U.S. Securities and Exchange Commission

                             Washington, D.C. 20549

                                   Form 10-KSB



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

                             For Fiscal Year Ended:


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

               For the transition period from January 1, 2001 To June 30, 2001
                                              ----------------   --------------


                         Commission file number 0-23825

                       Optimum Source International, Ltd.
                 (Name of small business issuer in its charter)

           Nevada                                               86-0674322
------------------------------                              --------------------
State or other jurisdiction of                                (I.R.S. Employer
incorporation or organization                                Identification No.)

           4525 West Hacienda Avenue, Ste 12H, Las Vegas, Nevada 89118
           -----------------------------------------------------------
               (Address of principal executive offices) (Zip code)

Issuer's telephone number                      (702) 868-7233
                                              ---------------

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


                          Common Stock Par Value $0.001
                                (Title of class)





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        Check  whether the issuer (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days. Yes X No


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

        State issuer's revenues for its most recent fiscal year. $39,632
                                                                 -------

        As of June 30, 2001,  there were 12,447,950  shares of the  Registrant's
common stock,  par value $0.001,  issued and  outstanding.  The aggregate market
value of the Registrant's  voting stock held by non-affiliates of the Registrant
was  approximately  $-0-computed at the estimated average bid and asked price as
of June 30, 2001.

                       DOCUMENTS INCORPORATED BY REFERENCE

        If the  following  documents  are  incorporated  by  reference,  briefly
describe them and identify the part of the Form 10-KSB  (e.g.,  Part I, Part II,
etc.) into which the document is incorporated: (1) any annual report to security
holders;  (2) any proxy or information  statement;  and (3) any prospectus filed
pursuant to Rule 424(b) or (c) of the Securities Act of 1933 ("Securities Act"):
NONE

        Transitional Small Business Disclosure Format (check one): Yes   ; NO X
                                                                      ---    ---




















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                                TABLE OF CONTENTS


Item Number and Caption                                                    Page
-----------------------                                                    -----

PART I

Item 1.        Description of Business.........................................4

Item 2.        Description of Property.........................................8

Item 3.        Legal Proceedings...............................................9

Item 4.        Submission of Matters to a Vote of Security Holders.............9


PART II

Item 5.        Market for Common Equity and Related Stockholder Matters.......10

Item 6.        Management's Discussion and Analysis or Plan of Operations.....11

Item 7.        Financial Statements...........................................13

Item 8.        Changes in and Disagreements With Accountants on Accounting and
               Financial Disclosure...........................................13

PART III

Item 9.        Directors, Executive Officers, Promoters and Control Persons;
               Compliance with Section 16(a) of the Exchange Act..............14

Item 10.       Executive Compensation.........................................15

Item 11.       Security Ownership of Certain Beneficial Owners and Management.15

Item 12.       Certain Relationships and Related Transactions.................16

Item 13.       Exhibits and Reports on Form 8-K...............................16







                                        3

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                                     PART I


                         ITEM 1 DESCRIPTION OF BUSINESS



General

        The Company was first  incorporated  in the State of Utah on October 24,
1984 as A.R.M.  Chemical  Company,  Inc. On November 13,  1984,  the name of the
Corporation was changed to E.R.M.  Chemical Company, Inc. From 1984 to 1986, the
Company attempted to manufacture,  distribute and sell chemical products for the
purification  of water.  This business  activity was abandoned.  On September 1,
1988 the Company  changed its name to M.P.V.  On September 7, 1989,  the name of
the Company was changed to Optimum Source International. The Company completed a
plan of  reorganization  on October  20,  1989  pursuant to which the assets and
corresponding  liabilities  of  LomaCycle,  Inc.  were  spun  off to the  former
shareholders of that corporation  before it became a wholly-owned  subsidiary of
M.P.V.,  Inc. From 1986 to 1990, the Company  attempted to acquire  interests in
various business  opportunities,  all attempts were abandoned. On June 29, 1990,
the  domicile  of the  Company was changed to Nevada and the name of the Company
was changed to Optimum Source International,  Ltd. The Company was inactive from
1990 to 1992.

Principal products or services and their markets

        The  Company's   primary   mission  is   Barter/Counter-trade   and  its
proprietary   interactive   services   both  Domestic  and   International   and
encompassing the liquidation & auction industries globally.

        Optimum  Source  International  Ltd.,  (OSI) is poised with products and
services for  individuals,  entrepreneurs,  and  companies of all sizes that are
desirous of learning or enhancing their  bartering,  trading and  countertrading
skills. Products are developed to fully integrate with each other or may be used
as stand alone products.  All products and services are currently offered on the
internet, and through selected channels of distribution.

        Barter,  Exchange, Swap, Trade and Countertrade are rapidly becoming the
method of choice for  individuals,  companies and governments for acquiring what
they  want or need as it  eliminates  the  constant  monetary  change.  It is an
industry  that has reached sales of $100 billion  dollars plus  worldwide and is
growing at an incredible annual rate of 20%. The industry though,  has lagged in
automating.  OSI has focused its efforts on  providing  solutions  for  bringing
traders together worldwide.  OSI is a provider of surplus consumer goods through
its international suppliers inventories that are owned by OSI and associates are
accessible 24 hours a day via OSI's private network. OSI has developed the forum
for buyers and  sellers to locate one another  and  conduct  business  using the
latest networking technologies.


                                        4

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        Current products including:

CABLE VIEW

        A membership  network for  companies  dealing with  premiums,  auctions,
small retail dealers,  overseas buyers, and corporate users.  Members may obtain
additional  inventories for non- dealer/members in their areas (with their prior
approval), enter their inventories, and charge a small exchange fee. As a member
in  CABLE  VIEW,  a  company  has  many  different   close-out  and  liquidation
inventories at their finger-tips,  24 hours a day. The services offered by CABLE
VIEW are listed below:

E-MAIL - SEARCH - FORUMS - CLASSIFIED ADS

CABLE  VIEW is  available  and is being  introduced  to the  Close-Out  industry
throughout  the world.  This  private  communication  network  which the Company
created has the capability of handling  thousands of calls,  24 hours a day, and
allows members to display, manipulate, extract and exchange information.

WHAT 'CHA GOT AUCTION SERVICES

        What "Cha Got is a network of auctioning services implemented to provide
a distribution  system for selling consumer goods to end users and dealers.  OSI
provides  complete  federally  bonded  auctioning  services.   All  segments  of
operations are controlled by OSI from its corporate  headquarters  in Las Vegas,
Nevada. Constant communication between all entities are maintained via computer.
Satellite  auction sites  provide  additional  sales  outlets of consumer  goods
flowing to cash buyers nationwide.

COUNTERTRADE/BARTER

        Countertrade  associations are forming in ever increasing  numbers.  The
recent  world  trade  agreements  open  up  more  opportunities  for an  already
expanding  countertrade  industry. A Barter,  Exchange,  Swap, Trade arrangement
enables a company to exchange  finished  goods for raw material at a fair price,
in lieu of  liquidating  inventories  at a  drastic  loss.  OSI  provides  these
services,  greatly  enhancing the Barter,  Exchange,  Swap, Trade industry,  and
establishing OSI as a world-wide countertrade resource leader.

        Potential  negative  impact of a  participant  in a  countertrade/barter
action can  negatively  impact the Company and its  services.  For example,  the
publicity resulting from a participant  activities such as inappropriate  claims
and  product  representations  by  participants  can  make  the  sponsoring  and
retaining of participants more difficult,  thereby  negatively  impacting sales.
Furthermore, the Company's business and results of operations could be adversely
affected if the Company  terminates  a  significant  number of  participants  or
certain  participants who play a key role in the Company's  distribution system.
There can be no assurance that these or other participant  actions will not have
a material adverse effect on the Company or results of operations.


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<PAGE>



Distribution

        The  infrastructure  for all of OSI's  operations is its own Interactive
Communications  Information  Exchange  Network.  This  network  allows  for  the
streamlining of OSI's corporate operations by minimizing paper work. It provides
both  buyers and  sellers of surplus  goods the arena in which to  identify  and
negotiate  transactions.  It also provides the interface to wide area  networks,
i.e.,  Internet,  Microsoft's  "MSN"  Network,  and  various  public and private
databases, i.e., real estate, import/export, associations, and corporations. The
Company has  developed  the first  application  software for traders  worldwide,
"Traders     ToolTM".     This    software     automates    all    aspects    of
trade/barter/countertrade,   including   currency   conversions   and  inventory
tracking.  Displays also indicate  reminders  for  expiration  dates of scrip or
services.  Traders ToolTM interfaces with Excel for tracking trade transactions,
as well as providing statistics,  reports and spreadsheets.  Traders ToolTM also
has  specialty  modules,  i.e.,  real estate,  gems,  and consumer  items.  Upon
request,  Traders ToolTM  automatically  dials and connects to outside databases
for specific goods  information.  Traders ToolTM is the only product of its kind
available to the Barter,  Exchange,  Swap,  Trade  industry at all levels,  from
novice to expert.  The Company's  focus is automating the liquidation and barter
industry. A network of independent  representatives develop sales and marketing,
introduce new services and products,  and expand  distribution of products while
pursuing strategic alliance worldwide.

Competition

        Competition  in the  barter,  trading and  counter  trading  industry is
vigorous,  characterized by a relatively large number of companies (estimated at
approximately  1,500),  most of which  have  relatively  small  sales.  Industry
sources  estimate  that there are less than 100  companies in the industry  that
have annual  sales of $2 million or more.  Since only one of these  companies in
this  industry  is  public  and the rest are  privately  held,  little  reliable
financial data is available.  Many of the companies have established reputations
for successfully  developing and marketing  barter,  trading and  countertrading
services,  with a variety of  well-established  marketing outlets.  Many of such
companies have greater financial,  managerial, and technical resources than OSI.
Principal  competitors  include members of the  International  Reciprocal  Trade
Association, and members of the National Association of Trade Exchanges.

        The Company competes by emphasizing the value and premium quality of the
Company's  products and the  convenience of the Company's  distribution  system.
There can be no assurance that the Company's  business and results of operations
will not be affected  materially by market  conditions  and  competition  in the
future.

Sources and availability of raw material and the names of principal suppliers

        All the  Company's  products  are  currently  produced  by  manufactures
unaffiliated  with the Company.  The Company's profit margins and its ability to
deliver  products  on a timely  basis  are  dependent  upon the  ability  of the
Company's  outside  suppliers to supply  products in a timely and cost efficient
manner.


                                        6

<PAGE>



        The  Company  currently   acquires  products  from  suppliers  that  are
considered by the Company to be the superior suppliers of such products.  Due to
the nature of the close out market the  availability of products varies from day
to day.  There can be no assurance  that the loss of a supplier would not have a
material adverse effect on the Company's business and results of operations.

Dependence on one or a few major customers

        No customer accounts for more than 10% of sales.

Trademark and Patent Protection

        As a  company  selling  products  nationwide  and  internationally,  OSI
believes  that  establishing  trade and service marks and  copyrights  for brand
names  and  associated  advertising  and  labeling  materials  is  important  in
maintaining company and product identification and integrity.  Accordingly,  OSI
is engaged on a continuing  basis in developing  brand names and such associated
materials for its products,  securing trade and service mark protection for such
brand names and copyright protection for such associated material,  policing its
existing   marks,   and  enforcing  its  legal  rights  in  cases  of  potential
infringement  by third parties of its legally  protected  marks and  copyrights.
Notwithstanding these safeguards,  it is possible for competitors of the Company
to imitate its products.  Furthermore, others may independently develop products
similar or  superior to those  developed  or planned by the  Company.  While the
Company  may  obtain  patents  or  trademarks  with  respect  to  certain of its
products,  the Company may not have sufficient resources to defend such patents;
such patents may not afford all necessary protection and competitors may develop
equivalent or superior products which may not infringe such patents.

Future Capital Needs and Uncertainty of Additional Funding

        The Company was not in full operation during 2001 and thus, the revenues
generated are not  representative of those that are expected once full operating
status  has been  achieved.  Revenues  are not yet  sufficient  to  support  the
Company's operating expenses. However, the Company is cautiously optimistic that
operating  revenues will be adequate to meet operating  expenses during the next
year.
 Since the  Company's  formation,  it has  funded  its  operations  and  capital
expenditures primarily through private placements of debt and equity securities.
The Company will be required to seek additional  financing in the future.  There
can be no assurance that such financing will be available at all or available on
terms acceptable to the Company.

Government Regulation

        The Company's products currently do not require government approval. The
Company is not aware of any existing or probable governmental regulations on the
business.

Research and Development Activities

        For the six months  (Transition  Period) ended June 30, 2001 and for the
years ended December 31, 2000 and 1999 there was no money  allocated to research
and development. Royalty

                                        7

<PAGE>



agreements provided that the research and development expenses are to be paid by
the royalty holder.

Employees

        As of June 30, 2001 the Company had no full time employees.  There are a
total  of  2  contract   employees   engaged  in  the  general   management  and
administration.

Risk of Low-priced Stocks

         Rules 15g-1 through 15g-9 promulgated under the Securities Exchange Act
of 1934 (the "Exchange  Act") impose sales practice and disclosure  requirements
on certain brokers and dealers who engage in certain  transactions  involving "a
penny stock."

        Currently,  the  Company's  Common Stock is considered a penny stock for
purposes of the  Exchange  Act. The  additional  sales  practice and  disclosure
requirements imposed on certain brokers and dealers could impede the sale of the
Company's  Common  Stock  in the  secondary  market.  In  addition,  the  market
liquidity and price for the Company's securities may be adversely affected.

        Under the penny  stock  regulations,  a broker or dealer  selling  penny
stock to anyone other than an  established  customer or  "accredited  investor"'
(generally,  an  individual  with a net worth in excess of  $1,000,000 or annual
incomes  exceeding  $200,000,  or $300,000 together with his or her spouse) must
make a special suitability  determination for the purchaser and must receive the
purchaser's  written consent to the transaction prior to sale, unless the broker
or dealer or the transaction is otherwise exempt.  In addition,  the penny stock
regulations  require the broker or dealer to deliver,  prior to any  transaction
involving a penny stock,  a disclosure  schedule  prepared by the Securities and
Exchange  Commission (the "SEC") relating to the penny stock market,  unless the
broker,  or dealer,  or the transaction is otherwise exempt. A broker, or dealer
is also required to disclose commissions payable to the broker or dealer and the
registered   representative  and  current  quotations  for  the  Securities.  In
addition,  a broker or dealer is required to send monthly statements  disclosing
recent  price  information  with respect to the penny stock held in a customer's
account and information with respect to the limited market in penny stocks.


                         ITEM 2 DESCRIPTION OF PROPERTY



        The Company has  committed to a month to month lease at $1,500 per month
for its corporate headquarters in Las Vegas, Nevada.







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                            ITEM 3 LEGAL PROCEEDINGS



        In addition to ordinary  routine  litigation  incidental to its business
operations,  which the Company does not believe,  in the aggregate,  will have a
material  adverse  effect on the  Company,  or its  operations,  the Company was
engaged in the following lawsuits:


        On December,  17, 1999,  The Company was named in a lawsuit by Financial
Observer West, dba Stockbrokers  Society et al, in the Glendale  District Court,
Glendale,  California.  The case is in the  discovery  stage.  Management of the
Company  believes this lawsuit to be without merit and expects all charges to be
dropped or  dismissed.  As of June 30, 2001,  it is not possible to estimate any
economic impact on the Company as a result of this law suit.



                        ITEM 4 SUBMISSION OF MATTERS TO A
                            VOTE OF SECURITY HOLDERS



        No matters were subject to a vote of security holders during 2001.



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                                     PART II


                       ITEM 5 MARKET FOR COMMON EQUITY AND
                           RELATED STOCKHOLDER MATTERS



MARKET INFORMATION

        The stock is traded  over-the-counter  on the NASDAQ Bulletin Board with
the trading  symbol  "OSIN".  The  following  high and low bid  information  was
provided by PC Financial Network.  The quotations provided reflect  inter-dealer
prices,  without retail  mark-up,  mark-down or commission and may not represent
actual transactions.


                                           High            Low
              2000:
First Quarter                           $        6.250  $       4.930
Second Quarter                          $        5.250  $       3.000
Third Quarter                           $        8.000  $       2.000
Fourth Quarter                          $        8.313  $       1.500
              2001:
Jan - Mar                               $        3.800  $       0.610
Apr - Jun                               $        2.880  $       1.210




        The number of shareholders of record of the Company's common stock as of
June 30, 2001 was approximately 261.

        The  Company  has not  paid  any  cash  dividends  to date  and does not
anticipate  paying  dividends  in the  foreseeable  future.  It is  the  present
intention of management to utilize all available  funds for the  development  of
the Company's business.

        During the six months  ended  June30,  2001,  the Company  declared a 7%
stock dividend for holders of record on March 31, 2001.









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



General

The following  discusses the financial position and results of operations of the
Company.

Results of Operations

        From 1984 to 1986, the Company attempted to manufacture,  distribute and
sell chemical products for the purification of water. This business activity was
abandoned.  From 1986 to 1990,  the Company  attempted  to acquire  interests in
various  business  opportunities,  all attempts were abandoned.  The Company was
inactive  from 1990 to 1992.  The  Company  was in the  development  stage  from
December  31,  1992  through  December  31,  1997.  The  Company was not in full
operations as of June 30, 2001, accordingly,  comparisons with prior periods are
not meaningful.

Total  Revenues - For the six months  ended June 30, 2001 and 2000,  the Company
had total trade revenues of approximately $40,000 and $29,000, respectively.

For the years  ended  December  31,  2000 and 1999,  the Company had total trade
revenues of approximately $401,000 and $183,000, respectively.

Costs and Expenses - For the six months  ended June 30, 2001,  the Company had a
net loss of approximately  $162,000. For the six months ended June 30, 2000, the
Company  had a net  loss of  approximately  $104,000.  The net  loss is  largely
attributable to the  amortization of intangible  assets and additional  expenses
incurred by startup companies.  Given the limited operations which took place in
2001, any discussion of operating expenses as a percentage of sales would not be
meaningful and might be misleading.

For  the  year  ended   December  31,  1999,  the  Company  had  net  income  of
approximately  $75,000.  For the year ended December 31, 2000, the Company had a
net  loss  of  approximately   $536,000.  The  net  loss  for  2000  is  largely
attributable to the  amortization of intangible  assets and additional  expenses
incurred by startup companies.  Given the limited operations which took place in
2000, any discussion of operating expenses as a percentage of sales would not be
meaningful and might be misleading.

Liquidity and Capital Resources

        The Company  requires  working  capital  principally to fund its current
operations.  Generally the Company has adequate funds for its activities.  There
are no formal  commitments  from  banks or other  lending  sources  for lines of
credit or similar  short-term  borrowing.  It is  anticipated  that the  current
operations  will expand and funds  generated  will exceed the Company's  working
capital

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requirements for the next year.

        The Company  intends to seek an acquisition of a larger and  potentially
more  profitable  business.  The Company  intends to focus on  opportunities  to
acquire new products or  technologies  in development as well as those currently
being operated,  including a complete  operating  business that has demonstrated
long-term  growth  potential,  strong  marketing  presence,  and the  basis  for
continuing profitability.  The Company has not identified any specific target or
possible  acquisition.  As the Company pursues its acquisition  program, it will
incur  costs for  ongoing  general  and  administrative  expenses as well as for
identifying, investigating, and negotiating a possible acquisition.

        In order to  complete  any  acquisition,  the Company may be required to
supplement  its  available  cash and other  liquid  assets  with  proceeds  from
borrowing, the sale of additional securities, including the private placement of
restricted  stock and/or a public  offering,  or other sources.  There can be no
assurance  that  any such  required  additional  funding  will be  available  or
favorable to the Company.

        There  are no  arrangements  or  understandings  between  non-management
shareholders and management under which non-management shareholders may directly
or  indirectly  participate  in or influence  the  management  of the  Company's
affairs.

        The Company may be required to supplement  its available  cash and other
liquid assets with proceeds from borrowing,  the sale of additional  securities,
or other sources.  There can be no assurance  that any such required  additional
funding will be  available  or, if  available,  that it can be obtained on terms
favorable to the Company.

Inflation and Regulation

        The  Company's  operations  have not been,  and in the near term are not
expected to be, materially affected by inflation or changing prices. The Company
will encounter competition from a variety of firms selling barter/trade services
in  its  market  area.   Many  of  these  firms  have  long  standing   customer
relationships and are well-staffed and well financed.  The Company believes that
competition  in the  barter/trade  industry  is  based on  competitive  pricing,
although  the  ability,  reputation  and support of a marketing  network is also
significant. The Company does not believe that any recently enacted or presently
pending proposed  legislation will have a material adverse effect on its results
of operations.

Factors That May Affect Future Results

        Management's Discussion and Analysis and other parts of this form 10-KSB
contain information based on management's beliefs and forward-looking statements
that involve a number of risks, uncertainties,  and assumptions. There can be no
assurance that actual results will not differ materially for the forward-looking
statements  as a result of various  factors,  including  but not  limited to the
following:


                                       12

<PAGE>



        The markets for many of the  Company's  offerings are  characterized  by
rapidly  changing  technology,  evolving  industry  standards,  and frequent new
product  introductions.  The  Company's  operating  results  will  depend  to  a
significant  extent on its ability to design,  develop,  or otherwise obtain and
introduce new products, services, systems, and solutions and to reduce the costs
of these offerings. The success of these and other new offerings is dependent on
many factors,  including proper  identification of customer needs,  cost, timely
completion  and  introduction,  differentiation  from offerings of the Company's
competitors,  and market acceptance.  The ability to successfully  introduce new
products and services could have an impact on future results of operations.


                           ITEM 7 FINANCIAL STATEMENTS



        The  financial  statements  of the  Company and  supplementary  data are
included beginning  immediately following the signature page to this report. See
Item 13 for a list of the financial statements and financial statement schedules
included.


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



        There are not and have not been any  disagreements  between  the Company
and its  accountants  on any  matter  of  accounting  principles,  practices  or
financial statements disclosure.



                                       13

<PAGE>



                                    PART III


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



Executive Officers and Directors

        The  following  table sets forth the name,  age,  and  position  of each
executive officer and director of the Company:


Director's   Name            Age    Office                       Term of Office

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


Rose Fischer                 49     CEO/CFO              June 1, 2001 to Present
Jeffrey Jackson              50     Director             June 1, 2001 to Present
Daniel Vasil                 51     Director             June 1, 2001 to Present



Business Experience

Rose Fischer,  Secretary/Treasurer,  with an associate degree in accounting, has
been Director and Operations  Facilitator for the past two years, which includes
finalization and  implementation of all electronic  commerce.  Prior to OSI, Ms.
Fischer's  experience was as a financial  consultant  with a privately held firm
since 1985.

Jeffrey Jackson, Environmental Industry, Business Assets and Resource Consultant
- Valley Pacific  Environmental and Energy Company CEO - Mr. Jackson has over 27
years  experience  in  the  Environmental  Industry,   Commercial  construction,
Business  Assets  Protection and Resource  Management.  Mr. Jackson has provided
oversight to  assessments of liability and asset  protection,  as well as future
public company acquisition and development.

Daniel Vasil,  is service the Company as Director of Operations,  overseeing and
coordinating many of the Company's  projects and  acquisitions.  Mr. Vasil has a
background  in Healthcare  and  Healthcare  Management  and is also the CEO of a
Healthcare Management Company.

Resignation of Officers

        James M. O'Brien, former CEO,  President and Director of the Company has
submitted a letter of resignation effective June 1, 2001 .



                                       14

<PAGE>



Compliance with Section 16(a) of the Exchange Act

        Based solely upon a review of forms 3, 4, and 5 and amendments  thereto,
furnished to the Company during or respecting its last fiscal year, no director,
officer,  beneficial owner of more than 10% of any class of equity securities of
the  Company  or any other  person  known to be  subject  to  Section  16 of the
Exchange  Act of 1934,  as  amended,  failed to file on a timely  basis  reports
required by Section 16(a) of the Exchange Act for the last fiscal year.


                         ITEM 10 EXECUTIVE COMPENSATION



        There has been no executive compensation.


                 ITEM 11 SECURITY OWNERSHIP OF BENEFICIAL OWNERS
                                 AND MANAGEMENT



Principal Shareholders

        The table  below  sets forth  information  as to each  person  owning of
record or who was known by the Company to own  beneficially  more than 5% of the
12,447,950  shares of issued and  outstanding  Common Stock of the Company as of
June 30, 2001 and information as to the ownership of the Company's Stock by each
of its  directors  and  executive  officers and by the  directors  and executive
officers  as a group.  Except  as  otherwise  indicated,  all  shares  are owned
directly,  and the persons  named in the table have sole  voting and  investment
power with respect to shares shown as beneficially owned by them.

                                                      # of
Name and Address               Nature of             Shares
of Beneficial Owners           Ownership             Owned               Percent
Directors

The Word, LLC                Common Stock            10,700,000            86%

All Executive Officers       Common Stock                  None             0%
and Directors as a Group
  (3 persons)





                                       15

<PAGE>




             ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS



        James O'Brien, the former President of the Company, provided the Company
with the marketing distribution plans,  compensation program,  commission payout
structure, operations, and automated monthly ordering system.

        During 2001 and 2000 the Company  borrowed  money from a stockholder  to
pay administrative expenses. The loan is payable on demand and carries an annual
interest  rate of 10 percent.  As of June 30, 2001 An amount of $104,928 was due
including accrued  interest.  During 2000, the Company  transferred  $500,000 in
rights to intangible  assets in partial  payment for principal and interest owed
by the Company to the stockholder.


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



(a)     The following documents are filed as part of this report.

1.      Financial Statements                                                Page

Independent Auditors' Report...............................................F - 1

Balance Sheets
  June 30, 2001 (Transition Period), and
  December 31, 2000 .......................................................F - 2

Statements of Operations for the
  Six Months (Transition Period) Ended June 30, 2001, and for the
  Years Ended December 31, 2000 and 1999 ..................................F - 4

Statement of Stockholders' Equity for the
  Six Months (Transition Period) Ended June 30, 2001, and for the
  Years Ended December 31, 2000 and 1999 ..................................F - 5

Statements of Cash Flows for the
  Six Months (Transition Period) Ended June 30, 2001, and for the
  For the Years Ended December 31, 2000 and 1999 ..........................F - 7

Notes to the Financial Statements
  June 30, 2001 (Transition Period), and
  December 31, 2000 and 1999 ..............................................F - 9

                                       16

<PAGE>



2.      Financial Statement Schedules

        The following  financial  statement schedules required by Regulation S-X
are included herein.

        All  schedules  are  omitted  because  they  are not  applicable  or the
required information is shown in the financial statements or notes thereto.


3.      Exhibits

               The following exhibits are included as part of this report:

Exhibit
Number         Title of Document


3.1          Articles of Incorporation(1)
3.2          By-laws(1)
10.1         2000/2001 Directors & Employees stock option & stock award plan.(1)


(1) Incorporated by reference.


        1.     No reports on Form 8-K were filed.






                                       17

<PAGE>



                                   SIGNATURES



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

                       OPTIMUM SOURCE INTERNATIONAL, LTD.


Dated: October 15, 2001                          By  /S/     Rose Fischer
                                                 -----------------------------
                                                 Rose Fischer,
                                                 C.E.O., C.F.O

        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 October 15, 2001.

Signatures                                       Title

/S/     Rose Fischer
------------------------------------------------------------------
Rose Fischer                                     Director, C.E.O., C.F.O.
                                                 (Principal Executive, Financial
                                                 and Accounting Officer)

/S/     Jeffrey Jackson
-----------------------------------------------------------------
Jeffrey Jackson                                  Director



/S/     Daniel Vasil
-------------------------------------------------------------------
Daniel Vasil                                     Director










                                       18

<PAGE>
                       OPTIMUM SOURCE INTERNATIONAL, LTD.

                                      - : -

                          INDEPENDENT AUDITORS' REPORT

                        JUNE 30, 2001 (Transition Period)

                                       AND

                                DECEMBER 31, 2000



<PAGE>










                                TABLE OF CONTENTS



Independent Auditors' Report...............................................F - 1

Balance Sheets
  June 30, 2001 (Transition Period), and
  December 31, 2000 .......................................................F - 2

Statements of Operations for the
  Six Months (Transition Period) Ended June 30, 2001, and for the
  Years Ended December 31, 2000 and 1999 ..................................F - 4

Statement of Stockholders' Equity for the
  Six Months (Transition Period) Ended June 30, 2001, and for the
  Years Ended December 31, 2000 and 1999 ..................................F - 5

Statements of Cash Flows for the
  Six Months (Transition Period) Ended June 30, 2001, and for the
  For the Years Ended December 31, 2000 and 1999 ..........................F - 7

Notes to the Financial Statements
  June 30, 2001 (Transition Period), and
  December 31, 2000 and 1999 ..............................................F - 9
















<PAGE>







                          INDEPENDENT AUDITORS' REPORT



Board of Directors
Optimum Source International, Ltd.


        We have  audited  the  accompanying  balance  sheets of  Optimum  Source
International,  Ltd., as of June 30, 2001  (Transition  Period) and December 31,
2000, and the related  statements of operations,  stockholders'  equity and cash
flows for the six months  (transition  period) ended June 30, 2001 and the years
ended  December  31,  2000  and  1999.   These  financial   statements  are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

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

        In our  opinion,  the  financial  statements  referred to above  present
fairly,  in all material  respects,  the  financial  position of Optimum  Source
International,  Ltd., as of June 30, 2001, and December 31, 2000 and the results
of its  operations,  and its cash flows for the six months  (transition  period)
ended June 30, 2001 and the years ended December 31, 2000 and 1999 in conformity
with generally accepted accounting principles.

                                                   Respectfully submitted,



                                                   /S/ ROBISON, HILL & CO.
                                                   Certified Public Accountants

Salt Lake City, Utah
September 28, 2001




                                      F - 1

<PAGE>



                       OPTIMUM SOURCE INTERNATIONAL, LTD.
                                 BALANCE SHEETS




                                                    (Transition
                                                       Period)
                                                      June 30,      December 31,
                                                        2001             2000
                                                     ---------        ---------
Assets
Current Assets
  Cash .......................................       $   6,363        $  19,222
  Accounts Receivable ........................           9,546           14,771
  Inventory ..................................         212,844          350,737
  Prepaid Expense ............................            --              9,000
  Available-for-Sale Investments .............          22,645            9,827
                                                     ---------        ---------

     Total Current Assets ....................         251,398          403,557

Fixed Assets
  Office Equipment & Furniture ...............          25,378           25,378
  Less Accumulated Depreciation ..............          (3,807)          (1,269)
                                                     ---------        ---------

     Total Fixed Assets ......................          21,571           24,109
                                                     ---------        ---------

Other Assets .................................          60,000             --
                                                     ---------        ---------

                                                     $ 332,969        $ 427,666
                                                     =========        =========


















                                      F - 2

<PAGE>



                       OPTIMUM SOURCE INTERNATIONAL, LTD.
                                 BALANCE SHEETS
                                   (Continued)



                                                      (Transition
                                                         Period)
                                                        June 30,    December 31,
                                                          2001          2000
                                                      -----------   -----------
Liabilities and Stockholders' Equity
Liabilities
  Accounts Payable .................................  $    15,108   $    10,000
  Accrued Liabilities ..............................        7,023         7,631
  Short-term Notes Payable .........................         --          55,000
  Loans From Shareholder ...........................      104,928          --
                                                      -----------   -----------

     Total Liabilities .............................      127,059        72,631
                                                      -----------   -----------

Stockholders' Equity
  Preferred Stock, authorized 5,000,000 shares of
    $.01 par value, issued and outstanding zero ....         --            --
  Common Stock, authorized 50,000,000 shares of
    $.001 par value, issued and outstanding
    12,447,950 at June 30, 2001 and
    11,656,585 at December 31, 2000 ................       12,448        11,657
    Additional Paid in Capital .....................    1,095,471     1,096,262
    Accumulated Other Comprehensive Income (Expense)      (64,507)      (77,325)
    Retained Deficit ...............................     (837,502)     (675,559)
                                                      -----------   -----------

     Total Stockholders' Equity (Deficit) ..........      205,910       355,035
                                                      -----------   -----------

   Total Liabilities and Stockholders' Equity ......  $   332,969   $   427,666
                                                      ===========   ===========












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

                                      F - 3

<PAGE>



                       OPTIMUM SOURCE INTERNATIONAL, LTD.
                            STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>


                                        (Transition Period)
                                         Six Months Ended               For the Year Ended
                                              June 30,                      December 31,
                                   ------------------------------  -------------------------------
                                        2001            2000            2000            1999
                                   --------------  --------------  --------------  ---------------
                                                    (Unaudited)

<S>                                <C>             <C>             <C>             <C>
Revenues                           $       39,632  $       29,150  $      400,704  $       182,626
Cost of Revenues                           19,955          29,581         111,555           56,400
                                   --------------  --------------  --------------  ---------------

     Gross Profit                          19,677            (431)        289,149          126,226

Expenses:
  Advertising                               2,092               -          24,488                -
  General & Administrative
    Expenses                              177,018         204,457         874,619           37,712
                                   --------------  --------------  --------------  ---------------

     Income (Loss) from Operations       (159,433)       (204,888)       (609,958)          88,514

Other Income (Expense):
  Gain on Sale of Marketable
    Securities                                  -         106,051         106,051                -
  Interest Income                              42             332           1,727                -
  Interest Expense                         (2,552)         (5,683)        (34,738)         (13,608)
                                   --------------  --------------  --------------  ---------------

     Net Other Income (Expense)            (2,510)        100,700          73,040          (13,608)
                                   --------------  --------------  --------------  ---------------

Net Income (Loss) Before Taxes           (161,943)       (104,188)       (536,918)          74,906

Income Taxes                                    -               -               -                -
                                   --------------  --------------  --------------  ---------------

Net Loss                           $     (161,943) $     (104,188) $     (536,918) $        74,906
                                   ==============  ==============  ==============  ===============

Net Income (Loss) Per Share        $      (0.01)   $      (0.01)   $      (0.05)   $        0.03
                                   ==============  ==============  ==============  ===============

Weighted Average shares
 Outstanding                           12,055,268      11,656,585      11,656,585        2,887,004
                                   ==============  ==============  ==============  ===============
</TABLE>


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

                                      F - 4

<PAGE>



                       OPTIMUM SOURCE INTERNATIONAL, LTD.
                        STATEMENT OF STOCKHOLDERS' EQUITY
         FOR THE SIX MONTHS (Transition Period) ENDED JUNE 30, 2001, AND
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
<TABLE>
<CAPTION>
                                                                                           Accumulated
                                                                               Additional     Other
                                  Preferred Stock           Common Stock         Paid-in  Comprehensive   Retained
                                ----------------------  ----------------------
                                  Shares      Amount      Shares      Amount     Capital      Income       Deficit
                                ----------  ----------  ----------  ----------  ----------  ----------   ----------

<S>                             <C>         <C>          <C>        <C>         <C>         <C>          <C>
Balance January 1, 1999 ......        --    $     --     1,654,051  $    1,654  $   92,765  $     --     $ (213,547)

November 2, 1999 Shares
issued in exchange for
"The Word" subsidiary ........        --          --    10,000,000      10,000     990,000        --           --

December 20, 1999 Shares
issued for cash ..............        --          --         2,534           3      13,497        --           --

Comprehensive income:
  Net Income .................        --          --          --          --          --          --         74,906
  Unrealized holding gains ...        --          --          --          --          --        25,511         --
                                ----------  ----------  ----------  ----------  ----------  ----------   ----------

Balance December 31, 1999 ....        --          --    11,656,585      11,657   1,096,262      25,511     (138,641)

Comprehensive income:
  Net Loss ...................        --          --          --          --          --          --       (536,918)
  Unrealized holding losses ..        --          --          --          --          --      (102,836)        --
                                ----------  ----------  ----------  ----------  ----------  ----------   ----------

Balance December 31, 2000 ....        --    $     --    11,656,585  $   11,657  $1,096,262  $  (77,325)  $ (675,559)
                                ----------  ----------  ----------  ----------  ----------  ----------   ----------
</TABLE>




                                      F - 5

<PAGE>



                       OPTIMUM SOURCE INTERNATIONAL, LTD.
                        STATEMENT OF STOCKHOLDERS' EQUITY
         FOR THE SIX MONTHS (Transition Period) ENDED JUNE 30, 2001, AND
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
                                   (Continued)
<TABLE>
<CAPTION>
                                                                                              Accumulated
                                                                                  Additional      Other
                                  Preferred Stock            Common Stock          Paid-in   Comprehensive    Retained
                             ------------------------  ------------------------
                                Shares       Amount      Shares       Amount       Capital       Income        Deficit
                             -----------  -----------  -----------  -----------  -----------   -----------   -----------

March 31, 2001, Shares
  Issued pursuant to a 7%
<S>                          <C>          <C>          <C>           <C>         <C>           <c>           <C>
  Stock dividend ..........         --           --        791,365          791         (791)         --            --

Comprehensive income:
  Net Loss ................         --           --           --           --           --            --        (161,943)
  Unrealized holding losses         --           --           --           --           --          12,818          --
                             -----------  -----------  -----------  -----------  -----------   -----------   -----------

Balance June 30, 2001 .....         --    $      --     12,447,950  $    12,448  $ 1,095,471   $   (64,507)  $  (837,502)
                             ===========  ===========  ===========  ===========  ===========   ===========   ===========

</TABLE>











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

                                      F - 6

<PAGE>



                       OPTIMUM SOURCE INTERNATIONAL, LTD.
                            STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                          (Transition Period)
                                                                           Six Months Ended               For the Year Ended
                                                                               June 30,                      December 31,
                                                                    ------------------------------- -------------------------------
                                                                         2001            2000            2000             1999
                                                                    --------------  --------------- ---------------  --------------
                                                                                      (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                 <C>             <C>             <C>              <C>
Net Income (loss)                                                   $     (161,943) $      (104,188)$      (536,918) $       74,906
Adjustments used to reconcile net income to net cash
  provided by (used in) operating activities:
    Depreciation and amortization                                            2,538          100,000         501,269               -
    Gain on sale of available-for-sale investments                               -         (106,051)       (106,051)              -
Changes in operating assets and liabilities:
   Decrease (increase) in accounts receivable                                5,225                -         (12,316)         (2,455)
   Decrease (increase) in inventory                                        137,893          (13,700)       (318,637)         17,900
   Increase in prepaid expense                                               9,000                -          (9,000)              -
   Increase (decrease) in accounts payable                                   5,108           11,146         (18,748)         10,059
   Increase (decrease) in trade dollars payable                                  -                -         (32,100)        (32,900)
   Increase (decrease) in accrued expenses                                    (608)           4,587          (3,667)          9,166
                                                                    --------------  --------------- ---------------  --------------
Net Cash Provided (used) by operating Activities                            (2,787)        (108,206)       (536,168)         76,676
                                                                    --------------  --------------- ---------------  --------------

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets                                                         -                -         (25,378)              -
Proceeds from sale of intangible assets                                          -                -         500,000               -
Cash received from sale of available-for-sale investments                        -          121,075         121,075               -
Acquisition of Other Assets                                                (60,000)               -               -               -
Acquisition of available-for-sale investments                                    -                -               -        (102,177)
                                                                    --------------  --------------- ---------------  --------------
Net cash provided (used) by investing activities                           (60,000)         121,075         595,697        (102,177)
                                                                    --------------  --------------- ---------------  --------------
</TABLE>




                                      F - 7

<PAGE>



                       OPTIMUM SOURCE INTERNATIONAL, LTD.
                            STATEMENTS OF CASH FLOWS
                                   (Continued)
<TABLE>
<CAPTION>
                                                                          (Transition Period)
                                                                           Six Months Ended               For the Year Ended
                                                                               June 30,                      December 31,
                                                                    ------------------------------- -------------------------------
                                                                         2001            2000            2000             1999
                                                                    --------------  --------------- ---------------  --------------
                                                                                      (Unaudited)
CASH FLOWS FROM FINANCING ACTIVITIES
<S>                                                                 <C>             <C>             <C>              <C>
Proceeds from issuance of common stock                                           -                -               -          13,500
Principal payments on loans from shareholder                                     -           (5,300)       (512,041)              -
Proceeds from Short-Term Notes Payable                                           -                -          55,000               -
Principal payments on Short-term Notes Payable                             (55,000)               -               -               -
Loans from shareholder                                                     104,928                -         416,585          12,150
                                                                    --------------  --------------- ---------------  --------------
Net cash provided (used) by financing activities                            49,928           (5,300)        (40,456)         25,650
                                                                    --------------  --------------- ---------------  --------------

Net increase (decrease) in cash and Cash equivalents                       (12,859)           7,569          19,073             149
Cash and cash equivalents at beginning of year                              19,222              149             149               -
                                                                    --------------  --------------- ---------------  --------------
Cash and cash equivalents at end of year                            $        6,363  $         7,718 $        19,222  $          149
                                                                    ==============  =============== ===============  ==============

Supplemental Disclosure of Cash Flow Information
Interest                                                            $       38,406  $         5,683 $        38,406  $            -
Income Taxes                                                        $            -  $             - $             -  $            -
</TABLE>

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
-----------------------------------------------------------------------

        During the six months  ended  June30,  2001,  the Company  declared a 7%
stock dividend for holders of record on March 31, 2001.




    The accompanying notes are an integral part of these financial statements

                                      F - 8

<PAGE>



                       OPTIMUM SOURCE INTERNATIONAL, LTD.
                        NOTES TO THE FINANCIAL STATEMENTS
                     JUNE 30, 2001 (Transition Period), AND
                           DECEMBER 31, 2000 AND 1999

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

        This summary of accounting  policies for Optimum  Source  International,
Ltd. is presented to assist in understanding the Company's financial statements.
The accounting policies conform to generally accepted accounting  principles and
have been consistently applied in the preparation of the financial statements.

Organization and History

        The  Company  was  incorporated  under  the laws of the State of Utah on
October 24,  1984.  The Company  Redomiciled  to the State of Nevada on June 29,
1990. From 1984 to 1986, the Company  attempted to  manufacture,  distribute and
sell chemical products for the purification of water. This business activity was
abandoned.  From 1986 to 1990,  the Company  attempted  to acquire  interests in
various  business  opportunities,  all attempts were abandoned.  The Company was
inactive from 1990 to 1992.

Nature of Business

        The  Company's   primary   mission  is   Barter/Counter-trade   and  its
proprietary   interactive   services   both  Domestic  and   International   and
encompassing the liquidation & auction industries globally.

Cash and Cash Equivalents

        For purposes of the statement of cash flows,  the Company  considers all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents to the extent the funds are not being held for investment
purposes.

Reclassification

        Certain  reclassifications have been made in the 2000 and 1999 financial
statements to conform with the 2001 presentation.

Concentration of Credit Risk

        The  Company  has no  significant  off-balance-sheet  concentrations  of
credit  risk such as foreign  exchange  contracts,  options  contracts  or other
foreign  hedging  arrangements.  The Company  maintains the majority of its cash
balances with one financial institution, in the form of demand deposits.


                                      F - 9

<PAGE>



                       OPTIMUM SOURCE INTERNATIONAL, LTD.
                        NOTES TO THE FINANCIAL STATEMENTS
                     JUNE 30, 2001 (Transition Period), AND
                           DECEMBER 31, 2000 AND 1999
                                   (Continued)

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

Loss per Share

        The  reconciliations  of the  numerators and  denominators  of the basic
earnings per share computations are as follows:
<TABLE>
<CAPTION>
                                                                                   Per-Share
                                                    Income          Shares           Amount
                                                  (Numerator)   (Denominator)

                                                     For the year ended December 31, 1999
Basic Earnings per Share
<S>                                             <C>             <C>              <C>
Income available to common shareholders         $        74,906       2,887,004  $         0.03
                                                =============== ===============  ==============

                                                     For the year ended December 31, 2000
Basic Loss per Share
Loss available to common shareholders           $      (536,918)     11,656,585  $       (0.05)
                                                =============== ===============  ==============

                                        For the six months (Transition Period) ended June 30, 2001
Basic Loss per Share
Loss available to common shareholders           $      (161,943)     12,055,268  $       (0.01)
                                                =============== ===============  ==============
</TABLE>

        There are no outstanding  common stock equivalents at June 30, 2001, and
December 31, 2000 and 1999.

Pervasiveness of Estimates

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

Advertising Expense

        Advertising  costs are  charged  to  operations  when the  services  are
provided.


                                     F - 10

<PAGE>



                       OPTIMUM SOURCE INTERNATIONAL, LTD.
                        NOTES TO THE FINANCIAL STATEMENTS
                     JUNE 30, 2001 (Transition Period), AND
                           DECEMBER 31, 2000 AND 1999
                                   (Continued)

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

Investments

        The Company's  investments in marketable  equity securities are held for
an indefinite  period and thus are classified as available for sale.  Unrealized
holding gains/(losses) on such securities, which were added/(subtracted) to/from
stockholders'  equity during the six months  (transition  period) ended June 30,
2001  and the  year  ended  December  31,  2000  were  $12,818  and  ($102,836),
respectively.

        Investments in securities are summarized as follows:
<TABLE>
<CAPTION>
                                                               December 31, 2000
                                                -----------------------------------------------
                                                  Gross Gross
                                                  Unrealized      Unrealized          Fair
                                                     Gain            Loss            Value
                                                --------------- ---------------  --------------
<S>                                             <C>             <C>              <C>
Available-for-Sale Securities                   $             - $        77,326  $        9,827
                                                =============== ===============  ==============


                                                                June 30, 2001
                                               -----------------------------------------------
                                                    Gross           Gross
                                                 Unrealized      Unrealized          Fair
                                                    Gain            Loss            Value
                                               --------------- ---------------  --------------
Available-for-Sale Securities                  $             - $        64,507  $       22,645
                                               =============== ===============  ==============
</TABLE>

        Realized  Gains and  losses  are  determined  on the  basis of  specific
identification.  During the six months  (transition  period) ended June 30, 2001
and the years  ended  December  31,  2000 and  1999,  sales  proceeds  and gross
realized  gains  and  losses  on  securities  classified  as  available-for-sale
securities were:
<TABLE>
<CAPTION>
                                      (Transition Period)
                                       Six Months Ended              For the Year Ended
                                           June 30,                      December 31,
                                ------------------------------- -------------------------------
                                     2001            2000            2000             1999
                                --------------  --------------- ---------------  --------------

<S>                             <C>             <C>             <C>              <C>
Sale Proceeds                   $            -  $       121,075 $       121,075  $            -
                                ==============  =============== ===============  ==============
Gross Realized Losses           $            -  $             - $             -  $            -
                                ==============  =============== ===============  ==============
Gross Realized Gains            $            -  $       106,051 $       106,051  $            -
                                ==============  =============== ===============  ==============
</TABLE>



                                     F - 11

<PAGE>



                       OPTIMUM SOURCE INTERNATIONAL, LTD.
                        NOTES TO THE FINANCIAL STATEMENTS
                     JUNE 30, 2001 (Transition Period), AND
                           DECEMBER 31, 2000 AND 1999
                                   (Continued)

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

Property and Equipment

        Property and equipment are stated at cost.  Depreciation is provided for
in amounts  sufficient  to relate the cost of  depreciable  assets to operations
over their estimated service lives,  principally on a straight-line basis from 3
to 5 years.

        Upon sale or other  disposition of property and equipment,  the cost and
related  accumulated  depreciation or amortization are removed from the accounts
and any gain or loss is included in the determination of income or loss.

        Expenditures  for  maintenance  and  repairs  are  charged to expense as
incurred.  Major overhauls and betterments are capitalized and depreciated  over
their useful lives.

        The Company  identifies  and  records  impairment  losses on  long-lived
assets such as property and  equipment  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 future
cash flows from the  respective  asset.  Impairment  losses are  measured as the
amount by which the carrying amount of intangible asset exceeds its fair value.

NOTE 2 - RELATED PARTY TRANSACTIONS

        During 2001 and 2000 the Company  borrowed  money from a Stockholder  to
pay administrative expenses. The loan is payable on demand and carries an annual
interest  rate of 10 percent.  As of June 30, 2001 An amount of $104,928 was due
including accrued  interest.  During 2000, the Company  transferred  $500,000 in
rights to intangible  assets in partial  payment for principal and interest owed
by the Company to the stockholder.

NOTE 3 - SHORT-TERM NOTES PAYABLE

        Short-Term  Notes on June 30, 2001 and  December 31, 2000 in the amounts
of $-0- and $55,000 respectively,  are due on demand with interest rates of 10%.
The note is collateralized by inventory.





                                     F - 12

<PAGE>


                       OPTIMUM SOURCE INTERNATIONAL, LTD.
                        NOTES TO THE FINANCIAL STATEMENTS
                     JUNE 30, 2001 (Transition Period), AND
                           DECEMBER 31, 2000 AND 1999
                                   (Continued)

NOTE 4 - INCOME TAXES

        As of June 30, 2001, the Company had a net operating  loss  carryforward
for income tax reporting  purposes of approximately  $480,000 that may be offset
against future taxable income through 2021. Current tax laws limit the amount of
loss that can offset future taxable income when there is a substantial change in
ownership.  The amount of net operating  loss  available to offset future income
will be limited if there is a substantial  change in  ownership.  No tax benefit
has been  reported in the  financial  statements,  because the Company  believes
there  is a  50%  or  greater  chance  the  carryforwards  will  expire  unused.
Accordingly,  the potential tax benefits of the loss carryforwards are offset by
a valuation allowance of the same amount.

NOTE 5 - COMMITMENTS AND CONTINGENCIES

        The Company has  committed to a month to month lease at $1,500 per month
for its corporate headquarters in Las Vegas, Nevada.

        In addition to ordinary  routine  litigation  incidental to its business
operations,  which the Company does not believe,  in the aggregate,  will have a
material  adverse  effect on the  Company,  or its  operations,  the Company was
engaged in the following lawsuits:

        On December,  17, 1999?, The Company was named in a lawsuit by Financial
Observer  West,  dba  Stockbrokers  Society  et al.  Management  of the  Company
believes  this lawsuit to be without merit and expects all charges to be dropped
or  dismissed.  As of June 30, 2001, it is not possible to estimate any economic
impact on the Company as a result of this law suit.

NOTE 6 - DIRECTORS AND EMPLOYEES STOCK OPTION PLAN

        The Company as  authorized  a stock  option and stock award plan whereby
the  Company can issue stock  options to  employees  at no less than 100% of the
fair market  value of a share of Common  Stock on the date the option is granted
or in the case of a more than 10%  owner no less  than  110% of the fair  market
value. As of June 30, 2001 no options have been granted.

                                     F - 13