<PAGE>

                     U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

                                   Form 10-KSB

[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 for the fiscal year ended August 31, 2002

[ ] TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934
for the transition period from . . . . to . . . .

                         Commission file number 0-26578

                                  MYRIENT, INC.
                         ------------------------------
        Exact name of small business issuer as specified in its charter)

           Nevada                                        33-0662114
           ------                                        ----------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

                      65 Enterprise, Aliso Viejo, CA 92656
                -------------------------------------------------
               (Address of principal executive offices) (Zip Code)

                                 (949) 330-6500
                                 --------------
              (Registrant's telephone number, including area code)


         Indicate by check mark whether the Issuer (1) has filed all the reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve months (or for such shorter period that the
Issuer was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

         Indicate by check mark if 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 the Issuer'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. $5,715,811

         Based upon the closing price of $0.02 per share of Common Stock as
reported on the OTC and OTCBB on January 10, 2003, the aggregate market value of
the Issuer's voting and non-voting stock held by non-affiliates was $895,033.
Solely for the purposes of this computation, the Issuer's directors and
executive officers have been deemed to be affiliates. Such treatment is not
intended to be, and should not be construed to be, an admission of the Issuer or
such directors and executive officers that any of such persons are "affiliates",
as that term is defined under the Securities Act of 1934, as amended.

         There were 69,324,237 issued and outstanding shares of the Issuer's
Common Stock, $.001 par value per share at January 13, 2002.

                       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 the rule 424(b) or (c) of the Securities Act of 1933 ("Securities
Act"). The listed documents should be clearly described for identification
purposes (e.g., annual report to security holders for fiscal year ended December
24, 1990).

None.

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


<PAGE>

                                  MYREINT, INC.

                                TABLE OF CONTENTS

PART I

       Item 1.   Description of Business
       Item 2.   Description of Property
       Item 3.   Legal Proceedings
       Item 4.   Submission of Matters to a Vote of Security Holders

PART II

       Item 5.   Market for Myrient, Inc. Common Stock and Related Stockholder
                   Matters
       Item 6.   Management's Discussion and Analysis of Financial Condition and
                   Results of Operations
       Item 7.   Financial Statements
       Item 8.   Changes In and Disagreements With Accountants on Accounting and
                   Financial Disclosure.

PART III

       Item 9.   Directors, Executive Officers, Promoters and Control Persons of
                   Myrient, Inc; Compliance with Section 16(a) of the Exchange
                   Act
       Item 10.  Executive Compensation
       Item 11.  Security Ownership of Certain Beneficial Owners and Management
       Item 12.  Certain Relationships and Related Transactions
       Item 13.  Controls and Procedures
       Item 14.  Exhibits and Reports on Form 8-K


       SIGNATURES

                                INTRODUCTORY NOTE

         This Annual Report on Form 10-KSB may be deemed to contain
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The
forward-looking statements included herein are based on current expectations
that involve a number of risks and uncertainties. Accordingly, to the extent
that this Annual Report contains forward-looking statements regarding the
financial condition, operating results, business prospects or any other aspect
of the Company, please be advised that the Company's actual financial condition,
operating results and business performance may differ materially from that
projected or estimated by the Company in forward-looking statements. The
differences may be caused by a variety of factors, including but not limited to
adverse economic conditions, intense competition, including intensification of
price competition and entry of new competitors and products, adverse federal,
state and local government regulation, inadequate capital, unexpected costs and
operating deficits, increases in general and administrative costs, lower sales
and revenue than forecast, loss of customers, customer returns of products sold
to them by the Company, termination of contracts, technological obsolescence of
the Company's products, technical problems with the Company's products, price
increases for supplies and components, inability to raise prices, failure to
obtain new customers, litigation and administrative proceedings involving the
Company, the possible acquisition of new businesses that result in operating
losses or that do not perform as anticipated, resulting in unanticipated losses,
the possible fluctuation and volatility of the Company's operating results,
financial condition and stock price, losses incurred in litigation and settling
cases, dilution in the Company's ownership of its business, adverse publicity
and news coverage, inability to carry out marketing and sales plans, loss or
retirement of key executives, changes in interest rates, inflationary factors,
and other specific risks that may be alluded to in this Annual Report or in
other reports issued by the Company. In addition, the business and operations of
the Company are subject to substantial risks, which increase the uncertainty
inherent in the forward-looking statements. In light of the significant
uncertainties inherent in the forward-looking information included herein, the
inclusion of such information should not be regarded as a representation by the
Company or any other person that the objectives or plans of the Company will be
achieved.



                                       1
<PAGE>

                                     PART I


ITEM 1.  DESCRIPTION OF BUSINESS

OVERVIEW
--------

         Myrient, Inc. (the "Company" or "Myrient") is an outsourced Information
Technology (IT) solutions provider that delivers managed services that allow
enterprises to conduct secure communications with remote offices, partners and
customers worldwide. Myrient enables customers to outsource all of their
communications needs, while ensuring the highest level of security and
reliability. The Company manages and controls a nationwide data communications
network that allows it to offer high-quality integrated turnkey solutions. The
Company's services include Managed Private Networking, Managed Web Hosting,
Storage and off-site Disaster Recovery Services, Network and Systems Management,
and Professional Services.

INDUSTRY BACKGROUND - THE INTERNET
----------------------------------

         The Internet is fundamentally changing the way businesses interact with
customers, partners and other businesses and has become an important medium for
both commerce and communications. Improvements in the quality and reliability of
global telecommunications networks and common Internet protocols permit large
volumes of data to be delivered to end users over a variety of Internet-enabled
devices. Businesses are now able to access and distribute a wide array of
services over the Internet, allowing them to implement solutions and migrate
operating functions on-line, market and sell products and services to customers
and offer web-based customer service programs. As a result, businesses are
increasing investments in internet services, network infrastructure, and
information technology personnel and hardware to leverage the reach and
efficiency of the Internet.

         The complexity of successfully deploying and maintaining Internet
operations continues to increase. In particular, the infrastructure required to
deploy and maintain large-scale Internet operations has become increasingly
complex. For example, businesses deploying large-scale Internet operations can
choose from multiple software applications with varying levels of functionality,
including transaction processing, personalization and enterprise systems
integration. In addition, with increasing globalization, businesses often must
maintain their operations in multiple locations and design their infrastructure
to accommodate local standards, while remaining synchronous with operations in
other geographies.

         The in-house expertise required to meet these challenges is significant
and typically requires a host of technical specialists, including network
administrators, systems administrators, database administrators, security
experts, monitoring and management experts, project managers, troubleshooting
specialists and performance engineers. It is often difficult, time consuming and
costly to hire and retain these experts. Even if businesses can effectively hire
and retain these experts, deploying this talent to maintain a business Internet
infrastructure may be inefficient as it diverts resources from enhancing the
business core competencies.

         To effectively manage the increasing complexity of Internet operations,
the Company believes that companies require a new set of infrastructure services
to run Internet operations on an automated basis. A reliable, secure, scalable
and cost-effective infrastructure network would permit businesses to focus on
their core competencies and provide greater functionality and flexibility than
they could otherwise attain on their own. Businesses could also access a robust
technology infrastructure without incurring the time or financial costs
associated with building out equivalent functionality on their own. In addition,
businesses would be able to access the operations capacity they require to
efficiently run their Internet-based software applications and to efficiently
increase or reduce capacity as business needs dictate. The solution would also
consistently deploy and maintain business Internet operations across multiple
locations via centralized network operations centers.

The Myrient Approach
--------------------

         The Company provides a suite of outsourced IT solutions that address
the challenges associated with deploying, maintaining and growing Internet
operations for critical business functions. Myrient offers its outsourced IT
services through its nationwide infrastructure network to furnish its customers
with guaranteed levels of reliability and the ability to efficiently grow their
Internet operations, helping them to reduce the time it takes to build or expand
their Internet initiatives. Myrient's infrastructure network maintains the
business Internet operations across all levels of the Internet infrastructure,
and allows it to centrally and consistently deploy and maintain its customer's
internet operations across multiple locations. Myrient automates manual tasks
for its clients, thereby reducing the amount of manual intervention required and
increasing the quality and reliability of its outsourced services.


                                       2
<PAGE>

BUSINESS STRATEGY
-----------------

         Myrient offers businesses a new class of Internet infrastructure
services that address the challenges associated with deploying, maintaining and
growing Internet operations for critical business functions. The Company offers
services to provide businesses with guaranteed levels of reliability and the
ability to quickly and efficiently grow their Internet operations, helping them
reduce the time it takes to build or expand their Internet operations, at a cost
savings by outsourcing to Myrient. By combining several different services
outsourced to Myrient, businesses can save incremental dollars associated with
their additional IT needs, reduce internal IT overhead, and allow their
remaining internal resources to focus on the businesses core competencies.

         Myrient's main product offerings are Managed Private Networking;
Managed Hosting Solutions; Off Site Storage and Disaster Recovery, Customized
Solutions and Network Management. The Company provides businesses outsourced
information technology infrastructure services that address the challenges
associated with deploying, maintaining and growing Internet operations for
critical business functions. The Company offers services through its Nationwide
Infrastructure Network to furnish its customers with guaranteed levels of
reliability and the ability to efficiently grow their internet operations,
helping them reduce the time it takes to build or expand their internet
initiatives. The Company's infrastructure network supports the business internet
operations across the internet infrastructure. Myrient also centrally and
consistently maintains its customer's internet operations across multiple
locations via its CentraPath Managed Private Networking solution.

         Myrient's co-location space contains edge-switches and routing
Equipment necessary to support services to house configured servers and
applications with connectivity as part of a bundled package, or simply as an
area for clients to connect their own servers to the high-speed access of the
Company's partner's fiber-optic networks. The Company is pursuing a Tier-1
service provider business plan without the costs associated with building the
core network infrastructure typically necessary to support Tier-1 services.

         By keeping costs down while developing a large area of coverage, the
Company hopes to identify itself as a profitable next-generation integrated
communications provider operating on a global scale.

COMPETITIVE ADVANTAGES
----------------------

         Myrient is currently establishing a sales and technical staff with
skills related in the outsourced IT solutions industry. Additionally, the
Company implemented training schedules for its employees in an effort to keep
them abreast of the latest information and knowledge from the industry. The
Company's technical teams are cross-trained wherever possible and are encouraged
to obtain technical certification in their respective area of specialization.

BUSINESS MODEL OPTIMIZES COST
-----------------------------

         In an effort to keep costs down, the Company has attempted to lease
rather than build infrastructure in its initial network deployment.
Additionally, by building Myrient's network at the "edge" of its strategic
partners infrastructure, the Company has greater flexibility in solving multiple
internet working problems.

EFFICIENCY
----------

         Myrient has established a network built to support services in specific
geographic regions. The Company has established a network comprised of
functional network elements supporting applications of several best-of-breed
technologies.

         Additionally, the Company's focus is on support systems that harness
and distribute the intelligence of Myrient's carriers and provide the
functionality and access of the carrier through specialized software
applications.

FLEXIBLE NETWORK
----------------

         The Company's business model optimizes network flexibility by utilizing
strategic relationships with multiple carriers. This allows the Company to use
the latest network and software technologies focused on meeting the business
plan. This advantage over embedded network elements and operation support
systems cannot be overstated and is the key to successful competition.


                                       3
<PAGE>

INTEGRATION
-----------

         Myrient's application of many different best-of-breed technologies
allows the Company to seamlessly integrate many different connectivity solutions
and network applications. The Company uses different vendors and carriers to
customize the optimum solution for its customer.

AUTOMATION AND ADVANCED TELECOMMUNICATIONS TECHNOLOGY
-----------------------------------------------------

         Myrient's network management tools are automated which leads to less
downtime and lower labor costs. The Company uses the latest equipment, works
closely with strategic partners that are leaders in their fields and are not
hampered by existing legacy infrastructures.

CUSTOMER-CENTRIC APPROACH
-------------------------

         Myrient emphasizes direct relationships with its customers. These
relationships enable the Company to learn information from customers regarding
their needs and preferences and help the Company expand its offerings to include
additional value-added services based on customer demand. The Company believes
that these customer relationships increase customer loyalty and reduce turnover.
In addition, existing customers have provided customer referrals which the
Company believes strong relationships will result from further customer
referrals in the future.

         The Company's success depends upon careful planning and selection of
partners. Myrient meets the customer's needs more effectively by implementing
procedures that work jointly with their partners. These procedures represent the
needs of both the Company and the carriers whose networks the Company utilized,
which the Company believes target the key aspect of successfully providing
ongoing customer-focused support.

PRODUCTS
--------

IP TECHNOLOGY:

         Myrient's network and entire suite of product offerings is based on
Internet Protocol Technology (IP). IP technology is the world's most popular
open-system (non-proprietary) protocol suite because it can be used to
communicate across any set of interconnected networks and is equally well suited
for local area network (LAN) and wide area network (WAN) communications. The IP
suite not only includes lower-layer protocols, but it also specifies common
applications such as electronic mail, terminal emulation, and file transfer. IP
technology is able to realize the convergence of traditional voice type
applications with current and future data/internet type applications. IP
provides operational efficiency when managing a single platform that can carry
any type of service application.

MANAGED PRIVATE NETWORKING:

         Myrient's core competency lies in providing Managed Private Networking
for small-to-medium sized businesses via the CentraPath Managed VPN delivered
over Myrient's patent pending Real Private Network(TM) (RPN(TM)) technology. The
main focus in managing private networks is to maintain and guarantee the highest
quality and reliability standards. The nominal-use of the public internet has
given the Company a competitive edge, therefore Myrient can ensure a better than
carrier grade quality. Myrient's CentraPath Private Network Service Suite adds
functionality and footprint to its RPN(TM) network, and is an advanced scalable
flexible VPN solution that is a secure, private connection between customers'
multiple locations. It is a fully managed, cost effective, rapidly deployable
solution that will work with any broadband carrier. By delivering a last mile
managed VPN solution, business customers can use their existing broadband
connectivity, and outsource the management of the private network to Myrient.

MANAGED STORAGE SOLUTIONS:

         Backing up business data is vital to any company's survival. Myrient
offers scalable storage-on-demand solutions to match each customer's growth
requirements and unique data storage needs. Myrient provides immediate access to
virtually unlimited storage space. The Company's ZIPBackup(TM) Managed Storage
services include primary storage, which is highly available, reliable, and
scalable, an entire backup and recovery chain, fast restore storage which adds
the capability to restore, within minutes, disaster recovery storage with no
hardware or personnel investment. Customers benefit by outsourcing to Myrient
without having to direct precious time or resources to such challenges as time
to market, capital expense and the storage and management of ever-growing data
needs. If unforeseen growth or seasonal surges affect storage needs, Myrient has
the ability to adapt to the situation.


                                       4
<PAGE>

MANAGED WEB HOSTING:

         Web presence requires increasingly advanced technologies to stay
competitive. Myrient's managed hosting services provide an alternative to
in-house managed operations. The Company provides the end-to-end support needed
to maintain web presence while reducing the expense associated with continuous
operations. Offering a single, turnkey solution, Myrient's entire dedicated
hosting infrastructure is powered by IBM's X Series of dedicated servers, the
most reliable cost efficient equipment in the industry. Myrient also uses
InterNAP's P-NAP (Private Network Access Point) technology, which sends the
customers data along the shortest, most direct path across the internet,
ensuring optimal performance. Myrient's customized hosting services are
business-critical solutions for companies of all sizes. Myrient's corporate
intranet website hosting offers a range of benefits, similar to those of
traditional web hosting with capabilities of being delivered as a package,
including Netavision multimedia streaming, GeoDirector content distribution, and
network management and security services.

PROFESSIONAL SERVICES:

         Myrient's professional service consultants deliver a wide range of
support and service options to assist with customers overall IT strategy.
Experienced specialists lay out full-scale global WANS, setup multiple-city
Private Networks, and design in-cabinet co-location networks. The Company's
professional service solutions assist customers to get the most from their
business communications. Myrient provides technical experience to take concepts
to reality. Myrient's professional services specialize in custom network design
and analysis, systems architecture and deployment, application integration,
project management, modeling, testing, disaster recovery, and security
management.

SALES AND MARKETING
-------------------

         The Company sells and markets its services nationwide primarily through
a direct sales force and indirectly through its sales and marketing channels.
However, the Company has begun to transition to an outsourced sales model that
optimizes the use of sales staff by incorporating Myrient's products and
services into outside sales opportunities.

         Myrient has focused its marketing efforts on increasing brand
recognition, market awareness and lead generation. The Company will continue to
invest in building brand recognition nationwide through public relations
programs, interactions with industry analysts, trade shows, and advertising.

         Myrient's marketing professionals have developed a methodology to
identify the businesses that would benefit from the Company's services. When
businesses are identified in a target market, the Company will employ a targeted
local marketing strategy utilizing enterprise solutions personnel. Using
industry experience and engineers, its personnel initiate contact with potential
customers. The Company's personnel are trained in customer oriented,
solution-based sales techniques and product knowledge. The enterprise team
focuses on customers that have a longer buying cycle. Business prospects are
developed through market research, referrals from telemarketers and referrals
from other customers.

CUSTOMER SUPPORT AND OPERATIONS
-------------------------------

         Myrient's Customer Loyalty Team (CLT) works to maximize the simplicity
and convenience of data communications and network access for customers. They
provide customers with a single point of contact for implementation, maintenance
and operations support.

IMPLEMENTATION
--------------

         Myrient manages the implementation of services for each customer. It
works together with strategic partners to ensure that solutions are delivered,
tested, and in good working order for all customer offices throughout the
network.

MAINTENANCE
-----------

         The Company's network operations center provides network surveillance
for all equipment in its customers' network. The Company is able to detect and
correct many of its customers' maintenance problems remotely, often before the
customer is aware of the problem. Customer-initiated maintenance and repair
requests are managed and resolved primarily through the help desk. The Company's
information management system, which generates reports for tracking maintenance
problems, allows the Company to communicate maintenance problems from the
customer service center to the network operations center 24 hours a day, seven
days a week.


                                       5
<PAGE>

COMPETITION
-----------

         The market for outsourced IT services is rapidly evolving and intensely
competitive. The Company expects competition to persist and intensify in the
future. In addition to in-house solutions, its primary current and prospective
competitors include: providers of co-location or web site hosting and related
services; technology vendors that have recently announced their intentions to
offer some of the services that the Company offers currently to a portion of its
targeted customer base; and providers of Internet systems integration or
professional services.

         The Company faces competition from many companies with significantly
greater financial resources, well-established brand names and large installed
customer bases. Although it believes competition in many second and third tier
cities is less intense than competition in larger cities, Myrient expects the
level of competition in its market to intensify in the future.

NATIONAL LONG DISTANCE CARRIERS
-------------------------------

         National long distance carriers, such as AT&T, MCI WorldCom, and
Sprint, have deployed large-scale data networks, sell connectivity to
businesses, and have high brand recognition. They also have interconnection
agreements with many of the traditional telephone companies and are beginning to
offer competitive services.

OTHER FIBER-BASED CARRIERS
--------------------------

         Companies such as Allegiance, ChoiceOne, Intermedia and Williams have
extensive fiber networks in many metropolitan areas, primarily providing
high-speed data and voice circuits to small and large corporations. They also
have interconnection agreements with the traditional telephone companies under
which they have acquired co-location space in many large markets.

WIRELESS AND SATELLITE DATA SERVICE PROVIDERS
---------------------------------------------

         Several companies, including Motorola Satellite Systems and Hughes
Communications, are emerging as satellite-based data service providers. These
companies use a variety of new and emerging technologies to provide high-speed
data services.

         The Company may be unable to compete successfully against these
competitors. The most significant competitive factors include, among others;
transmission speed, service reliability, breadth of product offerings, cost for
performance, network security, ease of access and use, content bundling,
customer support, brand recognition, operating experience, capital availability
and exclusive contracts with customers, including Internet service providers and
businesses with multiple offices. Myrient believes its services compete
favorably within its service markets with respect to transmission speed, service
reliability, breadth of product offerings, cost for performance, network
security, ease of access and use, content bundling, customer support, and
operating experience. Many of the Company's competitors enjoy competitive
advantages over Myrient based on their brand recognition and exclusive contracts
with customers.

INTELLECTUAL PROPERTY
---------------------

         Myrient regards its products, services and technology as proprietary
and attempts to protect them with copyrights, trademarks, trade secret laws,
restrictions on disclosure and other methods. There can be no assurance these
methods will be sufficient to protect the Company's technology and intellectual
property. The Company also may enter into confidentiality agreements with its
employees and consultants, and generally control access to and distribution of
its documentation and other proprietary information. Despite these precautions,
it may be possible for a third party to copy or otherwise obtain and use its
products, services or technology without authorization, or to develop similar
technology independently. Effective copyright, trademark and trade secret
protection may be unavailable or limited in certain foreign countries, and the
global nature of the Internet makes it virtually impossible to control the
ultimate destination of Myrient's proprietary information.

         There can be no assurance that the steps the Company has taken will
prevent misappropriation or infringement of its technology. In addition,
litigation may be necessary in the future to enforce its intellectual property
rights, to protect Myrient trade secrets or to determine the validity and scope
of the proprietary rights of others. Such litigation could result in substantial
costs and diversion of resources and could have a material adverse effect on its
business, operating results and financial condition. Some of Myrient's
information is a matter of public record and can be readily obtained by
competitors and potential competitors, possibly to Myrient's detriment.

         Additionally, the Company has chosen to discontinue all research and
development activities until such time it has negotiated favorable terms with
its creditors.


                                       6
<PAGE>

GOVERNMENT REGULATION
---------------------

         A significant portion of the services that the Company offers will be
subject to regulation at the federal and/or state levels. The Federal
Communications Commission (FCC), and state public utility commissions (PUC)
regulate telecommunications common carriers, which are companies that offer
telecommunications services to the public or to all prospective users on
standardized rates and terms. The Company's data transport services are common
carrier services.

         The FCC exercises jurisdiction over common carriers, and their
facilities and services, to the extent they are providing interstate or
international communications. The various state utility commissions retain
jurisdiction over telecommunications carriers, and their facilities and
services, to the extent they are used to provide communications that originate
and terminate within the same state. The degree of regulation varies from state
to state.

         In recent years, the regulation of the telecommunications industry has
been in a state of flux as the United States Congress and various state
legislatures have passed laws seeking to foster greater competition in
telecommunications markets. The FCC and state commissions have adopted many new
rules to implement those new laws and to encourage competition. These changes,
which are still incomplete, have created new opportunities and challenges for
its competitors and us. Certain of these and other existing federal and state
regulations are currently the subject of judicial proceedings, legislative
hearings and administrative proposals that could change, in varying degrees, the
manner in which this industry operates. Neither the outcome of these proceedings
nor their impact upon the telecommunications industry or us can be predicted at
this time. Indeed, future federal or state regulations and legislation may be
less favorable to us than current regulations and legislation and therefore have
a material and adverse impact on its business and financial prospects by
undermining Myrient's ability to provide DSL services at competitive prices. In
addition, the Company may expend significant financial and managerial resources
to participate in proceedings setting rules at either the federal or state
level, without achieving a favorable result.

FEDERAL REGULATION AND LEGISLATION
----------------------------------

         Through Myrient's strategic partners, Myrient must comply with the
requirements of a common carrier under the Communications Act of 1934, as
amended, to the extent the Company provides regulated interstate services. These
requirements include an obligation that the Company's charges, terms and
conditions for communications services must be "just and reasonable" and that
Myrient may not make any "unjust or unreasonable discrimination" in its charges
or terms and conditions. The FCC also has jurisdiction to act upon complaints
against common carriers for failure to comply with their statutory obligations.
Myrient is not currently subject to price cap or rate of return regulation at
the federal level and is not currently required to obtain FCC authorization for
the installation, acquisition or operation of its facilities.

         The FCC has established different levels of regulation for dominant and
non-dominant carriers. Of domestic carriers, only the large traditional local
telephone companies are classified as dominant carriers and all other providers
of domestic common carrier service, including the Company, are classified as
non-dominant carriers. As a non-dominant carrier, Myrient is subject to less FCC
regulation than are dominant carriers.

         The 1996 Telecommunications Act, enacted on February 8, 1996, made
comprehensive changes to the Communications Act. It represents a significant
milestone in telecommunications policy by establishing competition in local
telephone service markets as a national policy.

         The 1996 Telecommunications Act removes many state regulatory barriers
to competition and precludes state and local governments from creating laws
preempting or effectively preempting competition in the local telephone service
market.

         The 1996 Telecommunications Act places substantial interconnection
requirements on the traditional local telephone companies.

         Traditional local telephone companies are required to provide physical
co-location, which allows companies such as Myrient and other inter-connectors
to install and maintain their own network termination equipment in the central
offices of traditional local telephone companies, and virtual co-location only
if requested or if physical co-location is demonstrated to be technically
infeasible. This requirement is intended to enable the Company, along with other
competitive carriers, to deploy its equipment on a relatively convenient and
economical basis.

         Traditional local telephone companies are required to un-bundle
components of their local service networks so that other providers of local
service can compete for a wide range of local service customers. This
requirement is designed to provide Myrient flexibility to purchase only the
equipment required to deliver its services.


                                       7
<PAGE>

         Traditional local telephone companies are required to establish
"wholesale" rates for their services to promote resale by competitive local
exchange carriers and other competitors. Traditional local telephone companies
are required to establish number portability, which allows a customer to retain
its existing phone number if it switches from the traditional local telephone
companies to a competitive local service provider.

         The 1996 Telecommunications Act in some sections is self-executing. The
FCC issues regulations interpreting the 1996 Telecommunications Act that impose
specific requirements upon which Myrient's competitors and the Company rely. The
outcome of various ongoing FCC rulemaking proceedings or judicial appeals of
such proceedings could materially affect its business and financial prospects by
increasing the cost or decreasing the Company's flexibility in providing
broadband services. The FCC prescribes rules applicable to interstate
communications, including rules 33 implementing the 1996 Telecommunications Act,
a responsibility it shares in certain respects with the state regulatory
commissions. As part of its effort to implement the 1996 Telecommunications Act,
the FCC issued an order governing interconnection in August 1996. A federal
appeals court for the Eighth Circuit, however, reviewed the initial rules and
overruled some of their provisions, including some rules on pricing and
nondiscrimination. In January 1999, the United States Supreme Court reversed
elements of the Eighth Circuit's ruling, finding that the FCC has broad
authority to interpret the 1996 Telecommunications Act and issue rules for its
implementation, specifically including authority over pricing methodology. The
Supreme Court upheld the FCC's directive to the traditional local telephone
companies to combine individual elements for competitors, and to allow
competitors to pick and choose among provisions in existing interconnection
agreements. The Supreme Court also found that the FCC's interpretation of the
rules for establishing individual elements of a network system was not
consistent with standards prescribed in the 1996 Telecommunications Act, and
required the FCC to reconsider and better justify its delineation of individual
elements. The pick and choose rule permits a competitive carrier to select
individual provisions of existing interconnection agreements yet still tailor
its interconnection agreement to its individual needs by negotiating the
remaining provisions. Although the FCC has tentatively concluded that local
copper telephone lines should continue to remain available as an unbundled
element, there is no certainty as to the FCC's outcome on this issue or as to
other network elements that the traditional local telephone companies will be
required to un-bundle. Moreover, this proceeding, as well as a companion FCC
rulemaking, addresses related issues of significant importance to the Company,
including:

         o    the manner in which copper telephone lines should be subject to
              unbundling;

         o    compatibility among DSL services and between DSL and non-DSL
              services; and

         o    the sharing of copper telephone lines between DSL data services
              offered by one provider and voice services offered by another
              provider.

         In addition, some traditional telephone companies may take the position
that they have no obligation to provide individual elements of their network
systems, including copper telephone lines, until the FCC issues new rules.

         In March 1998, several traditional local telephone companies petitioned
the FCC for relief from certain regulations applicable to the DSL and other
advanced data services that they provide, including their obligations to provide
copper telephone lines and resold DSL services to competitive carriers. In
August 1998, the FCC concluded that DSL services are telecommunications services
and, therefore, the traditional local telephone companies are required to allow
interconnection of their facilities and equipment used to provide data transport
functionality, un-bundle local telecommunications lines and offer for resale DSL
services. In the same proceeding, the FCC issued a notice of proposed rulemaking
seeking comments on its tentative conclusion that traditional local telephone
companies should be permitted to create separate affiliates to provide the DSL
34 services. Under the separate affiliate proposal, traditional local telephone
companies would be required to provide wholesale service to other broadband
carriers at the same rates, terms and conditions that it provided to its
separate affiliate. The outcome of this proceeding remains uncertain. Any final
decision in this proceeding that alters Myrient's relationship with the
traditional local telephone companies could adversely affect the Company's
ability to provide broadband services at a competitive price.

         In March 1999, the FCC adopted regulations that require the traditional
local telephone companies to permit other carriers to co-locate all equipment
necessary for interconnection. This requirement includes equipment that the
Company may use to provide DSL data services. The FCC also adopted limits on
the construction standards and other conditions for co-location that may be
imposed by traditional local telephone companies. These rules should reduce the
Company's co-location costs and expedite its ability to provide service to new
areas. There is no guarantee that these new rules will be implemented fully by
the Traditional local telephone companies. Therefore, the benefits of these
rules may be delayed pending interpretation and enforcement by state and federal
regulators. These rules are currently subject to appeal by several traditional
local telephone companies.


                                       8
<PAGE>

         The 1996 Telecommunications Act also directs the FCC, in cooperation
with state regulators, to establish a universal service fund that will provide
subsidies to carriers that provide service to individuals that live in rural,
insular, and high-cost areas. A portion of carriers' contributions to the
universal service fund also will be used to provide telecommunications related
facilities for schools, libraries and certain rural health care providers. The
FCC released its initial order in this context in June 1997, which requires all
telecommunications carriers to contribute to the universal service fund. The
FCC's implementation of universal service requirements remains subject to
judicial and additional FCC review. Additional changes to the universal service
regime, which could increase costs, could have an adverse affect on the Company.

STATE REGULATION
----------------

         In October 1998, the FCC deemed data transmission to the Internet as
interstate services subject only to federal jurisdiction. However, this decision
is currently subject to reconsideration and appeal. Also, some services that are
not limited to interstate access potentially may be classified as intrastate
services subject to state regulation. All of the states where Myrient operates,
or intends to operate, require some degree of state regulatory commission
approval to provide certain intrastate services and maintain ongoing regulatory
supervision. In most states, intrastate tariffs are also required for various
intrastate services, although Myrient's services are not subject to price or
rate of return regulation. Actions by state public utility commissions could
cause us to incur substantial legal and administrative expenses and adversely
affect its business.

LOCAL GOVERNMENT REGULATION
---------------------------

         In certain instances, strategic partners may be required to obtain
various permits and authorizations from municipalities, such as for use of
rights-of-way, in which Myrient operates local distribution facilities. Whether
various actions of local governments over the activities of telecommunications
carriers, including requiring payment of franchise fees or other surcharges,
pose barriers to entry for competitive local exchange carriers that violate the
1996 Telecommunications Act or may be preempted by the FCC is the subject of
litigation. While the Company is not a party to this litigation, it may be
affected by the outcome. If municipal governments impose conditions on granting
permits or other authorizations or if they fail to act in granting such permits
or other authorizations, the cost of providing broadband services may increase
or negatively impact the ability to expand the Company's network on a timely
basis and adversely affect its business.

SUBSIDIARIES
------------

         Myrient has three wholly owned subsidiaries: Landmark Communications,
Inc., a Nevada Corporation doing business as Landmark Long Distance Inc. in the
State of California; Color Networks, Inc., a California corporation; and
Mobilenetics Corp., a Delaware corporation. All of the above are inactive with
no assets and are being dissolved, except for Landmark Communications, Inc.

EMPLOYEES
---------

         The Company employs twelve (12) full-time employees as of November 21,
2002. None of the employees are represented by collective bargaining agreements
and the Company considers relations with its employees to be good.

MAJOR SUPPLIERS
---------------

         The Company is dependent on the telecommunications carriers and other
carriers and suppliers to connect its network. Myrient relies on traditional
telecommunication carriers to transmit its traffic over local and long distance
networks. These networks may experience disruptions that are not easily
remedied.

         Additionally, the Company depends on certain suppliers of hardware and
software. If its suppliers fail to provide Myrient with network services,
equipment or software in the quantities, quality levels and times it is
required, or if Myrient cannot develop alternative supply sources, it will be
difficult, if not impossible, for Myrient to provide its services.


                                       9
<PAGE>

         Myrient's success depends on negotiating and entering into strategic
partner interconnection agreements with providers of communications bandwidth.
Myrient must enter into and renew interconnection agreements with providers of
communications bandwidth in each of its target markets in order to provide
service in that market. These agreements govern, among other things, the price
and other terms regarding location of equipment in the offices of providers of
communications bandwidth which house telecommunications equipment and from which
local telephone company service is provided, known as central offices, and
Myrient's lease of copper telephone lines that connect those central offices to
its customers. Delays in obtaining interconnection agreements would delay
Myrient's entrance into target markets and could have a material adverse effect
on its business and prospects. Myrient's interconnection agreements generally
have limited terms of one to two years and the Company cannot assure you that
new agreements will be negotiated or that existing agreements will be extended
on terms favorable to Myrient.

         The Company faces risks associated with its lease of bandwidth from
network suppliers. Myrient leases its bandwidth from various communications
providers. The Company is dependent upon their ability to satisfy their
obligations. If they cannot, the Company will incur significant expenses to
utilize other sources of bandwidth. The Company also has risks associated with
their ability to build-out their networks under construction and its access to
that bandwidth.

         Myrient is subject to a variety of risks relating to its recent lease
of fiber-based telecommunications bandwidth from the Company's various global
network suppliers, and the delivery, operation and maintenance of such
bandwidth. Such risks include, among others, the following:

         o    the risk that financial, legal, technical and/or other matters may
              adversely affect such suppliers' ability to perform their
              respective operation, maintenance and other services relating to
              such bandwidth, which may adversely affect the use of such
              bandwidth;

         o    the risk that Myrient will not have access to sufficient
              additional capital and/or financing on satisfactory terms to
              enable us to make the necessary capital expenditures to take full
              advantage of such bandwidth;

         o    the risk that such suppliers may not continue to have the
              necessary financial resources to enable them to complete, or may
              otherwise elect not to complete, contemplated build-out of their
              respective fiber optic telecommunications systems; and

         o    the risk that such build-out may be delayed or otherwise adversely
              affected by presently unforeseeable legal, technical and/or other
              factors.

         The Company cannot assure that it will be successful in overcoming
these risks or any other problems encountered in connection with its lease of
sufficient bandwidth.

PATENTS, TRADEMARKS, LICENSES
-----------------------------

         The Company currently has one patent pending on networking technology.
The Company has five applications on file with the U.S. Patent and Trademark
Office for RPN(TM), Real Private Network(TM), Myrient(TM), ZipDSL(TM), and A
Myriad of Enterprise Solutions(TM).

COST OF COMPLIANCE WITH ENVIRONMENTAL REGULATIONS
-------------------------------------------------

         The Company currently has no costs associated with compliance with
environmental regulations. However, there can be no assurances that the Company
will not incur such costs in the future.

ITEM 2.  DESCRIPTION OF PROPERTY

         The Company leases approximately 3,000 square feet of office space in
Aliso Viejo, California at a monthly rental rate of approximately $6,000 per
month. This facility serves as the primary place of business. The lease expires
in June, 2003.

ITEM 3.  LEGAL PROCEEDINGS

         The Company may from time to time be involved in various claims,
lawsuits, disputes with third parties, actions involving allegations of
discrimination, or breach of contract actions incidental to the operation of its
business. The Company is not currently involved in any such litigation that it
believes could have a materially adverse effect on its financial condition or
results of operations.


                                       10
<PAGE>

         Several of the Company's creditors have obtained judgments against the
Company totaling approximately $3,100,000 as of August 31, 2002. Said
liabilities have been recorded in accounts or notes payable in the accompanying
balance sheet. Several other such matters are pending. The Company has estimated
the amounts due under these pending matters in accounts payable.

         Additionally, the Company has entered into settlement agreements with
many of its creditors that include mutual releases to avoid further litigation
expense. These settlements have been stipulated by a significant fraction of the
original claim, resulting in a gain of $2,965,761 being recorded on the
Company's books for the year ended August 31, 2002. With some exceptions, the
settlements generally call for no payments during the first year, relatively low
quarterly payments starting the second year which increase through the fifth
year, and with accrued interest to be paid in the final year.

         Subsequent to August 31, 2002, the Company has entered into settlement
agreements with many of its creditors that include mutual releases to avoid
further litigation expense. These creditors' claims totaled $1,831,000 and have
been settled for $271,000 generally with terms similar to those described above.

         The Company is currently investigating a matter surrounding certain
cash advances made to the Company by the former Vice-Chairman and CEO and a line
of credit agreement entered into by the Company under the direction of the
former Vice-Chairman and CEO. The Company has retained legal counsel and
consultants to investigate the substance and propriety of all financial dealings
between the Company and its former Vice-Chairman and CEO and his affiliated
entities.

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

       None






                                       11
<PAGE>

                                     PART II

ITEM 5.  MARKET PRICE OF THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
         MATTER'S

         The following table sets forth the high and low bid prices for shares
of the Company's common stock for the periods noted, as reported by the National
Daily Quotation Service and the NASDAQ Bulletin Board. Quotations reflect
inter-dealer prices, without retail mark-up, markdown or commission and may not
represent actual transactions.

                                                    Bid Prices
                                              -----------------------
                                                High           Low
                                              ---------     ---------

         YEAR ENDED AUGUST 31, 2001

         First Quarter                         $ 0.437       $ 0.343
         Second Quarter                          0.460         0.430
         Third Quarter                           0.320         0.270
         Fourth Quarter                          0.200         0.170

         YEAR ENDED AUGUST 31, 2002

         First Quarter                         $ 0.150       $ 0.090
         Second Quarter                          0.190         0.180
         Third Quarter                           0.085         0.080
         Fourth Quarter                          0.045         0.040

         YEAR ENDED AUGUST 31, 2002

         First Quarter                         $ 0.025       $ 0.020


NUMBER OF SHAREHOLDERS
----------------------

         The number of beneficial holders of record of the Common Stock of the
Company as of the close of business on November 29, 2002 was approximately 750.
Many of the shares of the Company's Common Stock are held in a "street name" and
consequently reflect numerous additional beneficial owners.

DIVIDEND POLICY
---------------

         To date, the Company has declared no cash dividends on its Common
Stock, and does not expect to pay cash dividends in the next term. The Company
intends to retain future earnings, if any, to provide funds for operation of its
business.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

         The following discussion contains certain forward-looking statements
that are subject to business and economic risks and uncertainties, and the
Company's actual results could differ materially from those forward-looking
statements. The following discussion regarding the financial statements of the
Company should be read in conjunction with the financial statements and notes
thereto.

GENERAL OVERVIEW

         The Company's operating results have fluctuated in the past and may in
the future fluctuate significantly, depending upon a variety of factors,
including the timely deployment and expansion of new network architectures, the
incurrence of related capital costs, variability and length of the sales cycle
associated with the Company's product and service offerings, the receipt of new
value-added network services and consumer services subscriptions and the
introduction of new services by the Company and its competitors. Additional
factors that may contribute to variability of operating results include but are
not limited to: the pricing and mix of services offered by the Company; customer
retention rate; market acceptance of new and enhanced versions of the Company's
services; changes in pricing policies by the Company's competitors; the
Company's ability to obtain sufficient supplies of sole or limited-source
components; user demand for network and Internet access services; balancing of
network usage over a 24-hour period; the ability to manage potential growth and
expansion; the ability to identify, acquire and integrate successfully suitable
acquisition candidates; and charges related to acquisitions. In response to
competitive pressures, the Company may take certain pricing or marketing actions
that could have a material adverse affect on the Company's business. As a
result, variations in the timing and amounts of revenue could have a material
adverse affect on the Company's quarterly operating results. Currently, the
Company does not have the systems available to provide segment information. Due
to the foregoing factors, the Company believes the period-to-period comparisons
of its operating results are not necessarily meaningful and that such
comparisons cannot be relied upon as indicators of future performance. In the
event that the Company's operating results in any future period fall below the
expectations of securities analysts and investors, the trading price of the
Company's common stock would likely decline.


                                       12
<PAGE>

REVENUE

         Net sales totaled $5,715,811 for the year ending August 31, 2002, a
$8,839,159 decrease over net sales of $14,554,970 for the year ending August 31,
2001. The decrease reflects the loss of revenue from xDSL based broadband
internet connectivity and associated services, due to the Company's shift away
from providing DSL related services.

COST OF SALES

         Cost of sales decreased $8,243,402 during the year ending August 31,
2002 to $2,490,353 from $10,733,755 for the year ending August 31, 2001. Cost of
sales consists primarily of access charges from local exchange carriers,
backbone and internet access costs, and the cost of customer equipment to
support network systems. This decrease reflects the reduction in the cost of
xDSL based broadband internet connectivity and associated services, due to the
Company's shift away from providing DSL related services.

SELLING EXPENSE

         Selling expense consists primarily of personnel expenses, including
salary and commissions, and costs for customer support functions. Selling
expense decreased $133,264 to $1,350,898 for the year ending August 31, 2002
from $1,484,162 for the year ending August 31, 2001. Selling expense for the
year ended August 31, 2002 included payroll related costs of $1,220,766 and
advertising and promotion expense of $108,239. Selling expense for the year
ending August 31, 2001 included payroll and related costs of $1,402,212, and
advertising and promotion expenses of $81,949. The decrease was directly related
to the reduction of sales staff involved in reselling retail based business
class DSL connectivity. The Company's sales focus changed to higher margin
managed services, including Real Private Network(TM) (RPN(TM)) technology,
Internet and Intranet based Web Hosting, Hosted Application Services,
Intelligent Routing and Content Delivery Services, Network and Systems
Management, and Professional Services.

GENERAL AND ADMINISTRATIVE EXPENSE

         General and administrative expense consists primarily of personnel
expense, rent and professional fees. General and administrative expense
decreased $3,062,539 to $6,723,358 for the year ending August 31, 2002 from
$9,785,897 for the year ending August 31, 2001. General and administrative
expense for the year ending August 31, 2002 primarily consisted of $1,119,300 in
administrative wages, technical support engineers and related taxes and
benefits; $729,412 in depreciation expense; $2,456,834 of bad debt expense for
uncollectible accounts receivable; $457,076 in operating equipment leases;
$456,647 for professional fees; $786,936 in rent expense; $150,401 in telephone
expenses; $152,167 of non-cash charged for the issuance of common stock and
options for services rendered and for compensation; $16,477 in research and
development expenses; and $398,108 in other operating expenses. The significant
reduction of expenses in the current fiscal year was due to an approximate
$1,414,000 reduction in wages; $645,000 reduction of non-cash charged for the
issuance of common stock and options for services rendered and for compensation;
$526,000 reduction for systems implementation costs and research and development
which did not continue in the current fiscal year; $457,000 reduction for
professional fees; $285,000 reduction in operating equipment expenses; $211,000
reduction for depreciation expense, offset by an increase in bad debt expense
for uncollectible accounts receivable of $565,000. Currently, the Company is
continuing to take aggressive steps to decrease future general and
administrative expenses, reflecting increased operational efficiencies.

IMPAIRMENT

         Loss on impairment of long-lived assets increased $1,492,836 to
$1,593,007 at August 31, 2002 from $100,171 at August 31, 2001. The loss was
recognized due to the change in market conditions for the Company and its
long-lived assets.

SETTLEMENT EXPENSE

         Settlement expense increased $3,048,192 as of August 31, 2002. There
was no related expense recorded in fiscal 2001. These expenses are a result of
the Company's negotiation, judgments and settlement with its vendors.

INTEREST EXPENSE

         Interest expense increased $567,301 to $1,061,853 for the year ending
August 31, 2002 as compared to $494,552 for the year ending August 31, 2001.
This increase is primarily due to interest charges accrued during the year that
are associated with the negotiated with the conversion of accounts payable
liabilities to long term notes.



                                       13
<PAGE>

GAIN ON EXTINGUISHMENT OF DEBT AND OTHER OBLIGATIONS

           During the year ending August 31, 2002 the Company recognized a gain
of $2,965,761 on the settlement of accounts payable balances with vendors. The
relief of the payable was primarily due to the successful sale and migration of
certain DSL accounts to a third party's network as well as the negotiated
settlement with an IT consulting firm.

OTHER INCOME

           The Company generated one-time revenue of $454,569, primarily from
sale of its certain DSL accounts to a third-party supplier (which provides DSL
communication access) for the year ending August 31, 2002. No such revenue was
generated in the corresponding period in 2001.

NET LOSS

         As a result of the above, the Company incurred a net loss of $7,301,521
for the year ending August 31, 2002 as compared to $8,152,247 for the year
ending August 31, 2001. For the fiscal years ended August 31, 2002 and 2001, the
Company incurred a loss of $0.14 and $0.22 per share, respectively. The
Company's near term focus is to become profitable by increasing enterprise
business and reducing all expenses to minimum levels. However, the Company
believes that it will still incur losses in the near term and cannot assure that
the Company will be profitable in the future.

ASSETS AND LIABILITIES

         Assets decreased by $3,793,389 from $3,891,080 as of August 31, 2001 to
$97,691 as of August 31, 2002. The decrease was due primarily to decreases in
accounts receivable of $925,583, net property and equipment of $2,433,177, other
assets of $251,131 and decrease in cash of $183,498. The reduction of assets is
a direct result of the Company eliminating the infrastructure required to
support broadband Internet access for its customers. Liabilities increased by
$1,842,139 from $20,918,785 as of August 31, 2001 to $22,760,924 as of August
31,2002. The increase was primarily due to increases in current notes payable
and accrued expenses of $7,397,856. The decrease in accounts payable and accrued
expenses are associated with the settlement and write-off of debt. During the
fiscal year 2002, the Company borrowed $859,033 from related parties for
operating funds, and converted $988,235 (plus interest of $29,957) of debt into
equity.

STOCKHOLDERS' DEFICIT

         Stockholders' deficit increased by $5,665,528 from a deficit of
$17,027,705 as of August 31, 2001 to a deficit of $22,663,233 as of August 31,
2002. The increase is attributable to the current year net loss of $7,301,521
offset by the estimated fair market value of common stock for employee
compensation and services of $474,702, the sale of common stock for cash of
$175,000, and the conversion of debt to equity in the amount of $1,018,191.

LIQUIDITY AND CAPITAL RESOURCES

GENERAL

         Overall, the Company had negative cash flows of $183,498 in fiscal year
2002 resulting from $663,381 of cash provided by the Company's financing
activities, offset by $498,808 of cash used in operating activities and $348,071
of cash used in investing activities.

CASH FLOWS FROM OPERATIONS

         Net cash used in operating activities of $(498,808) in fiscal year 2002
was primarily due to the net loss of $7,301,521 and the decrease in accounts
receivable of $1,531,251, offset by the increase of operating liabilities of
$2,324,528; decrease in other assets of $251,131; fair market value of stock
issued for services of $474,702; allowance for doubtful accounts and bad debt
expense of $2,456,834; depreciation expense of $729,412; and the loss on
impairment of long-lived assets and disposal of property and equipment of
$1,763,008.

CASH FLOWS FROM INVESTING

         Net cash used in investing activities of $(348,071) in fiscal year 2002
funded purchases of property and equipment and software development costs to
replace equipment previously leased by the Company.


                                       14
<PAGE>

CASH FLOWS FROM FINANCING

         Net cash provided by financing activities of $663,381 in fiscal year
2002 was primarily due to the proceeds from related party borrowings of
$859,033, net of repayments on notes payable and capitalized leases obligations
of $372,452.

         To date, the Company has satisfied its cash requirements primarily
through related party debt and equity and capitalized lease financings. The
Company's principal uses of cash are to fund working capital requirements and to
service its capital lease and debt financing obligations. The Company hopes that
it will generate positive cash flow from operations within the next twelve-month
period. There can be no assurances that the Company will be successful in
securing additional financing, and if secured, it will be sufficient to satisfy
working capital needs.

LONG-TERM FINANCING

         The Company believes that its anticipated funds from operations will be
insufficient to fund its working capital and other requirements through August
31, 2003. Therefore, the Company will be required to seek additional funds
either through debt or equity financing to finance its long-term operations.
Should the Company fail to raise additional funds, the Company will have
insufficient funds for the Company's intended operations for the next twelve
months that may have a material adverse effect on the Company's long-term
results of operations.

CONTINGENT LIABILITIES AND SETTLEMENTS

         The Company has recorded an accrual for the past due federal and state
payroll taxes due to the under-payment of the Company's payroll tax liability.
As a result, the Company has accrued approximately $1,583,637 including interest
and penalties at August 31, 2002 in the accompanying balance sheet. The Company
is currently attempting to negotiate settlements on this matter and hopes to
establish agreeable payment plans or compromises.

         The Company has entered into settlement agreements with many of its
creditors that include mutual releases to avoid further litigation expense.
These settlements have been stipulated to a fraction of the original claim. With
some exceptions, the settlements generally call for no payments during the first
year, relatively low quarterly payments starting the second year which increase
through the fifth year, and with accrued interest to be paid in the final year.
The Company is expanding its settlement efforts to include judgment creditors
and holders of defaulted notes seeking to negotiate similar compromises and
payments terms. There can be no assurances that the Company will be successful
in these efforts.

GOING CONCERN

         The Company's independent certified public accountants have stated in
their report included in this Form 10-KSB, that the Company has incurred
operating losses in the last two years, has a working capital deficit, under
payment of payroll taxes, and a significant stockholders' deficit. These
conditions raise substantial doubt about the Company's ability to continue as a
going concern.

CAPITAL EXPENDITURES

         The Company has no capital expenditures of significance planned for the
next twelve months.

INFLATION

         Management believes that inflation has not had a material effect on the
Company's results of operations.

ITEM 7.  FINANCIAL STATEMENTS

         The consolidated financial statements and supplementary financial
information that are required to be filed under this item are presented as an
exhibit. Exhibits and Reports on Form 10-KSB in this document, and are
incorporated herein by reference.

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

         Effective January 1, 2003, certain principals of Corbin & Wertz
("C&W"), the Company's independent auditors, formed Corbin & Company, LLP
("C&C"), as a successor public accounting firm and transferred substantially all
of C&W's audit and attest clients to C&C. As a result, on January 10, 2003, the
Board of Directors has approved the engagement of C&C by the Company as its
independent auditors for the fiscal year ended August 31, 2002.


                                       15
<PAGE>

         C&W did not resign or decline to stand for re-election, but were
dismissed on January 10, 2003 to allow the appointment of C&C.

         During the past two fiscal years ended August 31, 2002, C&W's audit
opinion on the Registrant's financial statements did not contain an adverse
opinion or disclaimer of opinion, nor was it modified as to audit scope or
accounting principles.

         There were no disagreements with C&W during the past two most recent
fiscal years and through the date of their dismissal on any matter of accounting
principals or practices, financial statement disclosure or auditing scope or
procedure. Additionally, there were no other reportable matters as defined in
Item 304(a)(1)(iv) of Regulation S-B, during that period of time.

         Registrant has provided C&W with a copy of the disclosures Registrant
is making in this 10-KSB in response to the disclosures required by Regulation
S-B, Item 304(a). C&W has furnished Registrant with a letter addressed to the
Commission stating its agreement and absence of any disagreement with the
statements made by Registrant in response to this Item. Registrant has filed
herewith C&W's letter as Exhibit 16.1 to this Form 10-KSB.


                                       16
<PAGE>

                                    PART III

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

         The following table sets forth the names and ages of the directors and
executive officers of the Company at August 31, 2002, the principal offices and
positions with the Company held by each person and the date such person became a
director or executive officer of the Company. The Board of Directors elects the
executive officers of the Company annually. The directors serve one-year terms
until their successors are elected. The executive officers serve terms of one
year or until their death, resignation or removal by the Board of Directors.
There are no family relationships between any of the directors and executive
officers. In addition, there was no arrangement or understanding between any
executive officer and any other person pursuant to which any person was selected
as an executive officer.

The directors and executive officers of the Company are as follows:

            Name              Age                Positions(s)
--------------------------    ----     -----------------------------------------

Bryan L. Turbow                35      Director, President and Chief Technology
                                        Officer

Barry W. Hall                  54      Director, Chairman of the Board

Stephen V. Cagnazzi (1)        43      Director

(1) Subsequent to August 31, 2002, Mr. Cagnazzi resigned as a member of the
Board of Directors.

         The following is a brief summary of the business experience of the
Company's remaining executive officers and directors:

         BRYAN L. TURBOW has been a member of the Board of Directors since
October 1999. In 1986 Mr. Turbow founded Mobilenetics and was its President and
sole stockholder. Mobilenetics was a telecommunications consulting and systems
integration company that was acquired by Myrient in June 1999.

         BARRY HALL was Executive Vice President, Chief Financial Officer of
Styleclick, Inc. a publicly traded Internet services provider and distributor of
consumer products. Mr. Hall has held this position in Styleclick and its
predecessor company from October 1999 through July 31, 2001. From May 1998 until
August 1999 he was Chief Operating Officer of Interactive Light, Inc. a
developer and marketer of digital interactive entertainment systems and
platforms. From January 1998 to April 1998 Mr. Hall was Chief Financial Officer
of Apparel Technologies, Inc. a developer of digital printing technologies for
the apparel industry. From January 1996 to September 1997 he was Executive Vice
President, Chief Financial Officer of EarthLink Network, Inc. a nationwide
Internet Service Provider. Prior to that Mr. Hall was Chairman and Chief
Executive Officer of California Amplifier, a developer, manufacturer and
marketer of wireless communications components and subsystems.

AGREEMENTS

SECTION16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the
Securities Exchange Act of 1934, as amended, requires the Company's directors
and executive officers and persons who hold more than 10% of a registered class
of its equity securities to file with the Securities and Exchange Commission
initial reports of ownership and reports of changes in ownership of its equity
securities. These individuals are required to furnish the Company with copies of
all Section 16(a) forms they file. To the Company's knowledge, based solely on
review of the copies of such reports furnished to us and written representations
that no other reports were required during the year ended August 31, 2002, all
Section 16(a) filing requirements applicable to these individuals were complied
with.

ITEM 10.  EXECUTIVE COMPENSATION

         The Summary Compensation Table below sets forth information for
services in all capacities, which we paid or accrued for the fiscal years ended
August 31, 2002, 2001 and 2000. Other than as set forth herein, no executive
officer's salary and bonus exceeded $100,000 in any of the applicable years. The
following information includes the annual dollar value of salaries, bonus
awards, the number of stock options granted and certain other compensation, if
any, whether paid or declared.


                                       17
<PAGE>
<TABLE>
                           SUMMARY COMPENSATION TABLE
<CAPTION>
                                                           Annual Compensation
                                                         ------------------------
                                                                                                         Long-Term
                                                                                                       Compensation
                                         Fiscal                                       Restricted        Securities
        Name and Principal             Year Ended                                       Stock           Underlying
      Position/Payouts/Other            August 31        Salary ($)       Bonus         Awards            Options
-----------------------------------    --------------    ----------    ----------    -------------    ---------------
<S>                                      <C>            <C>                  <C>      <C>                  <C>
Bryan L. Turbow (1)                      2002           $       -            -        1,572,302                  -
Director, President and (2)              2001             120,000            -        5,000,000                  -
Chief Technology Officer                 2000             120,000            -                -                  -

Leonard Kajimoto                         2002           $ 100,000            -                -                  -
Vice President, Operations               2001             125,000            -                -            200,000
                                         2000             140,000            -                -            150,000

Vincent J. Roth (3)                      2002           $  85,000            -                -                  -
Former General Counsel,                  2001             113,000            -                -            150,000
Secretary and Treasurer                  2000                   -            -                -                  -

---------------
</TABLE>

(1) In 2002, Mr. Turbow was granted a one-time bonus issued in restricted stock.
(2) During fiscal 2001, 5,000,000 shares of common stock from Mr. Turbow were
pledged as collateral in negotiating with the former Chairman and CFO. Upon
final settlement with the former chairman and CFO, the pledged shares were
transferred to the former Chairman and CFO and the Company agreed to restore the
5,000,000 shares of common stock to Mr. Turbow.
(3) Subsequent to August 31, 2002, Mr. Roth resigned as general counsel,
secretary and treasurer.

OPTION/SAR GRANTS IN LAST FISCAL YEAR

         The following table provides information on option grants for the
fiscal year ended August 31, 2002 to individuals named in the Company's Summary
Compensation table above.
<TABLE>
                               Annual Compensation
<CAPTION>
                                                                                       Exercise
                                  Options          % of Total Options Granted to       Price Per         Expiration
          Name                   Granted (#)         Employees in Fiscal Year            Share              Date
--------------------------    -----------------   --------------------------------    -------------    ---------------
<S>                           <C>
  *None issued
</TABLE>

         The following table provides information on outstanding options as of
August 31, 2002 and options exercised for the year ended August 31, 2002 for the
individuals named on the Company's Summary Compensation table above.
<TABLE>
<CAPTION>
                                 Aggregated Option/SAR Exercises in Last Fiscal Year
                                        And Fiscal Year End Option/SAR Value

                                                               Number of Security
                                                             Underlying Unexercised          Value of in the Money
                              Number of                       Options/SARS at Fiscal          Options/SARS at Fiscal
                               Shares          Value                Year End                        Year End
          Name                Acquired       Realized       Exercisable/Unexercisable      Exercisable/Unexercisable
-------------------------    -----------    ------------   ----------------------------    ---------------------------
<S>                            <C>             <C>              <C>                                 <C>
Leonard Kajimoto               -               $ -              250,000 / 100,000                   $ - / $ -
Vincent J. Roth                -               $ -              150,000 / -                         $ - / $ -
</TABLE>


DIRECTOR'S COMPENSATION
-----------------------

       The directors of the Company are presently receiving no compensation for
time and responsibilities.

2000/1999 STOCK OPTION PLANS
----------------------------

         In February 2000, the Company's Board of Directors and majority
shareholders approved the Myrient, Inc. 2000 Stock Option Plan (the "2000
plan"), effective March 1, 2000. An aggregate of 5,000,000 shares of common
stock are reserved for issuance under the 2000 plan. The exercise price for each
option shall be equal to 85% to 110% of the fair market value of the common
stock on the date of grant, as defined, and shall vest over no more than a
five-year period. The plan shall terminate ten years after its adoption by the
Board of Directors and may be terminated by the Board of Directors on any
earlier date, as defined.


                                       18
<PAGE>

         On November 7, 1999 the Company's Board of Directors and majority
shareholders approved the Myrient, Inc. Amended and Restated 1999 Stock Option
Plan ("the 1999 plan"), effective April 13, 2000. An aggregate of 5,000,000
shares of common stock are reserved for issuance under the 1999 plan. The
exercise price for each option shall be equal to 85% to 110% of the fair market
value of the common stock on the date of grant, as defined, and shall vest over
no more than a five-year period. The plan shall terminate ten years after its
adoption by the Board of Directors and may be terminated by the Board of
Directors on any earlier date, as defined.

         During fiscal 2002 and 2001, the Board of Directors granted to various
employees, pursuant to the 2000 plan, an aggregate of 82,400 and 1,442,500,
options (net of 2,222,452 and 428,500 options that were issued and cancelled
during fiscal 2002 and 2001), respectively at exercise prices ranging from $0.01
to $4.000 (based on the closing bid price of the Company's common stock on the
date of each grant). The options vest through December 2003 and are exercisable
through January 2012.

ITEM 11. SECURITY OWNERSHIP OF EXECUTIVE OFFICERS, DIRECTORS AND BENEFICIAL
         OWNERS OF GREATER THAN 5% OF THE COMPANY'S COMMON STOCK

         The following table sets forth information with respect to the
beneficial ownership of Myrient's common stock owned, as of January 13, 2003 by:

          o     holders of more than 5% of the Company's common stock;
          o     each of the directors;
          o     the executive officers; and
          o     all directors and executive officers of the Company as a group

         As of January 13, 2003, an aggregate of 69,324,237 shares of Myrient's
common stock were issued and outstanding. For purposes of computing the
percentages under this table, it is assumed that all options and warrants to
acquire the Company's common stock which have been issued to the directors,
executive officers and the holders of more that 5% of common stock and are fully
vested or will become fully vested within 60 days of the date of this Annual
Report have been exercised by these individuals and the appropriate number of
shares of Myrient's common stock have been issued to these individuals.

                                  Amount and Nature of
     Name and Address of          Beneficial Ownership
      Beneficial Owner                    (1)                Percent of Class
-------------------------------   ---------------------    ---------------------

Bryan L. Turbow                         23,915,245                34.50%
65 Enterprise
Aliso Viejo, CA  92656

Vincent J. Roth                            385,586(2)                  *
65 Enterprise
Aliso Viejo, CA  92656

Leonard Kajimoto (2)                     1,849,208(3)              2.67%
Vice President, Operations
65 Enterprise
Aliso Viejo, CA  92656

Barry W. Hall                              175,000(2)                  *
65 Enterprise
Aliso Viejo, CA  92656

Steven Cagnazzi (4)                        904,977                 1.30%
65 Enterprise
Aliso Viejo, CA  92656

All directors and executive
officers of the Company as
a group                                 27,230,016                39.28%

------------
*  Less than one percent (1%)

1.       Beneficial ownership has been determined in accordance with Rule 13d-3
         under the Securities Exchange Act of 1934. Unless otherwise noted,
         Myrient believes that all persons named in the table have sole voting
         and investment power with respect to all shares of common stock
         beneficially owned by them.

2.       Includes 150,000 shares of Myrient's common stock issuable upon
         exercise of vested options.

3.       Includes 250,000 shares of Myrient's common stock issuable upon
         exercise of vested options.

4.       Mr. Cagnazzi resigned as a board member subsequent to August 31, 2002.


                                       19
<PAGE>

ITEM 12. TRANSACTIONS WITH OFFICERS AND DIRECTORS AND OTHER BUSINESS
         RELATIONSHIPS

         During fiscal 2001, the Company invoiced Speedsl.com, Inc. (a company
owned and operated by the son of the former Chairman and CEO) approximately
$191,000 for access service fees and $245,000 for disconnect fees. Speedsl.com,
Inc. made payments of approximately $103,000. During fiscal 2001 the Company
wrote off the remaining $721,000 due from Speedsl.com, Inc.

         During November 2001, the Company negotiated with the former Chairman
and CEO to retire his holdings of 15,000,000 shares of his common stock valued
at $1,000,000 which was added to the note payable owed to him.

         During fiscal 2001, pursuant to a settlement agreement with the former
Chairman and CEO, the Company issued 5,000,000 shares of common stock to the
current President and 370,000 shares of common stock to the former Chairman and
CEO for certain legal fees incurred.

         During fiscal 2001, the Company issued 2,000,000 shares of common stock
to the former Vice Chairman and CEO valued at $270,000 (based on the closing bid
price of the Company's common stock on the date of grant) as compensation. The
shares were to vest over a one-year period. Subsequent to the issuance, the
individual resigned, the Company and the individual agreed to cancel 1,000,000
of the original shares issued, resulting in the Company recognizing compensation
expense of $135,000 in the accompanying statement of operations for the year
ended August 31, 2001.

         During fiscal 2001, the Company received $847,017 from its then
Vice-Chairman and CEO, who resigned in May, 2001, for working capital purposes.
At the direction of said former CEO, these advances were later evidenced by
certain demand notes upon which the Company has not made any payments. The
Company has retained outside legal counsel and consultants to investigate the
substance and propriety of all of the financial dealings between the Company and
its former CEO and his affiliated entities.

         In January 2001, the Company entered into a line of credit agreement
(the "Line") with a financial institution. The Line bears interest at 10%, and
was agreed to be secured by 1,000,000 shares of the Company's common stock owned
by the President of the Company. As of August 31, 2002, the Company's
outstanding borrowings totaled $500,000 (and which matured in September, 2001)
and no further draws are available to the Company under the Line. The former
Vice-Chairman and CEO personally provided the funds to the financial institution
and instructed it to issue the Line. The President of the Company executed a
guaranty in connection with the $500,000 advance under the Line. Interest
expense incurred on the Line totaled $50,000 for the current fiscal year which
is recorded under accrued interest payable in the accompanying balance sheet at
August 31, 2002. The Company has retained outside legal counsel and consultants
to investigate the substance and propriety of all of the financial dealings
between the Company and the issuer of this line of credit and all persons and
entities affiliated with it.

         In March 2002, the President of the Company was issued 1,572,302 shares
of the Company's restricted common stock as a one-time bonus. These shares are
valued at $166,664 (based on the fair market value of the stock on the date of
grant).

         In March 2002 a director agreed to convert $100,000 of the principal
balance of a note payable into 904,977 shares of the Company's restricted common
stock (based on the fair market value of the stock on the date of grant).

         During the first fiscal quarter of 2002, the President of the Company
loaned the Company $597,905. These loans are due on demand, and are non-interest
bearing. In fiscal 2002, the President of the Company agreed to convert $565,084
of the principal balance of notes payable due him into 10,342,943 shares of the
Company's restricted common stock (based on the fair market value of the stock
on the date of grant).

         During fiscal 2002, the Company transferred equipment with a net book
value of $14,910 to the President of the Company in exchange for relief of debt
in the amount of $14,910. As the amount of debt relief was equal to the net book
value of the assets transferred, no gain or loss was recognized.

         As of August 31, 2002, the Company had $96,238 of demand loans payable
to relatives of the President. These loans are unsecured and non-interest
bearing.


                                       20
<PAGE>

ITEM 13. CONTROLS AND PROCEDURES

         During the 90-day period prior to the filing date of this report,
management, including the Corporation's President, evaluated the effectiveness
of the design and operation of the Corporation's disclosure controls and
procedures. Based upon, and as of the date of that evaluation, the President
concluded that the disclosure controls and procedures were effective, in all
material respects, to ensure that information required to be disclosed in the
reports the Corporation files and submits under the Exchange Act is recorded,
processed, summarized and reported as and when required.

         There have been no significant changes in the Corporation's internal
controls or in other factors that could significantly affect internal controls
subsequent to the date the Corporation carried out its evaluation. There were no
significant deficiencies or material weaknesses identified in the evaluation and
therefore, no corrective actions were taken.

ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K

INDEX TO EXHIBITS

EXIBIT NO       DESCRIPTION.

         16.1     Letter from former accountant

         23.1     Consent of experts and counsel

         99.1     Certification pursuant to 18 U.S.C. Section 1350, as adopted
                  pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

         (B)      Reports on Form 8-K



                                   [SIGNATURE]

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.

Date: January 15, 2003

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

MYRIENT, INC. (Registrant)

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


/S/ Bryan L. Turbow                 Director and               January 15, 2003
--------------------------------    President/CTO
Bryan L. Turbow





                                       21
<PAGE>


                                 CERTIFICATIONS


I, Bryan Turbow, certify that:

1.   I have reviewed this annual report on Form 10-KSB of Myrient, inc.

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

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

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

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

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

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

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

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

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

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

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

/S/ Bryan L. Turbow                                            January 15, 2003
--------------------------------    President/CTO
Bryan L. Turbow




<PAGE>


INDEX TO FINANCIAL STATEMENTS

                                                                     PAGE
                                                                     -----
Report of Independent Auditors  . . . . . . . . . . . . . . . . . .   F-1

Consolidated Balance Sheet. . . . . . . . . . . . . . . . . . . . .   F-2

Consolidated Statements of Operations for the Years
Ended August 31, 2002 and 2001. . . . . . . . . . . . . . . . . . .   F-3

Consolidated Statements of Stockholders' Deficit
for the Years Ended August 31, 2002 and 2001  . . . . . . . . . . .   F-4

Consolidated Statements of Cash Flows for the Years
Ended August 31, 2002 and 2001. . . . . . . . . . . . . . . . . . .   F-5

Notes to Consolidated Financial Statements. . . . . . . . . . . . .   F-6





<PAGE>

                          INDEPENDENT AUDITORS' REPORT



To the Board of Directors and Shareholders of Myrient, Inc:

We have audited the accompanying consolidated balance sheet of Myrient, Inc.
(the "Company") and subsidiaries as of August 31, 2002 and the related
consolidated statements of operations, stockholders' deficit and cash flows for
each of the years in the two-year period then ended. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Myrient, Inc. as of
August 31, 2002 and the results of their operations and their cash flows for
each of the years in the two-year period then ended, in conformity with
accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As disclosed in Note 1, the
Company has incurred significant operating losses in the last two years, has a
working capital deficit of $20,477,084, has liabilities from the underpayment of
payroll taxes, is not in compliance with certain restrictive loan covenants and
has a stockholders' deficit of $22,663,233 at August 31, 2002. These factors,
among others, raise substantial doubt about the Company's ability to continue as
a going concern. Management's plans in regard to these matters are described in
Note 1. The consolidated financial statements do not include any adjustments
that may result from the outcome of this uncertainty.




                                                     /s/ CORBIN & COMPANY, LLP

Irvine, California
January 10, 2003



                                      F-1
<PAGE>
<TABLE>

                                     MYRIENT, INC.

                              Consolidated Balance Sheet

<CAPTION>

                                                                       August 31, 2002
                                                                        -------------
<S>                                                                     <C>
ASSETS


Current assets:
     Accounts receivable, net of allowance for doubtful
       accounts of approximately $112,000                               $     37,602
                                                                        -------------

         Total current assets                                                 37,602

Property and equipment, net                                                   59,689

Deposits and other assets                                                        400
                                                                        -------------
                                                                        $     97,691
                                                                        =============
LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
     Accounts payable and accrued liabilities                           $  5,764,897
     Current portion of notes payable                                     12,118,032
     Accrued payroll and related liabilities                               1,583,637
     Accrued interest payable                                              1,048,120
                                                                        -------------
         Total current liabilities                                        20,514,686


Notes payable, net of current portion                                      2,150,000
Related party notes payable                                                   96,238
                                                                        -------------
         Total liabilities                                                22,760,924
                                                                        -------------
Commitments and contingencies

Stockholders' deficit:
     Preferred stock, $0.001 par value; 10,000,000 shares authorized,
       no shares issued and outstanding                                           --
     Common stock, $0.001 par value; 75,000,000 shares authorized,
       66,854,848 shares issued and outstanding                               66,855
     Additional paid-in capital                                           18,503,283
     Accumulated deficit                                                 (41,233,371)
                                                                        -------------
         Total stockholders' deficit                                     (22,663,233)
                                                                        -------------
                                                                        $     97,691
                                                                        =============

                         See independent auditors' report and
                accompanying notes to consolidated financial statements

                                          F-2
</TABLE>

<PAGE>
<TABLE>

                                      MYRIENT, INC.

                          Consolidated Statements of Operations
<CAPTION>

                                                           For The Year Ended August 31,
                                                           -----------------------------
                                                               2002            2001
                                                           -------------   -------------
<S>                                                        <C>             <C>
Net sales                                                  $  5,715,811    $ 14,554,970

Cost of goods sold                                            2,490,353      10,733,755
                                                           -------------   -------------
         Gross profit                                         3,225,458       3,821,215
                                                           -------------   -------------
Operating expenses:
     Selling                                                  1,350,898       1,484,162
     General and administrative                               6,723,358       9,785,897
     Loss on impairment of long-lived assets                  1,593,007         100,171
     Loss on disposal of property and equipment                 170,001         106,280
     Settlement expense                                       3,048,192              --
                                                           -------------   -------------
         Total operating expenses                            12,885,456      11,476,510
                                                           -------------   -------------
Loss from operations                                         (9,659,998)     (7,655,295)

Other income (expense):
     Interest expense                                        (1,061,853)       (494,552)
     Gain on settlement of debt and other obligations         2,965,761              --
     Other income, net                                          454,569              --
                                                           -------------   -------------
         Total other income (expense)                         2,358,477        (494,552)
                                                           -------------   -------------
Loss before provision for income taxes                       (7,301,521)     (8,149,847)

Provision for income taxes                                           --          (2,400)
                                                           -------------   -------------
Net loss                                                   $ (7,301,521)   $ (8,152,247)
                                                           =============   =============

Net loss available to common stockholders per share        $      (0.14)   $      (0.22)
                                                           =============   =============

Basic/diluted weighted average common shares outstanding     52,814,597      37,793,222
                                                           =============   =============

                           See independent auditors' report and
                 accompanying notes to consolidated financial statements

                                           F-3
</TABLE>

<PAGE>
<TABLE>

                                                            MYRIENT, INC.

                                          Consolidated Statements of Stockholders' Deficit

                             For Each Of The Years In The Two-Year Period Ended August 31, 2002 and 2001
<CAPTION>
                                   Common Stock               Preferred Stock           Additional                         Total
                          -----------------------------   --------------------------      Paid-in       Accumulated    Stockholders'
                              Shares         Amount          Shares         Amount        Capital         Deficit         Deficit
                          -------------   -------------   -------------   ----------   -------------   -------------   -------------
<S>                         <C>           <C>                    <C>      <C>          <C>             <C>             <C>
Balance at
September 1, 2000           42,288,367    $     42,289           4,000    $       4    $ 15,397,404    $(25,673,144)   $(10,233,447)

Accrued preferred
stock dividends                     --              --              --           --              --        (106,459)       (106,459)

Conversion and repurchase
of preferred stock,
including $237,614 of
accrued dividends            4,429,281           4,429          (4,000)          (4)       (966,811)
                                                                                                                 --        (962,386)

Estimated fair market
value of options and
warrants issued for
services                            --              --              --           --         316,598              --         316,598

Profit from short
swing sale                          --              --              --           --          16,380              --          16,380

Common stock converted
to debt                    (15,000,000)        (15,000)             --           --        (985,000)             --      (1,000,000)

Estimated fair market
value of common stock
issued for services
and compensation             3,124,409           3,124              --           --         476,994              --         480,118

Estimated fair market
value of common stock
issued for conversion
of debt                     10,032,739          10,033              --           --       2,603,705              --       2,613,738

Net loss                            --              --              --           --              --      (8,152,247)     (8,152,247)
                          -------------   -------------   -------------   ----------   -------------   -------------   -------------
Balance at
August 31, 2001             44,874,796          44,875              --           --      16,859,270     (33,931,850)    (17,027,705)

Estimated fair market
value of common stock
for conversion of debt      15,402,122          15,402              --           --       1,002,789              --       1,018,191

Estimated fair market
value of common stock
issued for employee
compensation                 4,227,767           4,228              --           --         394,028              --         398,256

Issuance of common
stock for cash               1,916,668           1,917              --           --         173,083              --         175,000

Estimated fair market
value of common stock
issued for services            838,495             838              --           --          75,608              --          76,446

Estimated fair market
value of common stock
issued for fixed assets         50,000              50              --           --           7,950              --           8,000

Estimated fair market
value of common stock
issued for settlement           30,000              30              --           --           3,270              --           3,300


Exercise of stock options       15,000              15              --           --           1,785              --           1,800

Cancellation of shares
previously purchased          (500,000)           (500)             --           --         (14,500)             --         (15,000)

Net loss                            --              --              --           --              --      (7,301,521)     (7,301,521)
                          -------------   -------------   -------------   ----------   -------------   -------------   -------------
Balance at
August 31, 2002             66,854,848    $     66,855              --    $      --    $ 18,503,283    $(41,233,371)   $(22,663,233)
                          =============   =============   =============   ==========   =============   =============   =============


                                                See independent auditors' report and
                                       accompanying notes to consolidated financial statements

                                                                 F-4
</TABLE>
<PAGE>
<TABLE>

                                     MYRIENT, INC.

                         Consolidated Statements of Cash Flows
<CAPTION>

                                                           For The Year Ended August 31,
                                                           ---------------------------
                                                               2002           2001
                                                           ------------   ------------
<S>                                                        <C>            <C>
Cash flows from operating activities:
     Net loss                                              $(7,301,521)   $(8,152,247)
     Adjustments to reconcile net loss to net cash
       (used in) provided by operating activities:
         Gain on settlement of debt
           and other obligations                            (2,965,761)            --
         Bad debt expense                                    2,456,834      1,891,664
         Depreciation                                          729,412        940,366
         Loss on impairment of long-lived assets             1,593,007        100,171
         Loss on disposal of property and equipment            170,001        106,280
         Estimated fair market value of stock, options
           and warrants issued for services                    474,702        796,716
         Non-cash portion of cost of goods sold                281,918             --
         Non-cash portion of settlement expense              3,018,192             --
         Changes in operating assets and liabilities:
              Accounts receivable                           (1,531,251)    (1,221,645)
              Other assets                                     251,131        101,423
              Accounts payable and accrued liabilities       1,185,787      4,883,640
              Accrued payroll and related liabilities          190,506        835,640
              Accrued interest payable                         948,235        220,121
                                                           ------------   ------------
     Net cash (used in) provided by operating activities      (498,808)       502,264
                                                           ------------   ------------
Cash flows from investing activities:
     Capitalized computer software development costs          (203,976)            --
     Purchases of property and equipment                      (144,095)    (1,792,222)
                                                           ------------   ------------
     Net cash used in investing activities                    (348,071)    (1,792,222)
                                                           ------------   ------------
Cash flows from financing activities:
     Net proceeds from issuance of common stock and
       exercise of stock options                               176,800             --
     Proceeds from borrowings on lines of credit                    --        294,000
     Proceeds from related party notes payable                 859,033      2,134,905
     Principal repayments on notes payable                     (51,000)      (151,265)
     Repayment on related party notes payable                 (265,940)      (749,464)
     Repayment on capitalized leases                           (55,512)       (83,977)
     Profit from short swing sale                                   --         16,380
                                                           ------------   ------------
     Net cash provided by financing activities                 663,381      1,460,579
                                                           ------------   ------------
Net change in cash                                            (183,498)       170,621

Cash at beginning of year                                      183,498         12,877
                                                           ------------   ------------
Cash at end of year                                        $        --    $   183,498
                                                           ============   ============
Supplemental cash flow disclosures:
     Cash paid during the year for:
         Interest                                          $   114,000    $   182,000
                                                           ============   ============
         Income taxes                                      $        --    $     2,400
                                                           ============   ============

See accompanying notes to consolidated financial statements for non-cash
investing and financing activities during fiscal year 2002 and 2001.



                          See independent auditors' report and
                accompanying notes to consolidated financial statements

                                          F-5
</TABLE>

<PAGE>

                                  MYRIENT, INC.

                   Notes to Consolidated Financial Statements

                       For The Year Ended August 31, 2002


NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
-----------------------------------------------

Organization and Operations
---------------------------

Myrient, Inc. (the "Company" or "MYRIENT") is a Nevada corporation engaged in
providing high-speed Internet access, data, voice and video streaming services
to individuals and businesses.

Going Concern
-------------

The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern, which contemplates, among other
things, the realization of assets and satisfaction of liabilities in the normal
course of business. The Company has negative working capital of $20,477,084,
liabilities from underpayment of payroll taxes (see Note 5), a stockholders
deficit of $22,663,233, significant losses from operations through August 31,
2002 and non-compliance with restrictive loan covenants, among other matters,
that raise substantial doubt about its ability to continue as a going concern.

The Company's continued existence is dependent upon several factors including
the Company's ability to fund operations and restructure liabilities and debt.

The Company's near and long-term operating strategies focus on exploiting
existing and potential competitive advantages while eliminating or mitigating
competitive disadvantages. In response to current market conditions and as a
part of its ongoing corporate strategy, the Company is pursuing several
initiatives intended to increase liquidity and better position the Company to
compete and operate under current market conditions.

Several completed and ongoing initiatives, which the Company hopes to
accomplish, are as follows:

         o    The Company has consolidated its equipment and network
              requirements without compromising levels of service. Through
              management of equipment utilization and space requirements the
              Company should be able to significantly reduce overhead costs.

         o    Additionally, the Company is aggressively pursuing other cost
              cutting programs to achieve positive cash flow from operations in
              the very near future.

         o    The Company is currently working on restructuring liabilities and
              debt to maximize cash flows. The Company is also exploring various
              fundraising alternatives.

Current market conditions have affected and are continuing to affect the
Company's operating results and liquidity. The Company operates within an
industry that is subject to rapid technological change and intense competition.
During the months ahead, the Company will be forced to make difficult decisions
regarding, among other things, the future direction and capital structure of the
Company. The Company has retained financial and legal advisors who are reviewing
the financial alternatives available to the Company.

In the absence of significant revenues, profits, and increased working capital,
the Company intends to fund operations through additional debt and equity
financing arrangements which management believes may be insufficient to fund its
capital expenditures, working capital, and other cash requirements for the
fiscal year ending August 31, 2003. Therefore, the Company may be required to
seek additional funds to finance its long-term operations. The successful
outcome of future activities cannot be determined at this time and there are no
assurances that, if achieved, the Company will have sufficient funds to execute
its intended business plan or generate positive operating results.

These circumstances raise substantial doubt about the Company's ability to
continue as a going concern. The accompanying consolidated financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.

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

The consolidated financial statements include the accounts of Myrient, Inc. and
its wholly owned subsidiaries; Mobilenetics Corp. ("Mobilenetics"), Landmark
Communications, Inc. ("Landmark") and Color Networks, Inc. ("Color Networks").
All significant intercompany balances and transactions have been eliminated in
consolidation. During the fiscal year 2002, these companies had no operations,
and all but Landmark Communications, Inc. is being dissolved.

                                      F-6
<PAGE>
                                  MYRIENT, INC.

                   Notes to Consolidated Financial Statements

                       For The Year Ended August 31, 2002


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
---------------------------------------------------

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

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
certain estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements, and reported amounts of
revenue and expenses during the reporting period. Actual results could differ
materially from those estimates. Significant estimates made by management are,
among others, realizability of long-lived assets, deferred taxes, payroll tax
liabilities and vendor obligations.

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

The Financial Accounting Standards Board ("FASB") issued Statement of Financial
Accounting Standards No. 107 ("SFAS No. 107"), "Disclosures About Fair Value of
Financial Instruments." SFAS No. 107 requires disclosure of fair value
information about financial instruments when it is practicable to estimate that
value. The carrying amounts of the Company's financial instruments as of August
31, 2002 approximate their respective fair values because of the short-term
nature of these instruments. Such instruments consist of cash, accounts
receivable, accounts payable, accrued expenses, line of credit, convertible note
payable and notes payable. The fair value of related party notes payable is not
determinable as the borrowings are with a related party.

Property and Equipment
----------------------

Property and equipment is stated at cost. Depreciation is computed using the
straight-line method over the estimated useful lives of the depreciable assets,
which range from three to seven years. Equipment under capital lease obligations
is depreciated over the shorter of the estimated useful lives or the term of the
lease. Management evaluates useful lives regularly in order to determine
recoverability taking into consideration current technological conditions.
Repairs and maintenance are charged to expense as incurred while improvements
are capitalized. Upon the sale or retirement of property and equipment, the
accounts are relieved of the cost and the related accumulated depreciation, with
any resulting gain or loss included in the statement of operations. As of August
31, 2002 and 2001, the Company assessed certain equipment to be impaired and
wrote off certain of these balances (see below).

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

The Company's management assesses the recoverability of its long-lived assets by
determining whether the depreciation and amortization of long-lived assets over
their remaining lives can be recovered through projected undiscounted future
cash flows. The amount of long-lived asset impairment is measured based on fair
value and is charged to operations in the period in which long-lived asset
impairment is determined by management. At August 31, 2002 and 2001, management
determined that the Company's long-lived assets have been impaired as follows:

         o    In fiscal 2002, management wrote down the value of certain
              property and equipment obtained in the normal course of business.
              Due to the change in market conditions for the Company and these
              assets, the Company recognized an impairment loss of approximately
              $1,594,000 on the related property and equipment in the
              accompanying statement of operations.

         o    In fiscal 2001, management wrote down the value of certain
              property and equipment obtained during the normal course of
              business. Due to the change in market conditions for these assets
              the Company recognized an impairment loss of approximately
              $101,000 on the related property and equipment in the accompanying
              statement of operations.

Management believes that the impairment losses recognized on long-lived assets,
including property and equipment, intangible assets, and other assets are
adequate. There can be no assurance, however, that market conditions or demand
for the Company's products will not change which could result in additional
future long-lived asset impairments.

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

Fees for Internet access, data, voice and video services are recognized as
services are provided. Certain sales of equipment to former customers have been
recognized on the cash basis, due to uncertainties regarding the ultimate
realization of the amounts invoiced.


                                      F-7
<PAGE>
                                  MYRIENT, INC.

                   Notes to Consolidated Financial Statements

                       For The Year Ended August 31, 2002


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
--------------------------------------------------------------

Advertising
-----------

The Company expenses the cost of advertising when incurred as selling expense.
Advertising expenses were approximately $108,000 and $81,000 for the fiscal
years ended August 31, 2002 and 2001, respectively.

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

The Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109 ("SFAS No. 109"), "Accounting for Income Taxes." Under SFAS
No. 109 deferred tax assets and liabilities are recognized for the expected tax
consequences of attributable differences between the tax bases and reported
amounts of assets and liabilities. Deferred tax assets and liabilities are
computed using enacted tax rates expected to apply to taxable income in the
years in which temporary differences are expected to be recovered or settled.
The effect on deferred tax assets and liabilities from a change in tax rates is
recognized in income in the period that includes the enactment date. A valuation
allowance is provided for significant deferred tax assets when it is more likely
than not that such assets will not be recovered.

Loss Per Share
--------------

The Company has adopted Statement of Financial Accounting Standards No. 128
("SFAS No. 128"), "Earnings per Share." Under SFAS No. 128, basic earnings per
share is computed by dividing income available to common shareholders by the
weighted-average number of common shares assumed to be outstanding during the
period of computation. Diluted earnings per share is computed similar to basic
earnings per share except that the denominator is increased to include the
number of additional common shares that would have been outstanding if the
potential shares had been issued and if the additional common shares were
dilutive (no shares where considered additional common stock equivalents at
August 31, 2002 and 2001). The Company's net loss has been increased for the
effect of accrued dividends to preferred stockholders (see Note 12). Stock
options and warrants outstanding are not considered common stock equivalents, as
the affect on net loss per share would be anti-dilutive.

Stock-Based Compensation
------------------------

The Company accounts for non-employee stock based compensation under Statement
of Financial Accounting Standards No. 123 ("SFAS No. 123"), "Accounting for
Stock-Based Compensation." SFAS No. 123 defines a fair value based method of
accounting for stock-based compensation. However, SFAS No. 123 allows an entity
to continue to measure compensation cost related to stock and stock options
issued to employees using the intrinsic method of accounting prescribed by
Accounting Principles Board Opinion No. 25 ("APB 25"), "Accounting for Stock
issued to Employees". Under APB 25, compensation cost, if any, is recognized
over the respective vesting period based on the difference, on the date of
grant, between the fair value of the Company's common stock and the grant price.
Entities electing to remain with the accounting method of APB 25 must make pro
forma disclosures of net income and earnings per share, as if the fair value
method of accounting defined in SFAS No. 123 had been applied. The Company has
elected to account for its stock-based compensation to employees under APB 25
(see Note 7).

Software Development Costs
--------------------------

On September 1, 2001, the Company adopted Statement of Position 98-1,
"Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use" ("SOP 98-1"). SOP 98-1 identifies three stages of a typical
software development project: preliminary project stage, application development
stage, and the post-implementation stage. As required by SOP 98-1, the Company
capitalizes certain qualifying costs (primarily employee salary expense)
incurred during the application development stage. All other internal use
development costs are expensed as incurred.

The Company has been developing certain computer software projects since the
third quarter of the prior year and incurred $191,679 research and development
cost in the prior year. The adoption of SOP 98-1 in the prior year did not have
a material impact on the Company's results of operations, financial position or
cash flows for the year. The $191,679 research and development cost was
presented as part of general and administrative expense in the Company's
statement of operations for the year ended August 31, 2001.

The Company incurred $923,804 of research and development expenditures during
the year ended August 31, 2002, of which $203,976 was originally capitalized
under SOP 98-1 as property and equipment. As of August 31, 2002, the related
asset was fully impaired and expensed in the accompanying statements of
operations as the Company does not foresee any future benefit from these
capitalized assets, consistent with the Company's policy regarding long-lived
assets (see above).

                                      F-8
<PAGE>
                                  MYRIENT, INC.

                   Notes to Consolidated Financial Statements

                       For The Year Ended August 31, 2002


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
--------------------------------------------------------------

Concentration Risk
------------------

The Company grants credit to customers within the United States and does not
require collateral. The Company's ability to collect receivables is affected by
economic fluctuations in the geographic areas served by the Company. Reserves
for uncollectible accounts are provided, based on past experience and a specific
analysis of the accounts, which management believes are sufficient. Two
customers accounted for approximately 18% of total product sales for fiscal 2001
and approximately 21% of accounts receivable at August 31, 2001.

Risks and Uncertainties
-----------------------

The Company operates in a highly competitive industry that is subject to intense
competition, government regulation and rapid technological change. The Company's
operations are subject to significant risk and uncertainties including
financial, operational, technological, regulatory and other risks associated
with an emerging business, including the potential risk of business failure.

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

The Company adopted Statement of Financial Accounting Standards No. 131 ("SFAS
No. 131"), "Disclosures about Segments of an Enterprise and Related
Information." SFAS No. 131 establishes standards for the way that public
companies report information about operating segments and related disclosures
about products and services, geographic areas and major customers in annual
consolidated financial statements. The Company accounts for its operations and
manages its business as one segment.

Comprehensive Income
--------------------

The Company has adopted Statement of Financial Accounting Standards No. 130
("SFAS No. 130"), "Reporting Comprehensive Income." SFAS No. 130 established the
standard for reporting and display of comprehensive income and its components in
a full set of general-purpose financial statements. The adoption of SFAS No. 130
has not materially impacted the Company's financial position or results of
operations as the Company has no items of comprehensive income.

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

In August 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 144 ("SFAS No. 144"),
"Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS No. 144
addresses financial accounting and reporting for the impairment of long-lived
assets and for long-lived assets to be disposed of. The provisions of SFAS No.
144 are effective for financial statements issued for fiscal years beginning
after December 15, 2001, and interim periods within these fiscal years, with
early adoption encouraged. The Company adopted SFAS No. 144 during fiscal year
2002. The adoption of SFAS No. 144 did not materially impact its financial
statements.

On April 30, 2002, the FASB issued Statement 145, "RESCISSION OF FASB STATEMENTS
NO. 4, 44, AND 64, AMENDMENT OF FASB STATEMENT NO. 13, AND TECHNICAL
CORRECTIONS." FASB 145 rescinds Statement 4, which required all gains and losses
from extinguishments of debt to be aggregated and, if material, classified as an
extraordinary item, net of related income tax effect. Early application of the
provisions of FASB 145 may be as of the beginning of the fiscal year or as of
the beginning of the interim period in which FASB 145 is issued. The Company has
elected to adopt FASB 145 as of the beginning of the current fiscal year, and
accordingly, reflected all gains on debt extinguishments (totaling $2,965,761 in
fiscal 2002) as other income instead of extraordinary in the accompanying
statements of operations.

NOTE 3 - PROPERTY AND EQUIPMENT
-------------------------------

Property and equipment consists of the following at August 31, 2002:

         Computer equipment                                         $   197,074
         Equipment                                                       89,939
         Furniture and fixtures                                           6,127
                                                                        293,140
                                                                    ------------
         Less accumulated depreciation                                 (233,451)
                                                                    ------------
                                                                    $    59,689
                                                                    ============


                                      F-9
<PAGE>
                                  MYRIENT, INC.

                   Notes to Consolidated Financial Statements

                       For The Year Ended August 31, 2002


NOTE 3 - PROPERTY AND EQUIPMENT, continued
------------------------------------------

During fiscal year ending August 31, 2002 the Company impaired $1,593,007 of
their equipment. The impairment was a result of the equipment placed in storage,
in need of repair and not in use, and/or obsolete and in need of replacement.
The Company has reflected the impairment as a reduction of the cost of the
respective assets.

NOTE 4 - NOTES PAYABLE
----------------------

Notes payable consist of the following as of August 31, 2002:

Unsecured note payable to a vendor pursuant to the terms of an
agreement to convert a trade account payable into a note
payable. The note requires various monthly payments of
principal and interest beginning in April 2002 and a balloon
payment in December 2009, bears interest at 12% per annum, and
contains prepayment incentives that provide the Company with
potential debt forgiveness in future years if certain payments
are made. The Company did not make any of the scheduled
payments, and therefore the entire amount of this note has
been presented as current debt. The Company is negotiating
with the vendor to restructure this debt.                          $  5,500,000

Unsecured note payable to a vendor per the terms of a
settlement agreement, which converted an accounts payable
balance into a note payable during fiscal year 2002. This note
requires various quarterly payments of principal beginning in
August 2004 with the final payment due in August 2007.
Interest will be accrued on the outstanding balance at a rate
of 6% per annum, but will be paid quarterly after the
principal payments have been completed.                               2,000,000

Unsecured note payable to a vendor pursuant to the terms of a
judgment entered against the Company. This note has no
stipulated payment terms, and accrues interest on the
outstanding balance at a rate of 10% per annum. The Company is
currently negotiating the terms of this note with the vendor.
Due to uncertainties regarding the timing of the payment
obligations, the entire amount of this note has been presented
as current debt.                                                      1,398,446

Secured convertible note payable to a financial institution.
Secured by substantially all assets of the Company. This note
bears interest at the prime rate (4.75% at August 31, 2002)
plus 2%, and was due May 30, 2002. This note is convertible
into shares of the Company's common stock at a conversion
price equal to the lesser of the share price on the date of
agreement or at a 30% discount of the share price as of the
date of conversion. The Company did not make the required
monthly payments or the balloon payment, and therefore the
entire amount of this note has been presented as current debt.
The Company is currently negotiating the terms of this note
with the financial institution.                                         875,000

Unsecured advances from the Company's former Vice-Chairman and
CEO. These advances were later evidenced by certain demand
notes upon which the Company has not made any payments. The
Company has retained outside legal counsel and consultants to
investigate the substance and propriety of all dealings
between the Company and the former Vice-Chairman and CEO.
These advances are due on demand and bear no interest.
Accordingly, the entire amount of this note has been presented
as current debt.                                                         847,017

Unsecured note payable to Mesora Investments LLC ("Mesora") a
shareholder. This note is secured by certain shares of common
stock repurchased by the Company and is personally guaranteed
by the Company's former CEO. This note bears interest at 12%
per annum, provides for payment of principal and interest by
May 2001. The Company has not made the required payments under
this note, and a judgment has been entered in favor of Mesora
against the Company and the former CEO for the entire amount
of the debt plus interest and collection costs.                         700,000



                                      F-10
<PAGE>
                                  MYRIENT, INC.

                   Notes to Consolidated Financial Statements

                       For The Year Ended August 31, 2002


NOTE 4 - NOTES PAYABLE, continued
---------------------------------

Unsecured note payable to a leasing company in settlement of
certain operating lease obligations during fiscal year 2002.
This note was originally non-interest bearing with payments
totaling $609,000, and payments ranging from $10,000 to
$40,000 beginning in June 2002. During fiscal 2002, the
Company did not make the required payments. Accordingly, the
interest rate increased to 18% per annum, per the terms of the
agreement. As a result of the default the entire amount of
this note has been presented as current debt.                           609,000

Secured note payable to a financial institution with various
monthly principal payments and a balloon payment due in May
2002. This note is secured by substantially all assets of the
Company. This note bears interest as 10% per annum. The
Company failed to make the required monthly payments due under
this note, and has therefore presented the entire amount as
current debt. The Company is negotiating with this financial
institution to restructure this debt.                                   523,734

Secured line of credit with a financial institution bearing
interest at 10% per annum. This line was agreed to be secured
by 1,000,000 shares of the Company's common stock owned by the
current CEO. This line was due in September 2001, and no
further draws are available to the Company. Based on current
ongoing investigations surrounding this arrangement, the
Company has retained outside counsel and consultants to
investigate the substance and propriety of all financial
dealings between the Company and the issuer of this line of
credit and all persons and entities affiliated with it. Due to
the fact that the line is fully matured, and no further
advances are available, the Company has presented the entire
amount of this debt in the current portion of notes payable.            500,000

Other various unsecured notes payable to individuals and
vendors (from judgments or settlement agreements) with various
monthly principal payments through 2007 and interest at rates
ranging from 6% to 19% per annum. Substantially all of these
notes are currently in default due to non-payment. In prior
fiscal years, some of these individuals were considered
related parties, but due to the fact they have either sold
their interests in the Company or have obtained judgments
against the Company these have now been presented as part of
notes payable. The Company is negotiating with certain of
these noteholders to restructure its debts.                           1,314,834
                                                                   -------------
                                                                     14,268,031

Less current portion                                                (12,118,031)
                                                                   -------------
                                                                   $  2,150,000
                                                                   =============


Principal payments are due on long-term debt as follows:

             Fiscal Years
           Ending August 31,
         --------------------

                 2003                                              $ 12,118,031
                 2004                                                   287,500
                 2005                                                   487,500
                 2006                                                   637,500
                 2007 and thereafter                                    737,500
                                                                   -------------
                                                                   $ 14,268,031
                                                                   =============

                                      F-11
<PAGE>
                                  MYRIENT, INC.

                   Notes to Consolidated Financial Statements

                       For The Year Ended August 31, 2002


NOTE 5 - COMMITMENTS AND CONTINGENCIES
--------------------------------------

Leases
------

The Company has cancelled or defaulted on most of its remaining equipment
leases, which expire at various dates through August 2004. The equipment has
been either returned or is in storage pending return. Management is negotiating
for the settlement on the lease agreements. As the Company is in default on most
of its equipment leases, both capital and operating, the future payments the
Company is obligated to pay have been accrued as of August 31, 2002 and reported
in the current liabilities section of the accompanying balance sheet, totaling
approximately $390,000.

The Company's lease for its facilities expires June, 2003, with future minimum
lease payments totaling approximately $30,000.

Rent and equipment expense under operating leases for the fiscal years ended
August 31, 2002 and 2001 was $1,243,000 and $1,366,000, respectively. Interest
expense incurred pursuant to the capital lease obligations was $15,000 and
$30,000 for the fiscal years ended August 31, 2002 and 2001, respectively.

Legal
-----

The Company may from time to time be involved in various claims, lawsuits,
disputes with third parties, actions involving allegations or discrimination, or
breach of contract actions incidental to the normal operations of its business.
The Company is currently not involved in any such litigation which management
believes could have a material adverse effect on its financial position or
results of operations.

Several of the Company's creditors have obtained judgments against the Company
totaling approximately $3,100,000 as of August 31, 2002. Said liabilities have
been recorded in accounts or notes payable in the accompanying balance sheet.
Several other such matters are pending. The Company has estimated the amounts
due under these pending matters in accounts payable.

Additionally, the Company has entered into settlement agreements with many of
its creditors that include mutual releases to avoid further litigation expense.
These settlements have been stipulated to a minor fraction of the original
claim, resulting in a gain being recorded on the Company's books for the year
ended August 31, 2002. With some exceptions, the settlements generally call for
no payments during the first year, relatively low quarterly payments starting
the second year which increase through the fifth year, and with accrued interest
to be paid in the final year. Subsequent to August 31, 2002, additional
settlements have been renegotiated and others are in current negotiations and
discussions (See Notes 10 and 13).

Accrued Payroll Taxes
---------------------

The Company has recorded an accrual for past due payroll taxes plus penalties
and interest as of August 31, 2002 due to the under-payment of the Company's
payroll tax liability. As a result, the Company has accrued approximately
$1,575,000 including penalties and interest of $376,000 related to payroll taxes
under accrued payroll and related liabilities in the accompanying balance sheet
at August 31, 2002. The Company is in the process of discussing and settling the
matter with the appropriate authorities.

NOTE 6 - INCOME TAXES
---------------------

A reconciliation of income taxes computed at the federal statutory rate of 34%
to the provision for income taxes is as follows for the years ended August 31:

                                                   For The Year Ended August 31,
                                                   -----------------------------
                                                       2002            2001
                                                   -------------   -------------

Tax benefit at statutory rates                     $ (2,483,000)   $ (2,771,000)
Difference resulting from:
   State taxes                                         (448,000)       (439,400)
   Non-deductible and other beneficial items              6,000           4,800
   Changes in allowance for deferred tax assets       2,925,000       3,208,000
                                                   -------------   -------------
        Provision for income taxes                 $         --    $      2,400
                                                   =============   =============


                                      F-12
<PAGE>
                                  MYRIENT, INC.

                   Notes to Consolidated Financial Statements

                       For The Year Ended August 31, 2002


NOTE 6 - INCOME TAXES, continued

The valuation allowance increased by approximately $2,925,000 and $3,208,000
during the years ended August 31, 2002 and 2001, respectively. No current
provision for income taxes is required for the years ended August 31, 2002 and
2001 since the Company incurred taxable losses during such years.

Net deferred income taxes are as follows as of August 31, 2002:

         Deferred tax liabilities:
             Depreciation and amortization                         $   (100,000)
                                                                   -------------
         Deferred tax assets:
             Net operating losses                                    10,312,000
             State taxes                                                  1,000
             Reserves and accruals                                    1,500,000
                                                                   -------------
                  Total deferred tax assets                          11,713,000

             Less allowance for deferred tax assets                 (11,713,000)
                                                                   -------------
                  Net deferred income taxes                        $         --
                                                                   =============

The Company has approximately $26,800,000 and $17,000,000 in Federal and
California State net operating loss carry forwards as of August 31, 2002, which,
if not utilized, expire through 2022 and 2009, respectively.

The utilization of the net operating loss carry-forwards might be limited due to
restrictions imposed under federal and state laws upon a change in ownership.
The amount of the limitation, if any, has not been determined at this time. A
valuation allowance is provided when it is more likely than not that some
portion or all of the deferred tax assets will not be realized. As a result of
the Company's continued losses and uncertainties surrounding the realization of
the net operating loss carry forwards, management has determined that the
realization of the deferred tax assets is questionable. Accordingly, the Company
has recorded a valuation allowance equal to the net deferred tax asset balance
as of August 31, 2002.

NOTE 7 - STOCKHOLDERS' EQUITY
-----------------------------

Preferred Stock
---------------

The Company's articles of incorporation authorize the issuance up to 10,000,000
shares of $.001 par value preferred stock. Shares of preferred stock may be
issued in one or more classes or series at such time and in such quantities the
board of directors may determine. All shares of any one series shall be equal in
rank and identical in all respects. On November 23, 1999, the board of directors
designated 5,000 shares as Series A 6% Convertible Preferred Stock ("Preferred
A"). Each Preferred A share had a liquidation preference of $1,000 per share
plus accrued dividends and was convertible at anytime into such number of fully
paid and non-assessable shares of common stock as was determined by dividing
$1,000 plus the amount of any accrued and unpaid dividends by the conversion
price in effect at the time of conversion, as defined.

During fiscal 2001, the Company accrued $106,459 of dividends in connection with
the outstanding Preferred A shares.

During fiscal 2001, all of the shares of Preferred A and the related accrued
dividends were either converted into common stock or repurchased (see below). As
a result, no shares of Preferred A or related accrued dividends were outstanding
as of August 31, 2002.

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

In November 2000, it was discovered that the former CFO and beneficial owner (as
defined by the Securities Exchange Act of 1934), had profited from purchases and
subsequent sales of the Company's common stock held for less than six (6) months
(a "short-swing" profit). Pursuant to Section 16(b) of thee Securities Exchange
Act of 1934, the Company acted to recover these profits from the former CFO. As
a result, the Company received $16,380 in fiscal year 2001, which has been
credited to additional paid-in capital as a contribution to shareholders'
deficit.

During fiscal 2001, the Company issued 698,710 shares of common stock in
connection with the conversion of 350 shares of Preferred A plus accrued
dividends of $18,285, at conversion prices ranging from $0.25 to $0.917 per
share in accordance with the conversion terms of Preferred A shares.

                                      F-13
<PAGE>
                                  MYRIENT, INC.

                   Notes to Consolidated Financial Statements

                       For The Year Ended August 31, 2002


NOTE 7 - STOCKHOLDERS' EQUITY, continued
----------------------------------------

During fiscal 2001, the Company reached an agreement with Mesora, the holder of
its Preferred A shares for the retirement of the remaining 3,650 Preferred A
shares. On March 8, 2001, Mesora converted 2,450 Preferred Series A shares, with
a liquidation value of $2,450,000, plus the remaining accrued dividends of
$219,329, at a price of $0.91 per share, into 2,952,794 shares of Myrient's
common stock. Mesora converted 700 Preferred Series A shares, with a liquidation
value of $700,000, at a price of $0.90 per share into 777,777 shares of
Myrient's common stock. On May 17, 2001, the Company agreed to repurchase the
shares of common stock at Mesora's cost of $700,000, personally guaranteed by
Myrient's then Vice-Chairman and CEO and secured by the 777,777 shares of common
stock repurchased by the Company (see Note 4). As Mesora has the right to
foreclose on the shares of common stock, the Company has reflected the shares as
outstanding as of August 31, 2001. The 500 remaining Preferred A shares were
repurchased by the Company at its cost of $500,000, which the Company financed
with its line of credit (see Note 4).

During November 2001, the Company negotiated with the former Chairman and CEO to
retire his holdings of 15,000,000 shares of his common stock valued at
$1,000,000 which was added to the note payable owed to him (see Note 4).

During fiscal 2001, pursuant to a settlement agreement with the former Chairman
and CEO, the Company issued 5,000,000 shares of common stock to the current
President and 370,000 shares of common stock to the former Chairman and CEO for
certain legal fees incurred (see Note 11).

During fiscal 2001, the Company issued 2,124,409 shares of common stock valued
at $345,118 (includes the 370,000 shares issued in connection with the
settlement agreement with the former Chairman and CEO) (based on the closing bid
price of the Company's common stock on the dates of grant) for services and
compensation.

During fiscal 2001, the Company issued 2,000,000 shares of common stock to the
former Vice-Chairman and CEO valued at $270,000 (based on the closing bid price
of the Company's common stock on the date of grant) as compensation. The shares
were to vest over a one-year period. Subsequent to the issuance, the CEO
resigned. The Company and the then CEO agreed to cancel 1,000,000 of the
original shares issued, resulting in the Company recognizing compensation
expense of $135,000 in the accompanying statement of operations for the year
ended August 31, 2001.

During fiscal 2001, the Company issued 5,032,739 shares of common stock valued
at $0.13 per share pursuant to the conversion of $672,759 of notes payable.

During the year ended August 31, 2002, the Company issued a total of 15,402,122
shares of the common stock valued at $1,018,191 (based on the closing bid price
of the Company's common stock on the date of issuance) for conversion of
$988,235 of related party debt and $29,957 of related accrued interest (see Note
11).

During the year ended August 31, 2002, the Company sold a total of 1,916,668
shares of common stock for proceeds of $175,000.

During the year ended August 31, 2002, an employee exercised options to purchase
15,000 shares of the Company's common stock for total proceeds of $1,800.

During the year ended August 31, 2002, the Company issued 30,000 shares of its
common stock to a third party as part of a settlement for terminating certain
operating lease agreements. These shares were valued at $3,300 based on the fair
market value on the date of issuance.

During the year ended August 31, 2002, the Company issued 50,000 shares of its
common stock to a third party for the purchase of certain fixed assets. These
shares were valued at $8,000 based on the fair market value on the date of
issuance.

During the year ended August 31, 2002, the Company cancelled and returned to the
Company's treasury 500,000 shares of common stock previously issued to Seven
Keys Development Trust ("Seven Keys"), of which Robert C. Weaver, Jr., the
Company's former director, is a trustee. The Company had investigated and
concluded that these cancelled shares were issued upon the exercise of the
unauthorized stock options granted by William J. Kettle, the Company's former
Chairman of the Board Directors and Chief Executive Officer. As a result of this
transaction the Company accrued the original $15,500 Robert Weaver paid for the
shares and offset this accrued liability against additional paid in capital.
Prior to August 31, 2002, Seven Keys obtained a judgment against the Company in
the amount of $310,000. The Company has accrued this amount in accounts payable
and accrued expenses in the accompanying balance sheet, and has expensed the
judgment amount as settlement cost in the accompanying statement of operations
for the year ended August 31, 2002.

                                      F-14
<PAGE>
                                  MYRIENT, INC.

                   Notes to Consolidated Financial Statements

                       For The Year Ended August 31, 2002


NOTE 7 - STOCKHOLDERS' EQUITY, continued
----------------------------------------

During the year ended August 31, 2002, the Company issued to several of its
employees a total of 4,277,767 shares of common stock valued at $398,256 (based
on the closing bid prices of the Company's common stock on the dates of
issuance), which was recorded as compensation expense.

During the year ended August 31, 2002, the Company issued to several outside
consultants a total of 838,495 shares of common stock valued at $76,446 (based
on the closing bid prices of the Company's common stock on the dates of
issuance), which was recorded as consulting expense.

Stock Options
-------------

In February 2000, the Company's board of directors and majority shareholders
approved the Myrient, Inc. 2000 Stock Option Plan (the "2000 plan"), effective
March 1, 2000. An aggregate of 5,000,000 shares of common stock are reserved for
issuance under the 2000 plan. The exercise price for each option shall be equal
to 85% to 110% of the fair market value of the common stock on the date of
grant, as defined, and shall vest over no more than a five-year period. The plan
shall terminate ten years after its adoption by the board of directors and may
be terminated by the board of directors on any earlier date, as defined.

During fiscal 2002 and 2001, the Board of Directors granted to various
employees, pursuant to the 2000 plan, an aggregate of 82,400 and 1,442,500
options (net of 2,222,452 and 428,500 options that were issued and cancelled
during fiscal 2002 and 2001), respectively, at exercise prices ranging from
$0.01 to $4.000 (based on the closing bid prices of the Company's common stock
on the dates of each grant). The options vest at various rates through December
2003 and are exercisable through January 2012.

From time to time, the Company grants non-plan stock options pursuant to various
agreements and other compensating agreements to employees and third parties.

The Company recorded no expenses in fiscal 2002 and $316,598 of expense in
fiscal 2001 related to stock options. Following is a status of the stock options
outstanding at August 31, 2002 and 2001 and the changes during the years then
ended:
<TABLE>
<CAPTION>
                                              2002                      2001
                                      -----------------------  ----------------------
                                                    Weighted                 Weighted
                                                    Average                  Average
                                                    Exercise                 Exercise
                                        Options      Price       Options      Price
                                      ------------  ---------  ------------  --------
<S>                                     <C>           <C>        <C>           <C>
Outstanding, beginning of year          2,773,440     $2.90      4,909,460     $3.71
     Granted                            2,304,852      0.11      1,871,000      0.90
     Exercised                            (15,000)     0.12             --        --
     Expired/forfeited                 (4,300,892)     1.68     (4,007,020)     3.42
                                      ------------  ---------  ------------  --------
Outstanding, end of year                  762,400     $1.30      2,773,440     $2.90
                                      ============  =========  ============  ========
Exercisable, end of year                  620,733     $1.31      1,921,595     $3.47
                                      ============  =========  ============  ========
Weighted average fair value
  of options granted                                  $0.03                    $0.16
                                                    =========                ========
</TABLE>

The following summarizes information about stock options outstanding at August
31, 2002:
<TABLE>
<CAPTION>

                                Options Outstanding            Options Exercisable
                     --------------------------------------   ----------------------
                                       Weighted
                                       Average
                                      Remaining    Weighted                 Weighted
    Range of           Number of     Contractual   Average     Number of    Average
    Exercise            Shares          Life       Exercise     Shares      Exercise
     Prices           Outstanding      (Years)      Price     Exercisable    Price
------------------   -------------   -----------   --------   -----------   --------
<S>                     <C>               <C>      <C>          <C>         <C>
   $0.01 - 0.38         432,400           8.9      $  0.16      332,400     $  0.12
   $1.30 - 8.00         330,000           7.9         2.80      288,333        2.31
                     -------------                 --------   -----------   --------
                        762,400                    $  1.30      620,733     $  1.31
                     =============                 ========   ===========   ========
</TABLE>



                                      F-15
<PAGE>
                                  MYRIENT, INC.

                   Notes to Consolidated Financial Statements

                       For The Year Ended August 31, 2002


NOTE 7 - STOCKHOLDERS' EQUITY, continued
----------------------------------------

The fair value of each option granted during 2002 and 2001 to consultants and
outside service providers is estimated using the Black-Scholes option pricing
model on the date of grant using the following assumptions: (i) no dividend
yield, (ii) average volatility of 179 percent and 168 percent, respectively,
(iii) weighted average risk free interest rate of approximately 4.18 percent and
6.27 percent, respectively, and (iv) average expected life of 5 years.

Had compensation costs for the Company's 2002 and 2001 options granted to
employees been determined consistent with SFAS 123, the Company's net loss and
net loss per share for the years ended August 31, 2002 and 2001 would
approximate the pro forma amounts below:
<TABLE>
<CAPTION>

                                          2002                           2001
                              -----------------------------   -----------------------------
                               As Reported      Pro forma      As Reported      Pro forma
                              -------------   -------------   -------------   -------------
<S>                           <C>             <C>             <C>             <C>
Net loss                      $ (7,301,521)   $ (7,508,968)   $ (8,152,247)   $ (8,907,172)
                              =============   =============   =============   =============
Basic and diluted loss per
  common share                $      (0.14)   $      (0.14)   $      (0.22)   $      (0.24)
                              =============   =============   =============   =============
</TABLE>

Stock Warrants
--------------

From time to time, the Company issues warrants pursuant to various consulting
and financing/investing agreements. During fiscal 2002 and 2001, no warrants
were issued.

The following represents a summary of the warrants (including the warrants
discussed in the preferred stock section above) outstanding for the years ended
August 31, 2002 and 2001:
<TABLE>
<CAPTION>
                                             August 31, 2002        August 31, 2001
                                         ----------------------  ----------------------
                                                       Weighted                Weighted
                                                       Average                 Average
                                                       Exercise                Exercise
                                           Warrants     Price     Warrants       Price
                                         ------------  --------  -----------   --------
<S>                                        <C>          <C>       <C>           <C>
Outstanding, beginning of year             1,248,163    $ 4.91    1,394,804     $ 4.99
      Granted                                     --        --           --         --
      Exercised                                   --        --           --         --
      Expired/Forfeited                      (15,686)     6.38     (146,641)      5.77
                                         ------------  --------  -----------   --------
Outstanding, end of year                   1,232,477    $ 4.88    1,248,163     $ 4.91
                                         ============  ========  ===========   ========
Exercisable, end of year                   1,232,477    $ 4.88    1,248,163     $ 4.91
                                         ============  ========  ===========   ========
Weighted average fair value of
  warrants granted                                          --                      --
                                                        =======                 =======
</TABLE>

The following summaries information about warrants outstanding at August 31,
2002:
<TABLE>
<CAPTION>

                               Warrants Outstanding            Warrants Exercisable
                     --------------------------------------   ----------------------
                                       Weighted
                                       Average
                                      Remaining    Weighted                 Weighted
    Range of           Number of     Contractual   Average     Number of    Average
    Exercise            Shares          Life       Exercise     Shares      Exercise
     Prices           Outstanding      (Years)      Price     Exercisable    Price
------------------   -------------   -----------   --------   -----------   --------
<S>                   <C>               <C>        <C>         <C>           <C>
   $1.37 - 3.84         406,923         2.1        $  3.62       406,923     $  3.62
   $4.01 - 6.00         650,523         1.8           4.50       650,523        4.50
   $6.63 - 14.63        175,031         5.5           9.23       175,031        9.23
                     -------------                 --------   -----------   --------
                      1,232,477                    $  4.88     1,232,477     $  4.88
                     =============                 ========   ===========   ========
</TABLE>



                                      F-16
<PAGE>
                                  MYRIENT, INC.

                   Notes to Consolidated Financial Statements

                       For The Year Ended August 31, 2002


NOTE 8 - SETTLEMENT EXPENSES
----------------------------

The Company has entered into settlement agreements with and received judgments
from vendors during fiscal 2002 for activities that occurred prior to fiscal
2002. Increases to previously accrued amounts recorded as a result of these
settlements and judgments are recorded in operating expenses in the accompanying
statement of operations under settlement expenses, as follows:

Judgment from a vendor (see Note 4).                               $  1,398,446

Settlement agreement with a leasing company (see Note 4).               642,300

Various other settlements and judgments with various vendors.         1,007,446
                                                                   -------------
                                                                   $  3,048,192
                                                                   =============

NOTE 9 - OTHER INCOME
---------------------

During the year ended August 31, 2002, the Company generated one-time revenue of
$475,000 from the sale of certain digital subscriber line ("DSL") accounts to a
third-party supplier (which provides DSL communication access), which is
included in other income. Pursuant to an agreement, the Company offset certain
accounts payable owed to the third party with this revenue amount.

NOTE 10 - GAIN ON SETTLEMENT OF DEBT AND OTHER OBLIGATIONS
----------------------------------------------------------

The Company entered into settlement agreements with certain of its vendors for
amounts less than what was originally owed. As a result, the Company has
recorded gains on the settlement of debt and other obligations during the year
ended August 31, 2002. These gains are included in the accompanying statement of
operations as other income as follows:

Gain on the settlement of an accounts payable balance based on
the amount claimed in court filings submitted by the vendor.        $ 1,353,370

Gain on the cancellation of account payable balance by a vendor
as part of settlement.                                                1,019,550

Gain on the settlement of an account payable amount on the
conversion of the balance to a note payable with the vendor.            452,819

Additional amounts settled by the Company less than what was
originally owed.                                                        140,022
                                                                    ------------
                                                                    $ 2,965,761
                                                                    ============

NOTE 11 - RELATED-PARTY TRANSACTIONS
------------------------------------

In August 2001, the Company reached a settlement with the former Chairman and
CEO. Pursuant to the settlement, the former Chairman and CEO foreclosed on the
5,000,000 shares of common stock held by the President as payment in full on his
note. In addition, the Company issued an additional 370,000 shares to the former
Chairman and CEO for other negotiated items. As a result, the promissory note in
the amount of $1,940,979 (including accrued interest of $216,028) was eliminated
from the Company's books. Upon the conclusion of the settlement, the Company
issued 5,000,000 restricted shares of common stock to the current President to
restore his holdings. The Company recorded a reduction of the note payable and
the accrued interest against the issuance of the 5,000,000 shares of common
stock issued to the President with no impact to the statement of operations, as
the transactions was with a majority shareholder. The Company valued the
additional 370,000 shares of common stock at $51,800 (based on the closing bid
price on the date of settlement) and expensed this amount under general and
administrative expenses in the accompanying statement of operations for the year
ended August 31, 2001.

Additionally, the settlement calls for an ongoing sale restriction on the shares
issued to the former Chairman and CEO.

During fiscal 2001, the Company issued 2,000,000 shares of common stock to the
former Vice-Chairman and CEO valued at $270,000 (based on the closing bid price
of the Company's common stock on the date of grant) as compensation. The shares
were to vest over a one-year period. Subsequent to the issuance, the CEO
resigned in which the Company and the then CEO agreed to cancel 1,000,000 of the
original shares issued, resulting in the Company recognizing compensation
expense of $135,000 in the accompanying statement of operations for the year
ended August 31, 2001.


                                      F-17
<PAGE>
                                  MYRIENT, INC.

                   Notes to Consolidated Financial Statements

                       For The Year Ended August 31, 2002


NOTE 11 - RELATED-PARTY TRANSACTIONS, continued
-----------------------------------------------

In March 2002 a director agreed to convert $100,000 of the principal balance of
a note payable into 904,977 shares of the Company's restricted common stock
(based on the fair market value of the stock on the date of conversion).

During the year ended August 31, 2002, the current CEO of the Company loaned the
Company $597,905. These loans are due on demand, and are non-interest bearing.
During fiscal 2002, the President of the Company converted $565,084 of the
principal balance of this loan into 10,342,943 shares of common stock (based on
the fair market value of the stock on the date of conversion).

During the year ended August 31, 2002, certain other related parties converted
$323,150 of principal and $29,957 of interest into 4,154,202 shares of the
Company's restricted common stock (based on the fair market value of the stock
on the date of conversion).

During the year ended August 31, 2002, the Company transferred equipment with a
net book value of $14,910 to the current CEO of the Company in exchange for debt
in the amount of $14,910. As the amount of debt was equal to the net book value
of the assets transferred, no gain or loss was recognized.

As of August 31, 2002, the Company had $96,238 of demand loans payable to
relatives of the current CEO. These loans are unsecured and non-interest
bearing.

NOTE 12 - EARNINGS PER SHARE
----------------------------

Basic and diluted loss per common share is computed as follows:
<TABLE>
<CAPTION>

                                                                            2002             2001
                                                                        -------------    -------------
<S>                                                                     <C>              <C>
Numerator for basic and diluted loss per common share:
         Net loss                                                       $ (7,301,521)    $ (8,152,147)
         Preferred dividends                                                      --         (106,459)
                                                                        -------------    -------------
              Net loss available to common stockholders                 $ (7,301,521)    $ (8,258,706)
                                                                        =============    =============
Denominator for basic and diluted loss per common share:
         Weighted average common shares outstanding                       52,814,597       37,793,222
                                                                        =============    =============
              Net loss per common share available to
                common stockholders                                     $      (0.14)    $      (0.22)
                                                                        =============    =============
</TABLE>

NOTE 13 - SUBSEQUENT EVENTS
---------------------------

Subsequent to August 31, 2002, the Company has entered into settlement
agreements with many of its creditors that include mutual releases to avoid
further litigation expense. These settlements have been stipulated to a minor
fraction of the original claim. With some exceptions, the settlements generally
call for no payments during the first year, relatively low quarterly payments
starting the second year which increase through the fifth year, and with accrued
interest to be paid in the final year. These creditors' claims totalled
$1,831,000 and have been settled for $271,000.

Subsequent to August 31, 2002, the Company issued 1,469,389 shares of common
stock, valued at $26,688 (based on the closing price of the Company's common
stock on the date of grant) to employees in lieu of net pay and employee
bonuses.

Subsequent to August 31, 2002, the Company sold to an employee 1,000,000 shares
of common stock at a 15% discount from the closing price at the date of the
transaction in exchange for a subscription receivable in the amount of $30,000.



                                      F-18