UNITED STATES

                  SECURITIES AND EXCHANGE COMMISSION

                        WASHINGTON, D.C. 20549

                             FORM 10-KSB

                           FIRST AMENDMENT

      ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES

                         EXCHANGE ACT OF 1934

             For the fiscal year ended December 31, 2002

                   Commission File Number 000-26337

                        MEDINEX SYSTEMS, INC.

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

        Delaware
                                    82-0514605
(State or jurisdiction of           (IRS Employer
 incorporation or organization)     Identification No.)

           804 North Lincoln Street #2, Post Falls ID 83814
                            (602) 765-9242
(Address and telephone number of principal executive offices and
                 principal place of business)

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

                      Name of each exchange
    Title of each class
               on which registered
Common Stock, $.01 par value
Over the Counter Board

____________________________________________________________

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 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 [ ]

Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not
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-K or any amendment to this Form 10-K. [X]

Based on the stock's average bid and asked price of $0.0110 on April
17, 2003, non-affiliated market capital was approximately $200,000.

                APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date:

As of April 17, 2002, there were 20,358,244 shares of the
registrant's $.01 par value common stock outstanding.

Transitional Small Business Disclosure Format: Yes [ ] No [X]


                        MEDINEX SYSTEMS, INC.
                             FORM 10-KSB
                 FOR THE YEAR ENDED DECEMBER 31, 2002

                          Table of Contents

PART I

Item 1   Description of Business            Page  4

Item 2   Description of Property            Page  8

Item 3   Legal Proceedings                  Page  9

Item 4   Submission of Matters to a Vote
          of Security Holders               Page  11


PART II

Item 5   Market for Common Equity and
          Related Stockholder Matters       Page  11

Item 6   Management's Discussion and
          Analysis or Plan of Operations    Page  17

Item 7   Financial Statements               Page  21

Item 8   Changes in and Disagreements with
          Accountants on Accounting and
          Financial Disclosure              Page  21


PART III

Item 9   Directors, Executive Officers,
          Promoters and Control Persons;
          Compliance with Section 16(a)
          of the Exchange Act               Page  22

Item 10  Executive Compensation             Page  23

Item 11  Security Ownership of Certain
          Beneficial Owners and Management  Page  23

Item 12  Certain Relationships and Related
          Transactions                      Page  24

Item 13  Exhibits and Reports on Form 8-K   Page  24


                                PART I

CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF
THE PRIVATE LITIGATION REFORM ACT OF 1995. Statements contained in
this filing that are not based on historical fact, including without
limitation statements containing the words "believe," "may," "will,"
"estimate," "continue," "anticipate," "intend," "expect" and similar
words, constitute "forward-looking statements". These
forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause the actual results,
events or developments to be materially different from any future
results, events or developments expressed or implied by such
forward-looking statements. These factors include, among others, the
following: general economic and business conditions, both nationally
and in the regions in which Medinex Systems, Inc. ("we", "Medinex"
or "Company") operates; technology changes; the competition we face;
changes in our business strategy or development plans; the high
leverage of Medinex; our ability to attract and retain qualified
personnel; existing governmental regulations and changes in, or our
failure to comply with, governmental regulations; liability and
other claims asserted against us; it's our ability or the ability of
our third-party suppliers to take corrective action in a timely
manner with respect to changing government regulations; and other
factors referenced in our filings with the Securities and Exchange
Commission.

NOTICE OF FILING OF BANKRUPTCY PETITION AND SALE OF OPERATING ASSETS
on November 27, 2002, the company filed a petition for protection
under Chapter 11 of the United States Bankruptcy code in the US
Bankruptcy Court for the District of Idaho.  This allows Medinex to
continue to operate while a plan of reorganization is finalized. On
December 1, 2002, a motion was filed with the Court for an emergency
sale of the Company's assets to protect their value. The motion was
conditionally approved on February 19, 2003.  The Court entered an
Order Confirming the Debtor's Plan ("Reorganization Plan") on March
6, 2003.  Pursuant to the Reorganization Plan, the Bankruptcy Court
approved and designated a Phase One sale and a Phase Two sale.  Both
Phase I and Phase II sales were conducted on March 26, 2003, and
March 27, 2003, respectively.  On these dates the Company sold all
of its operating assets and the corporate "shell".  All of the
proceeds from the sales of the operating assets will be distributed
to pay administrative expenses and the creditors of Medinex.  All
discussions regarding the financial condition and results of
operations should be read in conjunction with the Reorganization
Plan.  The liabilities and subsequent discharge of unsatisfied
creditors of the Company will be adjudicated in future proceedings
before the Bankruptcy Court.

GIVEN THESE UNCERTAINTIES, READERS ARE CAUTIONED NOT TO PLACE UNDUE
RELIANCE ON FORWARD-LOOKING STATEMENTS. Other than as required by
law, we disclaim any obligation to update information concerning the
factors mentioned above or to publicly announce the result of any
revisions to any of the forward-looking statements contained herein
to reflect future results, events or developments.

ITEM 1:        DESCRIPTION OF BUSINESS

CERTAIN DISCUSSIONS WHICH FOLLOW REGARDING THE DESCRIPTION OF
BUSINESS REFER TO THE OPERATING BUSINESS PRIOR TO BEING DISCONTINUED
DUE TO THE PENDING BANKRUPTCY AND PHASE I SALE OF ALL THE
OPERATIONAL ASSETS ON MARCH 26, 2003 AND PHASE II SALE ON MARCH 27,
2003.

Medinex Systems, Inc. ("Medinex" or "the Company") is a medical
technology and professional services company founded in 1997 and
incorporated in the state of Delaware. Medinex's medical software
solutions included Medinex Office, a Web-based practice management
system and MxMail, a Web-based secure medical messaging system.
Medinex also provided medical transcription services to its
physician clients. MedMarket.com is a business-to-business
e-commerce community that provides products and services to
physicians, hospitals, and medical professionals. In addition,
MedMarket.com is a venue used by manufacturers and distributors of
medical equipment and supplies for the promotion and distribution of
their products and services.

Pursuant to the Phase I sale conducted on March 26, 2003, the
medical technology and professional services business of the Company
was transferred as of March 31, 2003, subject to Bankruptcy Court
confirmation on April 28, 2003.  The funds received from the sale
are scheduled to pay administrative expenses and creditors pursuant
to the Reorganization Plan.

On November 27, 2002, Medinex Systems, Inc. (the "Company") filed a
voluntary petition for relief under Chapter 11 of the Bankruptcy
Code in Bankruptcy Court.  The Company manages, and will continue to
manage, its property and operate its business as a
"debtor-in-possession" under the jurisdiction of the Bankruptcy
Court and in accordance with the applicable provisions of the
Bankruptcy Code until a final decree is entered.  Both Phase I and
Phase II auctions were conducted on March 26, 2003, and March 27,
2003, respectively.  The Company plans to continue operating under
the Reorganization Plan to complete and resolve all pending matters
until a final decree is entered by the Bankruptcy Court.  Under the
Reorganization Plan a large number of creditors will receive no
payment or proceeds and the stockholders are not expected to benefit
or receive any distribution.

                               GENERAL

THE FOLLOWING INFORMATION IS APPLICABLE TO THE COMPANY UNTIL THE
ASSETS OF THE COMPANY WERE SOLD AT THE PHASE I AUCTION ON MARCH 26,
2003, PURSUANT TO THE REORGANIZATION PLAN.

Medinex's healthcare focused business-to-business exchange,
MedMarket.com, was a developer of Web-based solutions that provides
content, products, and services for physicians, nurses, hospitals,
pharmaceutical and insurance companies, medical supply providers and
others involved in the healthcare market.

Employees

The medical technology and professional services assets and business
sold under Phase I of the Reorganization Plan maintains 12 full-time
employees.  These employees remained employed with the business
assets sold under the Phase I sale as of March 31, 2003.  The
Company currently has no full-time employees.  The Company's Chief
Executive Officer has volunteered to remain involved in the final
disposition of Company assets, undertaking all necessary tax or
other governmental filings necessary to complete the bankruptcy
action and wrap up the final business of the Company.  Pursuant to
the Reorganization Plan Colin Christie was specifically empowered
and directed to exercise his power as CEO and no other Directors
have been granted authority by the Bankruptcy Court to take any
corporate action under the Reorganization Plan.  It is anticipated
that this will occur within the first nine months of fiscal 2003.

Patents And Trademarks

The Phase I sale conducted on March 26, 2003, included the transfer
and sale of all patents and applications and trademarks.  Medinex
federally registered the following trademarks: "MEDINEX" (Class 38,
Reg. No. 2,350,799), "MEDINEX" (Class 42, Reg. No. 2,365,142) and
"MEDINEX.COM" (Class 42, Reg. No. 2,414,566). Medinex  applied for
federal trademark registration for "MEDMARKET." Under common law,
these trademarks have an unlimited duration. But, if Medinex
receives the federal registration for these trademarks, the
trademark will be effective for ten (10) years and may be renewed
every ten (10) years indefinitely. As a result of the acquisition of
MedMarket.com in 1999, Medinex has obtained rights to the following
tradenames, trademarks, and domain names: "MedMarket,"
"medmarket.com," "medmarket.net," "medmarketnetwork.com," and
"medicom.com."  Medinex filed a patent application on the MxMail
secure messaging technology.  Because the trademarks were
transferred under the Phase I sale, the Company, which bears the
name "Medinex", will be required to change its name.  The Company
contemplates changing its name at the time the Bankruptcy Court
enters a final decree.

Business and Operating Strategies

On November 27, 2002, Medinex Systems, Inc. filed a voluntary
petition for relief under Chapter 11 of the Bankruptcy Code in
Bankruptcy Court.  The Company manages, and will continue to manage,
its property and operate its business as a "debtor-in-possession"
under the jurisdiction of the Bankruptcy Court and in accordance
with the applicable provisions of the Bankruptcy Code.

At a hearing held on February 19, 2003, the Bankruptcy Court
considered and approved motions allowing for the continued use of
cash collateral and the Debtor's continued drawdowns of Post
Petition Credit in light of the Reorganization Plan conditionally
approved by an Order signed by the Court on January 31, 2003.
Further, the Bankruptcy Court issued an Order authorizing the
Company to market the sale of its assets as described in the
Reorganization Plan; solicit offers for both the Phase I - Auction
Sale of Assets - and Phase II - Auction of the corporate entity;
and, to commence publication and mailing of proposed sale of assets
to prospective bidders and purchasers.  Final approval of the
Reorganization Plan was granted by the Bankruptcy Court on March 6,
2003.

Both Phase I and Phase II auctions were conducted on March 26, 2003,
and March 27, 2003, respectively.  The Bankruptcy Court has
scheduled the confirmation of the sale proceedings for April 28,
2003.  The Company plans to continue under the confirmation of
Debtor's Plan to complete and resolve all pending matters until a
final decree is entered by the Bankruptcy Court to maximize value
for creditors and stockholders.  The Company also plans to pursue
new business enterprises and business combinations upon the
Bankruptcy Court's entry of a final decree.

Competition

The Company currently has no competition relating to web-based
software applications providing Internet-based services and
products.  On March 26, 2003, under Phase I of the Reorganization
Plan the business assets were auctioned and sold effective March 31,
2003, pending Bankruptcy Court approval on April 28, 2003.  Prior to
March 31, 2003, the Company recognized that the markets for
developing web based software applications providing Internet-based
services and products are relatively new, intensely competitive and
rapidly changing. Since the Internet's commercialization in the
early 1990s, the number of Web sites on the Internet competing for
users' attention has proliferated.  Many companies have become
insolvent as a result of the intense competition. Barriers to entry
on the Internet are minimal, and competitors can launch new Web
sites or new products and services at a relatively low cost. As a
result, Medinex expected that competition in the Internet industry
would continue to intensify.

Medinex believed there were key factors to developing successful
software and Internet-based products and services. The primary
factors included functionality, brand recognition, visitor loyalty,
demographic focus, variety of value-added services, and critical
mass. Other important factors to consider in developing competitive
software and Internet-based products include ease-of-use, quality
and reliability of the services and products. Medinex also believed
that the principal competitive factors in attracting customers, and
advertisers include price, quality of services and implementation of
advertising placements.

Governmental Regulation and Legal Uncertainties

The Company is currently subject to various laws and regulations
relating to its business, including those of the Bankruptcy Code.
The Company must adhere to the Reorganization Plan and the Orders
imposed by the Bankruptcy Court.  The claims of the creditors have
not been paid, liquidated or discharged.  No final decree has been
entered.

If the Company were alleged to violate federal, state or foreign
civil or criminal laws, even if these claims could be successfully
defended, Medinex could be materially adversely affected.

History of Incorporation

Medinex, formerly named Nelloro Corporation, was a Nevada
corporation formed in 1993. Nelloro owned interests in mineral
properties from September 1993 until 1996, near Nelson, Nevada. No
mineral extraction or processing of the mining claims occurred, and,
in 1996, Nelloro abandoned the claims and did not conduct any other
business operations. Medinex began its current operations as
Netivation.com, Inc., a Nevada corporation in September 1997 after
acquiring the technology developed by Medinex's existing management
team in consideration for 2,500,000 shares of common stock of
Nelloro. On May 14, 1999, Netivation.com merged with and into
Netivation.com Merger, Inc., a Delaware corporation, leaving
Netivation.com Merger, Inc. as the surviving corporation. On June
28, 1999, Netivation.com Merger, Inc. filed a restated certificate
of incorporation in which it renamed the corporation Netivation.com,
Inc. On July 20, 2000, the Company's name was changed to Medinex
Systems, Inc., to reflect the Company's focus on the healthcare
industry.

Research and Development

The research and development expenses of the business assets sold
under Phase I of the Reorganization Plan on March 26, 2003,
consisted principally of technical engineering personnel costs,
equipment depreciation, consulting and supplies. Costs related to
research, design and product development have been charged to
research and development expense as incurred.  The Company is not
currently conducting any research and development.

Distribution

The business and assets sold under Phase I of the Reorganization
Plan distributed its products and services through the development
and maintenance of applications via the Internet and on-site
service, consulting and development.

The Company offered a variety of Internet based products and
services that were customized, hosted and maintained by Medinex.
The Company is not distributing any products or services but is a
debtor in possession under a Reorganization Plan.  The Company is in
the process of paying creditors and administrative claims under the
Reorganization Plan until there is a final decree.

ITEM 2.    DESCRIPTION OF PROPERTY

CERTAIN DISCUSSIONS WHICH FOLLOW REGARDING THE DESCRIPTION OF
PROPERTY REFER TO THE OPERATING BUSINESS PRIOR TO THE PHASE I SALE
OF ALL THE OPERATIONAL ASSETS MARCH 21, 2003 AND THE PHASE II SALE
ON MARCH 27, 2003.

Medinex's current headquarters are located at 804 North Lincoln
Street #2, Post Fallas, Idaho.  Until June 30, 2002, the corporate
headquarters were located at 1200 West Ironwood Drive, Suite 309,
Coeur d'Alene, Idaho, where it leased approximately 1,500 square
feet. Medinex also leased approximately 1,300 square feet at 16042
North 32nd St. Suite B-1, in Phoenix, AZ.  The Company closed its
Coeur d'Alene office and completed this move in August of 2002.
From June of 2002 until November, 2002, the Company headquarters
were located at Celebration, Florida. During 2001, prior to its move
to 1200 Ironwood in Coeur d' Alene, the Company was located in the
Riverbend development in Post Falls, Idaho.  The Company accrued its
back rent through September 2001 and moved to the Ironwood Drive
location.  The Company's offices in Post Falls and Arizona are on
month-to-month leases at $550 and $950 per month, respectively, as
at December 31, 2002.

The Company leased office space in Coeur d' Alene, Idaho for two
years beginning August 1, 2001 and terminating on July 31, 2002. The
monthly rent began at six hundred dollars per month at August 2001,
and increased by fifty dollars per month until December 2001 at
which time the rent was eight hundred dollars per month. Beginning
in January 2002, the rent increases by one hundred dollars per month
to a maximum of one thousand dollars per month. The Company paid one
thousand, two hundred dollars as a security and cleaning deposit.
The Company also leased one additional office in the same building
for two hundred, twenty dollars per month.  This Lease was rejected
as part of the bankruptcy proceeding.

An officer of the Company leased an apartment in Celebration,
Florida. This was a one-year lease that expired October 31, 2002.
The monthly lease payment was one thousand, one hundred eighty-five
dollars. The Company reimbursed the officer for the monthly rent.
This same officer leased an apartment in Phoenix, Arizona. This was
a six-month lease, which expired February 28, 2002. The monthly rent
was one thousand, eighty-nine dollars and is reimbursed by the
Company.

A former officer of the Company leased space in Phoenix Arizona on a
month-to-month basis beginning December, 2001, for four hundred and
fifty dollars per month. The Company reimbursed this rent to the
officer.  This lease was canceled.

A third officer and the Company jointly leased a house in Cave
Creek, Arizona on a six-month lease. The monthly lease payment is
two thousand, four hundred dollars per month. This lease expired
June, 2002.

Investment Policies

Medinex developed a formal investment policy during the 1999 fiscal
year. In 2000, Medinex adopted a formal policy which limited the
amount of assets to be invested in any type of investment to 10%.
The investment policy guidelines may be changed by the board of
directors ("Board of Directors") and do not require stockholder
vote. Currently, the Company's policy is to acquire investments
primarily for income. At this time, Medinex, does not have any funds
outside of the funds directed for administration under the
Reorganization Plan and does not invest in real estate, real estate
mortgages or the securities of parties engaged in real estate
activities.

ITEM 3.    LEGAL PROCEEDINGS

CERTAIN DISCUSSIONS WHICH FOLLOW REGARDING THE DESCRIPTION OF LEGAL
PROCEEDINGS TO THE OPERATING BUSINESS PRIOR TO THE PHASE I SALE OF
ALL THE OPERATIONAL ASSETS MARCH 26, 2003 AND THE PHASE II SALE ON
MARCH 27, 2003.

Petition For Relief Under Chapter 11

On November 27, 2002, the Company filed a petition for protection
under Chapter 11 of the Bankruptcy Code in the US Bankruptcy Court
for the District of Idaho.  This allows Medinex to continue to
operate while a plan of reorganization is finalized.  Liabilities
subject to the bankruptcy proceeding include approximately $197,000
of post-petition debt, approximately $3,065,000 of debt deferred
pursuant to Chapter 11.  These totals are subject to revision
through the Proof of Claim process and further proceedings of the
Bankruptcy Court.

The Company is under the general supervision of the Office of the
United States Trustee for the District of Idaho.  The Trustee must
approve any transactions outside the ordinary course of business.
The day to day operations of the Company are under the control of
the officer of the Company as a Debtor in Possession.  Monthly
operating and cash flow reports must be submitted to the U.S. Trustee.

On January 22, 2003, a Motion was filed with the Court for an
emergency sale of the Company's assets to protect their value.  The
Motion was approved on March 6, 2003.  The sale was completed on
March 21, 2003, and March 27, 2003.  On these dates the Company sold
all of its operating assets.  All of the proceeds from the sale of
the operating assets and the cash to be received will be distributed
to the creditors of Medinex after payment of all approved bankruptcy
administration expenses.  Management does not believe that any funds
will be available for distribution to stockholders after all
approved bankruptcy administration expenses have been paid and
distributions have been made to the Company's creditors whose claims
of approximately $2,220,000 appear to exceed the Company's potential
resources from the sale of its operating assets and administrative
expenses.  Under the Reorganization Plan nearly all of the creditors
claims will remain unpaid at the time the claims are discharged.

Pre-Chapter 11 Proceedings

Medinex filed an action against Oron Strauss, a beneficial owner of
the Company, in the District Court of Kootenai County, Coeur
d'Alene, Idaho on December 1, 2000.  Medinex alleged a breach of
contract for Mr. Strauss' failure to repay a promissory note, and
sought the balance due on the promissory note of $136,156, plus
costs and fees. Mr. Strauss filed a counterclaim against Medinex for
unrelated claims.  Mr. Strauss sought an unspecified sum, in excess
of $10,000 in damages.  On or about April 11, 2002, the parties
reached a settlement on this case and stipulated to the dismissal of
all claims and counterclaims in this action.  This settlement
included an indemnification from Medinex to Mr. Strauss to cover
certain contingencies.  In September, 2002, Medinex was notified by
Mr. Strauss that he had settled claims totaling $25,325 from
Financial Pacific Leasing, CDW Leasing, United Portfolio Management,
and Axis Capital, Inc., and was now seeking indemnification for such
amounts.

Advantage Human Resourcing, LP (Advantage) filed a complaint against
Medinex in the Superior Court of the District of Columbis on January
5, 2001.  Advantage alleged a breach of contract arising out of a
real estate lease and sought damages of $145,443, plus costs and
fees.  Both parties agreed to settle the dispute for the sum of
$100,000, all due and payable on July 1, 2001.  Medinex subsequently
defaulted in its obligation to pay the agreed upon amount.  On
August 28, 2002, a new settlement offer was prepared by Medinex
offering: (1) an immediate grant of 50,000 shares of Medinex
unregistered, restricted common stock, (2) a cash payment in the
amount of $100,000, payable in increments of $5,000 per month,
commencing on December 1, 2002, and continuing on the first day of
each month thereafter until paid.

The American Society of Association Executives filed suit on June 6,
2002, in Ada County, Idaho, Case Number CV OC 0204406D.  A request
for change of venue was granted, moving the case to Kootenai County,
Idaho.  The Complaint seeks to recover a balance owing of $45,931,
plus interest at the rate of 12 percent per annum from June 4, 2002.
 Medinex intends to pursue a settlement of this claim.

Riverbend #1, LLC ("Riverbend") was seeking an amount in excess of
$340,000 for unpaid rent under a written lease for office space
located in Post Falls, Idaho.  Subsequent to the filing of this
action, Medinex located a replacement tenant for the office space.
Riverbend filed a Motion for Summary Judgment on December 20, 2001,
seeking judgment against Medinex in the amount of $181,221.  On
September 27, 2002, Medinex and Riverbend signed a Settlement
Agreement.  Medinex signed a Promissory Note payable to Riverbend
LLC, in the amount of $181,221, bearing interest at 6% per annum
and, in addition, issued to Riverbend 50,000 shares of the Company's
common stock at the fair market value of $7,000 in settlement of
Riverbend's claim.  This common stock was never issued.

Triad Management Systems filed suit on June 6, 2002, in Ada County,
Idaho A request for change of venue was granted, moving the case to
Kootenai County, Idaho.  The balance owed is $102,343, plus interest
at the rate of 12 percent per annum from June 4, 2002.  Medinex
intends to pursue a settlement of this claim.

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

The Company's Annual Meeting of Shareholders was held on May 30,
2002, in Celebration, Florida, to consider and vote on three
proposals as follows:

1.         Elect two Class III Directors to serve until Medinex's
           2005 annual meeting or until their successors are duly
           elected and qualified.

2.         Ratify the selection of Williams & Webster, P.S., as
           Medinex's independent Auditors for the year ending
           December 31, 2002.

3.         Authorize an amendment to the Company's Articles of
           Incorporation to increase the authorized shares of Common
           Stock to 100 million shares and increase the authorized
           shares of Preferred Stock to 10 million shares.

These proposals were approved by the Medinex Shareholders and
implemented by the Directors.  Medinex Shareholders were not asked
to vote on any other matters during the year ended December 31, 2002.

                               PART II

ITEM 5.    MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

CERTAIN DISCUSSIONS FOLLOWING REGARDING THE MARKET FOR COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS REFER TO THE OPERATING BUSINESS
PRIOR TO THE SALE OF ALL THE OPERATIONAL ASSETS ON MARCH 21, 2003,
AND MARCH 27, 2003.

Market for Common Equity

Our common stock was quoted on Nasdaq after our initial public
offering on June 22, 1999. On February 28, 2001, the Company
received notice from Nasdaq of the delisting of our securities for
failure to maintain a minimum bid price of $1.00. Since May 10,
2001, our stock has been trading on the Over-the-Counter Bulletin
Board under the symbol MDNX.OB.

The following table sets forth certain sales price data for our
common stock for the periods indicated:


                                      Medinex Systems, Inc.
                                           Common Stock
                                      ----------------------
                                         High        Low
                                      ----------- ----------
Fiscal 2002:
 Quarter Ended December 31, 2002 .....  $  0.14    $   0.01
 Quarter Ended September 30, 2002 ....  $  0.29    $   0.09
 Quarter Ended June 30, 2002 .........  $  0.53    $   0.16
 Quarter Ended March 31, 2002 ........  $  0.41    $   0.19
Fiscal 2001:
 Quarter Ended December 31, 2001 .....  $  0.50    $   0.17
 Quarter Ended September 30, 2001 ....  $  0.24    $   0.10
 Quarter Ended June 30, 2001 .........  $  0.53    $   0.16
 Quarter Ended March 31, 2001 ........  $  0.41    $   0.19
Fiscal 2000:
 Quarter Ended December 31, 2000 .....  $1.1875    $ 0.1250
 Quarter Ended September 30, 2000 ....   3.0000      0.7500
 Quarter Ended June 30, 2000 .........   6.0625      1.1250
 Quarter Ended March 31, 2000 ........  10.0000      4.8750

 As of December 31, 2001 Medinex had 20,365,288 shares outstanding.

We granted 389,000 options as of December 31, 2002, that are fully
vested for exercise between 0.17 and 0.36 per share.  During the
year-ended December 31, 2002, we issued 3,442,208 common stock shares.

Medinex did not pay dividends in fiscal year 2002 or 2001 and does
not expect to pay dividends in the foreseeable future.  The Board of
Directors will determine whether any future cash dividends will be
paid and payment of any dividends will be dependent on Medinex's
financial condition, results of operations, capital requirements and
other such factors as the Board of Directors deems relevant.

Related Stockholders Matters

On June 22, 1999, Medinex's Registration Statement on Form SB-2
covering the offering of 2,500,000 shares of Medinex's Common Stock,
Commission file number 333-74569 was declared effective. The
offering commenced on June 23, 1999, and terminated upon the sale of
all 2,500,000 shares of Medinex common stock. The offering was
managed by EBI Securities Corporation and Millennium Financial
Group, Inc. The total price to the public for the shares offered and
sold by Medinex was $25,000,000. The amount of expenses incurred by
Medinex in connection with the offering was as follows:

Underwriting discounts and commissions. .........    $2,625,000
Finders fees ....................................       136,000
Expenses paid to or for the Underwriter .........     1,431,000
                                                  -------------
  Total expenses ................................    $4,192,000

                                                  =============

All of the foregoing expenses were direct or indirect payments to
persons other than (i) directors, officers or their associates; (ii)
persons owning ten percent (10%) or more of Medinex's common stock;
or (iii) affiliates of Medinex.

The net proceeds of the offering to Medinex (after deducting the
Underwriter's discounts and commissions and offering expenses) was
$20,808,000. From the settlement date, the net proceeds have been
used in the following manner, in the following reasonably estimated
amounts:

       Acquisition of other businesses: $1,912,000

       Loan to Oron Strauss, Votenet General Manager: $133,000

       Working Capital: $19,820,000

On November 15, 2000 Medinex completed a Private Placement Offering
(the Offering) in which Medinex sold 930,000 units to accredited
investors. Each unit consisted of one share of common stock of
Medinex, a warrant to purchase one share of common stock of Medinex
at a purchase price of $1.90 per share and a warrant to purchase one
share of common stock at $5.00 per share. The common stock was sold
without registering the stock under the Exchange Act. The securities
offered under the private placement are exempt from registration
requirements for public offerings under Regulation D or other
applicable exemptions from registration promulgated under the
Securities Act of 1933 and applicable state securities laws and
regulations. The holders of the shares of Medinex common stock
obtained upon exercise of the warrants will have certain
registration rights with regard to such common stock. The Offering
was managed by Global Capital Securities Corporation. The total
price for the units sold by Medinex was $837,000. The amount of
expenses incurred by Medinex in connection with the Offering was as
follows:

Underwriting discounts and commissions ................   $ 84,000
Expenses paid to or for the Underwriter ...............     25,000
                                                         ---------
Other expenses associated with this offering ..........     41,000
                                                         ---------
  Total expenses ......................................   $150,000

     The proceeds from the Offering were used for working capital

On August 3, 2001 Medinex completed a Private Placement Offering
(the Offering) in which Medinex borrowed $75,000 from an accredited
investor. Medinex agreed to repay the loan, plus interest of 12% per
annum, on August 3, 2003. The holder of the note also received
75,000 shares of Medinex common stock. The common stock was issued
without registering the stock under the Exchange Act. The securities
offered under the private placement are exempt from registration
requirements for public offerings under Regulation D or other
applicable exemptions from registration promulgated under the
Securities Act of 1933 and applicable state securities laws and
regulations. The proceeds from the Offering were used for working
capital.

On November 6, 2001 Medinex initiated a Private Placement Offering
(the Offering) in which Medinex could sell 4,200,000 shares of
common stock to accredited investors. The common stock was issued
without registering the stock under the Exchange Act. The securities
offered under the private placement are exempt from registration
requirements for public offerings under Regulation D or other
applicable exemptions from registration promulgated under the
Securities Act of 1933 and applicable state securities laws and
regulations.

The Company sold 3,677,000 shares of common stock in this private
placement before December 31, 2001. The total price of these shares
was $400,000, which includes $44,000 in issuance costs and expenses
in connection with this offering.

The proceeds from the Offering were used for working capital.

On May 22, 2001 Medinex completed a Private Placement Offering (the
Offering) in which Medinex offered for sale 312,500 units to
accredited investors. Each unit consisted of one share of Medinex
common stock and one warrant to purchase one share of common stock
at $.85. The common stock was issued without registering the stock
under the Exchange Act. The securities offered under the private
placement are exempt from registration requirements for public
offerings under Regulation D or other applicable exemptions from
registration promulgated under the Securities Act of 1933 and
applicable state securities laws and regulations. The holders of the
shares of Medinex common stock obtained upon exercise of the
warrants will have certain registration rights with regard to such
common stock. The total price for the units sold by Medinex in this
Offering was $100,000. The proceeds from the Offering were used for
working capital.

In June 2001, Medinex issued 4,950 shares of registered common stock
under the Company's Employee Stock Purchase Plan. In aggregate, the
shares were issued for approximately $1,000.

In 2001, Medinex issued 418,853 shares of unregistered common stock
to its non-employee directors for services rendered by the board of
directors for the year 2001. Each non-employee director receives a
quarterly retainer of $8,000 payable in shares of authorized capital
stock based on the market value on the last trading day of each
calendar quarter. Such shares are restricted under all applicable
state and federal securities laws. No additional fees are paid to
directors for meetings attended or chaired. Additionally, on his
election to the Board on May 22, 2001, R. Scot Haug received an
initial grant of 20,000 shares of restricted capital stock.

During the quarter ended March 31, 2002, the Company issued 825,000
common stock shares for $123,000 in cash; 83,334 common stock shares
for Board of Director's fees at the fair market value of $22,500;
45,503 common stock shares for financing expenses at the fair market
value of $15,563.

During the quarter ended March 31, 2002, the Company granted 75,000
common stock options exercisable at $0.30, which began to vest at
25,000 options per year on March 1, 2003.

During the quarter ended June 30, 2002,  the Company issued 50,643
common stock shares for payment to vendor in lieu of cash at the
value of $10,129; 250,000 shares for payment of services of David
Cantley at the fair market value of $42,500, and 140,375 shares to
Delta Group as part of the sale of MedMarket at a fair market value
of $16,000.

During May, 2002, the Company granted 50,000 common stock options
exercisable at $0.17, which begin to vest at 16,666 options per year
on May 29, 2003.

During the quarter ended September 30, 2002, the Company issued
94,436 common stock shares for accounts payable and finance fees
valued at approximately $6,000 and 1,940,000 common stock shares for
$97,000 in cash.

During the quarter ended December 31, 2002, the Company issued
14,917 common stock shares.

During the quarter ended September 30, 2002, the Company
retroactively granted 4,000 options previously earned by a
consultant at exercise prices between $0.17 and $0.36 per share.
These options were fully vested upon grant.

On October 9, 2002, the Company granted a total of 260,000 common
stock options exercisable at prices varying from $0.19 to $0.30 per
share.  Of these options, 210,000 were fully vested at the date of
grant.  These options were granted based upon agreements reach
during the three months ended September 30, 2002.

Beginning in March, 2002, with a loan of $175,000, a shareholder
loaned $370,000 in June and $215,000 in September, 2002 to the
Company.  Principal balance of the loan at September 30, 2002, was
$760,000.  The loan accrued interest through September 30, 2002 at
an annual rate of 12%.  Accrued interest through September 30 ,2002,
was $31,307.  The parties have negotiated a change in the terms and
conditions of the loan.  These changes have been approved by the
Company's Directors.  Effective October 1, 2002, accrued interest
will be added to the principal balance of the loan. The resulting
principal balance of $791,307 will accrue interest at the federal
rate of 3.75% per annum. The term of the loan has been extended to
five years with payments of interest only to commence in January,
2003.  This Note is secured by all assets, both tangible and
intangible of the Company held currently or acquired in the future.
The shareholder has agreed to subordinate its lien against the
Company's assets to any secured financing which meets the Company's
budgeted financial needs for the next twelve months.  At the option
of the Noteholder, all or any part of the principal amount and
accrued interest may be converted to Medinex common stock at the
lowest price that the Company's common stock has been sold during
the term of the Promissory Note. The Company sold common stock at
$0.05 per share during July, 2002. If the shareholder were to elect
to convert the entire principal and accrued interest balance at
December 31, 2002, the conversion would result in the issuance of
15,826,140 shares of the Company's common stock.

The Company had commitments for approximately 700,000 common stock
shares to be issued for services or settlements on debt which were
unissued at the time of filing for bankruptcy.  The Company does not
expect to issue these shares.

ITEM 6.        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
               CONDITION AND RESULTS OF OPERATIONS
General
                               Overview
Medinex Systems, Inc. ("Medinex" or the "Company"), a Delaware
corporation, formerly named Netivation.com, Inc. is headquartered in
Post Falls, Idaho. The Company commenced its current operations
after acquiring technology developed by the existing management team
on September 26, 1997.

CERTAIN DISCUSSIONS FOLLOWING REGARDING THE MANAGEMENT'S DISCUSSION
AND ANALYSIS OR PLAN OF OPERATION REFER TO THE OPERATING BUSINESS
PRIOR TO BEING DISCONTINUED DUE TO PENDING BANKRUPTCY AND PHASE I
SALE OF THE OPERATIONAL ASSETS ON MARCH 26, 2003, AND THE PHASE II
SALE ON MARCH 27, 2003.

The following discussion and analysis of our financial condition and
results of discontinued operations should be read in conjunction
with our consolidated financial statements, including all notes
attached to these statements, which appear at the end of this
filing. In addition to historical information, the discussion here
and elsewhere in this filing contains some forward-looking
statements. These statements by their nature involve risks and
uncertainties, and should not be construed to imply any promise,
certainty or likelihood that these results or trends will
necessarily continue in the future. Our actual results in the future
may differ significantly from those anticipated by these
forward-looking statements, due to many factors including those set
out in the "Risk Factors," "Business" and other sections of this
filing.

Plan of Operation

On November 27, 2002, the Company filed a petition for protection
under Chapter 11 of the United States Bankruptcy Code in the US
Bankruptcy Court for the District of Idaho.  This allows Medinex to
continue to operate while a plan of reorganization is finalized.
Liabilities subject to the bankruptcy proceeding include
approximately $170,373 of post-Petition liabilities, and
approximately $3,032,792 of liabilities deferred pursuant to Chapter
11 of the Bankruptcy Code.  These totals are subject to revision
through the Proof of Claim process and further proceedings of the
Bankruptcy Court.

The Company is under the general supervision of the Office of the
United States Trustee for the District of Idaho.  The Trustee must
approve any transactions outside the ordinary course of business.
The day to day operations of the Company are under the control of
the officer of the Company as a Debtor in Possession.  Monthly
operating and cash flow reports must be submitted to the U.S. Trustee.

All of the following discussions regarding the financial condition
and operations of Medinex Systems, Inc. refer to operations which
have been transferred and sold due to the Phase I sale of all
operational assets on March 26, 2003..

Medinex was focused on software and business-to-business web
services medical market. Medinex's medical software solutions
include Medinex Office, a Web-based practice management system and
MxSecure, a Web-based secure medical messaging system. MedMarket.com
is a business-to-business e-commerce community that promotes
products and services for physicians, hospitals, and medical
professionals. In addition, MedMarket.com is a venue used by
manufacturers and distributors of medical equipment and supplies for
the promotion and distribution of their products and services.

Medinex previously owned a subsidiary, Pinnacle MedSource, Inc., a
wholesale medical supply subsidiary, located in Alpharetta, Georgia.
Medinex sold Pinnacle MedSource in a management led buyout in
October 2001.

Medinex previously developed and operated a topic-specific Internet
community in the political arena. The public policy and political
community, Votenet.com, included content, products, and services
designed for candidates for political office, voters, political
organizations, political action committees and lobbyists. Medinex
sold its political division in a management-led buyout in February
2001.
                            Acquisitions

In 1999 and 2000 acquisitions played a major role in Medinex's
growth strategy. Medinex acquired three companies during 2000 and
seven companies during 1999. All acquisitions were accounted for by
the purchase method of accounting, so they were accounted for at
their fair market values and included prospectively in the financial
statements from the respective acquisition dates. The acquired
companies represented a substantial portion of Medinex's growth
during the second half of 1999 and all of 2000. Subsequently, most
of these acquisitions were disposed of during 2001.

On June 28, 2002, Medinex sold all of the capital stock of Medmarket
Inc., DiscountMedBooks, Inc., and its former Political Divisions
subsidiaries, which included Net.Capitol, Inc., Raintree
Communications Corporation, Public Disclosure, Inc., and U.S.
Congress Handbooks, Inc., to the Delta Group, Inc.  The report filed
with the Securities and Exchange Commission July 1, 2002, on Form
8-K described this sale in detail and included as an exhibit the
Stock Purchase Agreement by and between Delta Group, Inc. and
Medinex Systems, Inc.

                         Ticker Symbol Change

In conjunction with changing its name to reflect Medinex's focus on
developing service provider-based software and business-to-business
e-commerce and services for the growing Internet medical market, on
July 27, 2000, Medinex changed its stock symbol and as of May 10,
2001, Medinex is traded on the Over The Counter Bulletin Board under
the symbol MDNX.OB.

                            Restructuring

As Medinex had grown beyond a product development company and toward
a software organization, Medinex has reexamined its corporate
structure and made adjustments to operate the Company more
efficiently. Throughout 2002, Medinex has taken steps to simplify
its business processes, reduce its general and administrative
expenses and implement financial controls.

On November 27, 2002, Medinex Systems, Inc. (the "Company") filed a
voluntary petition for relief under Chapter 11 of the Bankruptcy
Code in Bankruptcy Court.  The Company manages, and will continue to
manage, its property and operate its business as a
"debtor-in-possession" under the jurisdiction of the Bankruptcy
Court and in accordance with the applicable provisions of the
Bankruptcy Code until a final decree is entered.  Both Phase I and
Phase II auctions were conducted on March 26, 2003, and March 27,
2003.  The Company plans to continue under the confirmation of
Debtor's Plan to complete and resolve all pending matters until a
final decree is entered by the Bankruptcy Court to maximize value
for creditors and stockholders.

As part of the restructuring, Medinex had also taken steps to
decrease its salary costs. Medinex reduced its employee headcount
from over 182 employees at the height of product development to 12
employees as of December 31, 2002.  The Company will continue to
operate as a debtor in possession under the approved Reorganization
Plan until the entry of a final decree by the Bankruptcy Court.

                   Liquidity and Capital Resources

At December 31, 2002, Medinex had a balance of cash and cash
equivalents of $81,000 compared to cash and cash equivalents of
$177,000 at December 31, 2001.  The cash reserves are restricted to
used approved by the U.S. Bankruptcy Trustee and the Bankruptcy
Court with respect to payment of administrative expenses and creditors.

For the years ended December 31, 2002 and 2001, cash used in
operating activities was $1,957,000 and $681,000, respectively.
Cash used in operating activities consisted mostly of funding the
Company's net operating losses and its continued operations.

Net cash used by investing activities in the year ended December 31,
2002, was $594,000 compared to $202,000 cash provided for the year
ended December 31, 2001.  Cash provided by financing activities
during the year ended December 31, 2002, was $1,267,000.  During the
year ended December 31, 2001, cash provided by financing activities
was $539,000.  Most of the activities for which the Company invested
cash are now discontinued operations and were sold in the Phase I Sale.

The Company's current business plan concentrates on the completion
of the sale of its assets and payment of its creditors pursuant to
the Reorganization Plan.  None of the Company's creditors have been
discharged and no final decree has been entered.

FACTORS AFFECTING FUTURE OPERATIONS.

On November 27, 2002, Medinex Systems, Inc. filed a voluntary
petition for relief under Chapter 11 of the Bankruptcy Code.  The
Company manages, and will continue to manage, its property and
operate its business as a "debtor-in-possession" under the
jurisdiction of the Bankruptcy Court and in accordance with the
applicable provisions of the Bankruptcy Code.

At a hearing held on February 19, 2003, the Bankruptcy Court
considered and approved motions allowing for the continued use of
cash collateral and the Debtor's continued drawdowns of Post
Petition Credit in light of the Disclosure Statement and Plan of
Reorganization conditionally approved by an Order signed by the
Court on January 31, 2003.  Further, the Court issued an Order
authorizing Medinex Systems, Inc., to market the sale of its assets
as described in the Plan and Disclosure Statement; solicit offers
for both the Phase I - Auction Sale of Assets - and Phase II -
Auction of the publicly traded corporate entity; and, to commence
publication and mailing of proposed sale of assets to prospective
bidders and purchasers.  Final approval of the Reorganization Plan
was granted by the Court on March 6, 2003.

Both Phase I and Phase II auctions were conducted on March 26, 2003,
and March 27, 2003.  The Court has scheduled the confirmation of the
sale proceedings for April 28, 2003.  The Company plans to continue
under the confirmation of Debtor's Plan to complete and resolve all
pending matters until a final decree is entered by the Court to
maximize value for creditors and stockholders.  The Company will
pursue a new product and marketing strategy upon the Bankruptcy
Court's entry of a final decree.

ITEM 7.           FINANCIAL STATEMENTS

The financial statements required by this item are set forth on
pages F-1 through F-28.

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

On February 12, 2001, the Board of Directors approved the
recommendation by the Audit Committee of the Board of Directors to
(i) engage Williams and Webster, P.S. as the independent accountants
for Medinex and (ii) dismiss Arthur Andersen LLP as such independent
accountants.  On May 30, 2002, the Company's Shareholders ratified
the employment of Williams and Webster, P.S., at the Company's
Annual Meeting.  William and Webster were formerly associated with
Arthur Anderson, LLP.

During the two fiscal years ended December 31, 2000 and the
subsequent interim period through February 12, 2001, (i) there were
no disagreements with Arthur Andersen LLP on any matter of
accounting principles or practices, financial statement disclosure,
or auditing scope or procedures, which disagreements if not resolved
to its satisfaction would have caused it to make reference in
connection with its report to the subject matter of the
disagreement, and (ii) Arthur Andersen LLP has not advised the
registrant of any reportable events as defined in paragraphs (A)
through (E) of Regulation S-B Item 304 (a)(1)(iv), except as noted
below.

On September 12, 2000, Arthur Andersen LLP notified the Audit
Committee and the Board of Directors of Medinex of a material
weakness in the internal control structure of the Company. The Audit
Committee and Board of Directors immediately reviewed the internal
control matters and recommendations from Arthur Andersen LLP,
discussed an appropriate plan of action, and provided the necessary
improvements to resolve the internal control deficiencies to the
satisfaction of Arthur Andersen LLP.

                              PART III

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

PURSUANT TO THE REORGANIZATION PLAN CONFIRMED BY THE BANKRUPTCY
COURT, COLIN CHRISTIE SHALL EXERCISE HIS AUTHORITY AS CEO FOR
PURPOSES OF CONSUMMATION OF THE PLAN AND A FINAL ORDER CLOSING THE
BANKRUPTCY.  WITHOUT SPECIFIC AUTHORIZATION AND DIRECTION FROM THE
BANKRUPTCY COURT, THE OTHER DIRECTORS HAVE NO AUTHORITY OR POWERS TO
TAKE ANY ACTION UNDER THE REORGANIZATION PLAN, INCLUDING, BUT NOT
LIMITED TO, GENERAL CORPORATE ACTION OF ANY KIND.  DIRECTOR COLIN
CHRISTIE WAS GRANTED ALL NECESSARY AUTHORITY TO EXECUTE REQUIRED
DOCUMENTS TO CONSUMMATE THE CHAPTER 11 REORGANIZATION PLAN.

Executive Officers and Directors

The following table describes certain information about Medinex's
executive officers and directors:

   Name                        Age             Position
---------------------------   -----   ---------------------------
Colin Christie .............    43    Chief Executive Officer,
                                      President and Secretary of
                                      Board of Directors, Director
Maureen Cantlay ............    47    Interim Principal Financial
                                       Officer
Donna L. Weaver ............    58    Director
Anthony J. Paquin               43    Director
R. Scot Haug ...............    55    Chairman of Board of Directors
John Haehl, Ph.D............    63    Director

For further information, reference is made to the Proxy Statement
filed pursuant to Section 14(A), dated April 1, 2002, for the Annual
meeting of May 30, 2002.

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

Section 16(a) of the Exchange Act requires the Company's directors
and officers and persons who beneficially own more than ten percent
of the Company's common stock to file with the Securities and
Exchange Commission initial reports of ownership and reports of
changes in ownership of common stock in the Company.  Officers,
directors and greater than ten percent shareholders are required by
Commission regulation to furnish the Company with copies of all
Section 16(a) reports they filed.  To our knowledge, based solely on
our review of the copies of reports furnished to us and written
representation that no other reports were required, during the
fiscal year ended December 31, 2002, these persons complied with all
Section 16(a) filing requirements.

ITEM 10.          EXECUTIVE COMPENSATION

CERTAIN DISCUSSIONS FOLLOWING REGARDING EXECUTIVE COMPENSATION REFER
TO THE OPERATING BUSINESS PRIOR TO BEING DISCONTINUED DUE TO THE
PENDING BANKRUPTCY AND PHASE I SALE OF THE OPERATIONAL ASSETS ON
MARCH 26, 2003, AND THE PHASE II SALE ON MARCH 27, 2003.

None of the current Directors or officers receive any compensation
with the exception of Colin Christie.  Under the direction of the
Bankruptcy Court, Colin Christie will be compensated for his
assistance pursuant to the Reorganization Plan as an administrative
expense and claim.

In September, 2000, the Compensation Committee agreed that each
non-employee Director would receive stock as payment for his or her
services as a Director in lieu of cash. Total stock and cash paid to
Directors for services rendered in fiscal years 2002 and 2001 was
83,334 shares of common stock and 418,835 shares of common stock and
$14,000 cash, respectively.

Reference is made to the information set forth under the caption
"Executive Compensation" in the Proxy Statement filed pursuant to
Section 14(A), dated April 14, 2002 for the Annual Meeting on May
30, 2002.

ITEM 11.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
                  AND MANAGEMENT

Disclaimer

Reference is made to the information set forth under the caption
"Security Ownership of Certain Beneficial Owners and Management" in
the Proxy Statement filed pursuant to Regulation 14A, on April 14,
2002 for the Annual Meeting of May 30, 2002, which information is
incorporated herein by reference.

ITEM 12.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Disclaimer

During the year ended December 31, 2002, a shareholder loaned
$760,000 to the Company.  The loan accrued interest through
September 30, 2002, at an annual rate of 12%.  Accrued interest at
December 31, 2002 $31,307.  The parties have negotiated a change in
the terms and conditions of the loan.  These changes have been
approved by the Company's Directors.  Effective October 1, 2002,
accrued interest will be added to the principal balance of the loan.
The resulting principal balance of $791,307 will accrue interest at
the federal rate of 3.75% per annum.  The term of the loan has been
extended to five years with payments of interest only to commence in
January of 2003.  This Note is secured by all assets, both tangible
and intangible of the Company held currently or acquired in the
future.  The shareholder has agreed to subordinate its lien against
the Company's assets to any secured financing which meets the
Company's budgeted financial needs for the next twelve months.  At
the option of the Noteholder, all or any part of the principal
amount and accrued interest may be converted to Medinex common stock
at the lowest price that the Company's common stock has been sold
during the term of the Promissory Note.  The Company sold common
stock at $0.05 per share during July, 2002.  If the shareholder were
to elect to convert the entire principal and accrued interest
balance at December 31, 2002, the conversion would result in the
issuance of 15,826,140 shares of the Company's common stock.

Reference is made to the information set forth in the Proxy
Statement to be filed pursuant to Regulation 14A, which information
is incorporated herein by reference.

ITEM 13.          EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

The following documents are filed as Exhibits to this Form 10-KSB:

2.1    Agreement and Plan of Merger dated January 13, 2000 among
       Netivation.com, Inc., Netivation.com Merger Seven Corp.,
       Pullen, Inc., U.S. Congress Handbook, Inc., and the
       Stockholders of Pullen, Inc. and U.S. Congress Handbook,
       Inc.; incorporated by reference to Exhibit 2.1 to the
       Registrant's form 10QSB filed May 12, 2000  (Commission File
       No. 000-26337).

2.2    Asset Purchase Agreement dated March 27, 2000 by and between
       Netivation.com, Inc.  and Curt and Bonnie Miller;
       incorporated by reference to Exhibit 2.2 to the Registrant's
       form 10QSB filed May 12, 2000 (Commission File No. 000-26337).

2.3    Agreement and Plan of Merger dated May 3, 2000 among
       Netivation.com, Inc., Netivation.com Merger Three Corp., and
       Pinnacle Medsource, Inc.; incorporated by reference to
       Exhibit 2.1 to the Registrant's form 10QSB filed August 14,
       2000 (Commission File No. 000-26337).

2.3    Agreement and Plan of Merger dated May 3, 2000 among
       Netivation.com, Inc., Netivation.com Merger Three Corp., and
       Pinnacle Medsource, Inc.; incorporated by reference to
       Exhibit 2.1 to the Registrant's form 10QSB filed August 14,
       2000 (Commission File No. 000-26337).

2.4    Asset Purchase Agreement, dated as of July 14, 2000, by and
       between Politics.com, Inc. and Medinex Systems, Inc.,
       formerly known as Netivation.com, Inc.; incorporated by
       reference to Exhibit A to the Registrant's Schedule 13D filed
       with the SEC on August 4, 2000 (Commission File No. 000-
       26337).

2.5    Agreement, dated effective as of July 26, 2000, by and
       between Politics.com, Inc. and Medinex Systems, Inc.;
       incorporated by reference to Exhibit 2.1 to the Registrant's
       Form 8K filed October 10, 2000 (Commission File No. 000-
       26337).

2.6    Stock Purchase Agreement, dated as of June 28, 2002, by and
       between Delta Group, Inc. and Medinex Systems, Inc., formerly
       known as Netivation.com, Inc., incorporated by reference to
       Exhibit 2.1 to Registrant' Form 8K filed July 1, 2002
       (Commission File No. 000-26337).

10.1   Content License Agreement; incorporated by reference to
       Exhibit 10.2 to the Registrant's Form 10QSB filed May 12,
       2000 (Commission File No. 000-26337).

10.2   1999 Equity Incentive Plan, as amended; incorporated by
       reference to Exhibit 99.1 to the Registrant's Form S-8 filed
       March 17, 2000 (Commission File No. 000-26337).

10.3   Non-Qualified Stock Plan; incorporated by reference to
       Exhibit 10.4 to the Registrant's Form 10KSB filed March 30,
       2000 (Commission File No. 000-26337).

23.1   Consent of Williams and Webster, P.S.

(b) Reports on Form 8-K.

Registrant's Form 8-K filed July 3, 2002, (Commission File No. 000-
  26337):
Registrant's Form 8-K filed November 14, 2002, (Commission File No.
 000-26337):
Registrant's Form 8-K filed November 27, 2002, (Commission File No.
 000-26337):
Registrant's Form 8-K filed January 8, 2003, (Commission File No.
 000-26337):
Registrant's Form 8-K filed January 24, 2003, (Commission File No.
 000-26337):
Registrant's Form 8-K filed January 27, 2003, (Commission File No.
 000-26337):
Registrant's Form 8-K filed February 25, 2003, (Commission File No.
 000-26337):

ITEM 14.       CONTROL AND PROCEDURES

Due to the pending bankruptcy of the Company, we are operating and
controlled by the Reorganization Plan approved by the Bankruptcy
Court.  Prior to the filing of the Bankruptcy, we carried out an
evaluation, under the supervision and with the participation of
management, including our principal executive officer and principal
financial officer, of the effectiveness of the design and operation
of our disclosure controls and procedures pursuant to Exchange Act
Rule 13a-14.  Based upon this evaluation, our principal executive
officer and principal financial officer concluded that our
disclosure controls and procedures are effective in timely alerting
them to material information relating to us (including our
consolidated subsidiaries) that is required to be included in our
periodic SEC reports.  There have been no significant changes in our
internal controls or in other factors that could significantly
affect those controls subsequent to the date we carried out this
evaluation.

There have been no significant changes in our internal controls or
in other factors that could significantly affect these controls
subsequent to the date of the evaluation described in the preceding
paragraph as the Bankruptcy is still pending.
                              SIGNATURES

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

Medinex Systems, Inc.

 Registrant

Date: April 23, 2003


By:  /s/  Colin Christie
     Colin Christie
     Chief Executive Officer


By:  /s/  Maureen Cantlay
     Maureen Cantlay
     Interim Chief Financial Officer



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

      Signature               Title                   Date


/s/ Colin Christie
Colin Christie        Chief Executive Officer     April 23, 2003



/s/ Maureen Cantlay
Maureen Cantlay       Interim Chief Financial     April 23, 2003
                      Officer



/s/ Colin Christie
Colin Christie        Director                    April 23, 2003



                            CERTIFICATIONS


I, Colin Christie, certify that:

1.       I have reviewed this annual report on Form 10-KSB of
         Medinex Systems, Inc.

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

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

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

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

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

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

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

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

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

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


Date: April 23, 2003



By: /s/ Colin Christie
    Colin Christie
    Chief Executive Officer





                            CERTIFICATIONS


I, Maureen Cantlay, certify that:

1.            I have reviewed this annual report on Form 10-KSB of
              Medinex Systems, Inc.

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

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

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

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

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

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

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

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

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

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


Date: April 23, 2003




By: /s/ Maureen Cantlay
    Maureen Cantlay
    Interim Chief Financial Officer



To the Board of Directors
Medinex Systems, Inc.
Post Falls, Idaho

                     INDEPENDENT AUDITOR'S REPORT

We have audited the accompanying balance sheet of Medinex Systems,
Inc as of December 31, 2002 and 2001, and the related statements of
operations, stockholders' equity and cash flows for the years then
ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Medinex
Systems, Inc. as of December 31, 2002 and 2001, and the results of
its operations and its cash flows for the year then ended in
conformity with accounting principles generally accepted in the
United States of America.

The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern.  As discussed in
Note 9 to the financial statements, the Company filed Chapter 11
under the U.S. Bankruptcy code, sold their operations and is
dependent on a future buyer for the public shell to continue
operations.  These factors raise substantial doubt about the ability
to continue as a going concern.  Management's plans in regard to
these matters are also described in Note 2.  The financial
statements do not include any adjustments that might result from the
outcome of this uncertainty.


Williams & Webster, P.S.
Certified Public Accountants
Spokane, Washington

April 14, 2003
                        MEDINEX SYSTEMS, INC.
                            BALANCE SHEETS
                            (IN THOUSANDS)



                                      December 31,    December 31,
                                         2002             2001
                                                       (Restated)


ASSETS

Current Assets:
     Cash                                $ 81            $ 177

          Total assets                   $ 81            $ 177



LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)

Current Liabilities:
Net liabilities of discontinued
 operations                              $ 39          $ 2,317

Liabilities subject to
 compromise                              3,065            -

    Total liabilities                    3,104           2,317

  COMMITMENTS AND CONTINGENCIES            -              -

Preferred stock, $0.01 par value,
 10,000,000 shares authorized, no
 shares issued                             -              -
Common stock, $0.01 par value,
 100,000,000 shares authorized,
 20,365,288 and 16,923,080 shares
 issued and outstanding, respectively      204            169
Additional paid-in capital              44,680         43,844
Stock subscriptions receivable             -              (34)
Warrants                                    41             41
Accumulated deficit                    (47,948)       (46,160)

 Total stockholders' equity (deficit)   (3,023)        (2,140)

 Total liabilities and stockholders'
  equity (deficit)                        $ 81          $ 177

The accompanying notes are an integral part of these financial
                            statements.
                                  2

                        MEDINEX SYSTEMS, INC.
                       STATEMENTS OF OPERATIONS
          (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

                                          Year Ended December 31,
                                          2002            2001
                                                       (Restated)

Revenues, net                             $    -          $   -

Total cost of revenue                          -              -

Gross profit                                   -              -

Operating expenses

Loss from continuing operations                -              -

Net loss from continuing operations
 before income taxes                           -              -

Income taxes                                   -              -

Loss from discontinued operations,
 net of income taxes                       (1,788)        (4,727)

Net loss available to common
 stockholders                          $   (1,788)    $   (4,727)

Basic and diluted net loss per
 common share, discontinued operations $    (0.10)    $    (0.11)

Weighted average shares outstanding     17,739,018     12,438,896



The accompanying notes are an integral part of these financial
statements.
                                  3





                        MEDINEX SYSTEMS, INC.
           STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)FLOWS



                                                        ADDITIONAL
                                         COMMON STOCK    PAID IN
                                       SHARES    AMOUNT  CAPITAL

Balance, December 31, 2000           12,309,631    123   43,264
 Issuance of stock for directors fees   418,853      4      114
 Issuance of stock for financing fees    82,360      1       34
 Options exercised                       27,786     -         6
 Issuance of common stock with debt      75,000      1       14
 Issuance of stock for cash less
   issuance cost of $44,000           3,989,500     40      410
 Employee stock purchase                  4,950     -         1
 Issuance of stock as severance pay      15,000     -         1
 Net loss for the year ended
   December 31, 2001 (restated)              -      -        -
Balance, December 31, 2001           16,923,080    169   43,844

Stock subscriptions paid                     -      -        -
Issuance of common stock for
   Directors fees                        83,334      1       22
Issuance of stock for accounts payable
   and interest                         190,582      2       29
Issuance of stock for legal services     14,917     -         2
Issuance of stock included in sale of
   MedMarket                            140,375      1
Gain on MedMarket transaction                -      -       537
Issuance of stock for services          250,000      3       39
Issuance of stock for cash            2,763,000     28      192
Net loss for the year ended
   December 31, 2002                         -      -        -
Balance, December 31, 2002           20,365,288    204   44,680



                                             STOCK
                                         SUBSCRIPTIONS
                                           RECEIVABLE      WARRANTS

Balance, December 31, 2000                      -              -
 Issuance of stock for directors fees           -              -
 Issuance of stock for financing fees           -              -
 Options exercised                              -              -
 Issuance of common stock with debt             -              -
 Issuance of stock for cash less
   issuance cost of $44,000                   (34)             41
 Employee stock purchase                        -              -
 Issuance of stock as severance pay             -              -
 Net loss for the year ended
   December 31, 2001 (restated)                 -              -
Balance, December 31, 2001                    (34)             41

Stock subscriptions paid                       34              -
Issuance of common stock for
   Directors fees                               -              -
Issuance of stock for accounts payable
   and interest                                 -              -
Issuance of stock for legal services            -              -
Issuance of stock included in sale of
   MedMarket                                    -              -
Gain on MedMarket transaction                   -              -
Issuance of stock for services                  -              -
Issuance of stock for cash
Net loss for the year ended
   December 31, 2002                            -              -
Balance, December 31, 2002                      -              41



                                          ACCUMULATED
                                           (DEFICIT)        TOTAL

Balance, December 31, 2000                  (41,433)        1,954
 Issuance of stock for directors fees            -            118
 Issuance of stock for financing fees            -             35
 Options exercised                               -              6
 Issuance of common stock with debt              -             15
 Issuance of stock for cash less
   issuance cost of $44,000                      -            457
 Employee stock purchase                         -              1
 Issuance of stock as severance pay              -              1
 Net loss for the year ended
   December 31, 2001 (restated)              (4,727)       (4,727)
Balance, December 31, 2001                  (46,160)       (2,140)

Stock subscriptions paid                         -             34
Issuance of common stock for
   Directors fees                                -             23
Issuance of stock for accounts payable
   and interest                                  -             31
Issuance of stock for legal services             -              2
Issuance of stock included in sale of
   MedMarket                                     -             16
Gain on MedMarket transaction                    -            537
Issuance of stock for services                   -             42
Issuance of stock for cash                       -            220
Net loss for the year ended
   December 31, 2002                         (1,788)       (1,788)
Balance, December 31, 2002                  (47,948)       (3,023)

                                  4

                        MEDINEX SYSTEMS, INC.
                       STATEMENTS OF CASH FLOWS
                            (IN THOUSANDS)



                                           Years Ended December 31,
                                              2002          2001
                                                         (Restated)
Cash flows from operating activities:
Net loss                                   $ (1,788)      $ (4,727)
Net loss from discontinued operations
Adjustments to reconcile net loss to net
 cash used in operating activities:
Stock issued for services and compensation       67            120
Stock issued for financing and interest
 expense                                         31             35
Depreciation and amortization                   172            986
Amortization of discount on debenture            -               3
Loss (gain) on sale and disposal of property
 and equipment                                  (15)           164
Impairment of intangibles                       279            102
Loss on permanent impairment investment          -              95
Loss on impairment of property                   43             -
Change in certain assets and liabilities:
Net cash provided (used) by discontinued
 operations                                    (746)         2,541
Net cash used in operating activities        (1,957)          (681)

Cash flows from investing activities:
Investments in discontinued operations          594            202
Net cash provided by investing activities       594            202

Cash flows from financing activities:
Proceeds from borrowing                       1,013             60
Proceeds from issuance of debentures             -               2
Proceeds from exercise of stock options          -               6
Proceeds from the issuance of stock and
 warrants                                       254            471
Net cash provided by financing activities     1,267            539

Net increase (decrease) in cash and cash
 equivalents                                    (96)            60
Cash and cash equivalents at beginning of
 period                                         177            117

Cash and cash equivalents at the end of the
 period                                        $ 81          $ 177

Supplemental cash flow disclosures
Interest paid                                  $  2          $  -
Income taxes paid                              $ -           $  -

Non-cash transactions
Stock issued for interest and financing fees   $ 31          $  35
Stock issued as director's fees                $ 23          $ 118
Stock issued for compensation and services     $ 44          $   1
Stock issued with debt                         $ -           $  15
Stock issued in disposition of Med Market      $ 16          $  -
Gain on Medmarket transaction recorded as
an increase in additional paid-in capital      $537          $  -
Liabilities subject to compromise           $ 3,065          $  -

The accompanying notes are an integral part of these financial
statements.
5

MEDINEX SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATE)


NOTE 1--ORGANIZATION AND DESCRIPTION OF BUSINESS

Medinex Systems, Inc. ("Medinex" or the "Company"), a Delaware
corporation, formerly named Netivation.com, Inc. is headquartered in
Post Falls, Idaho. The Company commenced operations after acquiring
technology developed by management on September 26, 1997.

On November 27, 2002, the Company filed a petition for relief under
Chapter 11 of the federal bankruptcy laws in the United States
Bankruptcy Court for the District of Idaho.  The claims under this
petition are reflected in the December 31, 2002, balance sheet as
"liabilities subject to compromise".  See Notes 11, 12, and 13.

The Company has historically and principally been engaged in the
development, design and marketing of software and websites focused
on medical communities.  Additionally, the Company had developed and
operated a topic-specific Internet community in the political arena.

During June 2002, Medinex sold the assets of its MedMarket division
and all of the remaining common stock of the subsidiary corporations
of its former political division to Delta Group, Inc.  In February
2001, Medinex sold its political division in a management-led
buyout.

Medinex sold off Pinnacle MedSource, Inc., a medical distribution
company on September 6, 2001. This subsidiary was acquired in 2000.
See Note 3 for additional information on the Company's divestitures.

Certain financial statement amounts have been reclassified to
conform to the 2002 presentation. These reclassifications had no
effect on the net loss, comprehensive loss or accumulated deficit as
previously reported.

All of the Company's prior operating components results are reported
as discontinued operations in the accompanying financial statements
for all periods presented. The assets and liabilities of these
entities have been reported in the Company's balance sheet as net
assets of discontinued operations.

Basis of Presentation and Going Concern
The accompanying financial statements have been prepared on a going
concern basis which contemplates the realization of assets and
satisfaction of liabilities in the normal course of business. The
Company has suffered material recurring losses from operations since
inception.

The Company filed Chapter 11 protection under the U.S. Bankruptcy
Code on November 27, 2002.  Subsequent to December 31, 2002, the
Company sold all of its operating assets and the public shell.  The
transfer of the public shell has not been consummated by the U.S.
Bankruptcy court.  These financial statements of not include any
adjustments that might result from the outcome of this uncertainty.
(See Note 9).

                                  6

MEDINEX SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATE)


NOTE 2   SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES

The following principles were significant to the Company's prior
operations upon completion and settlement of the bankruptcy these
principles may change.

This summary of significant accounting policies is presented to
assist in understanding the financial statements.  The financial
statements and notes are representations of the Company's
management, which is responsible for their integrity and
objectivity.  These accounting policies conform to accounting
principles generally accepted in the U.S. and have been consistently
applied in the preparation of the financial statements.

Principles of Consolidation
The Company's consolidated financial statements include the accounts
of the Company and its wholly owned subsidiaries.  These existing
subsidiaries are dormant, therefore no reference to consolidated
financial information has been made in the financial statements or
notes to the financial statements.

Estimates and Assumptions
The process of preparing financial statements in conformity with
accounting principles generally accepted in the United States of
America requires the use of estimates and assumptions regarding
certain types of assets, liabilities, revenues and expenses. Such
estimates primarily relate to unsettled transactions and events as
of the date of the financial statements.  Accordingly, upon
settlement, actual results may differ from estimated amounts.

Cash Equivalents
The Company considers all highly liquid investments with a maturity
of three months or less when purchased to be cash equivalents.
Medinex places its cash and cash equivalents with established
financial institutions.  At times, such investments may be in excess
of the federal insurance limit.

Inventory
Inventories are stated at the lower of average cost or net
realizable value.

Investments
The Company classifies investments as available for sale under
Statement of Financial Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity Securities". Investments are
carried at fair market value, which is based on quoted market
prices. Unrealized holding gains and losses are included as a
component of accumulated other comprehensive loss, net of related
deferred income taxes, unless a permanent impairment in value has
occurred, which is then charged to operations. Realized gains and
losses from the sale of available-for-sale securities are determined
on a specific identification basis. Dividend and interest income is
recognized as earned.

                                  7

MEDINEX SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATE)


NOTE 2   SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (CONTINUED)

Property and Equipment
Property and equipment are stated at the lower of cost or net
realizable value. Major additions and improvements are capitalized.
Minor replacements, maintenance and repairs that do not increase the
useful life of the assets are expensed as incurred. Depreciation is
determined using the straight-line method over the expected useful
lives of the assets which is 3-5 years for furniture and fixtures,
3-5 years for vehicles and equipment, 3 years for computer equipment
and software and 5 years or the remaining life of the lease,
whichever is less, for leasehold improvements.

Intangible Assets
Intangible assets have principally consisted of customer base and
goodwill related to acquisitions accounted for under the purchase
method of accounting. Amortization of these purchased intangibles
was provided on the straight-line basis over the respective useful
lives of the assets, primarily three years.  The Company identifies
and records impairment losses on intangible and other assets when
events and circumstances indicate that such assets might be
impaired. The Company considers factors such as significant changes
in the regulatory or business climate and projected undiscounted
future cash flows from the respective asset. As of December 31, 2002
and 2001, intangible assets consisted of the following:


                                       2002             2001
Customer base                         $  115           $  115
Goodwill                                 235            3,888
                                         350            4,003
Less: Accumulated amortization           (67)          (3,715)
                                      $  283           $  288

During the year ended December 31, 2002, the Company disposed of its
MedMarket subsidiary which included the customer base and goodwill
shown above.  These net intangibles are included in discontinued
operations at December 31, 2002 and 2001.

During the fourth quarter 2001, management determined the intangible
assets would not be fully recovered. Based on an estimated future
cash flows analysis, Medinex has taken a charge of $480 in its
statement of operations for the year ended December 31, 2001
reflecting this impairment of the intangibles.

Compensated Absences
Employees of the Company are entitled to paid vacation, paid sick
days and personal days off depending on job classification, length
of service and other factors. Liabilities of $0 and $26 for
compensated absences accrued have been recorded in the accompanying
financial statements at

                                  8

MEDINEX SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATE)


NOTE 2   SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (CONTINUED)

Compensated Absences (continued)
December 31, 2002 and 2001, respectively.  This liability is subject
to compromise in 2002 and discontinued operation in 2001.

Financial Instruments and Concentrations of Credit Risk
Financial instruments that potentially subject the Company to
concentrations of credit risk consist of cash and cash equivalents,
accounts receivable, unbilled receivables and accounts payable. Fair
values of cash and cash equivalents approximate cost due to the
short period of time to maturity.  The fair values of financial
instruments that are short-term and/or that have little or no market
risk are considered to have a fair value equal to book value. Assets
and liabilities that are included in this category are accounts
receivable, unbilled receivables and accounts payable.

The Company performs initial and ongoing evaluations of its
customers' financial position, and generally extends credit on open
account, requiring collateral as deemed necessary. The Company
maintains allowances for potential credit losses and believes that
its trade accounts receivable credit risk exposure is limited.

Income Taxes
The Company recognizes deferred income tax assets and liabilities
for the expected future income tax consequences, based on enacted
laws, of temporary differences between the financial reporting and
tax bases of assets, liabilities and tax carryforwards. Deferred tax
assets have been reduced, by a valuation allowance for the amount of
any tax benefits which, more likely than not based on current
circumstances, are not expected to be realized.

Revenue Recognition
In December 1999, the Securities and Exchange Commission released
Staff Accounting Bulletin (SAB) No. 101, "Revenue Recognition in
Financial Statements," to provide guidance on the recognition,
presentation and disclosure of revenues in financial statements. The
Company believes its revenue recognition practices are in conformity
with the guidelines prescribed in SAB No. 101.

The Company's revenues have historically been generated from
merchandise sales, website development and hosting, Internet access,
software licenses and advertising.

Sales of products directly to customers through e-commerce and
traditional channels are recognized when shipped. In these
transactions the Company acts as merchant-of-record. Accordingly,
the Company records as revenue the full sales price of the product
sold and records the full cost of the product to the Company as cost
of revenues, upon shipment of the product.

                                  9

MEDINEX SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATE)


NOTE 2   SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (CONTINUED)

Revenue Recognition
Software licensing costs and website development revenues are
generally recognized when all elements essential to the
functionality of the software or the website have been delivered.
Where the Company has significant continuing involvement with the
licensee, revenues are deferred and recognized over the term of the
agreement. Hosting contracts typically have a term of one year, with
fees charged on a monthly basis. Internet access is billed on a
monthly basis and is earned as billed.

Advertising consists of the sale of impressions on one or more of
the Company's network of websites. Advertising revenues are
recognized ratably over the term of the applicable agreement.

Deferred revenues principally consist of advertising, licensing and
hosting fees that are being amortized over their contract life.

Reclassifications
Certain prior year amounts in the accompanying financial statements
have been reclassified to conform to the fiscal 2002 presentation.
In the current fiscal year, the operating results of Medinex
Systems, Inc. which filed for bankruptcy protection in December
2002, have been reclassified as discontinued operations for all
periods presented.  See Note 9.

Stock-based Compensation
The Company measures compensation cost for stock option plans using
the intrinsic value method of accounting prescribed by Accounting
Principles Board Opinion No. 25 ("APB 25"), "Accounting for Stock
Issued to Employees." Medinex also provides the required disclosures
of Statement of Financial Accounting Standards No. 123 ("SFAS 123"),
"Accounting for Stock-Based Compensation."

In March 2000, the Financial Accounting Standards Board issued FASB
Interpretation Number 44 ("FIN 44"),"Accounting for Certain
Transactions Involving Stock Compensation." FIN 44 clarifies the
application of APB 25 for certain issues.  The adoption of FIN 44
did not have a material affect on the Company's financial position
or results of operations for the year ended December 31, 2002 or
2001.

Advertising Costs
The cost of advertising is expensed as incurred. During the periods
ending December 31, 2002 and 2001, the Company incurred advertising
expense of $20 and $6, respectively.

Research and Development
Research and development costs are expensed as incurred and consist
primarily of salaries, supplies and contract services.

                                  10

MEDINEX SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATE)


NOTE 2   SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (CONTINUED)

Software Development Costs
Under the criteria set forth in Statement of Financial Accounting
Standards No. 86, "Accounting for the Costs of Computer Software to
Be Sold, Leased, or Otherwise Marketed," capitalization of software
development costs begins upon the establishment of technological
feasibility of the product, which the Company has defined as the
completion of beta testing of a working product. The establishment
of technological feasibility and the ongoing assessment of the
recoverability of these costs require considerable judgment by
management with respect to certain external factors, including, but
not limited to, anticipated future gross product revenue estimated
economic life and changes in software and hardware technology.
Amounts that could have been capitalized under this statement after
consideration of the above factors were immaterial and, therefore,
no software development costs have been capitalized by the Company
to date.

Basic and Diluted Loss Per Share
In accordance with Statement of Financial Accounting Standards No.
128, "Computation of Earnings Per Share," basic earnings (loss) per
share is computed by dividing net earnings (loss) available to
common stockholders by the weighted average number of shares of
common stock outstanding during the period. Diluted earnings (loss)
per share reflects the potential dilution that could occur if
potentially dilutive securities were exercised or converted to
common stock. Due to the losses in 2002 and 2001, potentially
dilutive securities were excluded from the calculation of diluted
earnings (loss) per share as they were anti-dilutive. Therefore,
there was no difference in the calculation of basic and diluted
earnings (loss) per share in 2002 and 2001.  All losses were from
discontinued operation in 2002 and 2001 and reported as such.

Recent Accounting Pronouncements
In June 2002, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 146, "Accounting for
Costs Associated with Exit or Disposal Activities" (hereinafter
"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.  The financial statements for the prior year have been
restated to reflect discontinued operations and the petition for
bankruptcy at December 31, 2002.

In April 2002, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 145, "Rescission of
FASB Statements No. 44, 4 and 64, Amendment of FASB Statement No.
13, and Technical Corrections" (hereinafter "SFAS No. 145"), which
updates, clarifies and simplifies existing accounting
pronouncements.  FASB No. 4, which

                                  11

MEDINEX SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATE)


NOTE 2   SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (CONTINUED)

Recent Accounting Pronouncements (continued)
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.  FASB 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, FASB No. 44 is no longer
necessary and has been rescinded.  SFAS No. 145 amended FASB 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
did not have a material effect on the financial statements of the
Company at December 31, 2002.

In August 2001, the FASB issued Statement of Financial Accounting
Standards No. 144 ("SFAS 144"), "Accounting for the Impairment of
Long-Lived Assets", which requires a single accounting model to be
used for long-lived assets to be sold and broadens the presentation
of discontinued operations to include a "component of an entity"
(rather than a segment of a business).  A component of an entity
comprises operations and cash flows that can be clearly
distinguished, operationally and for financial reporting purposes,
from the rest of the entity.  A component of an entity that is
classified as held for sale, or has been disposed of, is presented
as a discontinued operation if the operations and cash flows of the
component will be (or have been) eliminated from the ongoing
operations of the entity and the entity will not have any
significant continuing involvement in the operations of the
component.

The Company adopted SFAS No. 144 effective August 1, 2001.  The
operating results of Medinex Systems, Inc. are included in the
accompanying financial statements as discontinued operations.
Assets and liabilities of Medinex Systems, Inc. are included in net
liabilities at December 31, 2002 and 2001.

In June 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 143, "Accounting for
Asset Retirement Obligations" (hereinafter "SFAS No. 143").  SFAS
No. 143 establishes guidelines related to the retirement of tangible
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 which did not have a
material impact on the financial statements of the Company.

                                  12

MEDINEX SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATE)


NOTE 2   SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (CONTINUED)

Recent Accounting Pronouncements (continued)
In June 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 141, "Business
Combinations" (hereinafter "SFAS No. 141") and Statement of
Financial Accounting Standard No. 142, "Goodwill and Other
Intangible Assets" (hereinafter "SFAS No. 142"). SFAS No. 141
provides for the elimination of the pooling-of-interests method of
accounting for business combinations with an acquisition date of
July 1, 2001 or later. SFAS No. 142 prohibits the amortization of
goodwill and other intangible assets with indefinite lives and
requires periodic reassessment of the underlying value of such
assets for impairment. SFAS No. 142 is effective for fiscal years
beginning after December 15, 2001. An early adoption provision
exists for companies with fiscal years beginning after March 15,
2001. On January 1, 2002, the Company adopted SFAS No. 142.
Application of the nonamortization provision of SFAS No. 142
resulted in no change to the Company's results of operations, as the
Company did not have assets with indeterminate lives.  At December
31, 2002 all intangible assets are included in discontinued
operations.

In November 2002, the Financial Accounting Standards Board issued
FASB Interpretation No. 45, "Guarantor's Accounting and Disclosure
Requirements for Guarantees, including Indirect Guarantees of
indebtedness of Others" ("FIN 45"), which expands the disclosure
requirements to be made by a guarantor in its interim and annual
financial statements about its obligations under certain guarantees
that it has issued.  The interpretation also clarifies that a
guarantor is required to recognize, at the inception of a guarantee,
a liability for the fair value of the obligation undertaken in
issuing the guarantee.  Certain guarantees, including (i)  an
original lessee's guarantee of the lease payments when the lessee
remains secondarily liable in conjunction with being relieved from
being the primary obligor and (ii)  a parent's guarantee of a
subsidiary's debt to a third party, and a subsidiary's guarantee of
debt owed to a third party by either its parent or another
subsidiary of that parent, are excluded from the provisions related
to liability recognition.  These guarantees, however, are subject to
the disclosure requirements of the interpretation.  The liability
recognition provisions of FIN 45 are applicable to guarantee's
issue dafter December 31, 2002.  The disclosure requirements of the
interpretation are effective for financial statements of interim and
annual periods ending after December 15, 2002.  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 a
material impact on its results of operations or financial position.
The Company has adopted the disclosure requirements of FIN 45
effective for fiscal year ended December 31, 2002.

Derivative Instruments
The Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 ("SFAS No. 133"), "Accounting
for Derivative Instruments and Hedging Activities," as amended by
SFAS No. 137, "Accounting for Derivative Instruments and Hedging
Activities -- Deferral of the Effective Date of FASB No. 133", and
SFAS No. 138, "Accounting for Certain

                                  13

MEDINEX SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATE)


NOTE 2   SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (CONTINUED)

Derivative Instruments (continued)
Derivative Instruments and Certain Hedging Activities", which is
effective for the Company as of January 1, 2001. These statements
establish accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities. They require that an
entity recognize all derivatives as either assets or liabilities in
the consolidated balance sheet and measure those instruments at fair
value.

If certain conditions are met, a derivative may be specifically
designated as a hedge, the objective of which is to match the timing
of gain or loss recognition on the hedging derivative with the
recognition of (i) the changes in the fair value of the hedged asset
or liability that are attributable to the hedged risk or (ii) the
earnings effect of the hedged forecasted transaction. For a
derivative not designated as a hedging instrument, the gain or loss
misrecognized in income in the period of change.

Historically, the Company has not entered into derivatives contracts
to hedge existing risks or for speculative purposes.

At December 31, 2002, the Company has not engaged in any
transactions that would be considered derivative instruments or
hedging activities.


NOTE 3 - DIVESTITURES

Divestitures
On June 28, 2002, Medinex sold all of the capital stock of
MedMarket, Inc., DiscountMedBooks, Inc., and its former political
division's subsidiaries, which included Net.Capital, Inc., Raintree
Communications Corporation, Public Disclosure, Inc., and U.S.
Congress Handbooks, Inc. to the Delta Group, Inc.  The report filed
with the Securities and Exchange Commission on July 1, 2002 on Form
8-K describes this sale in detail and includes as an exhibit the
stock purchase agreement by and between Delta Group, Inc. and
Medinex Systems, Inc.

On February 13, 2001, Medinex sold substantially all of the assets
of its political division, which included the assets of its
subsidiary corporations, Raintree Communications Corporation, Public
Disclosure, Inc., Net.Capitol, Inc., and U.S. Congress Handbooks,
Inc., along with certain other political-related assets and
liabilities, to Votenet Solutions, Inc. ("Votenet") in exchange for
cash consideration of $1,150 and an option by one of Votenet's
shareholders to purchase 3,448,276 shares of the Company's common
stock for $0.29 per share and 3,448,276 shares of the Company's
common stock for $0.61 per share. This option was not exercised and
expired in 2001. These assets sold to the Votenet and the revenues
previously derived from it were substantially all of the operations
of the Company's political segment for financial reporting purposes.

                                  14

MEDINEX SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATE)


NOTE 3 - DIVESTITURES

Divestitures (continued)
On September 6, 2001, Medinex Votenet sold substantially all of the
assets of its subsidiary, Pinnacle Medsource, Inc., a Delaware
corporation ("Pinnacle"), in exchange for cash consideration of
$325.  These assets sold to Pinnacle and the revenues previously
derived from it were substantially all of the operations of
Pinnacle's wholesale medical equipment supply and distribution
business for financial reporting purposes.


NOTE 4   FEDERAL INCOME TAXES

The Company did not provide an income tax benefit for any of the
periods presented because it has experienced operating losses since
inception. The Company's total tax net operating loss carryforwards
were approximately $34 million at December 31, 2002 which expire
between 2012 and 2020. The significant components of the deferred
tax asset at December 31, 2002 and 2001 were as follows:


                                              2002          2001
Income Tax Related to:
  Net operating loss carryforward           $ 11,745      $ 10,200
  Stock compensation                              65           651
  Amortization of intangibles and other           -            128
  Deferred tax asset                          11,810        10,979
  Deferred tax asset valuation allowance     (11,810)      (10,979)
                                            $     -       $     -

Medinex recorded a valuation allowance to reflect the estimated
amount of deferred tax assets which may not be realized principally
due to the expiration of net operating losses and tax credit carry
forwards. The valuation allowance on deferred tax assets increased
by $831 during 2002. In accordance with certain provisions of the
Internal Revenue Code, as amended, a change in ownership of greater
than 50% of a company within a two-year period results in an annual
limitation on the Company's ability to utilize its net operating
loss ("NOL") carryforwards from tax periods prior to the ownership
change. The Company disposed of subsidiaries over the past two
years. The tax effects of the subsidiaries' prior tax status have
not been included and are expected to be limited by provisions of
the Internal Revenue Code.


NOTE 5   DEBT

Promissory Notes
On August 3, 2001, Medinex completed a private placement offering in
which Medinex borrowed $75 from an accredited investor. Medinex
agreed to repay the loan, plus interest of

                                  15

MEDINEX SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATE)


NOTE 5   DEBT

Promissory Notes (continued)
12% per annum, on August 3, 2003. The holder of the note also
received 75,000 shares of Medinex common stock. (See Note 6).  The
securities offered under the private placement are exempt from
registration requirements for public offerings under Regulation D or
other applicable exemptions from registration promulgated under the
Securities Act of 1933 and applicable state securities laws and
regulations. The proceeds from the offering were used for working
capital. The stock issued was valued at $15 with the resulting
discount on the debenture being amortized as interest expense over
two years. As of December 31, 2002, the unamortized discount was $6.

In 2001, Medinex completed private placement offerings with accounts
payable vendors, converting the payable balances to debentures. The
debentures are due to be paid by Medinex in August, 2003, and bear
interest of 12% per annum.  The Company issued 82,360 shares of
common stock valued at $35 to these vendors for accrued interest on
these notes. See Note 6.


NOTE 6   STOCKHOLDERS' EQUITY

Convertible Preferred Stock
On June 23, 1999, the Company closed its initial public offering of
2,455,000 shares of common stock at $10.00 per share, for net
proceeds of $23.2 million. At closing, all of the Company's issued
and outstanding shares of convertible preferred stock were converted
into 2,325,000 shares of common stock.

In January 1999, the Company increased the authorized amount of
preferred stock to 10,000,000 shares, with a par value of $.01.
Shares of preferred stock may be issued from time to time in one or
more series, with designations, rights, preferences and limitations
established by the Company's board of directors.

Common Stock
At December 31, 2002, the Company has authorized 100,000,000 shares
of $.01 par value common stock.  During the year ended December 31,
2002, the Company issued 2,763,000 shares of common stock for cash
of $220; 83,334 shares of common stock for directors fees with a
fair market value of $23; 190,582 shares of common stock at a fair
market value of $31 for accounts payable and common stock; 14,917
shares of common stock with a fair market value of $2 were issued
for legal services; 140,375 common stock shares at a fair market
value of $16 were included with the sale of MedMarket; and 250,000
shares of common stock with a fair market value of $42 for services.

                                  16

MEDINEX SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATE)


NOTE 6   STOCKHOLDERS' EQUITY (CONTINUED)

Common Stock (continued)
The Company had commitments for approximately 700,000 common stock
shares to be issued for services or settlements on debt which were
unissued at the time of filing for bankruptcy.  The Company does not
expect to issued these shares.

On November 6, 2001, Medinex initiated a private placement offering
in which Medinex could sell 4,200,000 shares of common stock to
accredited investors.  The Company sold 3,677,000 shares of common
stock in this private placement before December 31, 2001. The total
price of these shares was $400, which includes $44 in issuance costs
and expenses in connection with this offering.

On May 22, 2001, Medinex completed a private placement offering in
which Medinex offered for sale 312,500 units to accredited
investors. Each unit consisted of one share of Medinex common stock
and one warrant to purchase one share of common stock at $0.85. The
common stock was issued without registering the stock under the
Exchange Act.  The holders of the shares of Medinex common stock
upon exercise of the warrants will have certain registration rights
with regard to such common stock. The total price for the units sold
by Medinex in this Offering was $100. The proceeds from the Offering
were used for working capital.

The Company also issued 418,853 shares of common stock with a fair
market value of $118 as board of directors fees; 82,360 common stock
shares with a fair market value of $35 as financing costs; 15,000
shares of common stock with a fair market value of $1 as severance
compensation; 27,786 common stock options were exercised at $6 and
4,950 shares of common stock were issued from the employee stock
purchase plan.

Stock Option Plans
The following information on stock options is subject to
modification under the petition for bankruptcy.  It is expected that
most if not all stock options and warrants and the plans associated
with the options and warrants  will be cancelled in the bankruptcy.

During the three months ended September 30, 2002 the Company
retroactively granted 4,000 options previously earned by a
consultant at exercise prices between $0.17 and $0.36 per share.
These options were fully vested upon grant.  On October 9, 2002 the
Company granted a total of 260,000 common stock options exercisable
at prices varying from $0.19 to $0.30 per share.  Of these options,
210,000 were fully vested at the date of grant.  These options were
granted based upon agreements reached during the three months ended
September 30, 2002.

During the three month period ended June 30, 2002, the Company
granted 50,000 common stock options exercisable at $0.17, which
begin to vest at 16,666 per year on May 20, 2003.

                                  17

MEDINEX SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATE)


NOTE 6   STOCKHOLDERS' EQUITY (CONTINUED)

Stock Option Plans (continued)
During the three months ended March 31, 2002, the Company granted
75,000 common stock options exercisable at $0.30, which begin to
vest at 25,000 options per year on March 1, 2003.

In July 1998, the Company's stockholders and board of directors
approved a nonqualified stock option and restricted stock plan. In
March 1999, the Company amended and restated this plan as the 1999
Equity Incentive Plan (the "Plan").The board of directors has the
authority to determine all matters relating to incentive and
non-qualified stock options and restricted stock to be granted under
the Plan, including the selection of individuals to be granted
options, number of shares to be subject to each option, the exercise
price and the term and vesting period, if any. Options generally
vest over periods ranging up to three years and have lives up to ten
years from the date of grant. Options outstanding at December 31,
2002 and 2001 have an average remaining contractual life of five and
seven years, respectively. At December 31, 2002 and 2001, exercise
prices ranged from $0.17 to $0.36 and $0.19 to $10.00 per share,
respectively.

In January 2000, the Plan was amended to adjust the calculation of
the increase in the share reserve as of January 1 of each year. The
amended Plan allows for the adjustment of the share reserve to
include 15% of the aggregate of (i) the total shares issued and
outstanding as of January 1 and (ii) the total shares Medinex is
obligated to issue as of January 1. The Company has reserved a total
of 1,617,155 shares of common stock for issuance to its stock option
holders under the plan and has 146,680 shares remaining in the Plan
available for future grant as of December 31, 2000. The Company has
elected not to update this Plan in 2001 or 2002. The estimated
increase for 2001 is 229,715 shares as of December 31, 2001.

The Company also has a non-qualified stock plan (the "Non-Qualified
Plan") for the benefit of employees and consultants. The Company has
1,000,000 shares authorized under the Non-Qualified Plan. At
December 31, 2000 and 1999, the Company had issued, net of options
cancelled, 417,029 and 105,270 shares, respectively, and there were
582,971 and 894,730 unissued shares remaining in the Non-Qualified
Plan, respectively.

The following table summarizes the Company's stock option activity:



                                2002                  2001
                                   Weighted              Weighted
                                   Average               Average
                                   Exercise              Exercise
                         Options    Price      Options    Price

Outstanding, beginning
 of period              1,391,755  $   0.98   1,934,734  $   0.66
Granted                   389,000      0.25     336,080      0.23
Exercised                      -         -      (10,000)    (0.19)
Canceled                       -         -     (869,059)    (2.94)
Outstanding, end of
 period                 1,780,755      0.82   1,391,755      0.98
Exercisable at end of
 period                   977,928      0.43     763,928      0.47

                                  18

MEDINEX SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATE)


NOTE 6   STOCKHOLDERS' EQUITY (CONTINUED)

Stock Option Plans (continued)
The following table summarizes information about all stock options,
including those issued outside of the Plan, outstanding at December
31, 2001:

                  Range of           Remaining
              Exercise Prices         Number

            $   0.03   $   1.00     1,110,213
                1.01       3.00       159,492
                3.01      10.00       511,050
                                    1,780,755

Under APB 25, the Company records compensation expense over the
vesting period for the difference between the exercise price and the
deemed fair market value for financial reporting purposes of stock
options granted.

The Company has adopted the disclosure-only provisions of SFAS No.
123.  Had compensation expense had been recognized on stock options
issued based on the fair value of the options at the date of grant
and recognized over the vesting period, the Company's net loss would
have been increased to the pro form amounts indicated below:


                                       2002                 2001
Net Loss:
   As reported                     $   (1,763)           $  (4,786)
   Pro forma                              (80)                 (30)
Basic and diluted loss per share
   As reported                     $    (0.10)           $   (0.38)
   Pro forma                       $    (0.10)           $   (0.38)

The weighted average grant date fair value of options granted in
2002 and 2001 was $0.20 and $0.12, respectively. The fair value of
each option was estimated using the Black-Scholes option-pricing
model with the following weighted-average assumptions:


                                       2002                 2001
Expected dividend yield                0.00%                0.00%
Expected stock price volatility      122.00%              122.60%
Risk-free interest rate                4.00%                5.00%
Expected life of options             3-4 years           1-10 years

                                  19



MEDINEX SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATE)


NOTE 6   STOCKHOLDERS' EQUITY (CONTINUED)

Stock Option Plans (continued)
The initial impact on pro forma net loss may not be representative
of compensation expense in future years when the effect of the
amortization of multiple awards would be reflected in results of
operations.

Employee Stock Purchase Plan.
In March 1999, the board of directors adopted the 1999 Employee
Stock Purchase Plan ("Purchase Plan"), to provide employees of the
Company and its affiliates with an opportunity to purchase common
stock at a discounted rate through payroll deductions. Under the
Purchase Plan which terminates at the board of directors'
discretion, 500,000 shares of common stock have been reserved for
issuance.

The Purchase Plan is intended to qualify as an employee stock
purchase plan within the meaning of Section 423 of the Internal
Revenue Code. The board of directors may authorize participation by
eligible employees, including officers, in periodic offerings
following the adoption of the Purchase Plan. A new offering period
begins every 6 months. The board of directors has currently
authorized an offering commencing on December 10, 1999, of the
Company's common stock and ending December 9, 2000, with sequential
6-month offerings thereafter.

During the year ending December 31, 2002 and 2001 the Company issued
-0- and 4,950 shares to employees under the Purchase Plan,
respectively.

Board Compensation
In September 2000, the compensation committee of the board of
directors agreed that each non-employee director would receive stock
as payment for his or her services as a director in lieu of cash.
Total stock and cash paid to Director's for services rendered in
fiscal years 2002 and 2001 was 83,334 shares of common stock and
418,835 shares of common stock and $14 cash, respectively.

In 2001, Medinex issued 418,853 shares of unregistered common stock
to its non-employee directors for services rendered by the board of
directors for the year 2001. Each non-employee director receives a
quarterly retainer of $7,500 payable in shares of authorized capital
stock based on the market value on the last trading day of each
calendar quarter. Such shares are restricted under all applicable
state and federal securities laws. No additional fees are paid to
directors for meetings attended or chaired. Additionally, on his
election to the board on May 22, 2001, one director received an
initial grant of 20,000 shares of restricted capital stock.

                                  20

MEDINEX SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATE)


NOTE 6   STOCKHOLDERS' EQUITY (CONTINUED)

Stock Warrants
In connection with the Company's initial public offering, the
Company agreed to issue warrants to purchase 250,000 shares of
common stock at $16.50 per share. At December 31, 2000, there were
250,000 warrants outstanding. The warrants expire in 2004.  In
connection with a private placement offering, the Company issued
warrants to purchase 930,000 shares of common stock at $1.90 and
930,000 shares of common stock at $5.00. All of these warrants,
which expire in 2005, were outstanding at December 31, 2002.

In connection with a private placement offering, the Company issued
312,500 warrants to purchase one share of common stock at $0.85 per
share and 241,700 warrants to purchase one share of common stock at
$0.23 per share.

Reserved for Future Issuance
The following common shares have been reserved for future issuance
as of December 31, 2002:


                                                 2002
  Employee stock options                      2,231,514
  Employee stock purchase plan                       -
  Other options                                 200,000
  Warrants                                    2,804,200
                                              5,235,714


NOTE 7   RELATED PARTY TRANSACTIONS

During the year ended December 31, 2002, a shareholder loaned $760
to the Company.  The loan accrued interest through September 30,
2002 at an annual rate of 12%.  The parties negotiated a change in
the terms and conditions of the loan, which were approved by the
Company's directors.  Effective October 1, 2002, accrued interest
was added to the principal balance of the loan.  The resulting
principal balance of $791 accrued interest at the federal rate of
3.75% per annum.  Accrued interest at December 31, 2002 was $31.
The term of the loan has been extended to five years with payments
of interest only to commence in January of 2003.  This note is
secured by all assets, both tangible and intangible, of the Company
held currently or acquired in the future.  The shareholder has
agreed to subordinate its lien against the Company's assets to any
secured financing which meets the Company's budgeted financial needs
for the next twelve months.  At the option of the note-holder, all
or any part of the principal amount and accrued interest may be
converted to Medinex common stock at the lowest price that the
Company's common stock has been sold during the term of the
promissory note.  If the shareholder had elected to convert the
entire principal and accrued interest balance at December 31, 2002,
the conversion would have resulted in the issuance of 15,826,140
shares of the Company's common stock at $0.05 per share, at which
price the Company sold stock during

                                  21

MEDINEX SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATE)


NOTE 7   RELATED PARTY TRANSACTIONS (CONTINUED)

July 2002.  This loan was included in the consideration paid for the
remaining operating assets of the Company in the Phase I sale of
assets.  (See Note 14.)


NOTE 8   LEASES

Leases
During 2001, prior to its move to 1200 Ironwood in Coeur d' Alene,
the Company was located in the Riverbend development in Post Falls,
Idaho. The Company accrued its back rent through September 2001 and
moved to its current location. See Note 11 commitments and
contingencies.

The Company has entered into non-cancelable operating lease
agreements involving equipment and facilities through the year 2001.
Rent expense totaled $133 for the year ended December 31, 2001.

The Company leased office space in Coeur d'Alene for two years
beginning August 1, 2001 and terminating on July 31, 2003. The
monthly rent began at six hundred dollars per month in August 2001
and increased by fifty dollars per month until December 2001 at
which time the rent was eight hundred dollars per month. Beginning
in January 2002, the rent was scheduled to increase by one hundred
dollars per month to a maximum of one thousand dollars per month.
The Company paid one thousand two hundred dollars as a security and
cleaning deposit. The Company also leases one additional office in
the same building for two hundred twenty dollars per month.

The Company has reimbursed one of its officers for an apartment
lease in Celebration Florida. Monthly payments under this one-year
lease which expired in October 31, 2002 were one thousand one
hundred eighty five dollars.  The Company also reimbursed this
officer for monthly rent of one thousand eighty nine dollars in
connection with a six-month apartment lease in Phoenix, Arizona,
which expired February 28, 2002.

A third officer and the Company jointly leased a house in Cave
Creek, Arizona on a six-month lease. The monthly lease payment is
two thousand four hundred dollars per month. This lease expired June
2002.


NOTE 9   PETITION FOR RELIEF UNDER CHAPTER 11

On November 27, 2002, the Company filed petitions for relief under
Chapter 11 of the federal bankruptcy laws in the United States
Bankruptcy Court for the District of Idaho.  Under Chapter 11,
certain claims against the debtor in existence prior to the filing
of the petitions for relief under the federal bankruptcy laws are
stayed while the debtor continues business operations as

                                  22

MEDINEX SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATE)


NOTE 9   PETITION FOR RELIEF UNDER CHAPTER 11 (CONTINUED)

debtor-in-possession.  These claims are reflected in the December
31, 2002, balance sheet as "liabilities subject to compromise".
Additional claims (liabilities subject to compromise) may arise
subsequent to the filing date resulting from rejection of executory
contracts, including leases, and from the determination by the court
(or agreement to by parties in interest) of allowed claims for
contingencies and other disputed amounts.  Claims secured against
the debtor's assets ("secured claims") also are stayed, although the
holders of such claims have the right to move the court for relief
from the stay.  Secured claims are secured primarily by liens on the
debtor's property, plant, and equipment.

As a debtor, the Company has received approval from the Bankruptcy
Court to pay or otherwise honor certain of its pre-petition
obligations, including employee wages, although the Company has
determined that there is insufficient collateral to cover the
interest portion of scheduled payments on its pre-petition debt
obligations therefore, the debtor has discontinued accruing interest
on these obligations.  Refer to Note 10 for a discussion of the
credit arrangements entered into subsequent to the Chapter 11
filings.

The Bankruptcy Court confirmed Medinex's plan of reorganization as
of March 6, 2003.  It was determined that Medinex's reorganization
value computed immediately before March 6, 2003, the date of plan
confirmation, was $238,592, which consisted of the following:


Cash in excess of normal operating requirements
 generated by operations                             $          -
Net realizable value of asset dispositions           $         158
Present value of discounted cash flows of
    the emerging entity                                         81
Reorganization value                                 $         239
Post-petition current liabilities                    $         197
Liabilities deferred pursuant to Chapter
 11 proceeding                                               3,065
Total post-petition liabilities and
 allowed claims                                              3,262
Secured claim waived (See Note 10)                            (791)
Reorganization value                                          (239)
Excess of liabilities over reorganization value      $       2,232

                                      23


MEDINEX SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER
SHARE DATE)


NOTE 10 PLAN OF REORGANIZATION

On March 6, 2003, the Bankruptcy Court confirmed the Company's plan
of reorganization (hereinafter "Plan"), which as the confirmed
provides for the following:

The Company will sell all of its assets in the manner set forth in
the Plan.  All expenses related to the administration and
liquidation of the Company's assets will be paid out of funds
available for distribution under the Plan, including cash held on
deposit for the Company and additional funds paid in accordance
with the minimum bid.

The Company will continue operating its business through the date
of the auction and until the auction sale is completely consummated.
During the interim period, all operating revenue in excess of
operating expenses, if any, will be held in reserve for distribution
under the Plan.

By way of the Plan, the Company intends to conduct the auction on
or before March 28, 2003 in order to sell all of its assets free
and clear of all liens, interests and encumbrances.  Claims will
attach to the sale of proceeds to the extent and in the priority
they exist at the time of sale. All net sale proceeds will be
placed in trust and distributed in accordance with the Plan.

Secured Debt
Class 1 debtor in possession ("DIP") Credit Agreement is impaired
under the plan and consequently, the holder of the Allowed Class 1
Claim is entitled to vote on the plan.  The legal, equitable and
contractual rights of the holder of the Allowed Class 1 Claim, the
Weaver Trust, will have its Class 1 Secured Claim in the amount
equal to the amount advanced under the DIP Financing Order, with
interest to the extent funds are available, post Auction. It is
anticipated the Class 1 will be paid in full from cash available
post auction.

Class 1 will continue to receive monthly payments pursuant to the
DIP note and DIP financing order until close of auction and
distribution of proceeds.

Senior Debt
Class 3 (Other Secured Claims) consists of the pre-petition secured
claim of the Weaver Trust.  The secured status of the claim of the
Weaver Trust is in question. Class 3 is impaired under the plan and,
consequently, the holder of the sole allowed Class 3 claim is
entitled to vote on the plan.

For purposes of the plan only, the secured status of the pre-
petition claim of the Weaver Trust will be treated as a general
unsecured claim as set forth in Class 4.  It is understood that the
Weaver Trust has agreed to waive its secured claim status as to the
pre-petition debt in order to minimize administrative expense and
provide an opportunity for distribution to priority tax claims and
general unsecured claims.  As such, on the distribution date the
Weaver Trust will receive a pro rata distribution of final cash
available with Class 4 allowed claims.

                                      24

MEDINEX SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER
SHARE DATE)


NOTE 10 PLAN OF REORGANIZATION (CONTINUED)

Priority Tax Claims
Class 2 (Priority Tax Claim) consists of the claim of the State of
Idaho, which is presently disputed as to amount only.  Class 2 is
impaired under the plan, and consequently, the holder of a Class 2
claim is entitled to vote on the plan.  Under the plan as proposed,
the minimum bid includes a set aside of $25 for distribution to
allowed Class 2 claim.  Any distribution under the plan will be
deemed a full accord and satisfaction of the claim.  As such, on
the distribution date, the State of Idaho will receive a
distribution of a minimum of $25 to the extent of its allowed claim.
If additional funds are available, Class 2 will continue to receive
payment to the full extent of its allowed claim.

Trade and Other Miscellaneous Claims
Class 4 consists of allowed unsecured claims which are other than
administrative claims and priority tax claims.

The Company estimates that the aggregate outstanding amount of
allowed claims in Class 4, as of the effective date, will be in
the range of $500 to $700.  Class 4 is impaired under the plan,
and consequently, the holders of allowed Class 4 claims are
entitled to vote on the plan.

On the distribution date, each holder of an allowed Class 4 claim
as of the distribution date will receive a pro rata distribution of
final available cash. Class 4 will only receive a distribution
under the plan upon payment in full of all administrative expenses,
Class 1, Class 2, and Class 3 claims.

Percentage of distribution and amount are entirely dependent upon
plan funds available and the aggregate amount of allowed claims.

Equity Interests
Class 5 consists of the issued and outstanding shares of common
stock of the Company as currently shown on the Company's share
registry.  Class 5 is impaired as the shares of common stock will
be modified and diluted by the plan of reorganization.

It is anticipated that the proposed transfer will require an 80%
or greater change in control of the ownership of the Company.  As
such, the Company will have to rely upon the broad powers of the
Bankruptcy Court to accomplish a reverse stock split of outstanding
shares of common stock.

The "corporate shell" is the continuing reporting entity for
securities matters, including reporting history, articles of
incorporation, and bylaws.  The essential nature of the value is
the publicly trading base of outstanding common stock.

                                      25

MEDINEX SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER
SHARE DATE)


NOTE 10 PLAN OF REORGANIZATION (CONTINUED)

Equity Interests (continued)
Class 5 will not receive or retain any property under the plan
other than an equity interest in the "shell" corporation that
survives after the auction of all assets.  The Company "shell",
including diluted common stock interest of Class 5, will be sold
to the highest bidder of a subsequent separate auction.  All
proceeds derived through such auction shall be distributed in
accordance with the terms of distribution contained in this plan.
A subsequent auction of the corporate entity shall only occur upon
receipt of a minimum qualified bid of at least $50, which was
received on March 27, 2003.

The Company will seek an order to cancel or significantly modify
all outstanding common stock shares, common stock options and
common stock warrants.

Leased Property
The Company will continue to make monthly lease payment through
the date of the auction for its leased property located in Idaho
and Arizona.


NOTE 11 COMMITMENTS AND CONTINGENCIES

On November 27, 2002, the Company filed a petition for protection
under Chapter 11 of the United States Bankruptcy Code in the US
Bankruptcy Court for the District of Idaho.  This allows Medinex
to continue to operate while a plan of reorganization is finalized.
Liabilities subject to the bankruptcy proceeding include
approximately $1,616 of accounts payable, approximately $232 of
accrued liabilities and approximately $1,186 of notes payable
including lines of credit.  These totals are subject to revision
through the Proof of Claim process and further proceedings of the
Bankruptcy Court.

The Company is under the general supervision of the Office of the
United States Trustee for the District of Idaho.  The Trustee must
approve any transactions outside the ordinary course of business.
The day to day operations of the Company are under the control of
the officer of the Company as a Debtor in Possession.  Monthly
operating and cash flow reports must be submitted to the U.S.
Trustee.

On January 22, 2003, a Motion was filed with the Court for an
emergency sale of the Company's assets to protect their value.
The Motion was approved on March 6, 2003. The sale was completed
on March 21, 2003, and March 27, 2003.  On these dates the
Company sold all of its operating assets. All of the proceeds
from the sale of the operating assets and the cash to be received
will be distributed to the creditors of Medinex after payment of
all approved bankruptcy administration expenses.  Management does
not believe that any funds will be available for distribution to
stockholders after all approved bankruptcy administration expenses
have been paid and distributions have been made to the Company's
creditors whose claims of
                                      26

MEDINEX SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER
SHARE DATE)


NOTE 11 COMMITMENTS AND CONTINGENCIES
(CONTINUED)

approximately $2,200 appear to exceed the Company's potential
resources from the sale of its operating assets and public shell.

Medinex filed an action against Oron Strauss, a beneficial owner
of the Company, in the District Court of Kootenai County, Coeur
d'Alene, Idaho on December 1, 2000. Medinex alleged a breach of
contract for Mr. Strauss' failure to repay a promissory note, and
sought the balance due on the promissory note of $136, plus costs
and fees. Mr. Strauss filed a counterclaim against Medinex for
unrelated claims.  Mr. Strauss sought an unspecified sum, in excess
of $10 in damages.  On or about April 11, 2002, the parties reached
a settlement on this case and stipulated to the dismissal of all
claims and counterclaims in this action.  This settlement included
an indemnification from Medinex to Mr. Strauss to cover certain
contingencies.  In September, 2002, Medinex was notified by Mr.
Strauss that he had settled claims totaling $25 from Financial
Pacific Leasing, CDW Leasing, United Portfolio Management, and Axis
Capital, Inc., and was now seeking indemnification for such amounts.

Advantage Human Resourcing, LP (Advantage) filed a complaint
against Medinex in the Superior Court of the District of Columbia
on January 5, 2001.  Advantage alleged a breach of contract arising
out of a real estate lease and sought damages of $145, plus costs
and fees.  Both parties agreed to settle the dispute for the sum of
$100,000, all due and payable on July 1, 2001.  Medinex
subsequently defaulted in its obligation to pay the agreed upon
amount.  On August 28, 2002, a new settlement offer was prepared
by Medinex offering: (1) an immediate grant of 50,000 shares of
Medinex unregistered, restricted common stock, (2) a cash payment
in the amount of $100, payable in increments of $5, per month,
commencing on December 1, 2002, and continuing on the first day of
each month thereafter until paid.

The American Society of Association Executives filed suit on June
6, 2002, in Ada County, Idaho, Case Number CV OC 0204406D.  A
request for change of venue was granted, moving the case to
Kootenai County, Idaho.  The Complaint seeks to recover a balance
owing of $4, plus interest at the rate of 12 percent per annum
from June 4, 2002.  Medinex intends to pursue a settlement of this
claim.

Riverbend #1, LLC ("Riverbend") was seeking an amount in excess of
$340, for unpaid rent under a written lease for office space
located in Post Falls, Idaho.  Subsequent to the filing of this
action, Medinex located a replacement tenant for the office space.
Riverbend filed a Motion for Summary Judgment on December 20,
2001, seeking judgment against Medinex in the amount of $181.  On
September 27, 2002, Medinex and Riverbend signed a Settlement
Agreement.  Medinex signed a Promissory Note payable to Riverbend
LLC, in the amount of $181, bearing interest at 6% per annum and,
in addition, issued to Riverbend 50,000 shares of the Company's
common stock at the fair market value of $7,000 in settlement of
Riverbend's claim.  At December 31, 2002 this stock had not been
issued.

                                      27

MEDINEX SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER
SHARE DATE)


NOTE 12 SUBSEQUENT EVENTS

Phase I Sale of Assets Sold at Auction On March 26, 2003, the
assets of Medinex Systems, Inc. were sold for $225 plus debt
relief of $791 free and clear of all liens, claims and
encumbrances and obligations of any nature.

The book value of recorded assets consisted of the following:

           Accounts receivable                               $111
           Contingent claims                                   41
           Patents, copyrights and Intellectual propety         -
           Internet domains and related property                -
           Secure certificates for mxoffice.net and
           mxsecure.com                                         -
           Customer lists, customer agreements and
           marketing/sales databases                            -
           Agreements with resellers and consultants            -
           Proprietary software including but not
           limited to:  MxSecure, MxTranscribe, MxSites,
                        Medinex Office Suite                    -
           Inventory                                            8
           Servers, computers, software and office
           equipment at all locations                          39
                                                             $199

Phase II Auction
On March 27, 2003, Medinex's remaining "shell" was sold for $53 for
the control block of stock plus and additional $10 if the Company
is successful in obtaining approval of the Section 15 small
accredited investor stock.  The purchaser will pay for all legal
work pertaining to the filing of the December 31, 2002 10KSB and
the March 31, 2003 10QSB.

                                      28

                 CONSENT FROM INDEPENDENT PUBLIC ACCOUNTANTS


As independent public accountants, we hereby consent to the
incorporation of our report included in this Form 10-KSB, into the
Company's previously filed Registration Statements, File No. 333-
90639, 333-32742 and 333-34306.


/s/  Williams & Webster, P.S.
     Williams & Webster, P.S.
     Certified Public Accountants
     Spokane, Washington
     April 21, 2003

EXHIBIT 99.X



                 CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

                   AND THE INTERIM CHIEF FINANCIAL OFFICER


We, Colin Christie, Chief Executive Officer and Maureen Cantlay,
Interim Chief Financial Officer, of Medinex Systems, Inc. (the
"Registrant"), do hereby certify in accordance with 18 U.S.C.
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:

(1)     the Annual Report on Form 10-KSB of the Registrant, to
        which this Certificate is attached as an Exhibit (the
        "Report'), fully complies with the requirements of
        Section 13(a) or 15(d) of the Securities Exchange Act of
        1934 (15 U.S.C. 78m), as amended; and

(2)     the information contained in the Report fairly presents,
        in all material respects, the financial condition and
        results of operations of the Registrant.

Date: April 23, 2003


By:  /S/ Colin Christie
     Colin Christie
     Chief Executive Officer



By:  /s/  Maureen Cantlay
     Maureen Cantlay
     Interim Chief Financial Officer