UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

(Mark One)
         [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
ACT OF 1934 [Fee Required] For the fiscal year ended December 31, 2002.

         [ ]  TRANSITION  REPORT  UNDER  SECTION  13 OR 15(d) OF THE  SECURITIES
EXCHANGE ACT OF 1934 [No Fee Required]

        For the transition period from ________________to_______________

                         Commission file number: 0-27704

                           DIGITAL DATA NETWORKS, INC.
                 (Name of small business issuer in its charter)


Washington                                               91-1426372
(State or other jurisdiction                  (IRS Employer Identification No.)
of incorporation or organization)

3102 Maple Avenue, Suite 230
Dallas, Texas                                           75201
(Address of principal executive offices)             (Zip Code)

                                 (214) 969-7200
              (Registrant's telephone number, including area code)

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

Securities registered under Section 12(g) of the Exchange Act: Common Stock,
                                                                no par value
                                                            (Title of class)

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

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ X ]

The issuer's revenues for its most recent fiscal year were $698,000.

The aggregate market value of the voting stock held by non-affiliates of the
issuer on March 24, 2003 was approximately $140,700.

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of March 24, 2003, 3,096,442
shares of Common Stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE: None.



<PAGE>



                                     PART I

Item 1.     Business.

Company Background

         Digital Data Networks, Inc. (the "Registrant", the "Company" or "DDN"),
was incorporated as Transit Information Systems, Inc. under the laws of the
State of Washington on October 17, 1988. The present name was adopted in July,
1995. The Company also operates as The Transit Network under an assumed name
certificate. The Company's offices are currently located at 3102 Maple Avenue,
Suite 230, Dallas, Texas 75201, and its telephone number is (214) 969-7200.

         In February 1996, the Company completed an initial public offering, and
received net cash proceeds of approximately $5.8 million. The Company's Common
Stock is reported on the OTC Electronic Bulletin Board under the trading symbol
"DIDA".

         DDN generates advertising revenue in the out-of-home advertising
industry through its Transit Network operation, which sells advertising on its
digital information network. The Transit Network's digital information network
is a network of computerized electronic displays that delivers information, both
text and graphics, to riders on-board public transit vehicles, utilizing an FM
subcarrier signal to transmit the data. The Transit Network currently operates
its digital information network on the Dallas Area Rapid Transit ("DART") bus
and rail system, having begun operations in 1991. The Company's contract with
DART expires in October 2005.

         The Company has experienced net losses and negative cash flows from
operations and has an accumulated deficit at December 31, 2002 of approximately
$13.7 million and a negative working capital position. The Company has pursued
merger possibilities and continues to do so, but there can be no assurance that
the Company will be successful finding a merger candidate.

The Transit Network's Digital Information Network

         Background

         The Transit Network's digital information network is a network of
computerized electronic displays that delivers news, information and advertising
to riders on-board public transit vehicles. The network consists of specialized
electronic LED displays, transmission protocol, and control software. The system
also requires an agreement with a local FM radio station for the use of an FM
subcarrier signal.

         The electronic display utilized on the DART vehicles is approximately
six inches high by twenty-six inches in length, strategically located to enhance
its visibility inside the vehicle. The software for the digital information
network is licensed from Sunrise Systems. See "--Digital Information Network
Technology" and "--Software License."

         News briefs, weather, trivia questions, sports reports, transit
authority information and other features are continuously presented,
interspersed with advertising messages. The program sequence runs approximately
12-15 minutes, generally assuring that the full program cycle is viewed more
than once during an average commute, which lasts approximately 30 minutes
according to United States Department of Transportation statistics. Programs are
normally updated twice a day, changing content to reflect late-developing news
and sports stories, new information from the transit authority, and often times,
new advertising messages. By accessing the Internet, the Company is able to

                                      -2-

<PAGE>

obtain current programming information on news, weather, sports and
entertainment, and can monitor stories throughout the day, allowing for news
stories to be changed more frequently if the events of the day warrant such
updates. Advertising copy is usually supplied by the advertiser, while public
service and transit information announcements are provided by the transit
authority.

         The digital information network has other important capabilities,
including the ability to (i) target specific buses and routes with different
programming and (ii) display information in Spanish and other foreign languages.
The network allows certain messages to be displayed system-wide, on selected
vehicles, or on vehicles in selected geographical areas. In addition to regular
programming, special programming can be custom-tailored for specific events.
This ability to target vehicles and selected geographical areas is a feature of
the system that can be sold to advertisers desiring to reach specific riders.
Targeting of individual buses which have been chartered for one-day special
events is also available on the system.

         In addition to advertiser messages which are displayed on the digital
information network, the Company has attached metal signs, approximately two
inches high by twenty-six inches wide, to the electronic displays. The Company
sells advertising on these metal signs (its "Marquee Headliner" product) using
adhesive-backed decals which can be removed when an advertiser's contract has
expired.

         Digital Information Network Technology

         The digital information network consists of specialized electronic LED
displays, transmission protocol, and control software. The software allows a
programmer to enter information and entertainment data into a personal computer.
The program is updated via a modem connected between the programming site and
the transmitting location. It is then broadcast through an FM subcarrier signal
and received by a small antenna located on each vehicle. The digital information
is then transferred into buffer memory inside the LED display. As the program
then being displayed completes its cycle, the new data automatically replaces
the old data without any interruption. The entire broadcast cycle - from
in-house computer, to transmitter, to transit vehicle, to its on-screen
appearance - can be completed in just minutes. The Company is responsible for
repairing or replacing its electronic displays that are defective or damaged
after installation, and contracts with a third party to provide monthly
maintenance and repair services on all installed message displays.

         Software License

         The Company licenses the software to operate its digital information
network from Sunrise Systems, pursuant to a License Agreement (the "Software
License") dated November 1, 1995, as amended. The Software License grants the
Company a perpetual, fully paid up license to use the software wherever it
wishes. The Software License is exclusive with regard to each metropolitan area
in the United States and Canada (the "Primary Territory") which has a population
of at least 100,000 people, and is otherwise non-exclusive in the Primary
Territory. In areas other than the United States and Canada (the "Option
Territory"), the Software License is non-exclusive, although the Software
License allows it to become exclusive if certain conditions are met.

         Dallas Area Rapid Transit

         In a 2002 industry survey, DART ranked 19th in the North American bus
transit market, with approximately 898 vehicles. The Company entered into a
contract with DART in October 1990, which granted the Company exclusive rights
to install and operate its digital information network on-board DART's buses for
a period of five years. Installation of the DART system was completed in August
1993. The Company and DART entered into a new contract in 1995 for an additional
three years. In 1997, the Company and DART modified their contract, whereby the

                                      -3-

<PAGE>

Company was granted approval to install its electronic information system on
DART's forty (40) light rail vehicles, the installation of which was completed
in July 1998. During 2000, DART received an additional fifty-five (55) trains,
which the Company also installed its system on.

         When the Company and DART modified their contract in 1997, they
simultaneously extended it through October 2001. The contract was extended an
additional year until October 2002, and extended again until October 2005. Under
the existing contract, the Company pays DART 4% of its gross advertising
receipts. In addition, DART has reserved a permanent position on the digital
information network program for its exclusive use, as well as limited access to
advertising space for its own printed material. The Company must reserve up to
30% of available space on interior advertising panels and one message block on
the digital information network during each cycle of messages for DART'S use and
public service announcements. Advertising revenues from the interior advertising
panels account for less than five percent of total advertising revenues and the
reservation of advertising space to DART does not materially affect the
Company's total advertising revenues. Maintenance of the digital information
network is subcontracted to an independent party. Each vehicle is inspected
monthly to ensure that the hardware is functioning properly and the program is
accurately displayed. Defective hardware is sent to a third party vendor for
repair or replacement.

         Advertiser Participation

         In the DART market, where The Transit Network depends on the sale of
advertising to generate revenues, its clients consist primarily of local
colleges, hospitals and other consumer products and service companies, as well
as regional and local offices of national companies.

         Competition for Advertisers

         The advertising industry is intensely competitive. The Company competes
for advertising dollars with all advertising and promotional channels, including
television, radio, magazines, newspapers, outdoor and direct mailings.
Management believes that its primary competition is radio and newspapers, which
charge rates significantly higher than those charged by the Company. The Company
believes that the primary basis for competition in the advertising industry is
price and value, although other factors such as market coverage, audience
demographics, and time and cost of production are also of importance.

         Manufacturing, Supply and Installation

         The Company does not manufacture its hardware, but contracts with third
parties to produce the equipment. Sunrise Systems assembled The Transit
Network's original hardware from components and subassemblies manufactured by
others. Currently, Sunrise Systems does not provide any production of equipment
to the Company. The Company has not historically encountered difficulties
obtaining components or subassemblies and, while it believes that most of such
components and subassemblies are available from multiple sources, there can be
no assurance that the Company will be able to obtain commitments from qualified
manufacturers to provide the components and subassemblies within the Company's
time and cost estimates. The Company incorporates both system and application
software, most of which has been licensed from Sunrise Systems. See "-Software
License."

         The Company contracts with third party electrical contractors to
install the hardware in participating transit authority vehicles. The Company
has an agreement with a Dallas electrical contractor who has installed The
Transit Network's hardware in DART vehicles, whereby the contractor has the
right of first refusal to install the hardware in other transit systems in the
United States, unless there are union labor or transit authority requirements
which the contractor cannot meet.

                                      -4-

<PAGE>

Employees

         As of January 31, 2003, the Company had four employees, of whom three
were employed full-time, and one part-time.

Item 2.     Properties.

         The Company leases approximately 1,370 square feet in Dallas for
approximately $2,200 per month pursuant to a lease that terminates on October
31, 2005.

Item 3.     Legal Proceedings.

         In 1997, the Company entered into a letter of intent with Advanced
Communication and Information Services ("ACIS") to acquire all of the capital
stock of ACIS in exchange for DDN common shares. Pursuant to the letter of
intent, the Company forwarded ACIS $1,048,000 cash under terms of promissory
notes for working capital pending completion of the acquisition. Subsequently,
ACIS withdrew from the letter of intent and defaulted on repayment of amounts
owed. In April 1998, the Company received a judgment from the King County
Superior Court in the State of Washington against ACIS, ordering ACIS to pay the
Company the amount of the loan, plus interest, plus a $300,000 cancellation fee.
The Company continues to monitor various collection actions but believes it is
unlikely that it will be successful in recovering any, all or part of this
judgment.

         The Company is subject to various legal proceedings and claims that
arise in the ordinary course of business. Company management currently believes
that resolution of such matters will not have a material adverse impact on the
Company's financial position, results of operations or cash flows.


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

         No matter was submitted to a vote of security holders during the fourth
quarter of 2002.

                                     PART II

Item        5. Market for Registrant's Common Equity and Related Stockholder
            Matters.

         (a) Since May 1998, the Company's Common Stock (symbol "DIDA") has been
reported on the OTC Electronic Bulletin Board. The following table sets forth
the high and low closing prices.

                     Period                     High              Low
                     ------                     ----              ---
                 2001:
                 1st Quarter               $   0.19           $  0.09
                 2nd Quarter                   0.49              0.05
                 3rd Quarter                   0.15              0.04
                 4th Quarter                   0.10              0.04
                 2002:
                 1st Quarter               $   0.17           $  0.06
                 2nd Quarter                   0.18              0.08
                 3rd Quarter                   0.10              0.06
                 4th Quarter                   0.15              0.06

                                      -5-

<PAGE>

         The above prices represent inter-dealer prices, without retail mark-up,
mark-down or commissions, and may not represent actual transactions.


         (b) As of January 31, 2003, the Company had approximately 252
shareholders of record.

         (c) The Company has never paid cash dividends on its Common Stock, and
currently intends to retain earnings, if any, for use in the operation of its
business and therefore does not anticipate paying any cash dividends on the
Common Stock in the foreseeable future.


                                      -6-
<PAGE>


Item 6.     Management's Discussion and Analysis of Financial Condition and
            Results of Operations.

The following discussion and analysis should be read in conjunction with the
Company's Consolidated Financial Statements included elsewhere in this Annual
Report on Form 10-KSB (the "Annual Report"). This Annual Report contains
forward-looking statements that involve risks and uncertainties, such as
statements of the Company's plans, objectives, expectations and intentions.
Forward-looking statements, within the meaning of Section 21E of the Securities
and Exchange Act of 1934, are made throughout this Management's Discussion and
Analysis of Financial Condition and Results of Operations. For this purpose, any
statements contained herein that are not statements of historical fact may be
deemed to be forward-looking statements. Without limiting the foregoing, the
words "believes", "anticipates", "plans", "expects", "estimates" and similar
expressions are intended to identify forward-looking statements. There are a
number of important factors that could cause the results of the Company to
differ materially from those indicated herein. The cautionary statements made in
this Annual Report should be read as being applicable to all related
forward-looking statements wherever they appear in this Annual Report.

Background

In February 1996, the Company closed its initial public offering and received
net cash proceeds of approximately $5.8 million from the issuance of
approximately 1.3 million shares of common stock. Subsequent to its public
offering, the Company acquired three internet-related businesses, and in 1998,
disposed of such businesses.

The Company currently generates advertising revenue in the out-of-home
advertising industry through its Transit Network operation, which sells
advertising on its digital information network. The Transit Network's digital
information network is a network of computerized electronic displays that
delivers information, both text and graphics, to riders on-board public transit
vehicles, utilizing an FM subcarrier signal to transmit the data. The Transit
Network currently operates its digital information network on the DART bus and
rail system, having begun operations in 1991. The Company's contract with DART
expires in October 2005.

Commencing in 2000, the Company, through an arrangement with a third party, also
derived revenue from selling truckside advertising. In 2002, the Company
discontinued selling truckside advertising.

Results of Operations

         2001 Compared to 2000

Revenues increased from $590,000 in 2000 to $835,000 in 2001, or approximately
42%, due primarily to the sales of new advertising products, the Marquee
Headliner and truckside. Revenues from the Marquee Headliner and truckside in
2001 accounted for $286,000 and $135,000 respectively, compared to $38,000 and
$8,000, respectively, in the prior year. Revenues from transit advertising
declined from $544,000 in 2000 to $413,000 in 2001, the result of lower demand
for this product.

Total expenses increased from $703,000 in 2000 to $1,031,000 in 2001, as
compared to the prior year, primarily due to a $307,000 increase in direct
costs. Direct costs increased significantly as a result of: a) expenses related
to the new truckside advertising product, as production and installation

                                      -7-

<PAGE>

expenses account for approximately 80% of truckside revenue; and b) expenses
related to the installation of electronic information systems on new DART
trains. Salaries and related remained relatively unchanged, increasing to
$362,000 from $343,000, as did marketing, general and administrative, which
increased from $190,000 to $192,000.

Other income (expense) was $15,000 of expense in 2001, primarily the result of
an additional $20,000 provision for litigation settlement. Other income
(expense) was $61,000 of income in 2000, primarily the result of a reduction of
provision for disputed liabilities of $105,000, offset by a $58,000 unrealized
loss on equity securities.

         2002 Compared to 2001

Revenues decreased from $835,000 in 2001 to $698,000 in 2002, due to a $124,000
decrease from truckside advertising and a $53,000 decrease in electronic
advertising revenue offset by a $40,000 increase in Marquee Headliner revenues.

Total expenses decreased from $1,031,000 in 2001 to $840,000 in 2002. Direct
costs decreased from $472,000 to $235,000 primarily due to a substantial decline
in truckside advertising. Salaries and related remained relatively unchanged,
decreasing from $362,000 to $359,000. Marketing, general and administrative
increased from $197,000 to $246,000, primarily the result of recording a $69,000
reserve for uncollectibility of receivables from officer and director.

Financial Condition, Liquidity and Capital Resources

Net cash provided by operating activities for the year ended December 31, 2002
was $35,000, a $270,000 increase as compared to the $235,000 used during the
prior year. The decrease in cash used in operating activities resulted primarily
from a larger decrease in accounts receivable and smaller decrease in deferred
revenue during 2002 as compared to 2001. Investing activities provided $30,000
in 2002 due to payments received on receivables from director as compared to a
use of cash of $80,000 for capital expenditures in 2001. Financing activities
provided cash of $54,000 from the sale of common stock in 2002 and used cash of
$50,000 in 2002 for payments on the DART note payable as compared to $15,000 of
debt payments made in 2001.

The Company has no current commitments or obligations for future capital
expenditures. A summary of the Company's debt and lease obligations are as
follows:
<TABLE>
<CAPTION>

                                                  Obligations payable in
                                            Less than 1 year        1 to 3 years               Total
                                            ----------------        ------------               -----
<S>                                         <C>                     <C>                   <C>
                     Debt                   $   37,000              $  80,000             $  117,000
                     Leases                     80,000                148,000                228,000
                                                ------                -------                -------
                                            $  117,000              $ 228,000             $  345,000
                                             =========               ========             ==========
</TABLE>
The Company has experienced net losses and negative cash flows from operations
and has an accumulated deficit at December 31, 2002 of approximately $13.7
million and a negative working capital position. The ability of the Company to
generate positive cash flows from operations and net income, is dependent, among
other things, on market conditions, the recovery of recorded assets, cost
control, identifying and securing additional revenue sources, and the Company's
ability to raise capital under acceptable terms. The Company has pursued merger
possibilities and continues to do so. While the Company has had some successes

                                      -8-

<PAGE>

in certain of these endeavors in the past, there can be no assurance that its
efforts will be successful in the future. The accompanying financial statements
do not include any adjustments that might result from the outcome of these
uncertainties. As noted in an explanatory paragraph in the Report of Independent
Certified Public Accountants on the Company's consolidated financial statements,
these conditions raised substantial doubt about the Company's ability to
continue as a going concern.

Company management believes that its existing cash and cash flows from
operations, supplemented by cash received from the sale of its common stock,
will be adequate to fund its operations through 2003. If additional revenue
sources or cash infusions are not realized, the Company may need to change its
business plan, sell or merge its business, or consider other alternatives.

CRITICAL ACCOUNTING POLICIES

The policies identified below are considered as relatively critical to the
Company's business operations and the understanding of the Company's results of
operations. The impact and any associated risks related to these policies on the
Company's business operations is discussed throughout Management's Discussion
and Analysis of Financial Condition and Results of Operations where such
policies affect reported and expected financial results. For a detailed
discussion on the application of these and other accounting policies, see Note 1
in the Notes to the Financial Statements included in this Annual Report.
Preparation of this Annual Report on Form 10-K requires the Company to make
estimates and assumptions that affect the reported amount of assets and
liabilities, disclosure of contingent assets and liabilities, and the reported
amounts of revenue and expenses. There can be no assurance that actual results
will not differ from those estimates.

Revenue Recognition

The Company recognizes revenue in accordance with SEC Staff Accounting Bulletin
No. 101, Revenue Recognition in Financial Statements (SAB 101), as amended by
SAB 101A and 101B. SAB 101 requires that four basic criteria must be met before
revenue can be recognized: 1) persuasive evidence of an arrangement exists; 2)
delivery has occurred or services rendered; 3) the fee is fixed and
determinable; and 4) collectibility is reasonably assured. Determination of
criteria 3) and 4) are based on management's judgments regarding the fixed
nature of the fee charged for services rendered and products delivered and the
collectibility of those fees. Should changes in conditions cause management to
determine these criteria are not met for certain future transactions, revenue
recognized for any reporting period could be adversely affected. The Company has
concluded that its revenue recognition policy is appropriate and in accordance
with accounting principles generally accepted in the United States of America
and SAB No. 101.

Impairment of Long-Lived Assets

The Company evaluates its long-lived assets for financial impairment and
continues to evaluate them as events or changes in circumstances indicate that
the carrying value of such assets may not be fully recoverable. The carrying
value of long-lived assets is considered impaired when the anticipated
undiscounted cash flows from an asset is less than its carrying value. In that
event, a loss is recognized for the amount by which the carrying value exceeds
the fair value of the long-lived asset. The Company has not recognized any
impairment losses.

                                      -9-

<PAGE>

Recent Accounting Pronouncements

In July 2001, the Financial Accounting Standards Board issued SFAS No. 143,
"Accounting for Asset Retirement Obligations" ("SFAS No. 143"). SFAS No. 143
addresses financial accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and the associated asset retirement
costs. It applies to legal obligations associated with the retirement of
long-lived assets that result from the acquisition, construction, development,
and (or) the normal operation of a long-lived asset, except for certain
obligations of lessees. The provisions of SFAS No. 143 are effective for fiscal
years beginning after June 15, 2002, when early application is permitted. The
adoption of SFAS No. 143 will not have a material impact on the Company's
results of operation or financial position.

In June 2002, the Financial Accounting Standards Board issued SFAS No. 146,
"Accounting for Costs Associated with Exit or Disposal Activities" ("SFAS No.
146"). SFAS No. 146 addresses financial accounting and reporting for costs
associated with exit or disposal activities and nullifies Emerging Issues Task
Force (EITF) Issue No. 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring)." The provisions of this Statement are
effective for exit or disposal activities that are initiated after December 31,
2002. The adoption of SFAS No. 146 did not have a material impact on the
Company's financial position or results of operation.

In November 2002, the FASB issued Interpretation No. 45, Guarantors Accounting
and Disclosure Requirements for Guarantees, Including Guarantees of Indebtedness
of Others, an Interpretation of FASB Statement Nos. 5, 57 and 107 and Rescission
of FASB Interpretation No. 34 ("Interpretation No. 45"). This interpretation
expands on the existing accounting guidance and disclosure requirements for most
guarantees. It requires that at the time a company issues a guarantee, the
company must disclose that information in its interim and annual financial
statements. The provisions for initial recognition and measurement of the
liability will be applied on a prospective basis to guarantees issued or
modified after December 31, 2002. The Company does not believe Interpretation
No. 45 will have a material impact on its results of operation, financial
position or cash flows.

Quantitative and Qualitative Disclosure about Market Risk

The Company believes that it does not have any material exposure to interest or
commodity risks. The Company does not own any derivative instruments and does
not engage in any hedging transactions.

                                      -10-
<PAGE>



Item 7.     Financial Statements.
                                                                    Page
         Index to Financial Statements:                             F-1

         Report of Independent Certified Public Accountants         F-2

         Consolidated Balance Sheets                                F-3

         Consolidated Statements of Operations                      F-4

         Consolidated Statement of Stockholders' Equity (Deficit)   F-5

         Consolidated Statements of Cash Flows                      F-6

         Notes to Financial Statements                              F-7 to F-11

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

         None.


                                    PART III

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

                        DIRECTORS AND EXECUTIVE OFFICERS

         Information regarding the executive officers and directors of the
Company as of December 31, 2002 is as follows:

Name                         Age        Position with the Company

Donald B. Scott, Jr.         48         President and Chairman of the Board
                                        Chief Executive Officer

James F. Biagi, Jr.          46         Secretary and Director

Robert F. Hussey             53         Director

Richard J. Boeglin           45         Vice President, Finance and Operations
                                        Chief Financial Officer

Susan E. Hassel              56         Vice President, Sales

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


         The names and a brief description of their business experience for at
least the past five years of the directors and executive officers of the Company
follows:

                                      -11-
<PAGE>

         Donald B. Scott, Jr. has served as President and a director of the
Company since March 1993. In July 1996, Mr. Scott was also elected as the
Company's Chairman of the Board and Chief Executive Officer. Mr. Scott served as
the Company's Acting President from December 1992 through March 1993. Mr. Scott
was previously a principal of Rutkowski, Erickson, Scott ("RES"), a consulting
firm, from 1991 to July 1995. Prior to his association with RES, Mr. Scott was
with Paine Webber in New York from 1987 to 1991.

         James F. Biagi, Jr. has served as Secretary and a director of the
Company since its inception in 1988. He is a practicing attorney in Seattle,
Washington, and has been a principal of the law firm Monahan & Biagi since March
1996. Prior to Monahan & Biagi, Mr. Biagi practiced law at the firm Monahan &
Robinson since 1989, where he has specialized in tax, corporate and securities
matters.

         Robert F. Hussey has served as a director of the Company since November
1997. Mr. Hussey was President and CEO of MetroVision of North America, Inc., a
niche cable television company, from February 1991 until April 1997, when the
company was sold. Mr. Hussey has been a director of Vennworks since May 1993,
Nur Macroprinters Ltd. since December 1997, New World Power since April 2000,
Digital Lightwave since August 2000, and H.C. Wainwright & Co. since July 2001.

         Richard J. Boeglin has served as Vice President of Finance and
Operations and the Chief Financial Officer since April 1995. He has been with
the Company since January 1992. He has sixteen years of management experience,
including direct management of transit system design, development and
installation. From 1987 to 1991, Mr. Boeglin worked in the outdoor advertising
industry.

         Susan E. Hassel has served as Vice President of Sales since she started
with the Company in April 1992. She has eighteen years of sales and marketing
experience. From 1985 until 1991, Ms. Hassel was the Director of Sales and
Marketing for The Relocation Center, a relocation counseling company in Dallas,
Texas.


                             SECTION 16 REQUIREMENTS

         Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange
Act") requires the Company's directors and officers, and persons who own more
than 10% of a registered class of the Company's equity securities, to file
initial reports of ownership and reports of changes in ownership with the
Securities and Exchange Commission (the "SEC"). Such persons are required by SEC
regulations promulgated pursuant to the Exchange Act to furnish the Company with
copies of all Section 16(a) report forms they file with the SEC.

         The Company's registration statement under Section 12 of the Exchange
Act became effective February 13, 1996. Based solely on its review of the copies
of report forms received by it with respect to initial filings from reporting
persons, the Company believes that all filing requirements applicable to its
directors, officers and persons who own more than 10% of a registered class of
the Company's equity securities have been timely complied with in accordance
with Section 16(a) of the Exchange Act.

                                      -12-

<PAGE>

Item 10.          Executive Compensation.

The following table sets forth certain information regarding cash and non-cash
compensation paid by the Company during each of the Company's last three fiscal
years to the Company's Chief Executive Officer and the other most highly
compensated executive officers of the Company whose annual compensation exceeded
$100,000 during the fiscal year ended December 31, 2002 (the "Named Persons").
<TABLE>
<CAPTION>

                                              Annual Compensation                  Long-Term Compensation
                                                                                            Awards
Name and                                                                                 Securities
Principal Position                      Year           Salary           Bonus        Underlying Options
------------------                      ----           ------           -----        -------------------

<S>                                     <C>           <C>           <C>                     <C>
Donald B. Scott, President              2002          $  -0-        $  9,000                 -0-
                                        2001             -0-          10,000                 -0-
                                        2000             -0-          10,000                44,723

Richard J. Boeglin, V.P.,               2002          $103,539      $  5,500                 -0-
  Finance and Operations                2001           104,667         -0-                  20,000
                                        2000            98,446         -0-                     559

Susan E. Hassel, V.P. Sales             2002          $140,860      $  4,000                 -0-
                                        2001           139,088         -0-                  20,000
                                        2000           125,697         -0-                     559
</TABLE>

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


The following table sets forth information with respect to options exercised and
held by the Named Persons at December 31, 2002 and during the year then ended.
<TABLE>
<CAPTION>



                                                                                           Number of
                                                                                           Securities
                                                                                           Underlying
                                                                                          Unexercised
                                                 Shares                                    Options at
                                                Acquired               Value                 Fiscal
                Name                          On Exercise             Realized            Year-End (1)


<S>                                             <C>                    <C>   <C>               <C>
Donald B. Scott, President                      114,366                $    -0-               -0-

Richard J. Boeglin, V.P.,
  Finance and Operations                         42,357                $    -0-               -0-

Susan E. Hassel, V.P., Sales                     31,738                $    -0-               -0-
</TABLE>


 ---------------
(1) All options held by the Named Persons were exercised during 2002.

                                      -13-
<PAGE>


                            COMPENSATION OF DIRECTORS

         As compensation for serving in 2002, Mr. Hussey was awarded $22,500,
Mr. Biagi was awarded $10,000 and Mr. Scott was awarded $9,000. Mr. Biagi was
paid in October 2002, Mr. Scott was paid in November 2002 and Mr. Hussey was
paid $12,500 in December 2002 and $10,000 in January 2003.


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

         The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of December 31, 2002, by
(i) each person or entity who beneficially owns 5% or more of the Common Stock,
(ii) each director, (iii) the Named Persons, and (iv) all officers and directors
of the Company as a group. Unless otherwise noted, the persons and entities
named below have sole voting and investment power with respect to such shares.
<TABLE>
<CAPTION>


Name of                             Total Beneficial Ownership                         Percent of Class
Beneficial Owner                            (including options)                       Beneficially Owned
-----------------                           -------------------                       ------------------
<S>                                          <C>                                        <C>
Steven Adelstein                             500,000 (1)                                16.7%
Whiterock, Inc.                              248,500 (2)                                 8.3%
Donald B. Scott, Jr., Chairman of
   the Board and President                   125,209                                     4.2%
James F. Biagi, Jr., Secretary and Director  154,946                                     5.2%
Robert F. Hussey, Director                   232,000 (3)                                 7.7%
Richard J. Boeglin, V.P., Finance and         44,035                                     1.5%
   Operations
Susan E. Hassel, V.P. Sales                   32,857                                     1.1%
All Executive Officers and Directors         589,047 (3)                                19.7%
  as a group (5 persons)
</TABLE>

-----------------------
(1)      Pursuant to a Schedule 13g filed with the Securities and Exchange
         Commission.
(2)      According to a Schedule 13d filed with the Securities and Exchange
         Commission, Whiterock, Inc. is a Texas corporation, principally engaged
         in the business of investments, of which Mr. Kevan Casey is founder,
         president and chairman of the board.
(3)      Includes options to purchase 100,000 shares exercisable within 60 days,
         which such options were exercised in January 2003.

Item 12. Certain Relationships and Related Transactions.

         During the period June 1996 through July 1997, through advances and the
payment of personal expenses, the Company's president and CEO, Donald B. Scott,
owed the Company approximately $42,000. The Company has been accruing interest
at various rates on this amount over the years. The Company's Board of Directors
awarded Mr. Scott $20,000 for services performed as a director in 1999 (of which
$10,000 was used to reduce his note with the Company), $10,000 was awarded for
services performed as a director in 2000, $10,000 was awarded for services
performed as a director in 2001 (which was used to reduce his note with the
Company), and $9,000 was awarded for services performed as a director in 2002.
As of December 31, 2002, the balance of Mr. Scott's receivable was approximately
$37,700, including accrued interest, which is fully reserved.

                                      -14-
<PAGE>

         In April 1999 the Company advanced one of its directors, Robert F.
Hussey, $100,000 pursuant to a promissory note bearing interest at the rate of
8% per year. The original note was to mature in September 1999, and was extended
to December 31, 2002. The Company's Board of Directors awarded Mr. Hussey
$35,000 for services performed as a director in 1999 (of which $25,000 was used
to reduce his note with the Company), $10,000 was awarded for services performed
as a director in 2000, $25,000 was awarded for services performed as a director
in 2001 (which was used to reduce his note with the Company), and $22,500 was
awarded for services performed as a director in 2002. In April 2002, Mr. Hussey
made a payment of $5,000. As of December 31, 2002, the balance of Mr. Hussey's
receivable was $68,427, including accrued interest, which is fully reserved. In
March 2003, pursuant to an arrangement with Mr. Hussey, the Company's board of
directors awarded Mr. Hussey a $70,000 consulting fee (to be applied to Mr.
Hussey's note, which had a balance at the time of this award of approximately
$69,200) for his efforts in finding a reverse merger candidate for the Company
and consummating the reverse merger transaction prior to September 30, 2003. If
Mr. Hussey is not successful in finding a reverse merger candidate for the
Company and/or a reverse merger transaction is not consummated by September 30,
2003, this $70,000 shall become due and payable to the Company on that date.

         The Company believes that the foregoing transactions with its officers
and directors were on terms no less favorable than could have been obtained from
independent third parties. All future transactions with such persons will also
be on terms no less favorable than could be obtained from independent third
parties.

Item 13.    Controls and Procedures

         (a)  The Company's Chief Executive Officer and Chief Financial Officer
              have evaluated the Company's disclosure controls and procedures as
              of March 28, 2003, and they concluded that these controls and
              procedures are effective.

         (b)  There are no significant changes in internal controls or in other
              factors that could significantly affect these controls subsequent
              to March 28, 2003.

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

         (a)  Exhibits - 23.1 Consent of Independent Certified Public
              Accountants dated March 27, 2003.
                             99.1 Certification by Chief Executive Officer
                             99.2 Certification by Chief Financial Officer

         (b)  Reports on Form 8K - No Form 8-K was filed by the Company during
              the fourth quarter of 2002.

                                      -15-
<PAGE>




                                   SIGNATURES

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


                          DIGITAL DATA NETWORKS, INC.
                          (Registrant)


                          By:    /s/  Donald B. Scott
                                ---------------------
                                Donald B. Scott, Chairman of the Board,
                                President and Chief Executive Officer


                          Date:  March 28, 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.


Signatures                Capacity                                    Date


/s/  Donald B. Scott      Chairman of the Board, President        March 28, 2003
-------------------------
Donald B. Scott           and Chief Executive Officer

/s/  James F. Biagi, Jr.  Secretary and Director                  March 28, 2003
-------------------------
James F. Biagi, Jr.


/s/  Robert  F. Hussey    Director                                March 28, 2003
-------------------------
Robert F. Hussey


/s/  Richard J. Boeglin   Vice President, Finance and             March 28, 2003
-------------------------
Richard J. Boeglin        Operations and Chief Financial Officer


                                      -16-
<PAGE>


                                 CERTIFICATIONS

I, Donald B. Scott, Jr., Chief Executive Officer of the Company, certify that:

1)        I have reviewed this annual report on Form 10-KSB of Digital Data
          Networks, 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' 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.


                                   By:    /s/   Donald B. Scott, Jr.
                                          ------------------------------
                                          Donald B. Scott, Jr.
                                          President and Chief Executive Officer
                                          March 28, 2003



                                      -17-
<PAGE>




I, Richard J. Boeglin, Chief Financial Officer of the Company, certify that:

1)        I have reviewed this annual report on Form 10-KSB of Digital Data
          Networks, 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' 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.



                         By:    /s/   Richard J. Boeglin
                                Richard J. Boeglin
                                Vice President, Finance and Operations and
                                Chief Financial Officer
                                March 28, 2003



                                      -18-
<PAGE>


                                                                EXHIBIT 23.1


               CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


Digital Data Networks, Inc.
Dallas, Texas

We hereby consent to the incorporation by reference in the Company's Form S-8 of
our report dated March 12, 2003 relating to the consolidated financial
statements of Digital Data Networks, Inc. appearing in the Company's Annual
Report on Form 10-KSB for the year ended December 31, 2002. Our report contains
an explanatory paragraph regarding the Company's ability to continue as a going
concern.





BDO Seidman, LLP
Seattle, Washington
March 27, 2003


                                      -19-
<PAGE>



                                                                   Exhibit 99.1


                   Certification Pursuant to 18 U.S.C. Section
           As Adopted to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with Form 10-KSB of Digital Data Networks, Inc. (the "Company")
for the year ended December 31, 2002 as filed with the Securities and Exchange
Commission on the date hereof (the "Report"), I, Donald B. Scott, Jr., Chief
Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

         1)       the Report fully complies with the requirements of Section
                  13(a) or 15(d) of the Securities Exchange Act of 1934, as
                  amended, and
         2)       the information contained in the Report fairly presents, in
                  all material respects, the financial condition and results of
                  operations of the Company.


                               By:    /s/   Donald B. Scott, Jr.
                                      -----------------------------
                                      Donald B. Scott, Jr.
                                      President and Chief Executive Officer
                                      March 28, 2003




                                      -20-
<PAGE>



                                                                    Exhibit 99.2


                   Certification Pursuant to 18 U.S.C. Section
           As Adopted to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with Form 10-KSB of Digital Data Networks, Inc. (the "Company")
for the year ended December 31, 2002 as filed with the Securities and Exchange
Commission on the date hereof (the "Report"), I, Richard J. Boeglin, Chief
Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

         1)       the Report fully complies with the requirements of Section
                  13(a) or 15(d) of the Securities Exchange Act of 1934, as
                  amended, and
         2)       the information contained in the Report fairly presents, in
                  all material respects, the financial condition and results of
                  operations of the Company.


                              By:    /s/   Richard J. Boeglin
                                     -----------------------------
                                     Richard J. Boeglin
                                     Vice President, Finance and Operations
                                     and Chief Financial Officer
                                     March 28, 2003




                                      -21-
<PAGE>

                           DIGITAL DATA NETWORKS, INC.
                        CONSOLIDATED FINANCIAL STATEMENTS


                                      INDEX

                                                                        Page

Report of Independent Certified Public Accountants                      F-2

Consolidated Balance Sheets                                             F-3

Consolidated Statements of Operations                                   F-4

Consolidated Statement of Stockholders' Equity (Deficit)                F-5

Consolidated Statements of Cash Flows                                   F-6

Notes to Financial Statements                                    F-7 to F-12











                                      F-1
<PAGE>



               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


To the Board of Directors and Stockholders of
Digital Data Networks, Inc.


         We have audited the accompanying consolidated balance sheets of Digital
Data Networks, Inc. and its subsidiaries ("the Company"), as of December 31,
2001 and 2002 and the related consolidated statements of operations,
stockholders' equity (deficit) and cash flows for each of the years then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our 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 audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
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 Digital Data
Networks, Inc. and its subsidiaries as of December 31, 2001 and 2002, and the
results of their operations and their cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States of
America.

         The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company has experienced net losses and
negative cash flows from operations, and has an accumulated deficit of
approximately $13.7 million and negative working capital. These conditions raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans concerning these matters are also described in Note 2. The
financial statements do not include any adjustments that might result from the
outcome of these uncertainties.



BDO Seidman, LLP
Seattle, Washington



March 12, 2003


                                      F-2
<PAGE>


                           DIGITAL DATA NETWORKS, INC.
                           CONSOLIDATED BALANCE SHEETS
                             (Dollars in thousands)

<TABLE>
<CAPTION>

                                                                                             December 31,
                                                                                  ------------------------------

                                                                                      2001              2002
                                                                                      ----              ----
Current assets
<S>                                                                               <C>              <C>
  Cash and cash equivalents                                                       $     26         $      95
  Trade accounts receivable, net of allowance
     for doubtful accounts of $3 and $8                                                 93                14
  Prepaid expenses and other current assets                                             51                 8
  Receivables from officer and director, net of reserves (Note 7)                       95                 -
                                                                                     -----           -------
     Total current assets                                                              265               117
Equipment, net (Notes 3 and 4)                                                          39                20
Other assets                                                                             1                 1
                                                                                     -----           -------

Total assets                                                                      $    305         $     138
                                                                                     =====             =====


Current liabilities
  Accounts payable                                                                $    100         $      64
  Accrued payroll and related                                                           22                18
  Deferred revenue                                                                     124               135
  Other accrued liabilities                                                             45                55
  Current portion of notes payable (Note 4)                                            167                49
                                                                                     -----          --------
     Total current liabilities                                                         458               321
  Notes payable, less current portion                                                    -                68
                                                                                     -----          --------
     Total liabilities                                                                 458               389
                                                                                     -----          --------

Commitments and contingencies (Notes 2, 9, and 10)

Stockholders' deficit
  Preferred stock, no par value, 1,000,000 shares authorized,
     no shares issued or outstanding                                                     -                 -
  Common stock, no par value, 10,000,000 shares authorized,
    2,458,390 and 2,996,442 shares issued and outstanding                           13,403            13,456
  Accumulated deficit                                                              (13,556)          (13,707)
                                                                                  --------          --------
     Total stockholders' deficit                                                      (153)             (251)
                                                                                  --------          --------

     Total liabilities and stockholders' deficit                                  $    305         $     138
                                                                                  ========         =========
</TABLE>













                 See accompanying notes to financial statements

                                      F-3
<PAGE>

                           DIGITAL DATA NETWORKS, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (in Thousands, Except Per Share Data)
<TABLE>
<CAPTION>

                                                                                Year Ended December 31,

                                                                                2001             2002
                                                                                ----             ----

<S>                                                                             <C>              <C>
Revenues                                                                        $    835         $    698
                                                                                 -------          -------

Expenses:
   Direct operating costs                                                            472              235
   Salaries and related                                                              362              359
   Marketing, general and administrative                                             197              246
                                                                                --------         --------
      Total expenses                                                               1,031              840
                                                                                --------         --------
Loss from operations                                                                (196)            (142)
                                                                                --------         --------

Other income (expense):
   Interest expense                                                                   (8)             (13)
   Investment income                                                                  15                4
   Unrealized loss on equity securities                                               (2)               -
   Provision for litigation settlement                                               (20)               -
                                                                                --------         --------
      Total other income (expense), net                                              (15)              (9)
                                                                                --------         --------

Net loss                                                                        $   (211)        $   (151)
                                                                                ========         ========

Net loss per share - basic and diluted                                          $  (0.09)        $  (0.06)
                                                                                ========         ========

Weighted average shares outstanding                                                2,369            2,522
                                                                                ========         ========
</TABLE>























                 See accompanying notes to financial statements

                                      F-4
<PAGE>


                           DIGITAL DATA NETWORKS, INC.
            CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
                                 (in Thousands)

<TABLE>
<CAPTION>


                                                     Common Stock           Accumulated
                                              Shares          Amount          Deficit             Total
                                              ------          -----           -------             -----

<S>                                            <C>            <C>            <C>                  <C>
Balance, December 31, 2000                     2,284          $ 13,390       $ (13,345)           $   45

Issuance of common stock upon
   exercise of stock options                      74                 9               -                 9
Shares issued in settlement of
   litigation (Note 10)                          100                 4               -                 4
Net loss                                           -                 -            (211)             (211)
                                               -----          --------       ---------            ------

Balance, December 31, 2001                     2,458            13,403         (13,556)             (153)

Cancellation of shares in
   exchange for note receivable                   (6)               (1)              -                (1)
Issuance of common stock for cash                200                16               -                16
Issuance of common stock upon
   exercise of stock options                     344                38               -                38
Net loss                                           -                 -            (151)             (151)
                                               -----          --------       ---------            -------

Balance, December 31, 2002                     2,996          $ 13,456       $ (13,707)           $ (251)
                                               =====          ========       =========            =======
</TABLE>
























                 See accompanying notes to financial statements



                                      F-5
<PAGE>


                           DIGITAL DATA NETWORKS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in Thousands)

                Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>

                                                                                Year Ended December 31,
                                                                                -----------------------
                                                                                      2001        2002
Cash flows from operating activities                                                  ----        ----
<S>                                                                                 <C>           <C>
Net Loss                                                                            $  (211)      $  (151)
   Adjustments to reconcile net loss to net cash
     provided (used) by operating activities
       Depreciation and amortization                                                     85            19
       Reserve for receivables from officer and director                                  -            69
       Decrease (increase) in accounts receivable                                       (20)           79
       Decrease in prepaid expenses and other current assets                             12            43
       Increase (decrease) in accounts payable and other current                         20           (30)
liabilities
       Increase (decrease) in deferred revenue                                         (127)           11
       Other                                                                              6            (5)
                                                                                    -------       -------
Net cash provided (used) by operating activities                                       (235)           35
                                                                                    -------       -------


Cash flows from investing activities
   Payments received on receivable from officer                                           -            30
   Purchases of equipment                                                               (80)            -
                                                                                    -------       -------
Net cash provided (used)  by investing activities                                       (80)           30
                                                                                    -------       -------

Cash flows from financing activities
   Proceeds from sale of common stock                                                     -            16
   Proceeds from exercise of stock options                                                9            38
   Debt principal payments                                                              (15)          (50)
                                                                                    -------       -------

Net cash used by financing activities                                                    (6)            4
                                                                                    -------       -------

Net increase (decrease) in cash and cash equivalents                                   (321)           69

Cash and cash equivalents
   Beginning of year                                                                    347            26
                                                                                    -------       -------

   End of year                                                                      $    26       $    95
                                                                                    =======       =======



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

Non-cash financing activity:
   Cancellation of shares in exchange for notes receivable                                -       $     6

</TABLE>




                 See accompanying notes to financial statements

                                      F-6
<PAGE>


                           DIGITAL DATA NETWORKS, INC.
                          NOTES TO FINANCIAL STATEMENTS
Note 1  Description of Business and Summary of Significant Accounting Policies

Digital Data Networks, Inc. ("the Company" or "DDN"), a wireless, passenger
communication and advertising company, is principally engaged in the operation
of a "digital information network", a network of computerized electronics
message displays that deliver current news, information and advertising to
riders on-board public transit vehicles. The digital information network
consists of a series of electronic information displays utilizing digital radio
transmission technology. The Company, incorporated in 1988, operates a digital
information network in Dallas, Texas under the name The Transit Network. Through
an arrangement with a third party, subsequently terminated in 2002, the Company
also derived revenue from selling truckside advertising.

Principles of Consolidation - The consolidated financial statements of DDN
include the accounts of its subsidiaries after elimination of intercompany
balances.

Cash and Cash Equivalents - For purposes of balance sheet classification and the
statements of cash flows, the Company considers all highly liquid investments
purchased with an original maturity of three months or less to be cash
equivalents.

Equipment - Equipment is stated at cost. Depreciation is computed using the
straight-line method over the shorter of estimated useful lives of the
respective assets, typically three years, or remaining contract term.

Impairment of Long-Lived Assets - The Company follows the provisions of
Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for
the Impairment and Disposal of Long-Lived Assets". The Company evaluates its
long-lived assets for financial impairment and continues to evaluate them as
events or changes in circumstances indicate that the carrying value of such
assets may not be fully recoverable. The carrying value of long-lived assets is
considered impaired when the anticipated undiscounted cash flows from an asset
is less than its carrying value. In that event, a loss is recognized for the
amount by which the carrying value exceeds the fair value of the long-lived
asset. The Company has not recognized any impairment losses.

Income Taxes - The Company accounts for income taxes in accordance with the
provisions of SFAS No. 109, "Accounting for Income Taxes". SFAS No. 109 requires
recognition of deferred income taxes to provide for temporary differences
between financial reporting and tax basis of assets and liabilities. Deferred
taxes are measured using enacted tax rates expected to be in effect in years in
which temporary differences are expected to reverse.

Fair Value of Financial Instruments - Carrying amounts reported in the balance
sheet for cash and cash equivalents, trade accounts receivable, notes
receivable, other current assets, accounts payable and other accrued expenses
approximate fair value because of their immediate or short-term nature. The fair
value of debt approximates its carrying value because of its relatively
near-term maturity date and recently negotiated terms.

Revenue Recognition - The Company records revenue over the contractual period
which services are provided. To the extent payment is received in advance of the
contractual period expiration, such prepaid amounts are recorded as deferred
revenue until services are provided. Additionally, for truckside advertising,
the Company recognized revenue on a gross basis in 2001. For contracts entered
into in 2002, a third party became the primary obligor in most transactions,
resulting in the Company receiving a commission, recognized on a net basis, from
the third party as the Company is acting as the agent in those transactions.

Stock-Based Compensation - Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation", as amended and interpreted, ("SFAS
123") encourages, but does not require, companies to record compensation cost
for stock-based employee compensation plans at fair value. The Company has
chosen to continue to account for stock-based employee compensation utilizing
the intrinsic value method prescribed in Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" and related amendments and
interpretations. Accordingly, compensation cost for stock options is measured as
the excess, if any, of the quoted market price of the Company's stock at the
date of grant over the amount an employee must pay to acquire the stock. If
stock options are repriced, the effects of changes in the stock price are
recognized as compensation expense in accordance with accounting for variable
stock option plans. Had the Company accounted

                                       F-7
<PAGE>

Note 1 Description of Business and Summary of Significant Accounting Policies
(continued)

for stock-based compensation at fair value in accordance with SFAS 123, the pro
forma financial statement effect on net loss and net loss per share would have
been insignificantly different from actual amounts.

Net Loss Per Share - Basic "Earnings Per Share" ("EPS") is computed as net
income (loss) divided by the weighted average number of common shares
outstanding for the period. Diluted EPS reflects the potential dilution that
could occur from common shares issuable through stock options. As the Company's
stock options for approximately 662,000 and 183,000 shares of Company common
stock at December 31, 2001 and 2002, respectively, are antidilutive, only basic
EPS is presented. These shares could potentially dilute future EPS calculations.

Accounting Estimates - Preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the financial statement date and reported amounts of revenues and
expenses during reported periods. Actual results could differ from those
estimates.

Reclassifications - Reclassifications of certain prior year balances have been
made to conform to current year classifications. The reclassifications have no
effect on stockholders' equity or net loss.

Recent Accounting Pronouncements - In July 2001, the Financial Accounting
Standards Board issued SFAS No. 143, "Accounting for Asset Retirement
Obligations" ("SFAS No. 143"). SFAS No. 143 addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. It applies to legal
obligations associated with the retirement of long-lived assets that result from
the acquisition, construction, development, and (or) the normal operation of a
long-lived asset, except for certain obligations of lessees. The provisions of
SFAS No. 143 are effective for fiscal years beginning after June 15, 2002, when
early application is permitted. The adoption of SFAS No. 143 will not have a
material impact on the Company's results of operation or financial position.

In June 2002, the Financial Accounting Standards Board issued SFAS No. 146,
"Accounting for Costs Associated with Exit or Disposal Activities" ("SFAS No.
146"). SFAS No. 146 addresses financial accounting and reporting for costs
associated with exit or disposal activities and nullifies Emerging Issues Task
Force (EITF) Issue No. 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring)." The provisions of this Statement are
effective for exit or disposal activities that are initiated after December 31,
2002. The adoption of SFAS No. 146 did not have a material impact on the
Company's financial position or results of operation.

In November 2002, the FASB issued Interpretation No. 45, Guarantors Accounting
and Disclosure Requirements for Guarantees, Including Guarantees of Indebtedness
of Others, an Interpretation of FASB Statement Nos. 5, 57 and 107 and Rescission
of FASB Interpretation No. 34 ("Interpretation No. 45"). This interpretation
expands on the existing accounting guidance and disclosure requirements for most
guarantees. It requires that at the time a company issues a guarantee, the
company must disclose that information in its interim and annual financial
statements. The provisions for initial recognition and measurement of the
liability will be applied on a prospective basis to guarantees issued or
modified after December 31, 2002. The Company does not believe Interpretation
No. 45 will have a material impact on its results of operation, financial
position or cash flows.

Note 2  Financial Condition, Liquidity and Going Concern

The Company has experienced net losses and negative cash flows from operations,
and has an accumulated deficit at December 31, 2002 of approximately $13.7
million and a negative working capital position. The ability of the Company to
generate positive cash flows from operations and net income, is dependent, among
other things, on market conditions, the recovery of recorded assets, cost
control, identifying and securing additional revenue sources, and the Company's
ability to raise capital under acceptable terms. The Company has pursued merger
possibilities and continues to do so. While the Company has had some successes
in certain of these endeavors in

                                      F-8

<PAGE>

Note 2  Financial Condition, Liquidity and Going Concern (continued)

the past, there can be no assurance that its efforts will be successful in the
future. These financial statements do not include any adjustments that might
result from the outcome of these uncertainties. These conditions raise
substantial doubt about the Company's ability to continue as a going concern.

Note 3  Equipment

Equipment consists of the following (in thousands):
<TABLE>
<CAPTION>
                                                                                        December 31,
                                                                                       ------------

                                                                                   2001           2002
                                                                                   ----           ----
<S>                                                                                <C>          <C>
Equipment installed in public transit vehicles                                     $ 1,581      $ 1,581
Office equipment and other                                                              24           24
                                                                                   -------      -------
                                                                                     1,605        1,605
Accumulated depreciation                                                            (1,566)      (1,585)
                                                                                   -------      -------
Equipment, net                                                                     $    39      $    20
                                                                                   =======      =======
</TABLE>


Note 4  Contract with DART and Note Payable

The Company has a contract, as extended and amended, to provide services to
Dallas Area Rapid Transit ("DART") that includes a provision for a 4% royalty
payable to DART on certain gross advertising receipts.

A 2001 contract extension provided for refinancing the Company's note payable to
DART. Prior to its original October 15, 2001 due date, the note provided for
interest at 5% and at 18% after the maturity date. Terms of the note were
revised to extend the due date to October 15, 2002, require monthly payments of
$5,000 commencing in October 2001, and provide for interest at 12% per annum.

In October 2002, the Company entered into a supplemental agreement with DART,
which, among other things, further extended the term of the contract to October
2005, and revised terms of the Company's note payable to DART such that the note
payments have been reduced and extended to October 2005, at which time the note
will be zero. The note continues to accrue interest at 12% per annum, and is
payable in monthly installments of $4,067. Future principal payments are $49,000
in 2003, $29,000 in 2004 and $39,000 in 2005. The Company's equipment installed
on DART public transit vehicles is pledged as collateral for the note.

Note 5  Software License and Supply Agreement

Pursuant to terms of a 1993 agreement, as amended, the Company licenses
substantially all of its computer software, which is an essential element of the
digital information network, from an electronics supplier and software
development company. The fully-paid license provides the Company with exclusive
rights to such software in metropolitan areas of the United States and Canada
with populations over 100,000 and nonexclusive rights elsewhere in the world.

Note 6  Common Stock and Stock Options

In February 1996, the Company closed its initial public stock and warrant
offering and received net cash proceeds of approximately $5.8 million, after
deduction for underwriters commissions and certain other offering related costs.
The Company issued 1,322,500 shares of its common stock and 1,840,000 of its
common stock purchase warrants. Each warrant entitled the holder to purchase one
share of the Company's common stock at an exercise price of $6 per share during
the five years commencing upon issuance. All of these warrants expired,
unexercised, in February 2001.

During 2002, the Company issued 200,000 shares of its common stock through
private placements under Section 4(2) of the Securities Act in exchange for cash
of $16,000 from one accredited investor.


                                      F-9

<PAGE>

Note 6  Common Stock and Stock Options (continued)

During 1994, the Company adopted a Combined Incentive and Non-Qualified Stock
Option Plan (the "1994 Plan") which permits the issuance of options to acquire
shares of Company common stock. The 1994 Plan permits grants of incentive stock
options to employees and of non-qualified stock options to employees, directors,
consultants or independent contractors of the Company. The exercise price of
incentive stock options shall not be less than the fair market value of Company
common stock at the date of grant. The exercise price of non-qualified stock
options may be greater or less than the fair market value of Company common
stock at the date of grant. The duration of options shall be established by the
Board of Directors, and shall not exceed ten years. During 1996, the Company
adopted a Combined Incentive and Non-Qualified Stock Option Plan (the "1996
Plan") with provisions similar to the 1994 Plan. The 1994 Plan and 1996 Plan
reserve approximately 112,000 shares and 250,000 shares, respectively, of common
stock for grant and provides that terms of each award be determined by the Board
of Directors. Prior to 1998, the Company granted approximately 323,000 options
under the 1994 and 1996 Plans.

During 2001, the Company repriced all options granted to officers and directors
from $.25 to $.125 per share.

All stock options granted had an exercise price not less than the fair market
value of the Company's common stock on the date of grant. The following
summarizes stock option activity during the two years ended December 31, 2002
and represent exercise prices as adjusted for repricings (thousands of shares):
<TABLE>
<CAPTION>


                                                                    Exercise Price      Weighted Average
                                                   Shares              Per Share           Exercise Price
                                                -----------         --------------      -----------------
<S>                                                    <C>           <C>                    <C>
   Outstanding at January 1, 2001                       777          $0.09 to $9.93         $      1.15


   Exercised                                            (74)         $      0.125           $      0.125
   Granted                                              140          $      0.07            $      0.07
   Repriced                                             304          $      0.125           $      0.125
   Expired or repriced                                 (485)         $0.25 to $5.00         $      0.34
                                                       ----


   Outstanding at December 31, 2001                     662          $0.07 to $9.93         $      1.16

   Exercised                                           (344)         $0.07 to $0.125        $      0.10

   Expired                                             (135)         $0.25 to $8.94         $      0.86
                                                       ----


   Outstanding at December 31, 2002                     183          $0.07 to $9.93         $      3.08
                                                       ====
</TABLE>




Information relating to outstanding and exercisable stock options at December
31, 2002, summarized by exercise price are as follows (thousands of shares):
<TABLE>
<CAPTION>

                                                                                   Weighted Average
                                                                     --------------------------------------------

            Range of                                                 Remaining Life
      Exercise Price                                   Shares             in Years         Exercise Price
   -------------------                               --------        --------------       ----------------
<S>                                                       <C>               <C>              <C>
   $  0.07 to $  0.125                                    118               3.7              $  0.10
   $  6.71 to $  9.93                                      65               0.4                 8.57
                                                          ---

                                                          183                                $  3.08
                                                          ===
</TABLE>


Subsequent to December 31, 2002, options for 100,000 shares were exercised for a
total exercise price of approximately $10,000, and options for 55,000 shares
expired. As of February 20, 2003, options still outstanding were for 28,000
shares at an exercise price of $9.93 per share and expiring December 21, 2003.



Note 7  Related Party Transactions

Prior to 1998, the Company made cash advances to its President, who is also one
of the Company's directors, which approximated $42,000. The Company has
continued to request repayments on amounts due, although none have been made to
date. During 1998, the entire amount of the receivable was reserved. During 1999

                                      F-10

<PAGE>

and 2001, the Company's Board of Directors authorized a $10,000 reduction in
this receivable in consideration for consulting services provided. Since the
receivable had been fully reserved in 1998, no net additional expense was
recognized.

Included in receivables from officer and director at December 31, 2001 and 2002
is $95,000 and $68,427 respectively, due from one of the Company's directors
pursuant to terms of a 5% promissory note, which had an original principal
balance of $100,000. The note's maturity date had been extended to December 31,
2002. The note is collateralized by shares of Company common stock owned by the
director and the director's options to purchase Company common stock. During
2001, the Company's Board of Directors authorized a $25,000 reduction in the
note receivable in consideration for consulting services, which has been
recorded as consulting expense included in marketing, general and administrative
expense, and accrued and included in accounts payable at December 31, 2001. In
2002, the Company paid the consulting fees to the Director and the proceeds were
returned to the Company and reduced the note receivable. Additionally, during
2002 a $5,000 payment was made. During 2002, the Company recorded a reserve for
uncollectibility of approximately $69,000, the full amount of the note and
accrued interest. In March 2003, pursuant to an arrangement with Mr. Hussey, the
Company's board of directors awarded Mr. Hussey a $70,000 consulting fee (to be
applied to Mr. Hussey's note, which had a balance at the time of this award of
approximately $69,200) for his efforts in finding a reverse merger candidate for
the Company and consummating the reverse merger transaction prior to September
30, 2003. If Mr. Hussey is not successful in finding a reverse merger candidate
for the Company and/or a reverse merger transaction is not consummated by
September 30, 2003, this $70,000 shall become due and payable to the Company on
that date.

Note 8  Income Taxes

At December 31, 2001 and 2002, the Company had deferred tax assets of
approximately $2.8 million, principally arising from net operating loss
carryforwards. As management of the Company cannot determine that it is more
likely than not that the Company will receive the benefit of these assets, a
valuation allowance equal to the deferred tax asset has been established.

As of December 31, 2002 the Company had net operating loss carryforwards
available to reduce future taxable income of approximately $8 million, which
begin to expire in 2006. As a result of potential changes in stockholder
ownership, utilization of net operating loss carryforwards could be subject to
annual limitation.

Note 9  Operating Lease Commitments

The Company leases an FM subcarrier for transmission to electronic display signs
located on-board public transit vehicles. At December 31, 2002, the FM
subcarrier lease is pursuant to an agreement expiring October 2005, which
requires monthly payments of $4,400. Also, the Company leases an office facility
under an operating lease with monthly payments of approximately $2,200 expiring
in October 2005. At December 31, 2002, future annual minimum lease payments for
all leases total $227,000, $80,000 in each of 2003 and 2004 and $67,000 in 2005.
Rent expense for 2001 and 2002 was $30,000 and $31,000, respectively.

Note 10  Commitments and Contingencies

In 1998, the Company settled litigation between the Company and the former
stockholder of hip Communications pertaining to the Company's 1996 acquisition
of that company. As part of that settlement agreement, the Company was required
to transfer the "hip.com" domain name to the former stockholder. The Company
failed to transfer the domain name and no longer has registration rights to such
domain name. As a result, in 1999 the former stockholder filed an action against
the Company for damages for breach of settlement agreement. In October 2001, the
Company and former stockholder entered into a new settlement agreement, whereby
the Company paid the former stockholder $25,000 and 100,000 shares of the
Company's stock, and in exchange, the former stockholder terminated its pending
legal action and agreed to take no further legal action in this matter. As

                                      F-11
<PAGE>

Note 10  Commitments and Contingencies (continued)

a result of this new settlement agreement, the Company recorded an additional
provision for litigation settlement of $20,000 during the year ended December
31, 2001.

The Company is subject to various legal proceedings and claims that arise in the
ordinary course of business. Company management currently believes that
resolution of such matters will not have a material adverse impact on the
Company's financial position, results of operations or cash flows.

Note 11  Segment, Geographic and Significant Customer Information

During 2001, revenues from major customers exceeding 10% of total revenue
included three customers, Parkland Hospital, Methodist Hospital and Dallas
County Community College District, which accounted for approximately 38%, 13%
and 12% of consolidated revenues, respectively. During 2002, revenues from major
customers exceeding 10% of total revenue included Parkland Hospital, Baylor
Health Care System and Dallas County Community College District, accounting for
approximately 25%, 20% and 15% of consolidated revenues, respectively.



                                      F-12