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

                                   FORM 10-KSB

[X]  Annual report under section 13 or 15(d) of the  Securities  Exchange Act of
     1934 for the fiscal year ended DECember 31, 2001

[ ]  Transition report under section 13 or 15(d) of the Securities  Exchange Act
     of 1934 for transition period from          to          .
                                       ---------    ---------

Commission file number 333-56552

                               NEBO PRODUCTS, INC.
                 (Name of small business issuer in its charter)

         UTAH                                               87-0637063
(State or other jurisdiction of                           (IRS Employer
incorporation or organization)                           Identification No.)

12382 Gateway Parkplace #300
Salt Lake City, Utah                                               84020
 (Address of principal executive offices)                       (Zip Code)

 Issuer's telephone number: (801) 495-2150

Securities registered under Section 12(b) of the Act:                 None
Name of each exchange on which registered:                            None

Securities registered under
Section 12(g) of the Act:        Common Stock, Par Value $0.000 Per Share

 Check whether the issuer (1) filed all reports required to be filed by Section
 13 or 15(d) of the Securities 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 the  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]

 Issuer's revenues for the fiscal year ended December 31, 2001, were $3,925,996.

 On April 1, 2002 the last reported bid price for the company's common stock as
 reported by the OTCBB was $0.53. The aggregate market value of the voting and
 non-voting common equity of the company held by non-affiliates at April 1,
 2002, was $6,349,190, based on the average bid and asked price of the company's
 common stock on that date.

 There were 15,177,445 shares of common stock of the registrant outstanding as
of April 1, 2002.

Transitional Small Business Disclosure Format (Check one): Yes ___ No  X
                                                                      ---


<PAGE>





                                     Part I

 Item 1.    Business


Caution Regarding Forward-looking Statements


         Certain statements contained in this report, which are not historical
facts, are forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995 that involve risks and uncertainties.
The terms "anticipate," "believe," "estimate," "expect," "objective," "plan,"
"project," and similar expressions are intended to identify forward-looking
statements. These forward-looking statements are subject to inherent risks and
uncertainties that may cause actual results or events to differ materially from
those contemplated by the forward-looking statements. In addition to the
assumptions and other factors referred to specifically in connection with these
statements, factors that may cause actual results or events to differ materially
from those contemplated by the forward-looking statements include, without
limitation, general economic conditions, market conditions in the company's
existing and intended markets and related industries, market acceptance of
existing and new products, successful integration of acquisitions, competitive
product and pricing pressures, interest rate risk, the company's ability to
access capital markets and other factors that may be referred to in the
company's reports filed with the Securities and Exchange Commission from time to
time.


         When used in this report, the terms "NEBO" and the "company" refer to
NEBO Products, Inc., a Utah corporation, unless the context requires otherwise.


Introduction


         The company's business commenced in 1996, operated first as a
partnership and then as a limited liability company, under the name Open Sea
Trading Company, LLC. In 1998, the company was incorporated as Open Sea
Corporation. In July 1999, the operations of Open Sea Trading Company LLC were
combined with Open Sea Corporation by an exchange of the member interests in the
limited liability company for shares of common stock in the corporation. The
corporate name was changed to NEBO Products, Inc., in September 2000. Since
December 2000, the company has maintained its principal offices at 12382 Gateway
Parkplace #300, Draper, Utah 84020. The telephone number is (801) 495-2150. The
company also maintains worldwide websites at neboproducts.com, nebosports.com,
and nebotools.com. These inactive textual references do not constitute a part of
this report.


Business Overview


         The company supplies hand tools and weekend camping gear to U.S.
retailers. Most of its products are manufactured in Taiwan, the People's
Republic of China, and India and are imported by the company to the United
States for sale under the company's trademark NEBO or under retailers' own
private labels. The company has established business relationships and a working
history with 15 Far East manufacturers, three shipping companies, and more than
5,000 customers nationwide, including Home Depot, Menards, and Sears.


         In August 2001, the company introduced the new UltraTM Socket Tool at
the National Hardware Show in Chicago, Illinois, and received a Best of Show
Award of Distinction for the marketing of innovative products selected by the
show's Retailers' Choice Awards Committee for Do It Yourself Retailing. In a
survey conducted in May 2000 by Home Improvement Executive magazine, more home
center chains cited NEBO as the number one brand driving their multi-bit
screwdriver business. The company has sold more than one million pieces of its
most popular hardware tool, the 13-in-1 multi-bit ratchet screwdriver. Beginning
in October 2000, the company started private-labeling NEBO safety glasses with
the Craftsman(R) brand and promoting those glasses in all 856 Sears stores
nationwide. The company has continued to expand its customer base within the
large retail segment in both its hand tool and outdoor product categories.


History and Milestones


         In 1997, the company's predecessor started importing products into the
United States under the NEBO brand. The following are significant milestones in


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<PAGE>

the development of the business:

     o    September 1997 -- Shipped first products to retail customers.

     o    December 1997-- Retained 1,000th U.S.  customer through  telesales and
          marketing programs.

     o    August  1998-- The NEBO  13-in-1  won the "Best of Show"  award at the
          National Hardware Show in Chicago.

     o    October  1998--  Rolled out the sale of the NEBO 13-in-1 to Home Depot
          to realize first profitable month.

     o    November  1998-- NEBO safety  glasses  first  introduced  to 200 Sears
          stores.

     o    April  1999--  Completed  the  Home  Depot  rollout  of the  "13-in-1"
          nationwide to establish a national presence.

     o    May  1999 --  Named  number  three  brand  in  nationwide  survey  for
          multi-bit screwdrivers by the Home Improvement Executive magazine.

     o    July 1999--  Combined  operations  under the name Open Sea Corporation
          and added new equity owners.

     o    August 1999--  Completed  seed round private  placement of $300,000 to
          finance growth.

     o    December 1999-- Completed year with more than $4 million in sales.

     o    January 2000 -- Sold one-millionth 13-in-1 multi-bit screwdriver.

     o    May 2000 -- Named  number one brand in  nationwide  market  survey for
          multi-bit screwdrivers by the Home Improvement Executive magazine.

     o    May 2000-- Awarded U.S. design patent for safety glasses.

     o    May 2000--  Began  selling  sporting  goods to Sam's Club,  eventually
          becoming one of Sam's Club's highest volume "road shows."

     o    June 2000 -- First sale to Menards, Inc.

     o    August 2000 -- Set record for world's  largest  sleeping bag (500 feet
          wide, holding 277 people  simultaneously)  at the semi-annual  Outdoor
          Retailer's National Convention. Donated proceeds of event to charity.

     o    September 2000-- Began  private-label  arrangement with Sears to place
          popular Craftsman(R)label on NEBO safety glasses.

     o    September 2000 -- Changed name to NEBO Products, Inc.

     o    October  2000-- Signed lease for new 17,000 square foot  warehouse and
          office space.

     o    December 2000-- Completed year with $4.7 million in sales.

     o    January  2001--  Expanded sales to 148 Menards,  Inc.  stores with six
          different hardware products.

     o    March 2001--  First sales of sleeping  bags and camping gear to Nordic
          Track, a 70-store chain.

     o    March 2001 -- First sales of  sleeping  bags to  Galyan's,  a 25-store
          chain.

     o    March  2001  --  Filed  Registration   Statement  on  Form  SB-2  with
          Securities and Exchange Commission.

     o    July  2001  --  Registration   Statement  declared  effective  by  the
          Securities and Exchange Commission.



                                       2
<PAGE>

     o    August 2001 -- Introduced  the new UltraTM Socket Tool at the National
          Hardware  Show in Chicago,  Illinois and received a Best of Show Award
          of Distinction  for the marketing of innovative  products  selected by
          the show's  Retailers'  Choice  Awards  Committee  for Do It  Yourself
          Retailing.

     o    November  2001--  Securities of the company began trading on the OTCBB
          under the symbol NEBO.

     o    December  2001--  Initiative to evaluate and  streamline  all business
          processes began. Information technology systems evaluated resulting in
          upgraded  computer  system  hardware and the  installation of software
          enhancements.


Products


         The company believes its primary strength has been its ability to
design or capitalize on modifications to common tools and camping gear to make
them more attractive, more practical, or more useful by adding attractive and
practical design features. This process includes considering customer feedback
and conducting extended hands-on trials and tests. NEBO design and marketing
teams identify enhancements that they believe will dramatically increase the
usability and functionality of a product. Foreign manufacturing sources are used
so that the price of the company's products remains competitive in key markets.


         Top-selling hardware products include the following:

     o    NEBO  13-in-1  screwdriver.  This is a handheld  multi-bit  ratcheting
          screwdriver  with 12 bits and an extension held in a cartridge that is
          stored in the  handle.  The NEBO  13-in-1  comes in three  colors  and
          continues to be one of the company's  fastest selling  products.  This
          product won a "Best of Show" award at the 1998 National Hardware Show.
          The 13-in-1 was  responsible for  approximately  70% of total sales in
          1999, 28% in 2000, and 15% in 2001.  Additional  sets of bit kits have
          been added as accessories to this product line.

     o    Speed   Reader  and  Speed  Reader  PRO  Tape   Measures.   These  are
          rubber-grip,  impact  resistant  tape measures.  They have  fractional
          markings to 1/32" and stud and truss  markings  indicated on the tape.
          Every  1/8" is  printed  with the  actual  fractions,  making the tape
          easier to read.  The Speed  Reader PRO is an  upgraded  version of the
          Speed Reader and is designed for the professional market.

     o    NEBO-X Safety  Glasses.  This is a line of  style-oriented  protective
          eyewear  with  interchangeable  lenses.  The  lenses are  produced  in
          different shades and styles to be marketed to a variety of user types.
          They  have  adjustable  frames  and  come  with  a  neck  strap  as an
          accessory. The company holds U.S. design patent No. 425,926 on May 30,
          2000, for  protective  eyewear for this product and these glasses meet
          government  requirements  for safety.  The company sells these glasses
          under  its  own  brand  name  and  under   private   labels  with  the
          Craftsman(R) name for Sears.  Revenue for this item has increased year
          over year and with sales in 2001 to a second  big box store,  Menards,
          this line is rapidly becoming our top selling hardware program.

     o    UltraTM  Socket.  This is a  complete  socket  set in one  handy  tool
          designed with a bi-directional  ratcheting drive that also adjusts for
          three different  drive angles.  This product comes packaged with seven
          different  sockets,  six of which are stored inside the handle.  Built
          for durability and comfort,  this tool's 650 kgf-cm torque  capability
          exceeds ANSI  standards by 25%.  During the tool's debut at the August
          2001  National  Hardware  Show  in  Chicago,  it won  the  prestigious
          Retailers' Choice Award.

     o    Hammers.  The company has completed its line of hammers  including the
          24 oz all steel  framing  hammer;  21 oz  hickory  straight  or curved
          handle;  20 oz., 16 oz., and 8 oz. hammer.  These hammers are designed
          for professional users and do-it-yourselfers. The primary advantage of
          this  program  is that  it  provides  another  full  tool  line to its
          customers,   providing  them  with  a  less  expensive,   yet  quality
          alternative.

     o    Combination  wrenches and pliers.  This is another new program for the
          company. The focus of this tool line is mainly to compete on price and
          with bold merchandising.



                                       3
<PAGE>


         Top-selling outdoor products include the following:

     o    The Bear  and  Moose  sleeping  bag  lines.  These  sleeping  bags are
          rectangular in shape, but come with a "mummy" style hood. This unusual
          design  experienced  immediate  sales  success and  garnered  industry
          attention.   Consequently,   other   sleeping   bag   companies   have
          incorporated  this design  combination.  These  sleeping bag lines are
          intended to fulfill the  mid-range  camping  market and have  recently
          been sold into several large chains, catalog companies, and in various
          sporting and specialty stores  throughout the United States.  They are
          produced in various temperature ratings, colors, and fabrics.

     o    The Wasatch and Teton sleeping bag lines.  These lines are designed in
          the classic "mummy" style. The target market for these products is the
          mid-range  backpacking  and sporting  consumer.  The Teton utilizes an
          unusual curved zipper  designed to facilitate  zipping from inside the
          sleeping bag.  Styles from both lines have recently sold into the same
          markets mentioned in the preceding paragraph. They are manufactured in
          an assortment of colors, temperature ratings, and fabrics.

     o    The Mammoth line.  The Mammoth is an extra large (100" x 60") sleeping
          bag,  originally  designed to be an oversized single bag but adaptable
          to be a double.  It has  incorporated  the same components as a single
          bag, such as a mummy hood,  zipper and shoulder  baffles,  and it adds
          other features such as a second zipper - one for each side.

     o    Value grade line. To serve those that desire a less  expensive line of
          sleeping  bags,  the company has formalized a program of sleeping bags
          for the budget-minded  customer.  This Value Grade program is composed
          of five styles of sleeping  bags,  built less  expensively,  yet still
          with good quality. This program will serve the high-volume, low-price,
          and family camping market. It is available immediately.

     o    Camping Tents.  The company has developed two tents,  the Arch VII and
          the Arch IX. They are  designed  with  modular  rain flies that can be
          changed  according to the user's needs.  They are  nicknamed  "8-in-1"
          tents because of the capability of being pitched eight different ways.
          The Arch IX has a 9'x 9' living  space while the Arch VII has a 7'x 7'
          living  space.  Both have a full rain fly that  extends  lengthwise  a
          total of 18 feet and 14 feet  respectively.  If the  user  desires,  a
          vestibule  section  of the rain fly can be  removed  to save space and
          reduce carrying  weight.  The rain fly can even be pitched on its own,
          separately from the tent.

     o    Camping Cots and Chairs.  The company produces camp chairs and cots in
          various  sizes and styles.  The most notable are an  oversized  patent
          pending cot  measuring  84"x 40"x19" and an oversized  camp chair that
          measures  22"x24"x38".  The large size of these items is not typically
          seen in the industry and is an important feature used to differentiate
          the company's products. The extra large cot was designed to compliment
          the oversized sleeping bag models. Each comes with its own carry bag.


Customers


         The company has three general types of customers for hardware and
camping products. These include:

     o    Small and medium  sized  retailers.  Smaller  stores  used to rule the
          hardware and sporting goods industries,  and there are still more than
          20,000 of these stores nationwide,  according to The National Hardware
          Retailers  Association.  In  some  instances,  these  storeowners  and
          managers have formed buying  co-operatives.  According to the National
          Hardware  Retailers   Association,   hardware  wholesale  cooperatives
          including TruServ Corporation and Ace Hardware  Corporation combine to
          purchase more than $7 billion a year in products, with distribution to
          more than 15,000  retailers.  The company believes it is necessary for
          small  retailers  to  rely  on  careful  product  selection,  personal
          service,  and liberal  return  policies to compete  with the  national
          chains.  The company markets directly to over 4,000 smaller  retailers
          with  an  internal  sales  force  of  six   individuals  and  numerous
          manufacturers'   representatives.    The   company   attends   several
          cooperative  trades  shows  annually,  in both  hardware  and sporting
          goods, to sell and show its wares. Approximately 36% of total sales in
          1999,  52% in 2000,  and 43% in 2001  were to small and  medium  sized
          retailers.



                                       4
<PAGE>

     o    National chains. Home Depot, Lowes,  Menards,  Costco,  Wal-Mart,  and
          Sears accounted for more than $100 billion a year in consumer hardware
          and  sporting  goods  sales in 1999 and 2000.  These  national  chains
          generally have long approval cycles when acquiring new products.  Only
          products  that sell  quickly get  reordered.  Those that remain on the
          shelves too long or that experience high return rates are dropped. The
          company believes that these national chains rely on enormous selection
          and   branding  to  compete.   The  company  uses   approximately   50
          manufacturers'  representatives  and an  internal  sales  force of six
          individuals  to sell and  service  the  inventory  in  national  chain
          stores.  Manufacturers'  representatives  are independent  contractors
          that  represent  products of a like type  manufactured  by one or more
          manufacturers in a particular  industry or market. The national chains
          accounted for approximately 64% of total sales in 1999,  approximately
          48% in 2000, and approximately 57% in 2001.

     o    Private-label   Partners.   Makers  of  well-known  brands,   such  as
          Craftsman(R)  and  NordicTrack(R)  often  select  products  from other
          manufacturers and private-label  them as their own. Only products that
          are a direct fit in quality,  price,  and packaging are considered for
          private label, and  manufacturing  relationships and company stability
          are also determining  factors.  In the future,  the company expects to
          expand its private  labeling  business to take advantage of the closer
          relationships  with the retailer and longer  exposure and life for its
          products that frequently result from these  arrangements.  The company
          began private-label sales in 2000 and they accounted for approximately
          2% of net sales in that year and approximately 4% in 2001.


         The company services these three different customer groups for several
reasons. It minimizes the risk that a single large customer will dominate the
revenue forecast at any one time. Selling to a cross-section of the market also
allows the company to achieve greater brand recognition and allows it to
capitalize more widely on its high-loyalty features.


Competition


         The company competes in both the hardware and the sporting goods
industries. Primary competition in these industries originates from several
large tool and sleeping bag manufacturing and import companies. Principal
competitors in the sporting goods industry are Coleman and Slumberjack. Primary
hardware competition is Alltrade, Stanley Works, Olympia Tools, and Allied.
Large retail chains like Menards and Home Depot sometimes import products under
their own private labels that compete directly with the company's products.


          The company competes with these larger wholesale and manufacturing
companies in several ways. First, the company identifies unique products or
product features that do not yet have significant market saturation. For
example, the company designed the Moose sleeping bag line to combine a "mummy"
style hood with a common rectangular bag shape. Another example is the 13-in-1
that combines a ratchet and 13 screw bits on a tool that is the same size as the
standard single-bit screwdriver. The company identifies unusual product features
or designs through customer or employee suggestions, or from suggestions made by
manufacturing partners. Second, the company attempts to sell its products at a
price that is competitive with, in many cases less than, the prices charged by
the competition. The company conducts market research by having sales personnel
regularly visit hardware and sporting goods retailers and note prices and
features of competing products. Third, the company tries to provide more
personal service to customers. The company believes that its smaller size allows
it to maintain personal contacts with key personnel at customers and
manufacturers. The company responds promptly to customer special requests and in
most cases can ship product within one business day of receipt of an order.
Fourth, the company attempts to help retail customers successfully merchandise
products. For example, the company packages its top-selling hardware products in
point-of-purchase boxes of one dozen units, which can be placed by the retail
customer at high traffic areas such as check stands. The company believes its
extra attention to packaging helps its products maintain better visibility and
makes them more attractive to potential purchasers. The company's sales
personnel and representatives also visit larger customers regularly to arrange,
clean and restock products at the customers' stores. This also allows the
company to ensure that its products enjoy favorable placement and appearance for
the patrons of these customers.




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<PAGE>

Market Opportunity


          The company has identified several trends that affect its primary
markets. These include the following:

     o    Consolidation  of hardware stores and emergence of national chains and
          large  wholesale  buying  groups.  A  relatively  recent  trend in the
          industry is the  consolidation of hardware stores and the emergence of
          national  chains and large buyer groups.  Industry  analysts  expected
          home center  chains to capture $83 billion in volume and more than 51%
          of the market in 2000. The company  believes that the number of retail
          outlets has decreased over the last ten years,  while the total volume
          of sales has more than doubled.

     o    Continued   steady  demand  in  home   remodeling   and   construction
          industries.   The  company  estimates  that  total  spending  on  home
          remodeling  increased by about 9% in 1998.  In the first half of 1999,
          the National  Retail  Hardware  Association  estimated that there were
          10,170,000  new  housing  starts and  5,515,000  new home  sales.  The
          association  further  estimated that total industry sales for the home
          remodeling and construction  industries are expected to increase at an
          annual rate of 4.6% through 2003. In addition,  hardware stores,  home
          centers,  and lumber  outlets  report that hardware  tools of the type
          provided  by  the  company   are  their   highest  or   second-highest
          productivity  items,  with a better gross  margin  return on inventory
          than power tools, plumbing, paint and home decor, lawn and garden, and
          lumber.

     o    Increased  participation in outdoor activities and greater emphasis on
          healthy lifestyle. Wholesale sales of camping equipment have increased
          at a steady rate from 1995  through  1999.  The company  expects  that
          trend to continue. In the United States,  approximately 8 million more
          people went camping in 1999 than in 1995 and  approximately  5 million
          more went backpacking.


         The company plans to capitalize on these industry trends as follows:

     o    Increasing  the number of programs  available in our product  line. By
          expanding  product  programs,  the company  believes it increases  the
          likelihood  of selling  directly to the larger  chain stores and co-op
          warehouses.  A product program is a program that expands the number of
          products of a similar type or line of products that can be marketed to
          the same group or similar type of customers.  The customer has a wider
          selection of similar  products with varied features to choose from and
          to pass along to its patrons.  This strategy involves an investment of
          capital into inventory;  however, the company believes that the volume
          of sales will greatly increase.

     o    Designing  consistent,  highly recognizable  packaging of both outdoor
          gear and tools.  The company plans to continue  providing  attractive,
          consistent  color themes and bold name branding on all  packaging.  By
          brand building,  the company helps customers merchandise the company's
          products to the end-user,  thus increasing sales and customer loyalty.
          NEBO products are targeted to take advantage of impulse buying.

     o    Increasing  sales efforts to chain stores and wholesale buying groups.
          The company intends to capitalize on the emergence of chain stores and
          the market consolidation by designing custom programs that work within
          the  chain's   existing  line  of  products  and  clientele,   and  by
          specifically  targeting those stores for sales and marketing  efforts.
          Depending  on the  specific  store,  the company  will  propose  these
          programs  directly  to the  customer  or  approach  the chain  through
          manufacturer's  representatives.  In all  cases,  the  company  offers
          incentives to customers who buy volume and receive  product  shipments
          directly from any of the company's overseas factories.


Manufacturing


          Substantially all of the company's hardware and outdoor products are
manufactured in Asia. Over the last four years, the company has carefully
selected the most suitable manufacturers and has obtained product-specific
exclusive arrangements from several different manufacturers. Under these
arrangements, NEBO manufacturers may not manufacture competing or similar
products for others.


          Unlike many import companies, the company's approach to manufacturer
relationships is very hands-on. NEBO executives travel to the Far East several
times a year, spending valuable one-on-one time gathering ideas from
manufacturers and inventors and communicating strict quality and feature
requirements. The company also works with manufacturers' representatives in some


                                       6
<PAGE>

instances to help ensure efficient but open communication. The company has
sufficiently strong relationships with some of these manufacturers that more
than half of them provide the company with favorable credit terms. Most products
are manufactured on a 30 to 60 day cycle.


          The company understands that working in the international arena
involves risks caused by geographical, political and cultural differences. The
company has made efforts to minimize its vulnerability to these risks. These
efforts include:

     o    Increasing the countries where manufacturing is performed. The company
          currently has manufacturing  arrangements in Taiwan, China, and India.
          Future locations may include Korea,  Thailand, Sri Lanka, Vietnam, and
          Mexico.  Moving into these other  countries  will allow the company to
          more easily and  quickly  shift a  manufacturing  order to a different
          country should a geopolitical or other problem arise.

     o    Increasing the number of factories within  countries.  The company has
          the ability to "overlap" the making of each product. In other words, a
          different foreign  manufacturing  company can make the same or similar
          products at comparable pricing.  The company meets regularly with many
          foreign  factory  representatives,  which it  believes  increases  the
          likelihood of maintaining  acceptable product quality and pricing. For
          initial orders, the company obtains quotes from multiple suppliers and
          then accepts the best offer, considering price, quality, speed, terms,
          and perceived value-added services. .

     o    Maintaining ongoing and consistent  communication with suppliers.  The
          company  communicates  daily with most suppliers  either by telephone,
          fax, or e-mail.  Face-to-face meetings are scheduled whenever possible
          and occur  approximately  twice a year with each factory.  The company
          works closely with two  freight-forwarding  companies  that have local
          offices in Utah and in major cities in Asia.

     o    Quality  assurance.  The  company  only  accepts  orders that meet the
          quality standards requested from a supplier.  NEBO product development
          personnel  sample several items from each shipment to perform in-house
          product  testing.  Sub-standard  or  defective  goods are  returned or
          reported to the supplier for credit.


Shipping, Warehousing, and Distribution


         Products are shipped on a 25-day cycle via common carrier to various
port cities and from there directly to the company's warehouse in Draper, Utah
or directly to company customers across North America. Company employees receive
the product inventory, inspect it for quality, and log it into the warehouse
storage system. Customer orders generally are shipped from the company's
warehouse within 24 hours of receipt, which helps maintain our reputation for
high availability. The company has implemented a direct shipment method with
certain customers who require large shipments of product. This enables the
company to create certain cost efficiencies, which can then be passed on to
these customers who receive drop shipments of product directly from the
company's manufacturing facilities. The company orders product every 15-30 days
in order to carefully manage cash flow while staying ahead of the average
customer order cycle, which generally is every 45-60 days. Having a sufficient
volume of best selling products "in stock" means that the company has product
available to fill customer orders without back-ordering product.

Accounts Receivable Management


         The company bills customers on "Net 30" terms generally, and most
accounts receivable are collected within 60 days. The company maintains a credit
line with Summit Financial that is collateralized by inventory and accounts
receivable. Under the terms of this credit line, the company sells its accounts
receivable to Summit Financial. The company receives 90% of the face value of
receivables sold and the company is required to repurchase receivables at face
value upon request of Summit Financial. At December 31, 2001, the uncollected
receivable balance that the company may be required to repurchase totaled
$398,576.




                                       7
<PAGE>

Product Liability


          The company believes that it retains sufficient product liability
insurance to protect against potential claims that can occur in hardware and
sporting goods manufacturing. The company seeks to ensure rigorous quality
testing in both manufacturing and product design and places appropriate warning
and usage labels on each product. To date the company has not had any product
liability claims. The American National Standard Institute (ANSI) certifies
several products sold by the company. ANSI is an organization that formally
conveys levels of quality and safety by product category. NEBO's suppliers have
represented to the company that their products meet these requirements.


Patents, Licenses, and Proprietary Technology


         The company relies upon a combination of patents, copyright protection,
trade secrets, know-how, continuing technological innovation, and licensing
opportunities to develop and maintain its competitive position. The company
believes that its future prospects depend in part on its ability to obtain
patent protection for products and formulations. The company believes it needs
to preserve its copyrights, trademarks and trade secrets. The company also
believes that it needs to operate without infringing the proprietary rights of
third parties. The company's products are protected by various patents and the
company owns US Patent #425,926 for its protective eyewear. The company also has
a patent pending for the UltraTM Socket tool.


         The company owns one registered trademark, the word and logo "NEBO(R)".
In addition, the company uses a number of unregistered marks for which the
company claims or believes it may be entitled to common law trademark or trade
name and service mark protection. These include many of the company's product
names and other marks identified in this report by the symbol (TM).


Employees


          As of December 31, 2001, the company had 15 full-time and 1 part-time
employee in management, sales, operations, administrative, and technical
positions. Of these full-time employees, 4 are in management, 4 in sales,
marketing and product development, and 7 in operations, administration, and
support. The company also has 1 part-time employee. The company considers
relations with its employees to be very good. None of the company's employees
are covered by a collective bargaining agreement and the company has not
experienced any business interruption as a result of any labor disputes. The
company anticipates that business growth will require an increase in headcount
in sales and shipping to meet demand for product sales.


Dependence on Major Customers


         During 1999, Home Depot was the company's leading customer. Sales to
this customer totaled approximately $2,506,000 (or approximately 61% of net
sales). In 2000, sales to Home Depot totaled $1,197,108 (approximately 25% of
net sales). In 2001, sales to Home Depot totaled $571,098 (approximately 15% of
net sales). Also in 2000, sales to Sam's Club totaled $967,391 or approximately
21% of net sales. The company does not have written contracts or other
agreements with these or other customers that would require them to continue to
do business with the company. Therefore, they are free to choose at will among
suppliers of products like those sold by the company. While the loss of either
of these customers could materially and adversely affect the company's business,
results of operations and financial condition, the company does not expect that
the Sam's Club relationship will continue in the future. The company does not
believe that the loss of that relationship will adversely affect its earnings,
as the expected profitability from this relationship did not develop. The
decrease in Home Depot sales and elimination of sales to Sam's Club, was
partially offset by increases in sales to Menards, Worldwide Distributors, and
various small hardware and outdoor products retailers.


Dependence on Major Suppliers


         The company's products are manufactured under contract by manufacturers
in China, Taiwan and other Asian countries. The company does not have written
agreements with these manufacturers or with the suppliers of the raw materials
used in the production of its products. If any significant manufacturers or
suppliers were to cease providing product or services, as the case may be, to
the company, the company would be required to seek alternative sources. There is


                                       8
<PAGE>

no assurance that alternate sources could be located or that the delay or
additional expense associated with locating alternative sources for these
products or services would not materially and adversely affect the company's
business and financial condition. The company believes that there are a
significant number of alternative suppliers that could be utilized if required.


Item 2.  Description of Property


          The company's corporate headquarters are located in approximately
17,000 square feet at 12382 Gateway Parkplace #300, Draper, Utah. The space
includes office and adjacent warehouse and showroom space in a newly constructed
industrial park. Lease payments total approximately $8,295 per month. The lease
expires on October 30, 2005.


Item 3.  Legal Proceedings


         The company is not a party to, and none of its property is subject to,
any pending or threatened legal proceedings, which, in the opinion of
management, are likely to have a material adverse impact on its financial
condition, results of operations or cash flows. On March 13, 2002, a creditor
was awarded a judgment against the company in the amount of $50,000 plus
reasonable attorney fees and costs as a result of non-payment on a note due and
payable October 1, 2001.


                                     Part II


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


         Market. The company's common stock began trading in the
over-the-counter ("OTC") market in November 2001. Its stock is included on the
OTC Electronic Bulletin Board under the symbol "NEBO". The following table
summarizes data from the OTC Electronic Bulletin Board indicating the high and
low bid prices for a share of common stock during the fourth quarter of 2001,
during which the shares were traded. These prices reflect inter-dealer prices
without retail markup, markdown or commission, are not necessarily
representative of actual transactions, or of the value of the company's
securities, and are, in all likelihood, not based upon any recognized criteria
of securities valuation as used in the investment banking community.

                                    Bid Price

Year              Calendar Period                    High             Low

2001              Fourth Quarter                     $0.80            $0.25


         Holders. As of December 31, 2001, there were approximately 103 holders
of record of the company's common stock and 13,707,445 shares are issued and
outstanding.


         Dividends.  Since its incorporation, the company has not declared any
dividend on its common stock.  The company does not anticipate declaring a
dividend on its common stock for the foreseeable future.


         Dilution. The company has a large number of shares of common stock
authorized in comparison to the number of shares issued and outstanding. The
board of directors determines when and under what conditions and at what prices
to issue the company's stock. In addition, a significant number of shares of
common stock of the company are reserved for issuance upon exercise of purchase
rights under stock options and warrants.


         The issuance of any shares of common stock, whether in connection with
new equity offerings, acquisitions, or the exercise of options, warrants, or
conversion rights will result in dilution of the equity and voting interests of
existing shareholders.


         Transfer Agent and Registrar. The transfer agent and registrar for the
Company's common stock is Colonial Stock Transfer Company, 66 Exchange Place,
Salt Lake City, UT 84111.




                                       9
<PAGE>

Recent Sales of Unregistered Securities


         The following information sets forth certain information for all
securities sold by the company during the past three years without registration
under the Securities Act of 1933, as amended (the "Securities Act").


1999


         On January 1, 1999, the company issued 300,000 shares of common stock
at a price of $0.10 per share to a director, Lance Heaton.


         On January 1, 1999, the company issued 50,000 shares of common stock at
a value of $0.10 per share as compensation for services provided by B&S Family
Trust in connection with financing.


         On February 25, 1999, the company issued 20,000 shares of common stock
to two of its employees under a compensation agreement with these employees. The
stated value per share issued in this transaction was $0.10.


         On July 27, 1999, the company exchanged 100,000 shares of common stock
to retire outstanding obligations with Brett Simonsen, one of its creditors, at
a price of $0.50 per share.


         On July 27, 1999, the company issued 158,000 shares of common stock at
a price of $0.50 per share (gross proceeds of $79,000). The purchasers of these
securities, Eric Albach, Steve Heaton, and Long Family Trust, all accredited or
sophisticated investors who had access to information concerning the company
necessary to make an informed investment decision concerning their purchase of
the Company's securities.


         On August 8, 1999, the company issued a total of 20,000 shares of
common stock to two of its employees under a compensation agreement, valued at
$0.50 per share.


         On August 8, 1999, the company sold 62,000 shares of common stock at a
price of $0.50 per share. The purchaser of these securities was Curt D. Eddy
IRA, a sophisticated purchaser who had access to information concerning the
company necessary to make an informed investment decision concerning his
purchase of the Company's securities.


         On September 1, 1999, the company sold 280,000 shares of common stock
in a private placement at a price of $0.50 per share to Jeff Holmes, Joann L.
Smith CRT, Matt M. Smith, and David Meyers IRA, each an accredited investor or a
sophisticated investor who had access to information concerning the company
necessary to make an informed investment decision concerning his or her purchase
of the company's securities.


 2000


         During the year ended December 31, 2000, the company did not sell any
shares of common stock or other securities for cash. However, the company did
issue shares as follows:


         On January 30, 2000, the company purchased a 50-acre parcel of
undeveloped real property for 147,800 shares of common stock from an entity
owned by Scott Holmes, an officer and director, and Mr. Holmes' brother-in-law.
The real property was recorded at the historical cost of the property, $20,000,
as required by GAAP. The land had an MAI appraisal value of $82,000. The
purchase price at historical carrying value is $0.135 per share and $0.555 per
share at the MAI appraisal value.


         On February 29, 2000, the company issued 20,000 shares of common stock
to two of its employees as part of a compensation agreement. These shares were
valued at $0.65 per share.


         On December 16, 2000, the company converted debt to equity and issued a
total of 436,115 shares of common stock to Finance Management International, one
of its creditors at a price of $0.45 per share, in satisfaction of an obligation
totaling $198,157.




                                       10
<PAGE>

2001


         On February 13, 2001, the company sold 13,333 shares of common stock to
a Vicki Fullmer, a sophisticated investor in a private transaction for $0.75 per
share.


         On November 15, 2001, the company issued 60,000 shares of common stock
to certain note holders in conjunction with the renegotiation of debt. On
November 15, 2001 the company issued 2,500 shares of common stock to an employee
for a commission bonus earned.


         No underwriters were engaged in connection with the issuance of
securities in any of the foregoing transactions. Unless otherwise stated, the
foregoing sales of securities were made in reliance upon the exemption from
registration set forth in Section 4(2) of the Securities Act as transactions not
involving any public offering. Issuance of options to employees, officers and
directors of the company were made pursuant to Rule 701 under the Securities
Act.


Information under Item 701 of Regulation S-B "Use of Proceeds"


         The company filed a registration statement on Form SB-2 with the
Securities and Exchange Commission on March 5, 2001. The registration statement
was declared effective by order of the Commission on July 16, 2001. Under the
registration statement the company registered the offer and sale of up to
4,000,000 shares of common stock at a price of $0.75 per share. The company
subsequently filed Post-effective Amendment No. 1 to update information in the
Registration Statement made public in the company's Quarterly Report for the
quarter ending June 30, 2001.


         On October 10, 2001, the company closed the offering. On November 8,
2001, the company filed Post-effective Amendment No. 2 to the Registration
Statement to terminate the Registration Statement and to deregister all shares
of the company's common stock, no par value, registered pursuant to the
Registration Statement but not sold pursuant to the Registration Statement.


         The results of the offering were as follows:

     o    The company issued 2,387,697 shares in the offering.

     o    Because the offering was "self-underwritten" and offers and sales were
          effected  by an officer and  director of the company on the  company's
          behalf,   there  were  no  underwriting   fees,   discounts  or  other
          commissions  or fees related to the offering of the  securities and no
          direct or indirect  payments were made to the officer and director who
          assisted in these transactions.

     o    The  company  incurred   approximately   $127,000  of  offering  costs
          consisting primarily of legal,  accounting,  and other fees related to
          the registration  statement.  These deferred  offering costs have been
          offset against the proceeds received from the sale of the securities.

     o    Proceeds  to the company  were  $1,791,000.  As of April 1, 2002,  the
          proceeds were received as follows:

          o    $232,000 in cash

          o    $252,000 in services

          o    $206,000  for  repayment  of  short-term  borrowings  and accrued
               interest payable

          o    $1,101,000 in subscriptions receivable


         Net proceeds to the company after payment of the offering costs were
$1,664,000. These net proceeds will be used for debt reduction, sales and
marketing and working capital. The subscriptions receivable are represented by
promissory notes payable in full on or before June 30, 2002. These notes bear


                                       11
<PAGE>

interest at an annual rate of 8%, which is payable only in the event of a
default on the note. As of the date of this report, a total of $1,101,000
remained outstanding under these notes.


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


          The following description of the company's financial condition and
results of operations should be read in conjunction with the audited financial
statements and the notes thereto included elsewhere in this report. This
discussion contains forward-looking statements based upon current expectations
that involve risks and uncertainties. Any statements contained herein that are
not statements of historical fact may be deemed to be forward-looking
statements. Actual results and the timing of important or material events may
differ significantly from the results discussed in the forward-looking
statements. Factors that might cause a discrepancy include, but are not limited
to, those discussed in "Risk Factors" in this section.


Outlook


          Cash requirements through the end of 2002 will vary based upon a
number of factors including, but not limited to, increased market development
activities, additional personnel, travel, and other expenses related to
projected growth. In the future, the company may consider additional financing
methods, such as the issuance of equity or debt securities, including debt
securities convertible into equity securities, all of which may result in
substantial dilution to stockholders. With respect to the year 2002, the company
expects that additional cash funding will be needed.


         Product research and development is an ongoing process. Existing
products are continuously being refined and new technology developed to solve
unmet market needs. The company does not anticipate any material capital
expenditures in the next 12 months. Existing facilities and equipment are
projected to be sufficient to meet most of the growth needs during that period.


         The company benefits from an experienced executive management team and
board of directors. An in-house team of respected, results-oriented marketing,
sales, product development, and operations professionals has been assembled and
developed by the company, and product innovation is emphasized in pursuing the
company's business strategy.


Results of Operations


Year ended December 31, 2001, compared to the year ended December 31, 2000


          During the year ended December 31, 2001, the company had net sales of
$3,925,996, reflecting a decrease of $790,984, or 17%, compared to net sales of
$4,716,980 for the same period in 2000. Net sales in both years were derived
from the sale of products. This decrease was due primarily to the decrease in
sales specific to the fourth quarter of 2001 as compared to the same period in
2000. In the fourth quarter of 2000, the company recorded a large sale to Sam's
Club. Of the $967,391 in total sales to Sam's Club in the year ended December
31, 2000, 72% or $697,930 was recorded in the fourth quarter. The company had no
sales to Sam's Club in 2001.


          Costs of goods sold decreased $177,368 or 8% from $2,394,730 for the
year ended December 31, 2000, to $2,217,362 for the same period in 2001. This
decrease was due primarily to lower sales in 2001. Gross profit decreased
$613,616 or 26% from $2,322,250 for the year ended December 31, 2000 to
$1,708,634 in 2001. Gross margin percentages decreased from 49% for the year
ended December 31, 2000 to 44% in 2001, primarily as a result of lower margins
on certain product lines.


          Selling, general, and administrative expenses were $2,285,255 and
$2,161,280 for the years ended December 31, 2001 and 2000, respectively,
representing an increase of $123,975 or approximately 6%. The increase over the
prior year is due primarily to increased expenses related to professional fees,
consulting, rent, bad debt expense, and salaries and wages, which were partially
offset by decreased expenses related to shipping, advertising and promotion,
commissions, and travel.




                                       12
<PAGE>

          Interest expense was $615,528 and $748,699 for the years ended
December 31, 2001 and 2000, respectively. This represents a decrease of $133,171
or 18% and is due primarily to the reduced availability on the line of credit
for the year ended December 31, 2001, compared to 2000, as well as the result of
lower rates of interest negotiated with creditors in the third and forth
quarters of 2001.


          The company had a net loss for the year ended December 31, 2001 of
$1,240,455 or approximately $0.11 per share, compared to a net loss of $313,284,
or approximately $0.03per share in 2000. This increase in net loss is mainly
attributable to lower revenues in the fourth quarter 2001, compared to the same
period in 2000, as well as lower gross margin percentages and increased selling,
general, and administrative expenses, some of which are related to the
administrative expenses of taking the company public, but not recordable as
offering costs.


Liquidity and Capital Resources


          The company had cash of $50,793 at December 31, 2001, compared to cash
of $4,376 at December 31, 2000. The working capital deficit as of December 31,
2001, was $922,076, compared to a working capital deficit of $1,099,929 at
December 31, 2000. The decrease in working capital deficit during the year ended
December 31, 2001, is due primarily to the decrease in current liabilities
associated with lines of credit, which are directly associated with the decrease
in accounts receivable and inventory. As of December 31, 2000, the company had
total short-term debt and current portion of long-term debt of $2,133,750. At
December 31, 2001, short-term and current portion of long-term debt totaled
$681,290 and bore interest at rates of prime plus 5% to rates of 24%. Long-term
debt obligations to unrelated parties at December 31, 2001, excluding current
maturities, totaled $949,361. This debt bears interest at rates of 12% to 24%.
Long-term debt to related parties at December 31, 2001, excluding current
maturities, totaled $278,318. This debt bears interest at rates of 15% to 24%.
Included in current maturities of long-term debt is $153,000, which bears
interest at 12% and $15,000, which bears interest at approximately 15% pursuant
to a capital lease agreement. During the year ended December 31, 2001, the
company refinanced or renegotiated and extended obligations totaling $1,354,636.
The company borrowed $547,755 from new and existing lenders.


         The company had an accumulated deficit of $3,304,272 at December 31,
2001, compared to a deficit of $2,063,817 at December 31, 2000. This deficit is
attributed to accumulated losses since inception.


         Historically, the company has financed operations principally through
loans, private placements of equity and debt securities, and product sales. The
company's operating activities provided $461,150 in net cash during the year
ended December 31, 2001. Improved cash flow was the result primarily of a
decrease in accounts receivable and inventory plus an increase in accounts
payable and stock based compensation during 2001.


         On November 9, 2001, the company finalized an agreement with Summit
Financial Resources, LLP ("Summit") pursuant to which the company repaid in full
a loan with Wells Fargo. The Summit financing agreement is a two-year renewable
arrangement with a maximum credit line of $1,000,000. The availability on the
credit line is based on advance rates on accounts receivable and inventory. The
accounts receivable component is based on a factoring arrangement and the
inventory component is based on eligible inventory not to exceed the lesser of
$250,000 or a ratio of 2:1 eligible accounts receivable to eligible inventory.
Interest is calculated on the daily outstanding balance and charged monthly in
arrears based on the prime rate plus 4% for the accounts receivable component
and the prime rate plus 5% on the inventory component. The company does not
anticipate the need to borrow more than the new maximum under this agreement.
However, the new maximum is only available if the eligible accounts receivable
and inventory are at levels, which provide for advances up to the new maximum
loan amount. The levels of accounts receivable and inventory are affected by
seasonality and other factors, which have an affect on the availability under
this agreement. At December 31, 2001, the balance outstanding on the loan with
Summit was $143,836 after adjustment for that portion of receivables for which
title had been transferred to Summit under the agreement. The company has also
negotiated a $300,000 line of credit to facilitate the cash flow requirements of
letter of credit payments to some vendors. At December 31, 2001, the balance
outstanding on this line of credit was $91,000. Of the remaining balance on the
line of credit at December 31, 2001, $180,676 was reserved for the settlement of
issued letters of credit. In the future, the company may consider additional
financing methods, such as the issuance of equity or debt securities, including
debt securities convertible into equity securities, all of which may result in
substantial dilution to stockholders.




                                       13
<PAGE>

         The ability of the company to continue as a going concern is dependent
on the company generating cash from the sale of its common stock, reducing debt
and attaining future profitable operations. Management's plans include expanding
market share through the introduction of new products, whether developed
internally or through acquisition and obtaining equity financing through the
sale of its common stock. However, there can be no assurance management of the
company will be successful.


         The following chart includes principal balances of short-term and
long-term borrowings as of December 31, 2000 and December 31, 2001.


<TABLE>
<CAPTION>
Debt as of   10.75%       12% Interest  15%         16.5%       18%         19% to 24%      30%          Prime plus
----------   -------      ------------  ----        ------      ----        -----------     ----         ----------
             Interest                   Interest    Interest    Interest    Interest        Interest     4% to 6.5%
             --------                   --------    --------    --------    --------        --------     ----------
<C>          <C>          <C>           <C>         <C>         <C>         <C>             <C>          <C>
12/31/00          -                -    $159,538    $13,611     $ 83,800    $1,377,575      $150,000     $881,139
12/31/01     $5,844       $1,118,576    $202,207          -     $221,000    $  217,506             -     $143,836
</TABLE>


          During the year ended December 31, 2001, the company refinanced
several loan agreements to resolve or cure defaults. Also at December 31, 2001,
the company was in default under twelve notes totaling $230,000.


Recent Developments

     o    After the year ended  December  31,  2001,  the company  entered  into
          consulting agreements,  which terminate in August 2002. The agreements
          require  the  company to issue  1,400,000  shares of common  stock and
          800,000  options to  purchase  common  stock at $0.60 per share to the
          outside consultants as payment for the services performed.

     o    From January 2002 to March 25, 2002, the company  collected a total of
          $201,664 of stock subscriptions receivable.


Recent Accounting Pronouncements


         Statement of Financial Accounting Standards ("SFAS") No. 140,
Accounting for Transfers and Servicing of Financial  Assets and  Extinguishments
of  Liabilities,  was issued in September 2000. SFAS No. 140 is a replacement of
SFAS No. 125,  Accounting  for Transfers  and Servicing of Financial  Assets and
Extinguishments of Liabilities.  The Financial Accounting Standards Board (FASB)
carried most of the  provisions  of SFAS No. 125 forward to SFAS No. 140 without
reconsideration,  and some were only minor changes. In issuing SFAS No. 140, the
FASB included issues and decisions that had been addressed and determined  since
the  original  publication  of SFAS No.  125.  SFAS  No.  140 is  effective  for
transfers after March 31, 2001.  Management does not expect the adoption of SFAS
No. 140 to have a  significant  impact on the  financial  position or results of
operations for the company.


         In June 2001, the FASB issued SFAS No. 141, "Business Combinations,"
and SFAS No. 142, "Goodwill and Other Intangible Assets." Certain provisions of
these statements are effective for business combinations entered into after June
30, 2001. Under the new rules, goodwill and intangible assets deemed to have
indefinite lives are no longer amortized but are subject to annual impairment
tests in accordance with the statements. Other intangible assets will continue
to be amortized over their useful lives. As allowed by these statements, the
company plans to adopt these provisions effective January 1, 2002. Management
expects that there will be no impact on the company's results of operations,
financial position or liquidity related to the adoption of the remaining
provisions of these statements.


         In August 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations," effective for fiscal years beginning after June 15,
2002, with earlier application encouraged. This statement requires entities to
record the fair value of a liability for an asset retirement obligation in the
period in which it is incurred. When the liability is initially recorded, the
entity capitalizes the cost by increasing the carrying amount of the related
long-lived asset. Over time, the liability is accreted to its present value each
period, and the capitalized cost is depreciated over the useful life of the
related asset. Upon settlement of the liability, an entity either settles the
obligation for its recorded amount or incurs a gain or loss upon settlement.
Management does not expect the adoption of this statement to have a material
impact on the company's results of operations, financial position or liquidity.




                                       14
<PAGE>

         In October 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," which replaces SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of." The accounting model for long-lived assets to be disposed of by
sale applies to all long-lived assets, including discontinued operations, and
replaces the provisions of APB Opinion No. 30, "Reporting Results of
Operations-Reporting the Effects of Disposal of a Segment of a Business," for
the disposal of segments of a business. This statement requires that those
long-lived assets be measured at the lower of carrying amount or fair value less
cost to sell, whether reported in continuing operations or in discontinued
operations. Therefore, discontinued operations will no longer be measured at net
realizable value or include amounts for operating losses that have not yet
occurred. This statement also broadens the reporting of discontinued operations.
The company will adopt the provisions of this statement on January 1, 2002.
Management does not expect the adoption of this statement to have a material
impact on the company's results of operations, financial position or liquidity.


Risk Factors


         This report contains forward-looking statements, which may be affected
by risks and uncertainties including many that are outside the company's
control. The company's actual operating results could differ materially as a
result of certain factors, including those set forth below and elsewhere in this
report.


The audited financial statements that accompany this report have been prepared
on the assumption that the company will continue as a going concern. If the
company fails to continue in business, you could lose your investment in the
company.


         The financial statements of the company that are included in this
report have been prepared on the assumption that the company will continue as a
going concern. The company's deficit in working capital, stockholders' deficit
and recurring net losses raise substantial doubt about its ability to continue
as a going concern. If the company is not successful in generating additional
sales, reducing expenses, or obtaining additional financing, it may be required
to scale back or discontinue operations, in which case its investors could lose
all or substantially all of their investment.


The company faces intense competition from larger and better-established
companies that may prevent it from ever becoming a significant market leader.


         The market for products is intensely competitive and highly fragmented.
The company may experience competition from potential customers or partners to
the extent that they manufacture or market their own competing product lines.
Many of these competitors may have longer operating histories, greater
financial, technical and marketing resources, and enjoy existing name
recognition and customer bases. New competitors may emerge and rapidly acquire
significant market share. In addition, new technologies likely will increase the
competitive pressures the company faces. Competitors may be able to respond more
quickly to technological change, competitive pressures, or changes in consumer
demand. As a result of their advantages, the company's competitors may be able
to limit or curtail its ability to compete successfully. These competitive
pressures could materially adversely affect the company's business, financial
condition, and results of operations.


If the company is to continue to be competitive, it will need to attract and
retain key personnel.


          The company's future success depends significantly on the continued
service of senior management. The familiarity of these individuals with the
industry makes them especially critical to the company's success. The loss of
the services of one or more of the company's key employees could have a material
adverse effect on its business. The company does not currently have key man
insurance on any of its employees, but the company anticipates obtaining that
insurance in the near future. The company's future success also depends on its
ability to attract and retain highly qualified design, technical, sales,
marketing, customer service, and management personnel. Competition for these
personnel is intense, and the company cannot guarantee that it will be able to
attract or retain a sufficient number of highly qualified employees in the
future. The lack of qualified management personnel could limit the company's
ability to grow the business and may limit its ability to effectively compete in
certain markets.




                                       15
<PAGE>

If the company is not successful in effectively managing growth, the cost of
doing business may increase or could result in inefficiencies that would reduce
cash available for growth and prevent the company from becoming profitable.


         To execute its business plan, the company must grow significantly. This
growth will place a significant strain on personnel, management systems, and
resources. The company expects that the number of employees, including
management-level employees, will continue to increase for the foreseeable
future, and that it may need additional office space and expanded technology
infrastructure. Failure to manage growth effectively will materially adversely
affect the company's business, results of operations, and financial condition.


In 2000, a significant portion of the company's net sales were to two customers.
During 2001, the company did not continue a relationship with one of its two
largest customers in 2000, which contributed to lower gross revenues for the
year ended December 31, 2001 compared to 2000.

     In 2000,  sales to Home Depot totaled  approximately  25% of net sales.  In
addition,  Sam's Club accounted for approximately 21% of the company's net sales
in 2000. In 2001, sales to Home Depot totaled approximately 15% of net sales and
there were no sales to Sam's Club. The company has no  arrangements or contracts
with any  customers  that would  require  them to purchase a specific  amount of
product  from the  company  and they are  therefore  free to choose at will from
among  suppliers  of like  products.  The  decrease  in  Home  Depot  sales  and
elimination of sales to Sam's Club,  was partially  offset by increases in sales
to Menards,  Worldwide  Distributors,  and various  small  hardware  and outdoor
products retailers.


         The company did not continue to receive orders from Sam's Club in 2001.
Sales to Sam's Club in 2000 represented approximately 21% of net sales. The
failure to continue to receive orders from Sam's Club reduced total revenues in
2001 as compared to 2000 and adversely affected net income for the year.


The company's earnings fluctuate seasonally, which may affect financial results.


         Because the company's products are sold in retail outlets, its business
is subject to seasonal fluctuations that affect retail business generally. The
company's inability to manage any potential fluctuations in revenues could
materially adversely affect its business, financial condition and results of
operations.


The company may not be able to protect its proprietary rights and it may
infringe the proprietary rights of others, which would require the company to
incur substantial costs or could result in payment of money damages to the
owners of those rights it infringes.


         The company regards its copyrights, service marks, trademarks, trade
secrets, and similar intellectual property as critical to its success and
competitive position. The company relies on trademark and copyright law, trade
secret protection, and confidentiality and license agreements with employees,
strategic partners, and others to protect these rights. Although the company
seeks to protect its proprietary rights, these actions may be inadequate to
protect any trademarks and other proprietary rights or to prevent others from
claiming violations of their trademarks and other proprietary rights.
Unauthorized parties may improperly obtain and use information that the company
regards as proprietary. Third parties may infringe or misappropriate the
company's proprietary rights. Any of these events would likely cause the company
to incur substantial expense, could result in loss of important competitive
advantage or result in an inability to continue to sell products that are based
on these proprietary rights.


          Patents issued to the company or to its strategic partners may not
provide a basis for commercially viable products or may not provide any
competitive advantages. Third parties could challenge these patents. The patents
of others could limit the company's ability to use protected processes or
technologies. Any of these situations could have a material adverse effect on
the company's ability to do business. The company cannot prevent others from
independently developing similar or alternative technologies, duplicating any of
its technologies, or, if patents are issued to the company, designing around its
patented technologies. The company could incur substantial costs in litigation
if required to defend itself in patent suits brought by third parties or if it
initiates patent suits.


         Others may have filed or in the future may file patent applications
that are similar or identical to those the company relies upon by license or
otherwise. To determine the priority of inventions, the company may have to
participate in interference proceedings declared by the United States Patent and
Trademark Office. These proceedings could result in substantial cost to us. The
company cannot ensure that any third-party patent application will not have


                                       16
<PAGE>

priority over ours. Additionally, it is possible that the laws of some foreign
countries may not protect the company's patent and other intellectual property
rights to the same extent as the laws of the United States.


          The company's future prospects also depend in part on it neither
infringing patents or proprietary rights of third parties nor breaching any
licenses that may relate to its technologies and products. The company cannot
guarantee that it will not infringe the patents, licenses or other proprietary
rights of third parties. The company could in the future receive notices
claiming infringement from third parties as well as invitations to take licenses
under third party patents. Any legal action against the company or its strategic
partners that claims damages and seeks to enjoin commercial activities relating
to the affected products and processes could subject the company to potential
liability for damages. These legal actions could also require the company or its
strategic partners to obtain a license in order to continue to manufacture or
market the affected products and processes. The company cannot ensure that its
strategic partners or the company would prevail in any of these actions. The
company cannot ensure that any license, including licenses proposed by third
parties, required under a patent would be available on terms that are
commercially acceptable, if at all. The company have not conducted an exhaustive
patent search and the company cannot ensure that patents do not exist or could
not be filed that would have a material adverse effect on its ability to develop
and market products. If the company becomes involved in patent litigation, it
could consume a substantial portion of managerial and financial resources, which
could have a material adverse effect on its business, financial condition,
results of operations, and relationships with corporate partners.


         The company attempts to control the disclosure and use of its
proprietary technology, know-how and trade secrets under agreements with the
parties involved. However, the company cannot ensure that others will honor all
confidentiality agreements. The company cannot prevent others from independently
developing similar or superior technology, nor can the company prevent disputes
that could arise concerning the ownership of intellectual property.


There is no assurance that the company's future products will be accepted in the
market.


          Although the company has had some success with its 13-in-1 product,
future products may not be accepted in the market. For the company to be
profitable, retail customers must accept its products as beneficial and
worthwhile. Market acceptance will require substantial education about the
benefits of the company's products. If consumers do not accept the company's
products or acceptance takes a long time, revenues and profits will be reduced.
The company can provide no assurance that there will be a favorable market for
its products or that it will realize a profitable rate of return.


The company may be subjected to claims under product liability law, which could
cause it to incur significant expense to defend and that might require that the
company pay high damage awards.


          Although the company insures against possible liability for injury or
damages resulting from the misuse of or defects in its products, there is no
assurance that the company will continue to maintain that insurance or that it
will be available on reasonable terms. The company may incur liability to
consumers based on claims that its products are harmful or ineffective. Those
claims, even if unfounded, could cause damage to the company's reputation,
result in expensive product recalls, or result in high litigation expense.


The loss of the company's exclusive distribution rights could limit or possibly
eliminate access to its most successful market to date.


          The company has purchased and distributed one of its products, the
NEBO 13-in-1 multi-bit ratchet screwdriver, under an exclusive arrangement with
the owner of the design for the product. Sales from this product totaled $1.3
million, or approximately 27.5% of sales in 2000 and approximately $571,098 or
15% in 2001. The company's written contract for this arrangement was entered
into effective April 1, 2001 and terminated March 31, 2002. The agreement was
not extended beyond March 31, 2002, and the company has lost its exclusive
rights to manufacture and market that product in the United States. The company
does not believe that the loss of this agreement will have a material adverse
impact on its sales of this product into the market. If the company is unable to
obtain additional licenses or similar arrangements on other products, then this
may limit the products the company can sell.




                                       17
<PAGE>

The company's business is subject to risks related to doing business in China,
which could result in its inability to meet manufacturing requirements or
delivery deadlines for products and cause the company to lose market share.


          The company obtains much of its manufacturing in the People's Republic
of China (also referred to as the PRC) from contract manufacturers. The
company's business relationships in the PRC could be adversely affected by
internal political, economic, and social uncertainties. Any change in policy by
the Chinese government could adversely affect investments in or business
relationships with Chinese businesses. Changes in policy could result in
imposition of restrictions on currency conversion, imports, or the source of
suppliers, as well as new laws affecting joint ventures and foreign-owned
enterprises doing business in the PRC. Although the PRC has been pursuing
economic reforms for the past two decades, events such as a change in leadership
or social disruptions that may occur upon the proposed privatization of
state-owned industries could significantly affect the government's ability to
continue with its reform.


          As a developing nation, the PRC's economy is more volatile than that
of developed Western industrial economies. The PRC's economy differs
significantly from that of the United States or a Western European country in
structure, level of development, capital reinvestment, resource allocation, and
self-sufficiency. There can be no assurance that under some circumstances, the
PRC government's pursuit of economic reforms will be restrained or curtailed.
Actions by the central government of the PRC could have a significant adverse
effect on economic conditions in the country as a whole and on the economic
prospects for the company's Chinese operations.


         Although the company believes that contract manufacturers outside the
PRC could meet supply needs if it were unable to continue to use Chinese
manufacturers within the PRC, this might result in delays in meeting orders or
in higher expense than current relationships.


The Chinese legal system embodies uncertainties, which could limit the legal
protections available to us.


         The Chinese legal system is a civil law system based on written
statutes. Unlike common law systems such as the United States and the United
Kingdom, the Chinese legal system is a system in which decided legal cases have
little precedential value. In 1979, the Chinese government began to promulgate a
comprehensive system of laws and regulations governing economic matters in
general. The overall effect of legislation over the past 20 years has
significantly enhanced the protections afforded to various forms of foreign
investment in Mainland China. Recent legal and political changes in China have
resulted in reforms. However, these laws, regulations, and legal requirements
are relatively recent, and there is little, if any, precedence in their
interpretation and enforcement. This lack of experience with these new laws
creates uncertainties that could limit the company's ability to accurately
predict the exact legal protections available to it and other foreign investors.
In addition, the company cannot predict the effect of future developments in the
Chinese legal system, particularly with regard to the Internet, including the
promulgation of new laws, changes to existing laws or the interpretation or
enforcement thereof, or the preemption of local regulations by national laws.


The company relies on third parties to manufacture its products. Therefore, the
company does not have direct control over the quality or other aspects of the
manufacturing process, which could result in a loss of customer acceptance of
its products and increased expense related to warranty claims or defective
product returns.


         The company does not directly control the manufacturing facilities
where its products are made and the company must depend on third parties to make
its products according to standards for quality and reliability. The company
does not own any manufacturing facilities or equipment and do not employ any
manufacturing personnel. The company uses third parties to manufacture its
products on a contract basis. The company cannot assure you that the company
will be able to obtain qualified contract manufacturing services on reasonable
terms. In addition, the manufacture of the company's products involves complex
and precise processes. Changes in the company's manufacturing processes or those
of its suppliers, or the use of defective components or materials, could
significantly reduce its manufacturing yields and product reliability. The
company's manufacturing costs are relatively fixed, and, thus, manufacturing
yields are critical to its results of operations. This may also cause delayed
product shipments and impaired gross margins. In some cases, existing
manufacturing techniques involve substantial manual labor. To improve gross


                                       18
<PAGE>

margins, the company may need to develop new, more cost-effective manufacturing
processes and techniques, and if the company fails to do so, its gross margins
may be adversely affected.


The company may experience adverse economic and political risks associated with
companies that operate in Taiwan.


         In addition to the company's contract manufacturing performed in the
PRC, the company uses manufacturers in Taiwan. Relations between Taiwan and the
PRC, and other factors affecting the political or economic conditions of Taiwan
in the future could affect the company's business and the market price and
liquidity of the company's shares. The PRC asserts sovereignty over all of
China, including Taiwan and other neighboring islands and all of mainland China.
The PRC government does not recognize the legitimacy of the Taiwanese
government. Although significant economic and cultural relations have been
established during recent years between Taiwan and the PRC, the PRC government
has indicated that it may use military force to gain control over Taiwan if
Taiwan were to declare its independence or take other actions China deems to be
offensive to its claims of sovereignty. Relations between Taiwan and the PRC
have on occasion adversely affected the market value of Taiwanese companies and
could negatively affect the operations of the company's manufacturers in Taiwan
in the future, which could have a materially adverse effect on its business,
financial condition or results of operations.


The location of the company's manufacturing facilities subjects it to increased
risk that a natural disaster could disrupt operations.


         Substantially all of the company's products are manufactured by
contract manufacturers in China, Taiwan, and India. These countries are in
regions that are prone to natural disasters, including the risk of earthquakes
due to the proximity of major earthquake fault lines. In September 1999, major
earthquakes in Taiwan affected the facilities of the company's manufacturers,
causing power and communications outages and disruptions that impaired
production capacity. In early 2001, a major earthquake caused significant damage
and loss of life in India. The occurrence of an earthquake or other natural
disaster in these countries could result in the disruption of work at the
company's manufacturing facilities, which could cause significant delays in the
production or shipment of products until the company is able to shift production
to different facilities or arrange for third parties to manufacture its
products. The company may not be able to obtain alternate capacity on favorable
terms or at all.


Item 7.  Financial Statements


         The company's audited financial statements and associated notes are
included and set forth on pages F-1 through F-24 of this report.


                                    Part III


Item 9.  Directors and Executive Officers


Executive Officers, Key Employees and Directors


         The executive officers and directors of NEBO as of April 1, 2002 are as
follows:

         Name, Age            Office

         Scott Holmes, 35     Director, President, CEO
         Darin Malchus, 40    Director
         Mont Warren, 40      Chief Financial Officer
         Jerry Mika, 37       Vice President Sporting Goods
         John Larsen, 36      Vice President Marketing and Product Development


         Mr. Scott Holmes has been with the company and its predecessors since
August 1997 and became CEO in December 1998. From November 1995 to August 1997,
he was a sales manager with United Staffing Alliance, a professional employer
organization. Prior to that he co-owned Liberty Loan, a retail lending company.


                                       19
<PAGE>

From January 1993 until December 1994, Mr. Holmes worked for Ostler
International d.b.a. Interstate Auto Supply where he gained extensive
international trade and business experience.


         Mr. Darin Malchus joined the company and its predecessors in January
1998 as controller. In May 2000, he was appointed Vice President Marketing and
Product Development. He became a director in February 2001. He holds a BS degree
in Business Administration, Accounting, from California State University, Chico,
with a minor in Mathematics. Beginning in June 1989, he was employed by KPMG
Peat Marwick as a financial auditor in Los Angeles, California. He is a
Certified Public Accountant (California). From September 1993 to April 1995 Mr.
Malchus was the Financial Manager of Barton Memorial Hospital and Carson Valley
Medical Center, located in South Lake Tahoe, California, and Gardnerville,
Nevada, respectively. He then joined NVMS, a medical group consisting of plastic
and oral surgeons, serving as Controller and Group Administrator. Effective
March 14, 2002, Mr. Malchus will no longer be serving as an officer of the
company, but he continues to serve as a member of the Board of Directors.


         Mr. Mont Warren joined the company in August 2001 as Chief Financial
Officer.  Mr.  Warren  has  an  extensive  background  in  finance,  accounting,
information  systems,  and  management  in addition to experience in IPO and SEC
related  issues.  Beginning  in 1998,  Mr.  Warren  held the  position  of Chief
Financial Officer of Experior Assessments, LLC in Salt Lake City, Utah. Prior to
that he worked as Chief  Financial  Officer of Renaissance  Golf Products,  Inc.
from 1991 to 1998.  Mr.  Warren holds a Bachelors  Degree in  accounting  with a
minor in Finance/Business Composition from Brigham Young University.


         Mr. Jerry Mika joined the company on July 1, 2001 as Vice President of
Sporting Goods. Mr. Mika has over 16 years of experience in sales to retail,
wholesale, and commercial customers. From 1998 to 2001 he worked as a national
sales representative for Utility Trailer Sales of Utah. Prior to that he held
the position of Sales Manager for Tire World in Salt Lake City, Utah, managing
their technical staff and selling to retail and commercial customers. In
addition to his extensive sales experience, Mr. Mika has worked as a hunting and
fishing guide for the last 14 years.


         Mr. John Larsen joined the company on March 28, 2002, as Vice President
Marketing and Product Development. From June 1994 to March 2002, he was employed
with Aetna, Inc. in Dallas, Texas and Tulsa,  Oklahoma. His most recent position
after several promotions was Network Manager & Director of Provider Relations in
the Tulsa office. He gained international  business experience working from 1998
to 1991 for Teiki Kanko, Inc., a Los Angeles-based  tourism company.  Mr. Larsen
holds an MBA  degree  from  Texas Tech  University  and a BA degree in  Japanese
Literature from Brigham Young University.


Section 16(a) Beneficial Ownership Reporting Compliance


         Section 16(a) of the Securities Exchange Act of 1934 requires the
company's officers, directors and persons who beneficially own more than 10
percent of a registered class of the company's equity securities to file reports
of ownership and changes in ownership with the Securities and Exchange
Commission. Officers, directors and greater than 10 percent shareholders are
required by regulation of the Securities and Exchange Commission to furnish the
company with copies of all Section 16(a) forms they file.


         Based solely upon its review of the copies of such forms furnished to
it, and representations made by certain persons subject to this obligation that
such filings were not required to be made, the company believes that all reports
required to be filed by these individuals and persons under Section 16(a) have
been filed.


The Board of Directors


         Directors hold office until the next annual meeting of the shareholders
and until their successors have been elected or appointed and duly qualified.
Executive officers are elected by the board of directors and hold office until
their successors are elected or appointed and duly qualified. Vacancies on the
board which are created by the retirement, resignation or removal of a director
may be filled by the vote of the remaining members of the board, with such new
director serving the remainder of the term or until his successor shall be
elected and qualify.




                                       20
<PAGE>

Meetings and Committees


         There were five regular meetings of the board of directors held during
the year ended December 31, 2001. No director attended fewer than 75 percent of
the meetings during the fiscal year. The board also acted during 2001 by
unanimous written consent in lieu of a meeting, as permitted by Utah law and the
Company's bylaws. The board has no formal Nominating Committee. The board also
has no Audit Committee at this time.


Remuneration


         No determination has been made regarding remuneration of directors for
2002. The company reimburses board members for reasonable travel expenses for
their attendance at meetings. No options have been granted or other compensation
paid to directors as of the date of this report.


Item 10.     Executive Compensation


         The following table sets forth the compensation paid in each of the
past three fiscal years to all individuals serving as the Company's chief
executive officer during the year ended December 31, 2001 (the "Named Executive
Officer"). None of the company's executive officers is paid more than $100,000
annually. The company does not have any written employment agreements with any
of its employees.


<TABLE>
<CAPTION>
                                                                                                      Long-Term
                                                                                                    Compensation
                                                                                                       Awards
                               Annual Compensation
       Name and                                                                  Other Annual        Securities
      Principal                             Salary              Bonus            Compensation        Underlying
       Position             Year              ($)                ($)               ($) (1)           Options (#)

<S>                         <C>             <C>                  <C>                <C>                   <C>
Scott Holmes, CEO           2001            $96,000              $0                 $1,427                0
                            2000            $96,000              $0                 $1,164                0
                            1999            $82,000              $0                 $  290                0
</TABLE>


     (1)  Includes  approximate  amount of  employer  matching  contribution  to
          401(k) plan.


Employment Agreements


         The company does not have employment agreements with any of its
executive officers.


Stock Option Plan


         Effective January 1, 2001, the board of directors adopted a Stock
Option Plan. The Plan authorizes the granting of awards of up to 7,000,000
shares of voting common stock to key employees, officers, directors,
consultants, advisors and sales representatives. Awards consist of stock options
(both non-qualified options and options intended to qualify as "incentive" stock
options under Section 422 of the Internal Revenue Code of 1986, as amended),
restricted stock awards, deferred stock awards, stock appreciation rights, and
other stock-based awards, as described in the Plan. Incentive stock options
granted under the Plan may not be exercisable after the expiration of five years
after the grant date and any non-qualified stock options granted under the Plan
may have an exercise date that is more than ten years after the grant date.


         The Plan is administered by the board of directors, which determines
the persons to whom awards will be granted, the number of awards to be granted,
and the specific terms of each grant, including the vesting thereof, subject to
the provisions of the Plan. The exercise price of qualified options may not be
less than 100% of the fair market value of the common stock on the date of grant
(or 110% of the fair market value in the case of a grantee holding more than 10%
of the company's outstanding stock). The aggregate fair market value (determined
at the date of grant) of shares for which qualified stock options are
exercisable for the first time by that employee during any calendar year may not
exceed $100,000. If the value of the stock subject to options exceeds this
amount, the excess is considered to be a non-qualified option, with the result


                                       21
<PAGE>

that the beneficial tax treatment of the incentive stock option will be lost as
to the excess amount. This does not limit the amount of options that an employee
can exercise.


          Non-qualified stock options granted under the Plan may be granted at a
price determined by the board of directors, but generally not to be less than
the fair market value of the common stock on the date of grant. The board has
the discretion to grant options with exercise prices less than the fair market
value of the common stock on the date of grant if it determines that
circumstances justify a below market price. If options or other awards are made
under the plan with exercise prices below the fair market value of the common
stock on the date of the grant, NEBO will incur a related expense for the
beneficial conversion feature of the below-market grant, which will reduce
NEBO's earnings, if any, or increase the amount of its loss, if any, for the
period in which the grant is made. However, the board does not anticipate
granting options with prices below the fair market value of the common stock in
the foreseeable future and has not granted options with below market exercise
prices at any time in the past.


         Options granted to employees under the Plan may not be exercised after
the termination of the employment of the holder except under circumstances
enumerated in the Plan. Those circumstances include termination of employment
resulting from retirement, disability and death of the holder. If termination
results from the retirement of the holder of the option, the option may be
exercised within three months after the retirement for all of the shares covered
by the grant. The Plan defines retirement to mean any termination of employment
after the completion of at least ten years of service. If employment is
terminated because of disability, the options may be exercised within three
months after the termination of the employment. If an employee dies while
employed and while holding vested but unexercised options under the Plan, the
personal representative of the deceased employee may exercise the options for
one year after the date of death. If the holder of the option dies within three
months after termination of employment for a reason other than retirement or
disability, the options granted under the Plan may be exercised within one year
after the date of death, but the options may not be exercised for more than the
number of shares, if any, as to which they were exercisable by the employee
immediately prior to his death.


         Options granted under the Plan may be exercised within three months
after the involuntary termination of employment as to the number of shares that
may be purchased immediately prior to the termination of employment.
"Involuntary termination of employment" means any termination of employment with
NEBO by reason of the discharge, firing or other involuntary termination of
employment by action of NEBO, other than an involuntary termination for cause.
Termination for cause can result by the employee's theft or embezzlement from
NEBO, the violation of a material term or condition of his or her employment,
the disclosure of confidential information, conviction of a crime involving
moral turpitude, stealing trade secrets or intellectual property, any act in
competition with NEBO or any other act, activity or conduct, which in the
opinion of the committee is adverse to the best interests of NEBO. In these
circumstances, all unexercised options become null and void effective as of the
date of the occurrence of the event that results in the termination for cause.


         The Plan also contains change in control provisions, which could cause
options and other awards to become immediately exercisable and restrictions and
deferral limitations applicable to other awards to lapse in the event any person
or group of persons owning more than 10% of the company's outstanding common
stock, excepting broker-dealers, banks, insurance companies, investment
companies, employee benefit plans, parent holding company or control person,
savings associations, church plans or groups comprised of these types of
shareholders, becomes the beneficial owner of more than 30% of the company's
outstanding shares of common stock.


         During the year ended December 31, 2001, the company granted options to
purchase a total of 1,422,000 shares under the Plan to 23 option holders. Of
these awards, 219,500 options expired during 2001, options to purchase 154,500
shares carry an exercise price of $0.70 per share, options to purchase 520,000
shares carry an exercise price of $0.77 per share, options to purchase 128,000
shares carry an exercise price of $0.75 per share, and options to purchase
400,000 shares carry an exercise price of $0.60 per share. These options vest
over periods ranging from immediately to four years from the date of grant. In
addition, on October 31, 2001, the company issued 65,000 warrants to purchase
stock at $0.75 per share to certain creditors. These warrants expire October 31,
2004.


Item 11.  Security  Ownership of Certain  Beneficial  Owners and  Management and
Related Stockholders Matters


         The following table sets forth information with respect to the
 beneficial ownership of the company's common stock as of April 1, 2002 by (1)
 each person, or group of affiliated persons, who is known by the company to own


                                       22
<PAGE>

 beneficially more than five percent of the common stock; (2) each director; (3)
 each executive officer; and (4) all directors and executive officers as a
 group. Unless otherwise noted, the address of each beneficial owner listed
 below is c/o the company at its corporate offices.

<TABLE>
<CAPTION>
                                                                        Percentage
                                                                         of Shares
Name of Shareholder                 Number of Shares (1)                 Owned (2)
-------------------                 --------------------                 ---------

5% or more Shareholders:

<S>                                       <C>                           <C>
Aspen Capital Group
8989 S. Schofield Cir.
Sandy, Utah 84093                         1,350,000                      8.9%

Officers and Directors

Scott Holmes (3)                          1,969,800                     13.0%
Mont Warren (4)                              37,500                      *
Darin Malchus (5)                            58,750                      *
Jerry Mika (6)                               18,750                      *
John Larsen (7)                              26,000                      *

All directors and officers
as a group (5 Persons)                    2,110,800                     13.9%
</TABLE>


* Less than one percent.


     (1) Based on 15,177,445 shares outstanding at April 1, 2002.


     (2) Beneficial ownership is determined in accordance with the rules of the
         Securities and Exchange Commission. In computing the number of shares
         beneficially owned by a person and the percentage ownership of that
         person, shares of common stock subject to options held by that person
         that are exercisable or convertible within 60 days of the date of this
         report, are deemed outstanding. Those shares, however, are not deemed
         outstanding for purposes of computing the ownership of any other
         person.


      (3)Includes options to purchase 50,000 shares that are or become
exercisable within 60 days of the date of this report.


     (4) Includes options to purchase 37,500 shares that are or become
exercisable within 60 days of the date of this report.


     (5) Includes options to purchase 18,750 shares that are or become
exercisable within 60 days of the date of this report.


     (6) Includes options to purchase 18,750 shares that are or become
exercisable within 60 days of the date of this report.


     (7) Includes options to purchase 20,000 shares that are or become
exercisable within 60 days of the date of this report.


Item 12.  Certain Relationships and Related Transactions


2000


          During the year ended December 31, 2000, the company loaned The
Murdock Group, a former affiliate, $75,000. In addition, the company had
discussions with The Murdock Group about the loss the company had incurred on


                                       23
<PAGE>

the exchange of prior loans for 1,034,000 shares of The Murdock Group common
stock in 1999. On November 15, 2000, The Murdock Group issued NEBO approximately
9,745,000 shares of its common stock to satisfy the $75,000 advances made during
2000 and to provide some relief for the loss incurred in the prior year,
together with interest income earned on the advances.


         The 9,745,000 shares the company received in November 2000 were valued
at approximately $.035 per share at the time they were received, based upon the
average trading value of The Murdock Group common stock when the first
discussions to resolve the issues took place. In establishing the price at which
the company would accept these shares, the company also took into consideration
the trading value of The Murdock Group common stock, the volume of trades of the
Murdock Group stock, and the financial condition of The Murdock Group.


         During 2000, the company sold 260,870 shares of The Murdock Group stock
for a gain of $28,420. The company also exchanged 9,950,000 shares of Murdock
Group stock in satisfaction of $348,250 of notes payable. The company exchanged
these shares at a price of approximately $.035 per share, which approximated the
fair market value of the shares based upon the trading value of The Murdock
Group stock and recorded no gain or loss on the transaction.


          At December 31, 2001, the company owned less than one percent of the
issued and outstanding common stock of The Murdock Group.


         In 2000, the company borrowed an aggregate of approximately $710,500
from Scott Holmes, an officer and director. Cash repayment totaling
approximately $600,000 was made prior to the year-end. The balance owing Mr.
Holmes at December 31, 2000 on this and other amounts loaned by him was
approximately $110,500. The annual interest rate on this debt is 15%.


         Also in 2000, the company purchased a 50-acre parcel of undeveloped
real property for 147,800 shares of common stock from an entity owned by Scott
Holmes, an officer and director, and Mr. Holmes' brother-in-law. The real
property was recorded at the historical cost of the property, approximately
$20,000, as required by GAAP. The land had an MAI appraisal value of $82,000.
The purchase price at historical carrying value is $0.135 per share and $0.555
per share at the MAI appraisal value.


         During 2000, the company borrowed $80,000 from Suzanne Heaton, the wife
of a former director, Lance Heaton. This loan is due in June 2003 and bears
interest at an annual rate of 24%. During 2000, the company repaid $10,000
principal on this loan.


2001


         During the year ended December 31, 2001, the company sold land with a
historical cost of approximately $20,000 to an officer of the company in
exchange for payment on a note payable due to the officer. Also, the company
issued 226,285 shares of common stock in exchange for a reduction of debt and
accrued interest of $169,714 payable to relatives or affiliates of an officer
and shareholders of the company.


Wells Fargo and Summit Financial


         On November 9, 2001, the company finalized an agreement with Summit
Financial Resources, LLP ("Summit") pursuant to which the company repaid in full
a loan with Wells Fargo. The Summit financing agreement is a two-year renewable
arrangement with a maximum credit line of $1,000,000. The availability on the
credit line is based on advance rates on accounts receivable and inventory. The
accounts receivable component is based on a factoring arrangement and the
inventory component is based on eligible inventory not to exceed the lesser of
$250,000 or a ratio of 2:1 eligible accounts receivable to eligible inventory.
Interest is calculated on the daily outstanding balance and charged monthly in
arrears based on the prime rate plus 4% for the accounts receivable component
and the prime rate plus 5% on the inventory component. The company does not
anticipate the need to borrow more than the new maximum under this agreement.
However, the new maximum is only available if the eligible accounts receivable
and inventory are at levels, which provide for advances up to the new maximum
loan amount. The levels of accounts receivable and inventory are affected by
seasonality and other factors, which have an affect on the availability under
this agreement. At December 31, 2001, the balance outstanding on the loan with
Summit was $143,836 after adjustment for that portion of receivables for which


                                       24
<PAGE>

title had been transferred to Summit under the agreement. The company has also
negotiated a $300,000 line of credit to facilitate the cash flow requirements of
letter of credit payments to some vendors. At December 31, 2001, the balance
outstanding on this line of credit was $91,000. Of the remaining balance on the
line of credit at December 31, 2001, $180,676 was reserved for the settlement of
issued letters of credit. In the future, the company may consider additional
financing methods, such as the issuance of equity or debt securities, including
debt securities convertible into equity securities, all of which may result in
substantial dilution to stockholders.


Item 13.  Exhibits and Reports on Form 8-K


The following exhibits are filed herewith pursuant to Rule 601 of Regulation S-B
or are incorporated by reference to previous filings.
<TABLE>
<CAPTION>

Exhibit #         Description

<S>               <C>
3.1               Articles of Incorporation*
3.2               Amended Articles of Incorporation*
3.3               Amendment to Articles of Incorporation **
3.4               Bylaws*
4.1               Specimen of Common Stock Certificate*
4.2               Form of Employee Incentive Stock Option Agreement ***
10.1              Credit and Security Agreement dated September 1, 2000 with Wells Fargo*
10.2              First Amendment dated July 26, 2000 to Credit and Security Agreement*
10.3              Second Amendment dated September 20, 2000 to Credit and Security Agreement*
10.4              Third Amendment dated November 22, 2000 to Credit and Security Agreement*
10.5              Lease for Draper, Utah corporate offices and warehouse facility*
10.6              Exclusive Agreement for Manufacture of 13-in-1*
10.7              SK Management Trust Note*
10.8              Feather River Trust Note*
10.9              Meyers Note*
10.10             Christensen Note*
10.11             Branch Note*
10.12             S&L Family Trust Note and Agreement*
10.13             New SK Management Trust Note dated September 30, 2001**
10.14             New Branch Note dated September 1, 2001**
10.15             New Meyers Note dated September 1, 2001**
10.16             New Feather River Trust Note dated September 4, 2001**
10.17             New S&L Family Trust Note dated September 30, 2001**
10.18             Set-Off and Release Agreement between NEBO Products, Inc., and
                  Pete Chandler dated as of December 28, 2001, filed herewith.
10.19             Set-Off and Release Agreement between NEBO Products, Inc., and
                  Suzanne Heaton dated as of December 28, 2001, filed herewith.
10.20             Set-Off and Release Agreement between NEBO Products, Inc., and
                  Rodger Smith dated as of December 28, 2001, filed herewith.
99.1              2001 Stock Option Plan*
        -------------------
</TABLE>


     *   Incorporated by reference to the same-numbered exhibit to the company's
         registration statement on Form SB-2, filed with the Securities and
         Exchange Commission on March 5, 2001.


     **  Incorporated by reference to the same-numbered exhibit to the company's
         quarterly report on Form 10-QSB for the quarter ended September 30,
         2001.


     *** Incorporated by reference to the same-numbered exhibit to the company's
         report on Form S-8 filed with the Securities and Exchange Commission on
         January 18, 2002.


(b)      Reports on Form 8-K


         During the quarter ended December 31, 2001, the company did not file
any reports on Form 8-K.



                                       25
<PAGE>

                                   SIGNATURES

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

                 NEBO Products, Inc.


                 By:   /s/ Scott Holmes
                      ------------------------------------------------
                         Scott Holmes, Chief Executive Officer

                 Dated:   April 15, 2002
                        ----------------------------------------------

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

Signature Name and Title            Date


/s/ Scott Holmes                            April 15, 2002
------------------------------------        ------------------
Scott Holmes
Chief Executive Officer
(Principal Executive Officer),
President and Director



/s/ Mont Warren                             April 15, 2002
------------------------------------        ------------------
Mont Warren
Chief Financial Officer
(Principal Financial and
Accounting Officer)


/s/ Darin Malchus                           April 15, 2002
------------------------------------        ------------------
Darin Malchus
Director



                                       26
<PAGE>
[GRAPHIC OMITTED]









Financial Statements
December 31, 2001 and 2000



<PAGE>


                               NEBO PRODUCTS, INC.

                          Index to Financial Statements

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





                                                                          Page


Independent auditors' report                                              F-1


Balance sheet                                                             F-2


Statement of operations                                                   F-3


Statement of stockholders' deficit                                        F-4


Statement of cash flows                                                   F-5


Notes to financial statements                                             F-6

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



<PAGE>


                               NEBO PRODUCTS, INC.

                          INDEPENDENT AUDITORS' REPORT



To the Board of Directors and Stockholders of
NEBO Products, Inc.


We have audited the accompanying balance sheet of NEBO Products, Inc. as of
December 31, 2001, and the related statements of operations, stockholders'
deficit and cash flows for the years ended December 31, 2001 and 2000. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of NEBO Products, Inc. as of
December 31, 2001 and the results of its operations and its cash flows for the
years ended December 31, 2001 and 2000 in conformity with accounting principles
generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 3, the Company
has a deficit in working capital, a stockholders' deficit and recurring net
losses. These issues raise substantial doubt about its ability to continue as a
going concern. Management's plans in regard to these matters are also described
in Note 3. The accompanying financial statements do not include any adjustment
that might result from the outcome of this uncertainty.



                                                /s/   TANNER + CO.

                                                      TANNER + CO.



Salt Lake City, Utah
March 25, 2002

                                                                            F-1

<PAGE>


                               NEBO PRODUCTS, INC.

                                  Balance Sheet
<TABLE>
<CAPTION>

                                                                          December 31, 2001
                  Assets
<S>                                                               <C>
Current assets:
      Cash                                                        $                  50,793
      Accounts receivable, net                                                      112,176
      Subscriptions receivable                                                      201,664
      Inventory                                                                     352,183
      Other current assets                                                           20,435
                                                                  -------------------------

                  Total current assets                                              737,251

Property and equipment, net                                                         150,487
Other assets                                                                         15,185
                                                                  -------------------------

                                                                  $                 902,923
                                                                  -------------------------

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

                  Liabilities and Stockholders' Deficit

Current liabilities:
      Accounts payable                                            $                 814,578
      Accrued liabilities                                                           112,962
      Interest payable                                                               50,497
      Short-term notes payable                                                      463,286
      Short-term notes payable - related party                                       50,000
      Current portion of long-term debt                                             168,004
                                                                  -------------------------

                  Total current liabilities                                       1,659,327

Long-term debt                                                                      949,361
Long-term debt - related party                                                      278,318
                                                                  -------------------------

                  Total liabilities                                               2,887,006
                                                                  -------------------------

Commitments and contingencies                                                             -

Stockholders' deficit:
      Preferred stock, no par value; 100,000,000
         shares authorized, no shares issued or outstanding                               -
      Common stock, no par value, voting; 100,000,000 shares
        authorized, 13,707,445 issued and outstanding                             2,421,111
      Subscriptions receivable                                                   (1,100,922)
      Accumulated deficit                                                        (3,304,272)
                                                                  -------------------------

                  Total stockholders' deficit                                    (1,984,083)
                                                                  -------------------------

                                                                  $                 902,923
                                                                  -------------------------
</TABLE>


See accompanying notes to financial statements.

                                                                             F-2

<PAGE>

                               NEBO PRODUCTS, INC.
                             Statement of Operations

<TABLE>
<CAPTION>
                                                                       Years Ended December 31,
                                                                   2001                      2000
                                                         ------------------------   ---------------------

<S>                                                      <C>                        <C>
Net sales                                                $              3,925,996   $           4,716,980
Cost of sales                                                           2,217,362               2,394,730
                                                         ------------------------   ---------------------

                  Gross profit                                          1,708,634               2,322,250
                                                         ------------------------   ---------------------

Expenses:
      Selling, general, and administrative                              2,285,255               2,161,280
      Depreciation                                                         30,098                  24,289
                                                         ------------------------   ---------------------

                                                                        2,315,353               2,185,569
                                                         ------------------------   ---------------------

                  (Loss) income from operations                          (606,719)                136,681

Other income and expense:
      Interest expense                                                   (615,528)               (748,699)
      Interest income                                                      10,202                       -
      Impairment loss on marketable securities                            (28,410)                      -
      Other income                                                              -                   7,318
      Other income - related party                                              -                 262,996
      Gain on sale of marketable securities                                     -                  28,420
                                                         ------------------------   ---------------------

                                                                         (633,736)               (449,965)
                                                         ------------------------   ---------------------

                  Loss before benefit for income taxes                 (1,240,455)               (313,284)

Income taxes                                                                    -                       -
                                                         ------------------------   ---------------------

check!!           Net loss                               $             (1,240,455   $            (313,284)
                                                         ------------------------   ---------------------

Loss per common share - basic and diluted                $                  (.11)   $               (.03)
                                                         ------------------------   ---------------------

Weighted average shares - basic and diluted                            11,801,000              10,752,000
                                                         ------------------------   ---------------------
</TABLE>

See accompanying notes to financial statements.
                                                                             F-3

<PAGE>

                               NEBO PRODUCTS, INC.
                   Combined Statement of Stockholders' Deficit
                     Years Ended December 31, 2001 and 2000

<TABLE>
<CAPTION>
                                                                                                     Accumulated Other
                                                             Common Stock            Subscriptions     Comprehensive
                                                   -----------------------------
                                                       Shares          Amount         Receivable            Loss
                                                   ------------   --------------   --------------   -------------------

<S>                                                <C>            <C>              <C>              <C>
Balance January 1, 2000                            10,640,000     $      347,000   $            -   $            -

Issuance of common stock for:
         Debt                                         436,115            198,157                -                -
         Land - related party                         147,800             20,000                -                -
         Services                                      20,000             13,000                -                -

Comprehensive loss:
         Net loss                                           -                  -                -                -
         Increase in unrealized loss                        -                  -                -           (8,670)

         Total comprehensive loss                           -                  -                -                -
                                                   ------------   --------------   --------------   -------------------

Balance December 31, 2000                          11,243,915            578,157                -           (8,670)

Issuance of common stock for:
         Cash                                          54,430             40,225                -                -
         Services                                     335,000            251,250                -                -
         Debt                                         260,280            195,210                -                -
         Accrued interest payable                      77,039             57,779                -                -
         Subscriptions receivable, net
                of offering costs                   1,736,781          1,175,233       (1,100,922)               -


Issuance of options for interest expense and                -            123,257                -                -
services

Comprehensive loss:
         Net loss                                           -                  -                -                -
         Decrease in unrealized loss                        -                  -                -            8,670

         Total comprehensive loss                           -                  -                -                -
                                                   ------------   --------------   --------------   -------------------

Balance December 31, 2001                          13,707,445     $    2,421,111   $   (1,100,922)  $            -
                                                   ------------   --------------   --------------   -------------------
</TABLE>







<TABLE>
<CAPTION>
                                                                      Total
                                                    Accumulated    Stockholders'
                                                      Deficit        Deficit
                                                   -------------   ----------------

<S>                                                <C>             <C>
Balance January 1, 2000                            $ (1,750,533)   $  (1,403,533)


Issuance of common stock for:
         Debt                                                 -          198,157
         Land - related party                                 -           20,000
         Services                                             -           13,000

Comprehensive loss:
         Net loss                                      (313,284)        (313,284)
         Increase in unrealized loss                          -           (8,670)
                                                                   ----------------
         Total comprehensive loss                             -         (321,954)
                                                   -------------   ----------------

Balance December 31, 2000                            (2,063,817)      (1,494,330)

Issuance of common stock for:
         Cash                                                 -           40,225
         Services                                             -          251,250
         Debt                                                 -          195,210
         Accrued interest payable                             -           57,779
         Subscriptions receivable, net
                of offering costs                             -           74,311


Issuance of options for interest expense and                  -          123,257
services

Comprehensive loss:
         Net loss                                    (1,240,455)      (1,240,455)
         Decrease in unrealized loss                          -            8,670
                                                                   ----------------
         Total comprehensive loss                             -       (1,231,785)
                                                   -------------   ----------------

Balance December 31, 2001                          $ (3,304,272)   $  (1,984,083)
                                                   -------------   ----------------
</TABLE>


See accompanying notes to financial statements.
                                                                            F-4

<PAGE>


                               NEBO PRODUCTS, INC.

                             Statement of Cash Flows

<TABLE>
<CAPTION>
                                                                                     Years Ended December 31,
                                                                                   2001                    2000
                                                                         -------------------------      -----------------
Cash flows from operating activities:
<S>                                                                      <C>                            <C>
      Net loss                                                           $             (1,240,455)      $        (313,284)
      Adjustments to reconcile net loss to net
        cash provided by (used in) operating activities:
            Depreciation                                                                   30,098                  24,289
            Provision for losses on accounts receivable                                     6,901                   7,878
            Non-cash interest income on related party notes receivable                          -                (262,996)
            Stock compensation for services and interest expense                          251,250                  13,000
            Stock option compensation for services and interest expense                   123,257                       -
            Gain on sale of marketable securities                                               -                 (28,420)
            Loss on impairment of marketable securities                                    28,410                       -
      (Increase) decrease in:
            Accounts receivable                                                           571,916                (431,340)
            Inventory                                                                     443,752                 (56,121)
            Other assets                                                                   14,456                  53,230
      Increase (decrease) in:
            Accounts payable                                                              151,676                 282,898
            Accrued liabilities                                                            79,889                  16,000
            Deferred revenue                                                                    -                 (53,827)
                                                                         -------------------------      -----------------

                        Net cash provided by (used in)
                        operating activities                                              461,150                (748,693)
                                                                         -------------------------      -----------------

Cash flows from investing activities:
      Proceeds from sale of securities                                                          -                  41,464
      Purchases of property and equipment                                                  (6,367)                (39,642)
      Issuance of related party notes receivable                                                -                 (75,000)
                                                                         -------------------------      -----------------

                        Net cash used in
                        investing activities                                               (6,367)                (73,178)
                                                                         -------------------------      -----------------

Cash flows from financing activities:
      Proceeds from long and short-term debt                                              490,249               1,451,114
      Principal payments on long and short-term debt                                   (1,088,439)               (804,110)
      Net proceeds from factored receivables                                              276,952                       -
      Offering costs                                                                     (127,353)                      -
      Proceeds from stock issuance                                                         40,225                       -
                                                                         -------------------------      -----------------

                        Net cash (used in) provided by
                        financing activities                                             (408,366)                647,004
                                                                         -------------------------      -----------------

Increase (decrease) in cash                                                                46,417                (174,867)

                        Cash at beginning of year                                           4,376                 179,243
                                                                         -------------------------      -----------------

                        Cash at end of year                              $                 50,793       $           4,376
                                                                         -------------------------      -----------------
</TABLE>

See accompanying notes to financial statements.
                                                                            F-5

<PAGE>


                               NEBO PRODUCTS, INC.

                          Notes to Financial Statements

                           December 31, 2001 and 2000
--------------------------------------------------------------------------------


1.    Organization
Description of Business
NEBO Products, Inc. (a.k.a. NEBO Tools and NEBO Sports) operates in the
wholesale industry as a wholesale distributor of hardware and outdoor equipment.
The Company is located in Draper, Utah, and maintains a number of manufacturing
arrangements with factories in Asia. The Company's customers consist of major
retail chains and other hardware and outdoor retailers throughout the United
States.


2.    Summary of
      Significant
      Accounting
      Policies
Concentration of Credit Risk
Financial instruments which potentially subject the Company to concentration of
credit risk consist primarily of trade receivables. In the normal course of
business, the Company provides on-going credit evaluations of its customers and
maintains allowances for possible losses which, when realized, have been within
the range of management's expectations.


The Company maintains its cash in bank deposit accounts which, at times, may
exceed federally insured limits. The Company has not experienced any losses in
such accounts and does not believe it is exposed to any significant credit risk
on cash and cash equivalents.


Cash and Cash Equivalents
For purposes of the statement of cash flows, cash includes all cash and
investments with original maturities to the Company of three months or less.


Marketable Securities
The Company classifies its marketable debt and equity securities as "held to
maturity" if it has the positive intent and ability to hold the securities to
maturity. All other marketable debt and equity securities are classified as
"available for sale." Securities classified as "available for sale" are carried
in the financial statements at fair value. Realized gains and losses, determined
using the specific identification method, are included as a separate component
of stockholders' deficit. Securities classified as held to maturity are carried
at amortized cost.


For both categories of securities, declines in fair value below amortized cost
that are other than temporary are included in earnings. During 2001, the Company
determined that its investment in certain marketable equity securities was
impaired (see note 5).


--------------------------------------------------------------------------------
                                                                             F-6

<PAGE>


                               NEBO PRODUCTS, INC.

                          Notes to Financial Statements
                                    Continued

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



2.    Summary of
      Significant
      Accounting
      Policies
      Continued
Inventory
Inventory is stated at the lower of cost or market and is valued on an average
cost basis. The inventory consists entirely of finished goods.

Property and Equipment
Property and equipment are recorded at cost less accumulated depreciation.
Depreciation and amortization on capital leases and property and equipment is
determined using the straight-line method over the estimated useful lives of the
assets or terms of the leases. Depreciation and amortization periods are as
follows:


Computer equipment and software              3 - 5 years
Furniture and fixtures                          10 years
Office and warehouse equipment                   5 years
Leasehold improvements                           5 years


Revenue Recognition
Revenue is recognized when a valid purchase order has been received, product has
been shipped, the selling price is fixed or determinable, and collectibility is
reasonably assured.


Income Taxes
Deferred taxes are computed using the asset and liability method. Under the
asset and liability method, deferred tax assets and liabilities are recognized
for future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date. Deferred tax assets are
not recognized unless it is more likely than not that the asset will be realized
in future years.


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

                                                                             F-7

<PAGE>

                               NEBO PRODUCTS, INC.

                          Notes to Financial Statements
                                    Continued

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



2.    Summary of
      Significant
      Accounting
      Policies
      Continued
Earnings Per Common and Common Equivalent Share The computation of basic
earnings per common share is computed using the weighted average number of
common shares outstanding during the year.

The computation of diluted earnings per common share is based on the weighted
average number of shares outstanding during the year plus common stock
equivalents which would arise from the exercise of stock options and warrants
outstanding using the treasury stock method and the average market price per
share during the year. Options and warrants to purchase 1,267,500 shares of
common stock at prices ranging from $.60 to $.77 per share were outstanding at
December 31, 2001. Common stock equivalents are not included in the diluted
earnings per share calculation since their effect is anti-dilutive.



Advertising
Advertising costs are expensed as incurred. Advertising expense was $19,000 and
$23,000 for the years ended December 31, 2001 and 2000, respectively.


Impairment of Long-Lived Assets
The Company reviews its long-lived assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of the assets may not
be recoverable through undiscounted future cash flows. If it is determined that
an impairment loss has occurred based on expected cash flows, such loss is
recognized in the statement of operations.


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


Reclassifications
Certain prior year amounts have been reclassified to conform with the current
year presentation.


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

                                                                             F-8

<PAGE>


                               NEBO PRODUCTS, INC.

                          Notes to Financial Statements
                                    Continued

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



3.    Going
      Concern
The Company has a working capital deficit, a stockholders' deficit, and
recurring net losses. In addition, the Company is in default on certain notes
payable. These factors create substantial doubt about the Company's ability to
continue as a going concern. The financial statements do not include any
adjustment that might be necessary if the Company is unable to continue as a
going concern.


The ability of the Company to continue as a going concern is dependent on the
Company generating cash from the sale of its common stock, reducing debt and
attaining future profitable operations. Managements plans include expanding
market share through introduction of new products and obtaining equity financing
and sale of its common stock. However, there can be no assurance management of
the Company will be successful.


4.    Accounts
      Receivable
Accounts receivable consist of the following at December 31, 2001:

<TABLE>
<CAPTION>

<S>                                                                           <C>
Trade receivables                                                             $                164,094
Allowance for doubtful accounts                                                                (51,918)
                                                                              ------------------------
                                                                              $                112,176
                                                                              ------------------------
</TABLE>


5.    Loss on
      Marketable
      Securities
During the year ended December 31, 2001, the Company wrote off its investment in
marketable securities which constituted common stock of an entity with some
common shareholders. The ownership interest in the related entity was less than
5%. The securities were classified as available-for sale and had a cost of
$28,410. The securities were written-off due to the lack of marketability of the
securities and the inability of the Company to sell the securities and the value
was considered to be other than a temporary decrease in the value of the stock.

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

                                                                             F-9

<PAGE>


                               NEBO PRODUCTS, INC.

                          Notes to Financial Statements
                                    Continued

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



6.    Property
      and
      Equipment
Property and equipment consists of the following at December 31, 2001:


<TABLE>
<CAPTION>
<S>                                                                           <C>
Computer equipment and software                                               $                142,271
Furniture and fixtures                                                                          30,755
Office and warehouse equipment                                                                  49,666
Leasehold improvements                                                                           4,376
                                                                              ------------------------
                                                                                               227,068

Less accumulated depreciation and amortization                                                 (76,581)
                                                                              ------------------------
                                                                              $                150,487
                                                                              ------------------------
</TABLE>


7.    Short-term
      Notes
      Payable
The Company has the following short-term notes payable at December 31, 2001:

<TABLE>
<CAPTION>

<S>                                                                              <C>
Note payable to a company, based on a lien against inventory. Under the advances
against inventory agreement the client may receive proceeds equal to 60% of the
cost value of eligible inventory up to the lessor of $250,000 or a ratio of one
dollar of eligible inventory to every two dollars of eligible accounts
receivable. Interest on loans against the inventory bear interest at 5% over
prime or approximately 9.75% at December 31, 2001. The note is secured by
the receivables and inventory and is due on                                      $             143,836
demand.


Notes payable to entities, with interest ranging from 18% to 24% and principal
due dates ranging from February 2001 to October 2001. The notes are secured by
inventory and all other assets of the Company. As of December 31, 2001 these
notes were in default.                                                                         100,000
</TABLE>


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

                                                                            F-10

<PAGE>


                               NEBO PRODUCTS, INC.

                          Notes to Financial Statements
                                    Continued

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




7.    Short-term
      Notes
      Payable
      Continued

<TABLE>
<CAPTION>
<S>                                                                              <C>
Notes payable to individuals, with interest ranging from 12% to 24% and
principal due dates ranging from June 2001 to October 2002. Certain notes are
secured by Company assets or guarantees of a related party, while others are
unsecured. As of December 31, 2001 $130,000 of these notes
were in default.                                                                               219,450
                                                                                 ---------------------


                                                                                 $             463,286
                                                                                 ---------------------
</TABLE>



8.    Short-term
      Note
      Payable -
      Related
      Party
The Company has a note payable to a relative of an officer of the Company. The
note bears interest at 18% and is secured by assets of the Company. At December
31, 2001 the note had a balance of $50,000 which is in default and due on
demand.


9.    Long Term
      Debt

The Company has the following long-term debt at December 31, 2001:


<TABLE>
<CAPTION>
<S>                                                                               <C>
Notes payable to various trusts and investment groups with interest at 12%,
secured by inventory and general assets of the Company and with average monthly
principal installments of approximately $9,500 with remaining principal due at
maturity with dates ranging from March
2003 to June 2003.                                                                $            649,044


Notes payable to individuals, with interest ranging from 12% to 24% and
principal due dates ranging from June 2003 to October 2005. Notes are
secured by general assets of the Company.                                                      401,582

Capital lease obligations (see Note 11)                                                         66,739
                                                                                  --------------------

Total                                                                                        1,117,365

Less current portion                                                                          (168,004)
                                                                                  --------------------

Long-term debt                                                                    $            949,361
                                                                                  --------------------
</TABLE>


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

                                                                            F-11

<PAGE>


                               NEBO PRODUCTS, INC.

                          Notes to Financial Statements
                                    Continued

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



9.    Long Term
      Debt
      Continued

Future maturities of long-term debt at December 31, 2001 are as follows:


<TABLE>
<CAPTION>
      Year                                                                             Amount
                                                                              ------------------------

<S>   <C>                                                                     <C>
      2002                                                                    $                168,004
      2003                                                                                     915,285
      2004                                                                                      16,269
      2005                                                                                      17,807
                                                                              ------------------------

                                                                              $              1,117,365
                                                                              ------------------------
</TABLE>



10.   Long-term
      Debt -
      Related
      Party
The Company has the following related party long-term debt at December 31, 2001:


<TABLE>
<CAPTION>
<S>                                                                               <C>    <C>    <C>    <C>    <C>    <C>
Note payable to an officer of the Company with
interest at 15%, principal due January  2005,
unsecured                                                                         $            181,474

Revolving line-of-credit to a relative of an officer of the Company with a
borrowing limit of $300,000. The line-of-credit bears interest at 12% and 24%
for advances on letters of credit outstanding over 90 days, is secured by assets
of the Company and is due November 2003. Of the remaining balance available on
the line of credit at December 31, 2001, $180,676 is reserved for
outstanding letters of credit.                                                                  91,000

Note payable to an officer with interest at 10.75%,
unsecured and principal due September 2016.                                                      5,844
                                                                                  --------------------

                                                                                  $            278,318
                                                                                  --------------------
</TABLE>



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

                                                                            F-12

<PAGE>


                               NEBO PRODUCTS, INC.

                          Notes to Financial Statements
                                    Continued

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



10.   Long-term
      Debt -
      Related
      Party
      Continued
Future maturities of long-term debt - related party at December 31, 2001 are as
follows:


<TABLE>
<CAPTION>
      Year                                                                             Amount
                                                                              ------------------------

<S>   <C>                                                                     <C>
      2002                                                                    $                      -
      2003                                                                                      91,000
      2004                                                                                           -
      2005                                                                                     181,474
      2006                                                                                           -
      Thereafter                                                                                 5,844
                                                                              ------------------------
                                                                              $                278,318
                                                                              ------------------------
</TABLE>


11.   Capital
      Lease
      Obligation

The Company leases equipment and software under noncancellable lease agreements.
The leases provide the Company the option to purchase the equipment at the end
of the initial lease term. The equipment and software under capital lease is
included in property and equipment at a cost of $71,117 and accumulated
depreciation of approximately $9,000 at December 31, 2001.


Depreciation expense for the equipment under capital lease for the years ended
2001 and 2000 was approximately $2,700 and $6,300, respectively. The leases have
imputed interest rates ranging from 15.3% to 18% and are payable in equal
monthly installments through December 2005 as follows:


<TABLE>
<CAPTION>
      Year                                                                             Amount
                                                                              ------------------------

<S>   <C>                                                                     <C>
      2002                                                                    $                 24,330
      2003                                                                                      24,330
      2004                                                                                      20,156
      2005                                                                                      19,321
                                                                              ------------------------

                                                                                                88,137
Less interest                                                                                  (21,398)
                                                                              ------------------------

Present value of future minimum lease payments                                $                 66,739
                                                                              ------------------------
</TABLE>



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

                                                                            F-13

<PAGE>


                               NEBO PRODUCTS, INC.

                          Notes to Financial Statements
                                    Continued

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



12.   Income
      Taxes
The benefit for income taxes is different than amounts which would be provided
by applying the statutory federal income tax rate to loss before benefit for
income taxes for the following reasons:


<TABLE>
<CAPTION>
                                                                        Years Ended
                                                                        December 31,
                                                      ------------------------------------------------
                                                                2001                    2000
                                                      ------------------------------------------------
<S>                                                   <C>                         <C>
Income tax benefit
  at statutory rate                                   $                463,000    $            115,000
Other                                                                  (18,000)                      -
Change in valuation allowance                                         (445,000)               (115,000)
                                                      ------------------------------------------------

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



Deferred tax assets (liabilities) are comprised of the following as of December
31, 2001:


<TABLE>
<CAPTION>
                                                                                        2001
                                                                              ------------------------

<S>                                                                           <C>
Net operating loss carry-forwards                                             $                583,000
Allowance for doubtful accounts                                                                 19,000
Compensated absences                                                                             8,000
Depreciation                                                                                   (13,000)
Contribution carryfoward                                                                         1,000
Valuation allowance                                                                           (598,000)
                                                                              ------------------------

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



At December 31, 2001, the Company has net operating loss carry- forwards
available to offset future taxable income of approximately $1,562,000, which
will begin to expire in 2019. The utilization of the net operating loss
carry-forwards is dependent upon the tax laws in effect at the time the net
operating loss carry-forwards can be utilized. A valuation allowance has been
recorded against the deferred tax asset due to the uncertainty surrounding its
realization caused by the Company's recurring losses.


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

                                                                            F-14

<PAGE>


                               NEBO PRODUCTS, INC.

                          Notes to Financial Statements
                                    Continued

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



13.   Stock Options
      and Warrants
The Company has a stock option plan (the Option Plan), which allows a maximum of
7,000,000 options to be granted to purchase common stock at prices generally not
less than the fair market value of common stock at the date of grant. Under the
Option Plan, grants of options may be made to selected officers and key
employees without regard to any performance measures. The options may be
immediately exercisable or may vest over time as determined by the Board of
Directors. However, the maximum term of an option may not exceed 5 years.


Information regarding stock options and warrants is summarized below:


<TABLE>
<CAPTION>
                                                             Number of
                                                            Options and              Price Per
                                                              Warrants                 Share
                                                      ------------------------------------------------

                                                      ------------------------------------------------
<S>                                                                  <C>           <C>
Outstanding at
January 1, 2001                                                              -                       -
  Granted                                                            1,487,000     $         .60 - .77
  Expired                                                             (219,500)              .70 - .77
                                                      ------------------------------------------------

Outstanding at
December 31, 2001                                                    1,267,500     $         .60 - .77
                                                      ------------------------------------------------
</TABLE>


14.   Stock-Based
      Compensation

The Company has adopted the disclosure only provisions of Statement of Financial
Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation."
Accordingly, no compensation expense has been recognized for stock options
granted to employees. Had compensation expense for the Company's stock options
been determined based on the fair value at the grant date consistent with the
provisions of SFAS No. 123, the Company's results of operations would have been
reduced to the pro forma amounts indicated below:


<TABLE>
<CAPTION>
                                                                                    Years Ended
                                                                                    December 31
                                                                              ------------------------
                                                                                        2001
                                                                              ------------------------

<S>                                                                           <C>
Net loss - as reported                                                        $             (1,240,455)
Net loss - pro forma                                                          $             (1,317,257)
Loss per share - as reported                                                  $                   (.11)
Loss per share - pro forma                                                    $                   (.11)
</TABLE>

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

                                                                            F-15

<PAGE>


                               NEBO PRODUCTS, INC.

                          Notes to Financial Statements
                                    Continued

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



14.   Stock-Based
      Compensation
      Continued
The fair value of each option and warrant grant is estimated on the date of
grant using the Black-Scholes option pricing model with the following
assumptions at December 31, 2001:


Expected dividend yield              $                  -
Expected stock price volatility                      141%
Risk-free interest rate                             4.75%
Expected life of options                     3 to 5 years

The weighted average fair value of each option and warrant granted during 2001
was $.45.



The following table summarizes information about stock options and warrants
outstanding at December 31, 2001:


<TABLE>
<CAPTION>
                                    Outstanding                               Exercisable
                 -------------------------------------------------------------------------------------
                                      Weighted
                                      Average
                                     Remaining        Weighted
    Range of                        Contractual        Average                           Average
    Exercise          Number            Life          Exercise          Number           Exercise
     Prices        Outstanding        (Years)           Price        Exercisable          Price
------------------------------------------------------------------------------------------------------

<C>                     <C>              <C>       <C>                       <C>          <C>
$   .60 to .77          1,267,500        4.46      $           .70           608,000      $        .65
------------------------------------------------------------------------------------------------------
</TABLE>



15.    Stock
      Subscriptions
      Receivable
During the year ended December 31, 2001 the Company issued 1,736,781 shares of
its common stock for $1,175,233 of stock subscriptions receivable, net of
offering costs of $127,353, of which $717,586 of subscriptions receivable with
corresponding shares of 956,781 were issued to relatives of an officer of the
Company. The subscriptions are due on or before June 30, 2002 and require
interest at 8% per annum upon default. The subscriptions may be extended from
time to time with the written consent of the Company. Subsequent to December 31,
2001, $201,664 of the subscriptions receivable were collected and have been
classified as a current asset at December 31, 2001.



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

                                                                            F-16

<PAGE>


                               NEBO PRODUCTS, INC.

                          Notes to Financial Statements
                                    Continued

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



16.   Commitments
      And
      Contingencies
Operating Leases
The Company leases office facilities under non-cancelable operating leases which
expire in the year 2005. Rental expense incurred under these leases for the
years ended December 31, 2001 and 2000 totaled approximately $97,000 and $69,000
each year. At December 31, 2001 the future minimum lease payments under these
operating leases are as follows:


      Year                                       Amount
                                        ------------------------

      2002                              $                100,701
      2003                                               104,255
      2004                                               107,873
      2005                                                74,432
                                        ------------------------

Total future minimum lease payments     $                387,261
                                        ------------------------



Factored Receivables
The Company has an agreement with a financing Company where the Company sells
its accounts receivable to the Financing Company. The Company receives 90% of
the face value of receivables sold and the Company is required to repurchase
receivables at face value upon request of the Financing Company. At December 31,
2001 the uncollected receivable balance that the Company may be required to
repurchase totaled $398,576.


Litigation
The Company may become or is subject to investigations, claims or lawsuits
ensuing out of the conduct of its business, including those related to
environmental safety and health, product liability, commercial transactions,
etc. The Company is currently not aware of any such items which it believes
could have a material effect on its financial position or results of operations.



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

                                                                            F-17

<PAGE>


                               NEBO PRODUCTS, INC.

                          Notes to Financial Statements
                                    Continued

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



17.   Supplemental
      Cash Flow
      Information
During the year ended December 31, 2001, the Company:

      o     Issued 260,280 shares of common stock in exchange for debt with a
            value of $195,210.

      o     Issued 77,039 shares of common stock in exchange for accrued
            interest totaling $57,779.

      o     Acquired software totaling $57,506 that was financed through a
            capital lease.



      o     Sold land with a cost of $20,800 to an officer in exchange for
            partial payment of a note payable to the officer of $20,800.

      o     Issued 1,736,781 of common stock in exchange for subscriptions
            receivable totaling $1,302,586. A total of $201,664 of the
            subscriptions receivable were collected subsequent to December 31,
            2001 and are classified as current assets.


During the year ended December 31, 2000, the Company:

      o     Issued 147,800 shares of common stock for land with an historical
            carrying value of $20,000 and a MAI appraised value of $82,000.

      o     Issued shares of common stock in exchange for a reduction of
            long-term debt totaling $198,157.

      o     Issued 20,000 shares of common stock for services valued at $13,000.


      o     Acquired equipment totaling $13,611 that was financed through a
            capital lease.

      o     Acquisition of 9,744,910 shares of common stock in an entity with
            common board members as repayment for $75,000 advance and $262,996
            of other income.

      o     Reduced long-term debt in exchange for marketable securities
            totaling $348,250.


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

                                                                            F-18

<PAGE>


                               NEBO PRODUCTS, INC.

                          Notes to Financial Statements
                                    Continued

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



17.   Supplemental
      Cash Flow
      Information
      Continued
      o     Experienced an unrealized loss on marketable securities totaling
            $8,670.


<TABLE>
<CAPTION>
                                                                        Years Ended
                                                                        December 31,
                                                      ------------------------------------------------
                                                                2001                    2000
                                                      ------------------------------------------------

<S>                                                   <C>                         <C>
Interest                                              $                517,058    $            688,000
                                                      ------------------------------------------------

Income taxes                                          $                      -    $                  -
                                                      ------------------------------------------------
</TABLE>



18.   Related Party
      Transactions
      Not Otherwise
      Disclosed
Related party transactions are as follows:

2001

      o     During the year ended December 31, 2001 the Company sold land with a
            historical cost of $20,800 to an officer of the Company in exchange
            for payment on a note payable due to the officer.

      o     During the year ended December 31, 2001 the Company issued 226,285
            shares of common stock in exchange for a reduction of debt of
            $160,210 and accrued interest of $9,504 payable to relatives of an
            officer and share holders of the Company.

      o     The Company at December 31, 2001 has subscriptions receivable from
            relatives of the Company's President of $717,586.


2000

      o     The Company borrowed approximately $710,000 from the President. The
            balance due at December 31, 2000 is approximately $110,000.

      o     The Company issued 147,800 shares of common stock to purchase land
            from the President of the Company and a relative of the President.
            The land was recorded at $20,000, which is the historical carrying
            value of the land by the selling shareholders.

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

                                                                            F-19

<PAGE>


                               NEBO PRODUCTS, INC.

                          Notes to Financial Statements
                                    Continued

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



18.   Related Party
      Transactions
      Not Otherwise
      Disclosed
      Continued

      o     A relative of a former board member loaned the Company $80,000 at
            24% annual interest. A $10,000 principal payment was made in
            December 2000.

      o     The Company loaned an entity with common board members $75,000 and
            received 9,744,910 shares of that entity's common stock as
            repayment.

      o     The Company received $262,996 in other income from related
            individuals and entities with common ownership.


     o      The Company has notes payable to related parties (see Notes
            8 and 10)

      o     The Company has an investment in marketable securities from an
            entity with some common board members (see Note 5).


19.   Retirement
      Plan
The Company sponsors a defined contribution 401(K) profit sharing plan for all
eligible employees. Employees may contribute a percent of their annual
compensation subject to regulatory limitations. Contributions by the Company are
discretionary and the Company may elect not to contribute in any given year. The
Company made contributions of approximately $8,000 and $5,000 for the years
ended December 31, 2001 and 2000, respectively.


20.   Major
      Customers
Sales to customers which exceeded 10% of total sales are as follows for the
years ended December 31,:


<TABLE>
<CAPTION>
                                                                2001                    2000
                                                      ------------------------------------------------

<S>                                                   <C>                         <C>
Customer A                                            $                571,098    $          1,197,108
Customer B                                                                   -                 967,391
                                                      ------------------------------------------------

                                                      $                571,098    $          2,161,499
                                                      ------------------------------------------------
</TABLE>




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

                                                                            F-20

<PAGE>


                               NEBO PRODUCTS, INC.

                          Notes to Financial Statements
                                    Continued

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



21.   Fair Value of
      Financial
      Instruments
The Company's financial instruments consist of cash, receivables, payables, and
notes payable. The carrying amount of cash, receivables and payables
approximates fair value because of the short-term nature of these items. The
aggregate carrying amount of the notes payable approximates fair value as the
individual borrowings bear interest at market interest rates.


22.   Recent
      Accounting
      Pronounce-
      ments
In August 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 144 "Accounting for the Impairment of
Long-Lived Assets". This Statement addresses financial accounting and reporting
for the impairment of long-lived assets and for long-lived assets to be disposed
of. This Statement supercedes FASB Statement 121 and APB Opinion No. 30. This
Statement retains certain fundamental provisions of Statement 121, namely;
recognition and measurement of the impairment of long-lived assets to be held
and used, and measurement of long-lived assets to be disposed of by sale. The
Statement also retains the requirement of Opinion 30 to report discontinued
operations separately from continuing operations. This Statement also amends ARB
No. 51 to eliminate the exception of consolidation for a temporarily controlled
subsidiary. The provisions of this statement are effective for financial
statements issued for fiscal years beginning after December 15, 2001.


In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 143, "Accounting for Asset Retirement
Obligations". This Statement addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs. This Statement is effective for financial
statements issued for fiscal years beginning after June 15, 2002. This Statement
addresses financial accounting and reporting for the disposal of long-lived
assets.


Management does not expect the adoption of SFAS No. 144 or 143 to have a
significant impact on the financial position or results of operations of the
Company.



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

                                                                            F-21

<PAGE>


                               NEBO PRODUCTS, INC.

                          Notes to Financial Statements
                                    Continued

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



22.   Recent
      Accounting
      Pronounce-
      ments
      Continued
In June 2001, the Financial Accounting Standards Board issued
Statements of Financial Accounting Standards No. 141 "Business
Combinations" (SFAS No. 141)and No. 142 "Goodwill and Other
Intangibles" (SFAS No. 142).  SFAS No. 141 and No. 142 are effective
for the Company on July 1, 2001.  SFAS No. 141 requires that the
purchase method of accounting be used for all business combinations
initiated after June 30, 2001.  The statement also establishes specific
criteria for recognition of intangible assets separately from goodwill and
requires unallocated negative goodwill to be written off immediately as
an extraordinary gain.  SFAS No. 142 primarily addresses the
accounting for goodwill and intangible assets subsequent to their
acquisition.  The statement requires that goodwill and indefinite lived
intangible assets no longer be amortized and be tested for impairment
at least annually.  The amortization period of intangible assets with finite
lives will no longer be limited to forty years.  Management does not
expect the adoption of SFAS No. 141 and 142 to have a significant
impact on the financial position or results of operations of the Company.


SFAS No. 140, Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities, was issued in September
2000.  SFAS No. 140 is a replacement of SFAS No. 125, Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities.  Most of the provisions of SFAS No. 125 were carried forward
to SFAS No. 140 without reconsideration by the Financial Accounting
Standards Board (FASB), and some were changed only in minor ways.
In issuing SFAS No. 140, the FASB included issues and decisions that
had been addressed and determined since the original publication of
SFAS No. 125.  SFAS No. 140 is effective for transfers after March 31,
2001.  Management does not expect the adoption of SFAS No. 140 to
have a significant impact on the financial position or results of
operations of the Company.


23.   Subsequent
      Events
On March 13, 2002 a judgment was entered into against the Company for default of
a note payable to Utah Fabrication, Inc. The Company is obligated to pay $50,000
to Utah Fabrication along with accrued interest and legal fees of approximately
$5,000. The note payable balance, accrued interest, and legal fees have been
included in the financial statements at December 31, 2001.


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

                                                                            F-22

<PAGE>


                               NEBO PRODUCTS, INC.

                          Notes to Financial Statements
                                    Continued

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


23.   Subsequent
      Events
      Continued
On January 2002 the Company entered into consulting agreements which terminate
in August 2002. The agreements require as payment for the services performed the
Company to issue 1,400,000 shares of Common stock and 800,000 options to
purchase Common stock at $.60 per share to the outside consultants.


From January 2002 to March 25, 2002 the Company collected a total of $201,664 on
stock subscriptions receivable.


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

                                                                            F-23