetary benefits from the Company's intended acquisition of
         Comunicacoes 100Fio, Ltda, a Brazilian corporation, and the Company's
         subsequent relations with Luis Cuza, a former vice-president and
         director of Broad Horizons, Inc., and a former member of the Company's
         board of directors. The Company denies the allegations and believes
         that the resolution of this matter will not have a material effect on
         the Company's financial statements.

         In fiscal 2003, Electric & Gas Technology Inc (ELGT) filed suit against
         the Company in Federal District Court in Texas, alleging patent
         infringement and other claims regarding the Company's AirWater
         products. This suit was dismissed without prejudice, for
         venue/jurisdictional reasons. It is not yet clear whether ELGT will
         re-file in another jurisdiction. The Company has counter-sued ELGT in
         Federal District Court in Florida for defamation and patent
         infringement, which case is still pending. Management believes that the
         resolution of these matters will not have a material effect on the
         Company's financial statements.

                                      F-16
<PAGE>
             Universal Communication Systems, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               September 30, 2003

NOTE 4 - COMMITMENTS AND CONTINGENCIES (continued)

         Operating Leases
         ----------------

         During 2003, the Company converted the lease of its Miami executive and
         administrative offices to a month-to-month basis. The Company's
         Millennium subsidiary in Israel rents facilities under non-cancelable
         operating leases for periods ending in 2005, and also leases a car
         under a 36-month lease commencing October 2003.

         Future minimum lease payments required under these leases are as
         follows at September 30, 2003:

         Fiscal year
         Ending September 30,
         --------------------

                2004                $ 73,692
                2005                  68,677
                2006                  13,512
                                    --------
                                    $155,881
                                    ========

         Management Agreement
         --------------------

         The Company entered into a three year consulting agreement with
         Overseas Communications Limited ("Overseas") on November 2, 2001, for
         Mr. Michael Zwebner to act as Chairman and CEO of the Company. The
         Agreement calls for a monthly payment of $20,000, payable in cash or
         the Company's common stock. For the fiscal years ended September 30,
         2003 and 2002, the Company paid $80,000 and $20,000 in cash,
         respectively, and issued 3,160,742 and 365,966 shares of common stock,
         respectively, under this agreement. Mr. Zwebner is a shareholder of
         Overseas.

         Settlement Agreement
         --------------------

         As described more fully in Note 9, below, the Company has entered into
         a settlement agreement with the Andrew Corporation, formerly a major
         supplier to the Company. The related note payable for $300,000 was
         timely paid in April 2004.

                                      F-17
<PAGE>
             Universal Communication Systems, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               September 30, 2003

NOTE 4 - COMMITMENTS AND CONTINGENCIES (continued)

         Consultant Agreements
         ---------------------

         In September 2003, the Company entered into two consulting agreements
         with two Millennium executives. The remaining contingent obligations on
         these agreements at September 30, 2003 totals $114,000.

         AirWater Minimum Royalty Payments
         ---------------------------------

         As discussed more fully in Note 1, the Company's license agreement,
         through its AirWater subsidiary, requires monthly royalty payments of
         $10,000 per month through October 2013.

NOTE 5 - STOCKHOLDERS' EQUITY

         On May 21, 2002, stockholders approved a measure to increase the number
         of authorized common shares from 300 million to 800 million, and to
         authorize 10 million preferred shares.

         The Company's Board of Directors approved a one-for-one-thousand
         reverse stock split, effective August 23, 2002. Fractional shares were
         rounded up to the next share. All share and per share information
         reflects this reverse stock split.

         During the fiscal year ended September 30, 2003, the Company sold
         22,742,301 shares of its common stock for net cash proceeds of
         $1,214,829. The Company issued 23,486,734 shares of common stock in
         conversion of outstanding debentures for an aggregate value of
         $717,065. The Company also issued 18,008,770 shares of its common stock
         for services at an aggregate value of $1,104,395. Stock issued for
         services was at the reported market price for the shares at the time of
         issuance.

         During the fiscal year ended September 30, 2002, the Company sold
         45,254 shares of its common stock for net cash proceeds of $173,500.
         The Company issued 4,898,636 shares of common stock in conversion of
         outstanding debentures for an aggregate value of $2,616,436. The
         Company also issued 584,011 shares of its common stock for services at
         an aggregate value of $573,485. Stock issued for services was at the
         reported market price for the shares at the time of issuance.

                                      F-18
<PAGE>
             Universal Communication Systems, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               September 30, 2003

NOTE 6 - INCOME TAXES

         A reconciliation between the actual income tax benefit and the federal
         statutory rate follows:

                                          Fiscal years ended September 30,
                                              2002                 2003
                                       -----------------    ----------------
                                         Amoun        %       Amount      %
                                       ---------     ---    ---------    ---
         Computed income tax
           benefit at statutory rate   $ 447,000     34 %   $ 656,000     34 %
         Tax benefit reserved
           for doubtful valuation       (447,000)   (34)%    (656,000)   (34)%
                                       ---------            ---------

   Income tax benefit                       None                 None
                                            ----                 ----

         At September 30, 2003 the Company had a net operating loss carry
         forward for federal tax purposes of approximately $29,300,000 which, if
         unused to offset future taxable income, will expire between the years
         2011 to 2023. A valuation allowance has been recognized to offset the
         related deferred tax assets due to the uncertainty of realizing any
         benefit therefrom.

         Under section 382 of the Internal Revenue Code, the utilization of net
         operating loss carryforwards is limited after an ownership change, as
         defined, to an annual amount equal to the market value of the loss
         corporation's outstanding stock immediately before the date of the
         ownership change multiplied by the highest Federal long-term tax exempt
         rate in effect for any month in the 3 calendar month period ending in
         the calendar month in which the ownership change occurred. Due to the
         ownership changes as a result of the May 1998 reorganization and
         subsequent stock issuances, any future realization of the Company's net
         operating losses will be severely limited.

         Significant components of the Company's deferred tax assets are as
         follows:

                                                2002            2003
                                            ------------    ------------
         Net operating loss carryforwards   $ 28,000,000    $ 29,300,000

         Valuation allowance                 (28,000,000)    (29,300,000)
                                            ------------    ------------
         Net deferred tax assets                    None            None
                                            ============    ============

                                      F-19
<PAGE>
             Universal Communication Systems, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               September 30, 2003

NOTE 7 - STOCK OPTION PLANS

         Nonstatutory Stock Options
         --------------------------

         The Company has issued stock options under nonstatutory stock option
         agreements. The options are granted at the fair market value of the
         shares at the date the option is granted. The options are granted for a
         period of 5 years, and are fully exercisable during the term of the
         option period or within thirty (30) days of the participant's
         resignation or termination.

         Combined transactions in non-employee options for the fiscal years
         ended September 30, 2003 and 2002 are as follows:
<TABLE>
<CAPTION>
                                                          2003                    2002
                                                  --------------------    --------------------
                                                               Average                  Average
                                                  Number of    Exercise   Number of     Exercise
                                                  Shares       Price      Shares        Price

         <S>                                      <C>           <C>       <C>           <C>
         Options outstanding October 1            251,300       $0.624    251,300       $0.624
         Granted                                       --           --         --           --
         Cancelled/Expired                            250        95.00         --           --
         Exercised                                     --           --         --           --
                                                  -------       ------    -------       ------
         Options outstanding, September 30        251,050       $0.095    251,300       $0.624
                                                  =======       ======    =======       ======
</TABLE>


         Incentive Stock Plan
         --------------------

         The Company adopted an incentive stock plan on August 5, 1998, which
         was approved by the shareholders on March 1, 2001. The options are
         granted at the fair market value of the shares at the date that the
         option is granted. The options are granted for a period of 10 years,
         and are exercisable after one year from the date of grant, at a vested
         rate of 20% per year during the term of the option period or within
         thirty (30) days of the participant's resignation or termination. The
         number of shares of stock covered by each outstanding option, and the
         exercise price per share thereof set forth in each such option, shall
         be proportionately adjusted for any stock split, and or stock dividend.
         All such options were being treated as non-statutory stock options
         until the incentive stock plan was approved by the shareholders.

                                      F-20
<PAGE>
             Universal Communication Systems, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               September 30, 2003

NOTE 7 - STOCK OPTION PLANS (continued)

         Combined transactions in employee options for the fiscal years ended
         September 30, 2003 and 2002 are as follows:
<TABLE>
<CAPTION>
                                                          2003                    2002
                                                  --------------------    --------------------
                                                               Average                  Average
                                                  Number of    Exercise   Number of     Exercise
                                                  Shares       Price      Shares        Price

         <S>                                      <C>           <C>       <C>           <C>
         Options outstanding October 1              6,300           $602.00      6,300          $ 602.00
         Granted                                        0              0             0             0
         Cancelled/Expired                           (200)           602.00          0             0
         Exercised                                      0              0             0             0
                                                    -----           -------      -----           -------
         Options outstanding, September 30          6,100           $602.00      6,300           $318.00
                                                    =====           =======      =====           =======
</TABLE>
         The Company applies APB Opinion 25 in accounting for its stock
         compensation plans discussed above. Accordingly, no compensation costs
         have been recognized for these plans in 2003 or 2002. Had compensation
         costs been determined on the basis of fair value pursuant to FASB
         Statement No. 123, no compensation costs would have been recognized
         inasmuch as no options were granted under these plans.

NOTE 8 - SECURITIES PURCHASE AGREEMENTS AND DEBENTURES

         On April 14, 2000, the Company entered into a Securities Purchase
         Agreement with six investors, for the purchase of investment units,
         consisting of common stock, common stock purchase warrants, 4%
         subordinated debentures maturing April 14, 2005, and preferred stock.
         On August 10, 2000 and again on October 18, 2000, the Company agreed
         with the investors to modify certain terms of the earlier funding
         agreement including elimination of the warrants and the preferred
         stock. The investors acquired $6,720,000 of 4% subordinated debentures.
         Interest is compounded semi-annually on the aggregate principal amount
         and is payable upon conversion, redemption or maturity of the
         debentures. Accumulated accrued interest is payable by increasing the
         aggregate principal amount of the debentures semi- annually and
         convertible into common stock of the Company. The debentures are not
         callable and can be converted into common stock at the option of the
         Holder at any time. The debentures are convertible generally at 85% of
         the average per share market value for the 5 consecutive trading days
         immediately prior to the conversion date.

         On March 29, 2001, the Company entered into a Senior Secured
         Convertible Debentures and Warrants Purchase Agreement with several
         investors. On June 7, 2001 the Company and several investors agreed to
         amend the March 29, 2001 Senior Secured Convertible Debentures and
         Warrants Purchase Agreement. The investors agreed to purchase $200,000
         principal amount of 8% senior convertible debentures, maturing in
         February and March 2005. The Company also agreed to issue letter
         warrants to purchase up to $125,000 divided by 85% of the average of
         the three lowest bid prices during the 22 trading days prior to June 7,
         2001. Interest is computed at 8% per annum on the principal amount,
         compounded quarterly and is payable upon conversion, redemption or
         maturity of the debentures. The debentures are convertible generally at
         70% of the average of the 3 lowest bid prices during the 22 trading
         days immediately prior to the conversion date.

         In July 2003, an individual purchased a 4% Convertible Debenture with a
         principal amount of $100,000, maturing in 2005, from an existing
         bondholder. The debenture, as amended, allows its conversion at any
         time into 2,300,000 freely transferable shares of the Company's stock.

                                      F-21
<PAGE>
             Universal Communication Systems, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               September 30, 2003

NOTE 8 - SECURITIES PURCHASE AGREEMENTS AND DEBENTURES (continued)

         Commencing on February 5, 2002 through September 30, 2002, debenture
         holders exercised their option to convert $2,492,885 of 4% debentures
         and $123,551 of 8% debentures into 4,898,636 shares of common stock.

         During the fiscal year ended September 30, 2003, debenture holders
         exercised their option to convert $717,065 of 4% debentures into
         23,486,734 shares of common stock.

         The balance of long-term debentures are shown in the following table.
         All of the debentures are due in the year 2005.

                                                Balance Outstanding
                                                 September 30, 2003
                                                -------------------
         4% Debenture                                $3,380,547
         8% Debentures                                1,066,449
                                                     ----------
                        Total long term              $4,446,996
                                                     ==========

NOTE 9 - NOTE PAYABLE

         The Notes Payable of $344,746 is composed of $284,746, related to the
         Andrew Corporation settlement agreement (discussed below), and a
         $60,000 note, bearing an interest rate of 12%, which matured on January
         6, 2003. The Company is in negotiations with the holder to convert the
         note into stock of the Company, which has not yet occurred.

         On January 14, 2001, the Company entered into a Settlement Agreement
         with its systems integrator, Andrew Corporation, to repay costs
         incurred in purchasing their services and equipment in an approximate
         amount of $1,400,000. Under the Agreement, Andrew received an initial
         payment of $100,000 and was scheduled to receive an additional $100,000
         each month until the loan was repaid. No payments were made. In
         addition, the Company issued a warrant to purchase no less than 200 and
         no more than 500 shares of the Company's common stock. The warrants are
         exercisable until January 24, 2005 at an exercise price of $230 per
         share. The warrants were issued in lieu of interest, and the Company is
         required to register the shares underlying the warrants. Further, on
         July 23, 2001, the Company entered into an agreement with Andrew to
         resolve all remaining indebtedness. This agreement required the return
         of all equipment previously shipped to Argentina, most of which has
         been held in the duty free zone in La Plata, Argentina, as well as some
         inventory held in the U.S. The equipment in Argentina has not yet been
         returned to Andrew. The Company has not been able to locate the
         equipment in Argentina. On September 3, 2002, the Company reached a
         settlement agreement with Andrew Corporation for all amounts due. The
         Company issued a note in the amount of $300,000 due in April 2004. The
         note bears no interest and is secured by 300,000 shares of the
         Company's common stock. The amount due was paid in April 2004.

                                      F-22
<PAGE>
             Universal Communication Systems, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               September 30, 2003

NOTE 9 - NOTE PAYABLE (continued)

         Because there was no stated interest, $45,763 was calculated as imputed
         interest, resulting in a stated value of the note payable of $254,237
         recorded as part of Notes Payable. Interest expense of $30,509 was
         computed for the year ended September 30, 2003 and added to the stated
         value of the note, increasing the stated value of the note payable to
         $284,746 as of September 30, 2003.

NOTE 10 - RELATED PARTY TRANSACTIONS

         Company CEO Michael Zwebner is the majority shareholder of Hard Disc
         Cafe, Inc (HDC), with which the Company entered into a letter of intent
         to acquire HDC, as discussed in Note 3 above.

         Mr. Zwebner is also the majority shareholder of Card Universal
         Corporation, Inc., with which the Company entered into a letter of
         intent to acquire Card Universal, as discussed in Note 1 above.

         Mr. Zwebner advanced certain funds to the Company, of which $11,368 was
         outstanding and payable to him at September 30, 2003. Furthermore, Mr.
         Zwebner assumed a liability owing to the Company from a third party,
         resulting in an account receivable, stockholder of $93,500.

         As discussed in Note 4, the Company entered into a three year
         consulting agreement with Overseas Communications Limited ("Overseas")
         on November 2, 2001, for Mr. Michael Zwebner to act as Chairman and CEO
         of the Company. The Agreement calls for a monthly payment of $20,000,
         payable in cash or the Company's common stock. For the fiscal years
         ended September 30, 2003 and 2002, the Company paid $80,000 and $20,000
         in cash, respectively, and issued 3,160,742 and 365,966 shares of
         common stock, respectively, under this agreement. Mr. Zwebner is a
         shareholder of Overseas.

         During fiscal 2003, the Company paid $6,963 to its stock registrar, The
         Nevada Agency and Trust Company (NATCO). Alexander Walker Jr, the
         Company's Corporate Secretary and a Director, is the Chairman and a
         shareholder of NATCO. Mr. Walker also received 500,000 shares of the
         Company's stock as compensation for legal services.

         Mr. Curt Orgil, the Company's Treasurer and a Director, received
         200,000 shares of the Company's stock as compensation for financial
         services.

NOTE 11 - RESEARCH AND DEVELOPMENT COSTS

         The Company does not capitalize costs for improvement or refinement of
         existing products. Product development expenses charged against
         earnings were $62,333 in the fiscal year ended September 30 2003.

                                      F-23
<PAGE>
             Universal Communication Systems, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               September 30, 2003

NOTE 12 - PATENTS

         Intangibles consist of $300,064 of goodwill allocated to patents,
         related to the Millennium acquisition (see Note 1), and $306,650 of
         patent and related license costs, $300,000 of which relates to the
         acquisition of the AirWater patent licenses from J.J. Reidy (also see
         Note 3), and $6,650 of which relates to the Company's distributed
         wireless call processing (DWCP) system. The Company has chosen to
         amortize the cost of the patents and patent licenses using the units-
         of-production method. No amortization is recognized during fiscal 2003
         on the Millennium patents, because they were acquired at the end of the
         year. No amortization is recognized during fiscal 2003 on the AirWater
         and DWCP patents, because no units were sold. No reasonable estimate of
         future amortization costs can be made at this time.

         With the Company's adoption of SFAS No. 142, intangible assets will be
         tested for impairment annually, and will be tested for impairment
         between annual tests if an event occurs that would indicate that the
         carrying amount may be impaired. The amount of the impairment loss is
         calculated by the excess of the asset's carrying value over its fair
         value. Management has analyzed the patents and licenses, and has
         determined that there is no impairment at this time.

NOTE 13 - NOTES RECEIVABLE

         The Company's investment in notes receivable consists solely of demand
         notes maturing in less than one year, in the amount of $116,782.
         Investments with maturities of less than one year are classified as
         short-term investments. These investments are carried at cost (which
         approximates fair value), with an interest rate of 10% per annum.

NOTE 14 - LIABILITIES FROM DISCONTINUED OPERATIONS

         This amount of $946,794 represents expenses incurred before 9/30/01, in
         the normal course of business, at the time when the Company was engaged
         in developing and providing of wireless broadband internet services.
         While the Company is currently in the process of renegotiating or
         settling these liabilities, it is not possible to determine at this
         time if, and to what degree, it will be successful in doing so.
         Therefore, it is not practicable or cost effective to develop any
         estimates of fair value (SFAS No. 107).

NOTE 15 - SUBSEQUENT EVENTS

         On December 15, 2003, the Company tentatively agreed to acquire
         GiraSOLAR BV, a Dutch holding company with 2 subsidiaries, Stroomwerk
         Energy and Solar Service Buro, both involved in the photo-voltaic solar
         industry. The Company is in the process of conducting its due diligence
         in connection with this proposed acquisition.

                                      F-24