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: June 30, 2003


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

                        For the transition period from To


                         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.)

                   2417 East Belmont, Fresno, California 93701
                   -------------------------------------------
               (Address of principal executive offices) (Zip code)

Issuer's telephone number                      (559) 237-2738
                                              ---------------

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)






<PAGE>



         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. $136,000

         As  of  September  26,  2003,   there  were  7,692,885  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 $3,262,245 computed at the estimated average
bid and asked price as of September 26, 2003.

                       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





















                                        2

<PAGE>




                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
Item Number and Caption                                                                                        Page

PART I

<S>                                                                                                            <C>
Item 1.           Description of Business.........................................................................4

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

Item 3.           Legal Proceedings...............................................................................8

Item 4.           Submission of Matters to a Vote of Security Holders.............................................8


PART II

Item 5.           Market for Common Equity and Related Stockholder Matters........................................8

Item 6.           Management's Discussion and Analysis or Plan of Operations......................................9

Item 7.           Financial Statements...........................................................................11

Item 8.           Changes in and Disagreements With Accountants on Accounting and
                  Financial Disclosure...........................................................................12

PART III

Item 9.           Directors, Executive Officers, Promoters and Control Persons;
                  Compliance with Section 16(a) of the Exchange Act..............................................12

Item 10.          Executive Compensation.........................................................................13

Item 11.          Security Ownership of Certain Beneficial Owners and Management.................................13

Item 12.          Certain Relationships and Related Transactions.................................................14

Item 13.          Exhibits and Reports on Form 8-K...............................................................14

Item 14.          Controls and Procedures........................................................................15
</TABLE>




                                        3

<PAGE>




                                     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.  From 1992 to the  present,  the  Company  has been in the barter,
exchange,  swap and trade  business.  As of December 1, 2003, the Company was in
default with the State of Nevada.

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  at   www.optimumsourceintl.com,   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

                                        4

<PAGE>



business using the latest  networking  technologies.  (The above  information is
from the National  Association of Trade Exchange,  the International  Reciprocal
Trade Association, and the magazine "Barter News", a monthly publication.)

         Current products including:

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.

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'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

                                        5

<PAGE>



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.

         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.  Optimum
Source International, Ltd. has been trademarked.

Future Capital Needs and Uncertainty of Additional Funding

         The  Company was not in full  operation  during 2002 and 2003 and thus,
the revenues

                                        6

<PAGE>



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 year  ended  June 30,  2003  there  was no money  allocated  to
research and  development.  Royalty  agreements  provided  that the research and
development expenses are to be paid by the royalty holder.

Employees

         As of June 30, 2003 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

                                        7

<PAGE>



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 $500 per month
for its corporate headquarters in Fresno, California.


                            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. On September 5, 2003, a Notice
of  Entry  of  Judgement  was  filed  in the  Superior  Court  of the  State  of
California,  for the County of Los Angeles against the Company for  $13,296,005.
The Company is filing a motion to vacate judgement.  The amount of the judgement
has been reported on the financial statements as of June 30, 2003.


                        ITEM 4 SUBMISSION OF MATTERS TO A
                            VOTE OF SECURITY HOLDERS



         No matters were subject to a vote of security holders during 2003.

                                     PART II


                       ITEM 5 MARKET FOR COMMON EQUITY AND
                           RELATED STOCKHOLDER MATTERS



MARKET INFORMATION


                                        8

<PAGE>



         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.
<TABLE>
<CAPTION>
                                                     High                Low
                 2003:
<S>           <C> <C>                            <C>                 <C>
First Quarter (09/30/02)                         $          1.110    $         0.360
Second Quarter (12/31/02)                        $          1.150    $         0.250
Third Quarter (03/31/03)                         $          0.980    $         0.220
Fourth Quarter (06/30/03)                        $          0.980    $         0.220

                 2002:
First Quarter (09/30/01)                         $            -      $          -
Second Quarter (12/31/01)                        $            -      $          -
Third Quarter (03/31/02)                         $            -      $          -
Fourth Quarter (06/30/02)                        $          0.750    $         0.450
</TABLE>

         To the best of  management's  knowledge,  there was no  trading  of the
Company's stock during the first, second and third quarter of 2002.

         The number of shareholders  of record of the Company's  common stock as
of June 30, 2003 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 year ended June30,  2002,  the Company  declared a 10% stock
dividend for holders of record on December 14, 2001.



                       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

                                        9

<PAGE>



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.  During the six months ended June 30, 2001, the
Company  was in a  transition  period,  having  changed its fiscal year end from
December to June.  During the year ended June 30,  2003,  the Company was not in
full operations. Accordingly, comparisons with prior periods are not meaningful.

Total  Revenues - For the year ended June 30, 2003,  the Company had total trade
revenues of $136,000.  For the year ended June 30,  2002,  the Company had total
trade revenues of approximately $8,000.

Costs and  Expenses - For the year ended June 30,  2003,  the  Company had a net
loss of approximately $13,500,000. For the year ended June 30, 2002, the Company
had a net loss of approximately  $218,000.  The net loss for the year ended June
30, 2003 is largely attributable to a legal judgement against the Company. Given
the limited  operations  which took place in 2002 and 2003,  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 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.

                                       10

<PAGE>




         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:

         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.




                                       11

<PAGE>




              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.


                                    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:
<TABLE>
<CAPTION>
Director's   Name                   Age     Office                              Term of Office

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

<S>                                 <C>                                         <C>
Jeffrey Jackson                     52      President                           June 1, 2002 to Present
</TABLE>


Business Experience

         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.

         On July 13, 2003,  Rose Fischer and Daniel Vasil  resigned as directors
of the Company.

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

                                       12

<PAGE>



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
7,692,885  shares of issued and  outstanding  Common  Stock of the Company as of
June 30, 2002 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.
<TABLE>
<CAPTION>
                                                                                                    # of
Name and Address                        Nature of                           Shares
of Beneficial Owners                    Ownership                         Owned                   Percent
Directors

<S>                                 <C>                                <C>                      <C>
The Word, LLC (1)                   Common Stock                        4,700,000                61%
2417 East Belmont St.
Fresno, CA 93701

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

(1)  Investment  Trust Services is the principal  beneficial  owner of The Word,
LLC.






                                       13

<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. Mr. O'Brien
has never received any type of consideration.

         During 2002 and 2001 the Company  borrowed  money from The Word, LLC to
pay administrative expenses. The loan is payable on demand and carries an annual
interest rate of 10 percent.  As of June 30, 2003, an amount of $118,852 was due
including accrued interest.


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



(a) The following documents are filed as part of this report.
<TABLE>
<CAPTION>
1.       Financial Statements                                                                                  Page

<S>                                                                                                           <C>
Independent Auditors' Report..................................................................................F - 1

Balance Sheets
  June 30, 2003 and 2002 .....................................................................................F - 2

Statements of Operations for the
  Year Ended June 30, 2003 and 2002...........................................................................F - 4

Statement of Stockholders' Equity for the
  Year Ended June 30, 2003 and 2002 ..........................................................................F - 5

Statements of Cash Flows for the
  Year Ended June 30, 2003 and 2002 ..........................................................................F - 6

Notes to the Financial Statements
  June 30, 2003 and 2002 .....................................................................................F - 8
</TABLE>

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.

                                       14

<PAGE>




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)
31      Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32      Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


(1) Incorporated by reference.

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



                        ITEM 14. CONTROLS AND PROCEDURES


         The Company's Chief Executive  Officer and Chief Financial Officer have
concluded,  based on an evaluation  conducted within 90 days prior to the filing
date of this  annual  report  on Form 10- KSB,  that  the  Company's  disclosure
controls and  procedures  have  functioned  effectively  so as to provide  those
officers the information necessary whether:

                  (i) this  annual  report on Form  10-KSB  contains  any untrue
                  statement of a material fact or omits 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 on Form 10-KSB, and

                  (ii) the financial statements, and other financial information
                  included in this annual report on Form 10-KSB,  fairly present
                  in all material respects the financial  condition,  results of
                  operations  and cash flows of the Company as of, and for,  the
                  periods presented in this annual report on Form 10-KSB.

         There  have  been no  significant  changes  in the  Company's  internal
controls or in other factors since the date of the Chief Executive Officer's and
Chief  Financial  Officer's  evaluation  that could  significantly  affect these
internal controls,  including any corrective actions with regards to significant
deficiencies and material weaknesses.



                                       15

<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: September 26, 2003                       By  /S/     Jeffrey Jackson
                                                --------------------------------
                                                            Jeffrey Jackson,
                                                            President

         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 September 26, 2003.

Signatures                                       Title

/S/     Jeffrey Jackson
Jeffrey Jackson                                  Director, President
                                                (Principal Executive, Financial
                                                 and Accounting Officer)




















                                       16
<PAGE>
                       OPTIMUM SOURCE INTERNATIONAL, LTD.

                                      - : -

                          INDEPENDENT AUDITORS' REPORT

                             JUNE 30, 2003 AND 2002




<PAGE>










                                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

<S>                                                                                                           <C>
Independent Auditors' Report..................................................................................F - 1

Balance Sheets
  June 30, 2003 and 2002 .....................................................................................F - 2

Statements of Operations for the
  Years Ended June 30, 2003 and 2002..........................................................................F - 4

Statement of Stockholders' Equity for the
  Years Ended June 30, 2003 and 2002..........................................................................F - 5

Statements of Cash Flows for the
  Years Ended June 30, 2003 and 2002..........................................................................F - 6

Notes to the Financial Statements
  June 30, 2003 and 2002......................................................................................F - 8
</TABLE>




















<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, 2003 and 2002, and the related statements of
operations, stockholders' equity and cash flows for the two years ended June 30,
2003.  These  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

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

         In our opinion,  the  financial  statements  referred to above  present
fairly,  in all material  respects,  the  financial  position of Optimum  Source
International,  Ltd.  as of June  30,  2003 and  2002,  and the  results  of its
operations  and its  cash  flows  for the two  years  ended  June 30,  2003,  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 1 to the
financial statements,  the Company has suffered recurring losses from operations
and has a net capital  deficiency that raise substantial doubt about its ability
to continue as a going  concern.  Management's  plans in regard to these matters
are also  described  in Note 1. The  financial  statements  do not  include  any
adjustments that might result from the outcome of this uncertainty.

                                                    Respectfully submitted,



                                                    /s/ Robison, Hill & Co.
                                                    Certified Public Accountants

Salt Lake City, Utah
September 26, 2003

                                      F - 1

<PAGE>



                       OPTIMUM SOURCE INTERNATIONAL, LTD.
                                 BALANCE SHEETS
<TABLE>
<CAPTION>




                                                                                  June 30,            June 30,
                                                                                    2003                2002
                                                                             ------------------  ------------------
Assets
Current Assets
<S>                                                                          <C>                 <C>
  Cash                                                                       $                -  $              280
  Accounts Receivable                                                                     7,970                   -
  Inventory                                                                                   -             192,044
  Available-for-Sale Investments                                                              -                   -
                                                                             ------------------  ------------------

     Total Current Assets                                                                 7,970             192,324

Fixed Assets
  Office Equipment & Furniture                                                           25,378              25,378
  Less Accumulated Depreciation                                                         (13,960)             (8,883)
                                                                             ------------------  ------------------

     Total Fixed Assets                                                                  11,418              16,495
                                                                             ------------------  ------------------

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

                                                                             $           19,388  $          268,819
                                                                             ==================  ==================
</TABLE>



















                                      F - 2

<PAGE>



                       OPTIMUM SOURCE INTERNATIONAL, LTD.
                                 BALANCE SHEETS
                                   (Continued)
<TABLE>
<CAPTION>



                                                                                  June 30,            June 30,
                                                                                    2003                2002
                                                                             ------------------  ------------------
Liabilities and Stockholders' Equity
Liabilities
<S>                                                                          <C>                 <C>
  Accounts Payable                                                           $           17,420  $                -
  Accrued Liabilities                                                                13,296,005                   -
  Accrued Interest                                                                       32,990              24,809
  Loans From Shareholder                                                                 85,861             191,999
                                                                             ------------------  ------------------

     Total Liabilities                                                               13,432,276             216,808
                                                                             ------------------  ------------------

Stockholders' Equity
  Preferred Stock, authorized 5,000,000 shares of
    $.01 par value, -0- shares issued and outstanding at
    June 30, 2003 and 2002                                                                    -                   -
  Common Stock, authorized 50,000,000 shares of
    $.001 par value, issued and outstanding 7,692,885 at
    June 30, 2003 and 7,692,822 at June 30, 2002                                          7,693               7,693
  Treasury Stock, 6,000,000 shares at June 30, 2003
    and 2002                                                                              6,000               6,000
  Additional Paid in Capital                                                          1,094,226           1,094,226
  Accumulated Other Comprehensive Income (Expense)                                            -                   -
  Retained Deficit                                                                  (14,520,807)         (1,055,908)
                                                                             ------------------  ------------------

     Total Stockholders' Equity (Deficit)                                           (13,412,888)             52,011
                                                                             ------------------  ------------------

   Total Liabilities and Stockholders' Equity                                $           19,388  $          268,819
                                                                             ==================  ==================
</TABLE>










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

                                      F - 3

<PAGE>



                       OPTIMUM SOURCE INTERNATIONAL, LTD.
                            STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>



                                                                                    For the Year        For the Year
                                                                                        Ended              Ended
                                                                                      June 30,            June 30,
                                                                                        2003               2,002
                                                                                  -----------------  ------------------

<S>                                                                               <C>                <C>
Revenues                                                                          $         136,000  $            8,000
Cost of Revenues                                                                            184,074               3,500
                                                                                  -----------------  ------------------

     Gross Profit                                                                           (48,074)              4,500

Expenses:
  Advertising                                                                                     -              15,000
  General & Administrative                                                               13,348,644             120,041
                                                                                  -----------------  ------------------

     Income (Loss) from Operations                                                      (13,396,718)           (130,541)

Other Income (Expense):
  Gain (Loss) on Sale of
    Marketable Securities                                                                         -             (70,082)
  Gain (Loss) on Disposal of Assets                                                         (60,000)
  Interest Income                                                                                 -                   3
  Interest Expense                                                                           (8,181)            (17,786)
                                                                                  -----------------  ------------------

     Net Other Income (Expense)                                                             (68,181)            (87,865)
                                                                                  -----------------  ------------------

Net Income (Loss) Before Taxes                                                          (13,464,899)           (218,406)

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

Net Loss                                                                          $     (13,464,899) $         (218,406)
                                                                                  =================  ==================

Net Income (Loss) Per Share                                                       $         (1.75)   $          (0.02)
                                                                                  =================  ==================

Weighted Average shares
 Outstanding                                                                              7,692,885           9,411,592
                                                                                  =================  ==================
</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 YEAR ENDED JUNE 30, 2003, AND 2002
<TABLE>
<CAPTION>

                                                                                          Accumulated
                                                                              Additional    Other
                              Preferred Stock      Common Stock     Treasury    Paid-in  Comprehensive           Retained
                               --------------  --------------------
                               Shares  Amount    Shares     Amount    Stock      Capital     Income               Deficit
                               ------  ------  ----------  -------- ---------  ----------  -----------  -----------

<S>                            <C>     <C>     <C>         <C>      <C>        <C>         <C>          <C>
Balance June 30, 2001               -  $    -  12,447,950  $ 12,448 $       -  $1,095,471  $  (64,507)  $  (837,502)

November 17, 2001
  Stock returned to company         -       -  (6,000,000)   (6,000)    6,000           -           -             -

December 14, 2001
  Shares issued pursuant to
  10% stock dividend                -       -   1,244,872     1,245         -      (1,245)          -             -

Comprehensive income:
  Net Loss                          -       -           -         -         -           -           -      (218,406)
  Loss on Investment                -       -           -         -         -           -      64,507             -
                               ------  ------  ----------  -------- ---------  ----------  ----------  ------------

Balance June 30, 2002               -       -   7,692,822     7,693     6,000   1,094,226           -    (1,055,908)

Fractional shares issued
   Pursuant to stock dividend       -       -          63         -         -           -           -             -

Comprehensive income:
  Net Loss                          -       -           -         -         -           -           -   (13,464,899)
                               ------  ------  ----------  -------- ---------  ----------  ----------  ------------

Balance June 30, 2003               -  $    -   7,692,885  $  7,693 $   6,000  $1,094,226  $        -  $(14,520,807)
                               ======  ======  ==========  ======== =========  ==========  ==========  =============
</TABLE>

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

                                      F - 5

<PAGE>



                       OPTIMUM SOURCE INTERNATIONAL, LTD.
                            STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>



                                                                                Year Ended          Year Ended
                                                                                 June 30,            June 30,
                                                                                   2003                2002
                                                                            ------------------  ------------------

CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                         <C>                 <C>
Net Income (loss)                                                           $      (13,464,899) $         (218,406)
Adjustments used to reconcile net income to net cash
  provided by (used in) operating activities:
    Depreciation and amortization                                                        5,076               5,076
    Loss on sale of investments                                                         60,000              87,152
Changes in operating assets and liabilities:
   Decrease (increase) in accounts receivable                                           (7,970)              9,546
   Decrease (increase) in inventory                                                    192,044              20,800
   Increase in prepaid expense                                                               -                   -
   Increase (decrease) in accounts payable                                              17,420             (15,108)
   Increase (decrease) in accrued expenses                                          13,304,187              17,786
                                                                            ------------------  ------------------
Net Cash Provided (used) by operating Activities                                       105,858             (93,154)
                                                                            ------------------  ------------------

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of Other Assets                                                                  -                   -
                                                                            ------------------  ------------------
Net cash provided (used) by investing activities                                             -                   -
                                                                            ------------------  ------------------

CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on Short-term Notes Payable                                        (136,000)                  -
Loans from shareholder                                                                  29,862              87,071
                                                                            ------------------  ------------------
Net cash provided (used) by financing activities                                      (106,138)             87,071
                                                                            ------------------  ------------------

Net increase (decrease) in cash and Cash equivalents                                      (280)             (6,083)
Cash and cash equivalents at beginning of year                                             280               6,363
                                                                            ------------------  ------------------
Cash and cash equivalents at end of year                                    $                -  $              280
                                                                            ==================  ==================

Supplemental Disclosure of Cash Flow Information
Interest                                                                    $                -  $                -
Income Taxes                                                                $                -  $                -
</TABLE>





                                      F - 6

<PAGE>



                       OPTIMUM SOURCE INTERNATIONAL, LTD.
                            STATEMENTS OF CASH FLOWS
                                   (Continued)



SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

         During the year ended June 30, 2002,  the Company  declared a 10% stock
dividend for holder of record on December 14, 2001.


































         The  accompanying  notes  are  an  integral  part  of  these  financial
statements

                                      F - 7

<PAGE>



                       OPTIMUM SOURCE INTERNATIONAL, LTD.
                        NOTES TO THE FINANCIAL STATEMENTS
                             JUNE 30, 2003 AND 2002

NOTE 1 - NATURE OF OPERATIONS AND GOING CONCERN

         The accompanying  financial  statements have been prepared on the basis
of accounting principles applicable to a "going concern",  which assume that the
Company  will  continue in  operation  for at least one year and will be able to
realize  its assets  and  discharge  its  liabilities  in the  normal  course of
operations.

         Several conditions and events cast doubt about the Company's ability to
continue  as  a  "going  concern".  The  Company  has  incurred  net  losses  of
approximately  $13,500,000  for the year  ended  June 30,  2003  and  losses  of
approximately  $218,000  for the year  ended  June  30,  2002,  has a  liquidity
problem,  and  requires  additional  financing  in order to finance its business
activities on an ongoing  basis.  The Company is actively  pursuing  alternative
financing and has had discussions  with various third parties,  although no firm
commitments have been obtained.

         The  Company's  future  capital  requirements  will  depend on numerous
factors  including,  but not limited to,  continued  progress in developing  its
products, and market penetration.

         These  financial  statements do not reflect  adjustments  that would be
necessary  if the Company  were unable to continue as a "going  concern".  While
management believes that the actions already taken or planned, will mitigate the
adverse conditions and events which raise doubt about the validity of the "going
concern" assumption used in preparing these financial  statements,  there can be
no assurance that these actions will be successful.

         If the  Company  were unable to  continue  as a "going  concern",  then
substantial adjustments would be necessary to the carrying values of assets, the
reported amounts of its liabilities, the reported revenues and expenses, and the
balance sheet classifications used.

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.  At June 30, 2003,  the Company was in default with
the State of Nevada.

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.

                                      F - 8

<PAGE>



                       OPTIMUM SOURCE INTERNATIONAL, LTD.
                        NOTES TO THE FINANCIAL STATEMENTS
                             JUNE 30, 2003 AND 2002
                                   (Continued)

NOTE 2 - SUMMARY OF 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.

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  fiscal  year  2002
financial statements to conform with the fiscal year 2003 presentation.

Loss per Share

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

                                                                     For the year ended June 30, 2003
Basic Loss per Share
<S>                                                     <C>                           <C>        <C>
Loss available to common shareholders                   $      (13,464,899)           7,692,885  $           (1.75)
                                                        ==================  ===================  ==================

                                                                     For the year ended June 30, 2002
Basic Loss per Share
Loss available to common shareholders                   $         (218,406)           9,411,592  $           (0.02)
                                                        ==================  ===================  ==================
</TABLE>

         There are no outstanding  common stock equivalents at June 30, 2003 and
2002.





                                      F - 9

<PAGE>



                       OPTIMUM SOURCE INTERNATIONAL, LTD.
                        NOTES TO THE FINANCIAL STATEMENTS
                             JUNE 30, 2003 AND 2002
                                   (Continued)

NOTE 2 - SUMMARY OF ACCOUNTING POLICIES (continued)

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.

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.

Income Recognition

         Revenue and related  costs are reflected in the accounts when earned or
incurred.

Advertising Expense

         Advertising costs are expensed when the services are provided.

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

                                     F - 10

<PAGE>



                       OPTIMUM SOURCE INTERNATIONAL, LTD.
                        NOTES TO THE FINANCIAL STATEMENTS
                             JUNE 30, 2003 AND 2002
                                   (Continued)

NOTE 2 - SUMMARY OF ACCOUNTING POLICIES (continued)

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.

New Accounting Pronouncements

         In October  2001,  the FASB issued SFAS No.  144,  "Accounting  for the
Impairment or Disposal of Long-Lived  Assets".  SFAS No. 144 requires that those
long-lived assets be measured at the lower of carrying amount or fair value less
cost to sell,  whether  reported in  continuing  operations  or in  discontinued
operations. Therefore, discontinued operations will no longer be measured at net
realizable  value or include  amounts  for  operating  losses  that have not yet
occurred.  SFAS No. 144 is effective for financial  statements issued for fiscal
years  beginning  after  December  15,  2001 and,  generally,  is to be  applied
prospectively. The implementation of this new standard is not expected to have a
material effect on the Company's financial statements.

         On July 30, 2002,  the FASB issued FASB  Statement No. 146,  Accounting
for the  Costs  Associated  with Exit or  Disposal  Activities.  This  statement
requires   companies  to  recognize  costs  associated  with  exit  or  disposal
activities only when liabilities for those costs are incurred rather than at the
date of a commitment  to an exit or disposal  plan.  FASB No. 146 also  requires
companies to initially measure  liabilities for exit and disposal  activities at
their fair values.  FASB No. 146 replaces  Emerging  Issues Task Force  ("EITF")
Issue No. 94-3, Liability  Recognition for Certain Employee Termination Benefits
and Other  Costs to Exit an  Activity  (including  Certain  Costs  Incurred in a
Restructuring)  and EITF No. 88-10,  Costs Associated with Lease Modification or
Termination.  The  provisions of FASB No. 146 are effective for exit or disposal
activities that are initiated after December 31, 2002.

         In  December  2002,  the FASB  issued  SFAS  No.  148,  Accounting  for
Stock-Based   Compensation-Transition   and  Disclosure-an   amendment  of  FASB
Statement  No.  123.  This  Statement  amends  SFAS  No.  123,   Accounting  for
Stock-Based  Compensation,  to provide  alternative  methods of transition for a
voluntary  change to the fair value based method of accounting  for stock- based
employee  compensation.  In  addition,  this  Statement  amends  the  disclosure
requirements  of Statement 123 to require  prominent  disclosures in both annual
and interim financial  statements about the method of accounting for stock-based
employee  compensation  and the effect of the method used on  reported  results.
This Statement also requires that those effects be disclosed more prominently by
specifying the form, content, and location of those disclosures.




                                     F - 11

<PAGE>



                       OPTIMUM SOURCE INTERNATIONAL, LTD.
                        NOTES TO THE FINANCIAL STATEMENTS
                             JUNE 30, 2003 AND 2002
                                   (Continued)

NOTE 3 - COMMITMENTS AND CONTINGENCIES

         The Company has  committed  to a month to month lease at $500 per month
for its corporate headquarters in Fresno, California.

NOTE 4 - 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, 2003 no options have been granted.

NOTE 5 - INCOME TAXES

         As of June 30, 2003, the Company had a net operating loss  carryforward
for income tax  reporting  purposes  of  approximately  $14,000,000  that may be
offset against  future  taxable income through 2023.  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 6 - RELATED PARTY TRANSACTIONS

         During 2003 and 2002 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, 2003, an amount of $118,852 was due
including accrued interest.

NOTE 7 - TREASURY STOCK

         On November  17,  2001, a  stockholder  returned six million  shares of
common stock to the Company.

NOTE 8 - STOCK DIVIDEND

         On December  14,  2001,  the Company  declared a 10% stock  dividend to
shareholders  with proof of ownership as of the issue date. The certificate will
be restricted for one year from the date of issuance.


                                     F - 12

<PAGE>


                       OPTIMUM SOURCE INTERNATIONAL, LTD.
                        NOTES TO THE FINANCIAL STATEMENTS
                             JUNE 30, 2003 AND 2002
                                   (Continued)

NOTE 9 - LEGAL

         On December,  17, 1999, The Company was named in a lawsuit by Financial
Observer West, dba Stockbrokers  Society,  et al. On September 5, 2003, a Notice
of  Entry  of  Judgement  was  filed  in the  Superior  Court  of the  State  of
California,  for the County of Los Angeles against the Company for  $13,296,005.
The Company is filing a motion to vacate judgement.  The amount of the judgement
has been reported on the financial statements as of June 30, 2003.

                                     F - 13