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,
                  2002

[ ]               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 Exchange Act:       None
Name of each exchange on which registered:                           None

Securities registered under Section 12(g) of the Exchange Act:
Common Stock, No Par Value Per Share

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

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will be contained,  to
the best of 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, 2002, were $3,572,817.

On April 14, 2003 the last reported bid price for the Company's  common stock as
reported by the OTCBB was $0.028 per share.  The  aggregate  market value of the
voting and  non-voting  common equity of the Company held by  non-affiliates  at
April 14, 2003, was $625,525, based on the average of the bid and asked price of
the Company's common stock on that date.

There were 21,777,741 shares of common stock of the registrant outstanding as of
April 14, 2003.

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


<PAGE>




                                TABLE OF CONTENTS


Item No. and Description                                               Page No.
------------------------                                               --------

PART   I

Item 1.  Description of Business                                           2

Item 2.  Description of Property                                          11

Item 3.  Legal Proceedings                                                12

PART   II

Item 5.  Market for Common Equity and Related Stockholder Matters         12

Item 6.  Management's Discussion and Analysis or Plan of Operation        15

Item 7.  Financial Statements                                             24

PART   III

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
           Compliance with Section 16(a) of the Exchange Act              24

Item 10. Executive Compensation                                           26

Item 11. Security Ownership of Certain Beneficial Owners and Management
          and Related Stockholder Matters                                 28

Item 12. Certain Relationships and Related Transactions                   30

Item 13. Exhibits and Reports on Form 8-K                                 31

Item 14. Controls and Procedures                                          32

Signatures                                                                33

Certifications                                                            34

Financial Statements and Schedules                                       F-1


                                       1


<PAGE>


                                     Part I

 Item 1.    Description of 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 in the state of Utah
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 The Home Depot, Menard's, Sears, Gander
Mountain, Sportsman's Warehouse, The Sportsman's Guide, and Cabela's.


         In 2002, the Company acquired the assets of Straightway Tools,
including primarily the patent on its expandable level products. In the third
quarter of 2002 the Company completed a major balance sheet restructuring that
converted over $1.1 million of debt and contingent liabilities to convertible
preferred stock at a conversion price of $0.20 per share. Additionally, $461,244
of debt was restructured with longer maturities, lower interest rates and a
conversion option at $0.20 per share.


         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


                                       2

<PAGE>

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
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 The
                Home Depot to realize first profitable month.

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

        o       April 1999 -- Completed the nationwide rollout of the "13-in-1"
                screwdriver at The Home Depot.

        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 Menard's, 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.


                                       3

<PAGE>


        o       January 2001-- Expanded sales to 148 Menard's, 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.

        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.

        o       April 2002-- Retained the services of Thorpe Capital, Inc., a
                NASD Member Investment Banking firm specializing in mergers and
                acquisitions and capital raising activities.

        o       April 2002--Began the initial production run of the new and
                patented 400 lbs capacity Outfitter Extra Large Cot. TM

        o       July 2002-- Acquired the assets of Straightway Tools(R)
                including patents, inventory, and contracts relating to the
                proprietary Straightway line of expandable construction levels
                marketed through Lowe's, Sears Hardware, Orchards and Menard's
                in the United States.

        o       August 2002 -- Introduced "factory direct" program to customers
                at the Outdoor Retailer trade show.

        o       October 2002-- Restructured the staff and lowered annual
                operating costs in excess of $300,000.

        o       November 2002-- Completed restructuring of $1.1 million of debt
                and contingent liabilities to convertible preferred stock at a
                conversion price of $0.20 per share. In addition, restructured
                $461,244 of debt with longer maturities, lower interest rates,
                and a conversion option at $0.20 per share.

        o       December 2002-- Sporting Goods division sales exceed $2.2
                million for 2002.


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 a magnetic 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 best multi-bit
              screwdrivers in the marketplace. This product won a "Best of Show"
              award at the 1998 National Hardware Show. The 13-in-1 was


                                       4

<PAGE>

              responsible for approximately 70% of total sales in 1999, 28% in
              2000, 15% in 2001, and 5% in 2002. Additional sets of bit kits are
              available 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.
              The Company recently added metric markings to some tape measures
              to enhance the product line and make it more attractive to the
              international markets.

        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. D425,926 on
              May 30, 2000, for protective eyewear for this product. These
              glasses comply with OSHA requirements for industrial eyewear. The
              Company sells these glasses under its own brand name and under
              private labels with the Craftsman(R) brand name for Sears.

        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 Ultra
              Socket's debut at the August 2001 National Hardware Show in
              Chicago, it won the prestigious Retailers' Choice Award. A metric
              version of the Ultra Socket is set for release in early 2003.

        o     Hammers. The Company has completed its line of hammers including
              the 24 oz. all-steel framing hammer;  the 21 oz. hickory straight
              or curved handle framing  hammers;  and 20 oz., 16 oz., and 8 oz.
              hammers.  These hammers are designed for  professional  users and
              do-it-yourselfers.  Each hammer comes with a magnetic nail holder
              built  into  the head to help  hold  the  nail in  place  for the
              initial strike.

        o     Expandable levels. In June of 2002, the Company acquired the
              assets of Straightway(R)Tools  and relocated the manufacturing of
              these  levels  from the  United  States  to  China.  The  Company
              received its first expandable levels manufactured in China during
              the 3rd quarter of 2002 and has introduced the levels through its
              existing  distribution  channels.  There are two levels currently
              available  in this  product  line,  the  ComPac  4',  which  is a
              two-foot  level that  expands  to four  feet,  and the ComPac 8',
              which is a  four-foot  level  that  expands  to eight  feet.  The
              Company  holds U.S.  Patent No.  6,293,023  on these  levels.  In
              August 2000, these levels won the Retailers'  Choice Award at the
              National  Hardware Show in Chicago.  The Company  anticipates and
              has begun to experience  increased  demand for these  products in
              the marketplace due to their unique design.


         Top-selling outdoor products include the following:

        o     The Company's sleeping bag lines accounted for approximately 49%
              of its total sales in 2002  compared  with  approximately  34% of
              total sales in 2001.

        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


                                       5

<PAGE>

              preceding  paragraph.  They are  manufactured in an assortment of
              colors, temperature ratings, and fabrics.

        o     The Sandstone sleeping bag line.  Like the Moose and Bear lines,
              the  Sandstone  is square at the bottom for a roomier feel and it
              incorporates  many of the extra features of the mummy bag design.
              Crafted  for  the  rugged   outdoorsman,   the  Sandstone  has  a
              full-length  zipper  baffle,  shoulder  baffles,  and dual  layer
              construction with offset quilt seams,  which the Company believes
              successfully  keeps warm air inside the bag from escaping,  while
              blocking  cold outside air from  penetrating  the bag. The cotton
              canvas shell and brushed  flannel lining are intended to cater to
              hunters by  blending  durability  and  comfort.  The  Company has
              already  received  strong  interest in both the -30 and  0-degree
              models in its existing distribution channel.

        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.  The  Mammoth  sleeping  bag has
              incorporated the same components as a single bag, such as a mummy
              hood, zipper and shoulder baffles,  with additional 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 line 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.

        o     The camping equipment line accounted for 11% of total sales in
              2002 compared with 4% of total sales in 2001.

        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 nine square feet of living space
              while the Arch VII has seven  square feet of 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. Due to  disappointing  sales levels of
              the  existing  tent line,  the  Company  intends  to improve  and
              reintroduce  the line later this year or during the first quarter
              of 2004.

        o     Camping Cots and Chairs. The Company produces cots and camping
              chairs 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 and boasts a 400-pound weight capacity,  with
              tests of nearly 1,500 pounds.  The Company's cots and chairs come
              with a carry bag.

        o     Backpacks.  The Company offers three different styles and sizes of
              internal   frame   backpacks   and  a  daypack   that  are  being
              incorporated into existing distribution channels. These backpacks
              are  lightweight  and  are  made  of  durable  material.   Active
              distribution  to three of the Company's  largest  sporting  goods
              customers  is  already  in place for all four  packs.  One of the
              backpacks  is made for  entry-level  backpackers  or for the more
              budget conscious consumer, while the other backpacks are designed
              for  the  high-tech  consumer  and  include  adjustable  shoulder
              straps, contoured shoulder,  lumbar support, hip pads, and a rain
              fly. All three backpacks and the daypack are water bladder ready.


                                      6

<PAGE>


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 such as 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  five   individuals  and  numerous
              manufacturers'  representatives.   The  Company  attends  several
              cooperative trades shows annually,  in both hardware and sporting
              goods,  to sell and show its products.  The small and medium size
              retailers accounted for approximately 36% of total sales in 1999,
              approximately  52%  in  2000,  approximately  43%  in  2001,  and
              approximately 20% in 2002.

        o     National Chains. The Home Depot, Lowes, Menard's, Costco,
              Wal-Mart,  Sears,  Gander Mountain,  Sportsman's  Warehouse, The
              Sportsman's  Guide,  and  Cabela's  accounted  for more than $105
              billion a year in consumer  hardware and sporting  goods sales in
              2001 and 2002. 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
              five  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,  approximately 57% in
              2001,and approximately 78% in 2002.

        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
              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, approximately 4% in 2001, and approximately 2% in 2002.

         The Company services all three of these 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 Menard's and The Home Depot sometimes import products
under their own private labels that also 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


                                       7

<PAGE>

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
screwdriver that combines a reversible ratchet screwdriver and 12 screw bits
plus a magnetic extension on a tool that is the same size as a standard
single-bit screwdriver. More recent is the patented expandable level coming in
two-foot and four-foot models expanding to four and eight feet respectively. 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.


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 hardware industry is the consolidation of hardware stores and
              the emergence of national chains and large buyer groups. Home
              center chains now capture more than $83 billion in volume
              representing more than 51% of the market. 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 National Retail Hardware Association 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 2002. The Company
              expects that trend to continue.

o             Growth by acquisition.  In recent years, several companies in the
              hardware and sporting goods industries have successfully grown
              through acquisition.  For example, Direct Focus, Inc. has acquired
              Bowflex, Nautilus, Schwinn, and Stairmaster.


         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.


                                       8

<PAGE>


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.

o             Identifying strategic acquisitions. The Company plans to evaluate
              acquisition candidates such as its Straightway acquisition that
              fit compatibly within the Company's existing distribution
              channels. The Company has engaged the services of an investment
              banking firm to assist it in this effort.


Manufacturing


         Substantially all of the Company's hardware and outdoor products are
manufactured in Asia. Over the last five 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
instances to help ensure efficient and 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 75-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 number of countries where manufacturing is
              performed. The Company currently has manufacturing arrangements in
              Taiwan, China, Vietnam, and India. Future locations may include
              South Korea, Thailand, Sri Lanka, 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 three 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


                                       9

<PAGE>

              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 from Asia, taking about 25 days from port to port,
via common carrier to various port cities and from there directly to the
Company's warehouse in Draper, Utah or directly to customers across North
America. Company employees receive the product inventory, inspect it for
quality, and log it into the warehouse inventory 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. The Company has had to back-order some product due to
working capital challenges.

         On July 1, 2002, the labor contract between the International Longshore
and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) expired.
This contract affects all of the ports on the western coast of the United
States. The members of the ILWU are primarily responsible for the removal of
cargo from container loaded shipping vessels. The members had been working under
a daily extension of the contract; however, on September 27, 2002 the ILWU began
a work slowdown, which resulted in a PMA lockout of the longshoremen. On October
8, 2002, a federal court judge imposed an 80-day cooling-off period, which
temporarily reopened the west coast ports. Many of our shipments from Asia move
through these ports. On November 23, 2002,during the cooling-off period, a
tentative 6-year agreement was reached between union negotiators of the ILWU and
the PMA. On January 22, 2003 members from both the ILWU and PMA overwhelmingly
approved the 6-year contract. The new 6-year contract is retroactive to November
23, 2002 and runs through June 30, 2008. The Company's operations were adversely
affected by the lockout especially during the fourth quarter of 2002 and first
quarter of 2003. The closure created a significant backlog at port, subsequent
transportation delays, and increased freight costs. Product delivery delays of
up to two months were not unusual. These delivery delays affected the timing of
revenues, profit margins, and resulted in some orders being cancelled.


Accounts Receivable Management


         The Company generally bills customers on "Net 30" terms, 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, 2002, the uncollected
receivable balance that the Company may be required to repurchase totaled
$487,780.


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


                                       10

<PAGE>

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. Various patents are in place to protect the Company's products.
The Company owns US Patent No. D425,926 for the protective eyewear and US Patent
No. 6,293,023 for the expandable levels. The Company also has a patent pending
for the UltraTM Socket tool. The Company is the exclusive licensee of the patent
pending Outfitter XL cot.


         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


         Following a reduction in force during the fourth quarter of 2002, as of
December 31, 2002, the Company had nine full-time employees in management,
sales, operations, administrative, and technical positions. Of these full-time
employees, three are in management, four are in sales, marketing and product
development, and two in operations, administration, and support. The Company
considers relations with its employees to be satisfactory. 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.


Dependence on Major Customers


         During 2002 sales in the outdoor division outpaced sales in the
hardware division. In 2002, outdoor division customer Gander Mountain was the
Company's leading customer. Sales to this customer totaled approximately
$619,499 (approximately 17% of net sales). Sportsman's Warehouse was second in
sales with approximately $438,091 (approximately 12% of net sales). The
Sportsman's Guide was third in 2002 sales with approximately $345,481
(approximately 10% of net sales). In 2001 one customer, The Home Depot,
accounted for approximately 15% of 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. The
loss of any of these customers could materially and adversely affect the
Company's business, results of operations and financial condition. During 2002,
sales to The Home Depot declined, but this decline was partially offset by
increases in sales to Gander Mountain, Sportsman's Warehouse, The Sportsman's
Guide, Menard's, Cabela's, Worldwide Distributors, and various small and medium
size 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
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 $8,585 per month. The lease
expires on October 30, 2005. Due to cash flow problems in the fourth quarter of
2002, we were delinquent in the payment of rent under the lease. We entered into
an agreement with the lessor under the terms of which we agreed to pay $5,000
per month during the months of January through June 2003, with the balance
accruing to be paid plus interest at 7% per annum. During July through December


                                       11

<PAGE>

2003 we will pay the rent stated in the lease each month, plus 1/6th of the
accrued amount plus accrued interest.


Item 3.  Legal Proceedings


         The Company is a party to the following legal proceedings as of
December 31, 2002, which, in the opinion of management, are not likely to have a
material adverse impact on its financial condition, results of operations or
cash flows.


         Kenton Lee v. NEBO Products, Inc. (Civil No. 020913478, Third Judicial
District Court, Salt Lake County,  State of Utah).  Kenton Lee filed this action
to collect $20,000 under a promissory note.


         Jay Christensen v. NEBO Products, Inc. (Civil No. 030905078, Third
Judicial District Court, Salt Lake County, State of Utah). Jay Christensen filed
this action to collect $25,000 under a promissory note.


         Alpha Cit v. NEBO Products, Inc. (Civil No. 020913477, Third Judicial
District Court, Salt Lake County, State of Utah). The Company purchased certain
product from a supplier between October 2001 and November 2001; however, the
Company believed that some of the product failed to meet quality control
specifications. Consequently, NEBO refused to make payments to the supplier, TNC
Outdoor Products Enterprise CO., LTD, on several purchase orders and paid for
one order of products that never shipped. The Company believes it was damaged by
the high volume of returns on the poor quality products sold and was further
damaged by a cancelled order that resulted directly from the supplier's refusal
to ship after the dispute developed. Andrew Peterson, a former employee of NEBO,
purchased the unpaid invoices and has sued in the name of Alpha Cit for
collection of a total of $106,520 plus interest. The Company intends to
vigorously defend itself against this claim.


                                     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 sale prices for a share of common stock during the fourth quarter of 2001,
and each quarter of 2002 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.


                                                        Sales Price
           Year              Calendar Period       High             Low

           2001              Fourth Quarter        $0.800           $0.250

           2002              First Quarter         $0.770           $0.300
                             Second Quarter        $0.660           $0.105
                             Third Quarter         $0.150           $0.053
                             Fourth Quarter        $0.065           $0.020


         Holders. As of December 31, 2002, there were approximately 98 holders
of record of the Company's common stock and 19,627,471 shares are issued and
outstanding. A substantial number of shares of common stock, approximately 50%,
are held in "street name" and the company believes that the ultimate beneficial
owners of those shares exceed 1,000 in number. As of December 31, 2002, the
Company had one series of convertible preferred stock outstanding, Series A
Convertible Preferred Stock. There were 5,521,565 shares outstanding, held by 24
shareholders. On November 1, 2003 and 2004, the Company is required to redeem a
total of 62,365 and 251,648 shares of convertible preferred stock at $0.20 per
share, respectively.


                                       12

<PAGE>


         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 or convertible preferred stock for the foreseeable
future. The Series A Convertible Preferred accrues dividends of 6% per annum. At
December 31, 2002, dividends in arrears totaled approximately $5,500. The
Company does not anticipate paying a cash or other dividend on the Series A
Convertible Preferred 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 and upon conversion of the Series A
Convertible Preferred.


         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, Utah 84111.


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").


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.


2001


         On February 13, 2001, the Company sold 13,333 shares of common stock to
a single 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.


2002


         During the year ended December 31, 2002, the Company issued 5,521,566
shares of Series A Convertible Preferred stock with a liquidation preference of
$1,104,313 and warrants for the purchase of 1,278,189 shares of common stock to
various individuals and entities as a result of restructuring certain debt
obligations. The Company is obligated to redeem 62,365 shares of convertible


                                       13

<PAGE>

preferred stock on November 1, 2003 and an additional 251,648 shares of Series A
convertible preferred on November 1, 2004, all at a price of $0.20 per share.


         Holders of the Series A Convertible Preferred are entitled to one vote
per share on all matters upon which holders of the common stock are entitled to
vote. Each share of Series A Convertible Preferred is convertible at any time
into fully paid and nonassessable shares of common stock at a conversion price
of $0.20 per share, subject to adjustment under certain circumstances. The
Series A Convertible Preferred is automatically converted into shares of common
stock at the then effective conversion rate upon the closing a firm commitment
underwritten public offering by the Company in which the initial offering price
to the public is not less than $0.20 per share. The holders of Series A
Convertible Preferred are entitled to receive a dividend prior and in preference
to any declaration or payment of any dividend on the common stock, at the rate
of 6% of the stated value of the Series A Convertible Preferred. Dividends will
be paid either in cash or in additional shares of Series A Convertible Preferred
at the discretion of the Company's board of directors. Dividends are fully
cumulative and accrue from the date declared by the board of directors until
paid in full. At December 31, 2002, dividends in arrears totaled approximately
$5,500. Once dividends are paid on the Series A Convertible Preferred, holders
of Series A Convertible Preferred will not participate in dividends paid to
holders of common stock. No dividends may be paid or declared and set apart for
payment on any class or series of shares that are junior to the Series A
Convertible Preferred for any period unless full cumulative dividends have been
paid or contemporaneously are declared and paid or set apart for payment on the
Series A Convertible Preferred. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Company, the holders of Series A
Convertible Preferred are entitled to receive out of the assets of the Company
available for distribution to shareholders before any distribution or payment is
made to holders of the common stock, or to holders of any other shares of the
Company ranking junior upon liquidation to the Series A Convertible Preferred, a
liquidation distribution in the amount of $0.50 per share, plus all accrued and
unpaid dividends, if any, before any payment is made to holders of shares of the
Company's equity securities that are junior to the Series A Convertible
Preferred. If upon any voluntary or involuntary liquidation, dissolution or
winding up of the Company, its assets are insufficient to pay in full the
liquidation preference of the Series A Convertible Preferred and any other class
of shares ranking on a parity with the Series A Convertible Preferred upon
liquidation, then the holders of the Series A Convertible Preferred and any such
other class of shares will share ratably in any distribution of assets in
proportion to the full respective distributable amounts to which they are
entitled.


         No underwriters were engaged in connection with the issuance of
securities in any of the foregoing transactions. Unless otherwise stated, all of
the foregoing offers and 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, including Regulation D under the
Securities Act. 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 common stock registered pursuant to the Registration Statement but not sold
pursuant to the Registration Statement.


         The results of the offering were as follows:

o                 A total of 2,387,697 shares were originally sold in the
                  offering at a price of $0.75 per share for cash, services and
                  subscriptions receivable.


                                       14

<PAGE>


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 expected to be approximately
                  $1,664,000, net of offering costs. Subsequent to the offering
                  a total of approximately $966,000 in subscriptions receivable
                  were written off.


         A significant portion of the proceeds in the offering were
subscriptions receivable, consisting of promissory notes. Of these subscriptions
receivable, approximately $717,600 was received in connection with the sale of
approximately 957,000 shares of common stock to relatives of the Company's
president and CEO. The subscriptions had a due date of June 30, 2002. Due to the
declining market prices of the common stock, a substantial portion of those
notes remains unpaid at December 31, 2002. Consequently, the Company has
determined that approximately $48,500 of these receivables remains collectible.
The Company has cancelled 246,666 shares of common stock originally issued upon
receipt of the impaired portion of the subscriptions receivable. The remaining
subscriptions receivable are now due between August 15, 2008 and November 1,
2010, including interest at the rate of 8% per annum. See, "Item 12. Certain
Relationships and Related Transactions."


         Net proceeds will be used for debt reduction, sales and marketing and
working capital.


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 2003 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. The Company expects that additional cash
funding will be needed during 2003.


         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 the needs of the Company during that period.


         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.


Critical Accounting Policies


         In Note #2 to the financial statements attached to this Form 10-KSB, we
discuss those accounting policies that are considered to be significant in
determining the results of operations and the Company's financial position. In


                                       15

<PAGE>

all material respects, the accounting principles utilized by the Company conform
with accounting principles generally accepted in the United States of America.


         The preparation of consolidated financial statements requires
management to make significant estimates and judgments that affect the reported
amounts of assets, liabilities, revenues and expenses. By their nature, these
judgments are subject to an inherent degree of uncertainty. On an on-going
basis, the Company evaluates its estimates, including those related to bad
debts, inventories, intangible assets, warranty obligations, product liability,
revenue, and income taxes. The Company bases its estimates on historical
experience and other facts and circumstances that are believed to be reasonable,
and the results form the basis for making judgments about the carrying value of
assets and liabilities. The actual results may differ from these estimates under
different assumptions or conditions.


         With respect to concentration of credit risk, inventory, revenue
recognition, stock-based compensation, and impairment of long-lived assets, and
the use of estimates, the Company applies the following critical accounting
policies in the preparation of its financial statements:

o             Concentration of Credit Risk. Financial instruments that
              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 that, 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.

o             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.

o             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.

o             Stock-based Compensation. The Company accounts for stock options
              granted to employees under the recognition and measurement
              principles of APB Opinion No. 25, Accounting for Stock Issued to
              Employees, and related Interpretations, and has adopted the
              disclosure-only provisions of Statement of Financial Accounting
              Standards (SFAS) No. 123, "Accounting for Stock-Based
              Compensation." Accordingly, no compensation cost has been
              recognized in the financial statements on options issued to
              employees, as all options granted to employees had an exercise
              price equal to or greater than the market value of the underlying
              common stock on the date of grant.

o             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.


Results of Operations


Year ended December 31, 2002, compared to the year ended December 31, 2001


         During the year ended December 31, 2002, the Company had net sales of
$3,572,817 reflecting a decrease of $353,179, or 9.0%, compared to net sales of
$3,925,996 for 2001. Net sales in both years were derived from the sale of
products. This decrease was due primarily to a $937,910 decrease in sales of the
Company's hardware division, partially offset by a $585,067 increase in sales of
the outdoor products division. The Company believes that the decrease in
hardware sales is mainly attributable to product lifecycles, particularly the
13-in-1 screwdriver, which saw declining sales in 2002, which were partially
offset by an increase in sales of the Ultra Socket and expandable levels. The
Company's results of operations have also been adversely affected by a downturn
in general economic conditions affecting its primary customers in the United
States.


                                       16

<PAGE>



         Cost of goods sold decreased $192,496 or 8.7% from $2,217,362 for the
year ended December 31, 2001, to $2,024,866 for 2002. This decrease was due
primarily to lower sales in 2002. Gross profit decreased $160,683 or 9.4% from
$1,708,634 for the year ended December 31, 2001 to $1,547,951 in 2002. Gross
margin percentages decreased from 44% for the year ended December 31, 2001 to
43.3% in 2002, primarily as a result of the shift in sales mix from higher
margin hardware to lower margin sporting goods products.


         Selling, general, and administrative expenses were $3,552,528 and
$2,315,353 for the years ended December 31, 2002 and 2001, respectively,
representing an increase of $1,237,175 or approximately 53.4%. The increase over
the prior year is due primarily to increased expenses related to professional
and consulting fees, which were $1,982,259 and $484,948 for the years ended
December 31, 2002 and 2001, respectively, representing an increase of
$1,497,311. Professional and consulting fees of $1,756,811 were paid in the form
of equity, including options valued at $155,227, which were not exercised and
which have since expired. The professional fees relate largely to investor
relations, mergers and acquisitions advisory fees and the costs associated with
the restructuring during the fourth quarter. By and large, these activities are
not required to support the sourcing and distribution of the Company's products
or other of its operations. The Company intends to substantially reduce spending
on professional services in 2003.


         NEBO's resulting operating loss widened from $606,719 in 2001 to
$2,004,577 in 2002. Interest expense was $291,433 and $609,328 for the years
ended December 31, 2002 and 2001, respectively. This represents a decrease of
$317,895 or 52.1% and is due primarily to the reduced availability on the line
of credit for the year ended December 31, 2002, compared to 2001, the shift from
borrowing against receivables to the sale of receivables under a factoring
arrangement with the costs reflected as "loss on sales of receivables, as well
as the result of lower rates of interest negotiated with creditors in the third
and fourth quarters of 2002.


         The Company had a net loss for the year ended December 31, 2002 of
$2,391,958 or approximately $0.14 per share, compared to a net loss of
$1,240,455, or approximately $0.11 per share in 2001. This increase in net loss
is mainly attributable to the higher professional and consulting fees previously
discussed, which were paid primarily with the issuance of equity securities
rather than cash, and that are expected to be reduced substantially in 2003.


Liquidity and Capital Resources


         The Company had cash of $77,712 at December 31, 2002, compared to cash
of $50,793 at December 31, 2001. The working capital deficit as of December 31,
2002, of $926,757, was virtually unchanged from the working capital deficit of
$922,076 at December 31, 2001. As of December 31, 2001, the Company had total
short-term debt and current portion of long-term debt of $681,290. At December
31, 2002, short-term and current portion of long-term debt totaled $655,053 and
bore interest at rates ranging from 5% to 24% per year. Long-term debt
obligations to unrelated parties at December 31, 2002, excluding current
maturities, totaled $471,704. This debt bears interest at rates ranging from 5%
to 24%. Long-term debt to related parties at December 31, 2002, excluding
current maturities, totaled $213,442. This debt bears interest at rates of
10.75% to 15%. Included in current maturities of long-term debt is $81,922,
which bears interest at 6% to 24%. During the year ended December 31, 2002, the
Company refinanced or renegotiated and extended obligations totaling
approximately $461,000.


         The Company had an accumulated deficit of $5,696,230 at December 31,
2002, compared to a deficit of $3,304,272 at December 31, 2001. This deficit is
attributed to accumulated losses since inception.


         Historically, the Company has financed operations principally through
loans, sales of equity and debt securities, and product sales. The Company's
operating activities used $717,905 in cash during the year ended December 31,
2002. Decreased cash flow was the result primarily of lower sales and margins
and a reduction in accounts payable.


         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


                                       17

<PAGE>

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 requires
additional financing. There is no assurance that such financing will be
available to the Company. At December 31, 2002, the balance outstanding on the
loan with Summit was $243,890 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 with a relative of an officer of
the Company to facilitate the cash flow requirements of letter of credit
payments to some vendors. At December 31, 2002, the balance outstanding on this
line of credit was $281,451. Of the remaining balance on the line of credit at
December 31, 2002, $18,549 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.


         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 the Company will
continue as a going concern.


         The following chart includes principal balances and interest rates
applicable to short-term and long-term borrowings as of December 31, 2001 and
December 31, 2002.


<TABLE>
<CAPTION>
                                                                                         12.00%     15.00%   19.00%    Prime
                                                                                         -------    -------  -------   -----
                         6.00% to                                             5.00% to   and        to       to        plus 4%
                         ---------                                            ---------  ----       ---      ---       -------
 Debt as of     2.90%      8.00%    10.75%     12.00%     15.00%     18.00%    24.00%     24.00%    24.00%    24.00%   to 6.5%
 ----------     -----      -----    ------     ------     ------     ------    ------     ------    ------    ------   -------
<S>            <C>       <C>        <C>      <C>         <C>        <C>       <C>        <C>        <C>      <C>       <C>
   12/31/2001  $     -   $      -   $5,844   $1,118,576  $202,207   $221,000  $     -    $      -   $    -   $57,506   $ 143,836

   12/31/2002  $36,065   $333,898   $5,359   $        -  $208,083   $ 56,317  $127,346   $281,451   $47,790  $     -   $ 243,890
</TABLE>

          During the year ended December 31, 2002, the Company refinanced
several loan agreements to resolve or cure defaults. Also at December 31, 2002,
the Company was in default under two notes totaling $45,000. See, "Item 3. Legal
Proceedings" at page 12.


Recent Developments


         After the year ended December 31, 2002, specifically on March 15, 2003,
the Company entered into a revised promissory note payable by KC Holmes for the
$17,500 balance owing on the subscription receivable executed by XKX, LLC. The
note provides for increasing payments of principal and interest at 8% per annum
over 5 1/2 years. Mr. Holmes is the brother of the Company's president.


         In addition, on February 1, 2003, the Company entered into a revised
promissory note payable by Mendelssohn, LLC for the $31,000 balance owing on its
subscription receivable. The note provides for increasing payments of principal
and interest at an annual rate of 8% payable over 7 1/2 years.


Recent Accounting Pronouncements


         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 will have a material
impact on the Company's results of operations, financial position or liquidity.


         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


                                       18

<PAGE>

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 adopted 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.


         In April 2002, the FASB issued Statement of Financial Accounting
Standards (SFAS) No. 145, "Rescission of FASB Statements No. 4, 44, and 64,
Amendment of FASB Statement No. 13, and Technical Corrections." This statement
requires the classification of gains or losses from the extinguishments of debt
to meet the criteria of Accounting Principles Board Opinion No. 30 before they
can be classified as extraordinary in the income statement. As a result,
companies that use debt extinguishment as part of their risk management cannot
classify the gain or loss from that extinguishment as extraordinary. The
statement also requires sale-leaseback accounting for certain lease
modifications that have economic effects similar to sale-leaseback transactions.
The Company does not expect the adoption of SFAS No. 145 to have a material
impact on its financial position or results of operations.


         In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." This standard, which is effective
for exit or disposal activities initiated after December 31, 2002, provides new
guidance on the recognition, measurement and reporting of costs associated with
these activities. The standard requires companies to recognize costs associated
with exit or disposal activities when they are incurred rather than at the date
the Company commits to an exit or disposal plan. The adoption of SFAS No. 146 by
the Company is not expected to have a material impact on the Company's financial
position or results of operations.


         In December 2002, the FASB issued SFAS No. 148 "Accounting for
Stock-Based Compensation--Transition and Disclosure--an amendment of FASB
Statement No. 123," which is effective for all fiscal years ending after
December 15, 2002. SFAS No. 148 provides alternative methods of transition for a
voluntary change to the fair value based method of accounting for stock-based
employee compensation under SFAS No. 123 from the intrinsic value based method
of accounting prescribed by Accounting Principles Board Opinion No. 25. SFAS 128
also changes the disclosure requirements of SFAS 123, requiring a more prominent
disclosure of the pro-forma effect of the fair value based method of accounting
for stock-based compensation. The adoption of SFAS No. 148 by the Company did
not have a material impact on the Company's financial position or results of
operations.


         In November 2002, the FASB issued Interpretation No. 45, Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others (FIN No. 45). FIN No. 45 requires certain
guarantees to be recorded at fair value, which is different from current
practice to record a liability only when a loss is probable and reasonably
estimable, as those terms are defined in FASB Statement No. 5, Accounting for
Contingencies. FIN No. 45 also requires the Company to make significant new
disclosures about guarantees. The disclosure requirements of FIN No. 45 are
effective for the Company in the first quarter of fiscal year 2003. FIN No. 45's
initial recognition and initial measurement provisions are applicable on a
prospective basis to guarantees issued or modified after December 31, 2002. The
Company's previous accounting for guarantees issued prior to the date of the
initial application of FIN No. 45 will not be revised or restated to reflect the
provisions of FIN No 45. The Company does not expect the adoption of FIN No. 45
to have a material impact on its consolidated financial position, results of
operations or cash flows.


         In January 2003, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 46, Consolidation of Variable Interest Entities (FIN No. 46),
which addresses consolidation by business enterprises of variable interest
entities. FIN No. 46 clarifies the application of Accounting Research Bulletin
No. 51, Consolidated Financial Statements, to certain entities in which equity
investors do not have the characteristics of a controlling financial interest or
do not have sufficient equity at risk for the entity to finance its activities
without additional subordinated financial support from other parties. FIN No. 46
applies immediately to variable interest entities created after January 31,
2003, and to variable interest entities in which an enterprise obtains an
interest after that date. It applies in the first fiscal year or interim period
beginning after June 15, 2003, to variable interest entities in which an


                                       19

<PAGE>

enterprise holds a variable interest that it acquired before February 1, 2003.
The Company does not expect to identify any variable interest entities that must
be consolidated. In the event a variable interest entity is identified, the
Company does not expect the requirements of FIN No. 46 to have a material impact
on its financial condition or results of operations.


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 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. 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.


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.


                                       20

<PAGE>



In 2002, a significant portion of the Company's net sales were to large
customers. The loss of any one of these customers could materially and adversely
affect the Company's business, results of operations and financial condition.


         During 2002 sales in the outdoor division outpaced sales in the
hardware division. In 2002, outdoor division customer Gander Mountain was the
Company's leading customer. Sales to this customer totaled approximately
$619,499 (approximately 17% of net sales). Sportsman's Warehouse was second in
sales with approximately $438,091 (approximately 12% of net sales). The
Sportsman's Guide was third in 2002 sales with approximately $345,481
(approximately 10% 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. The loss of any
of these customers could materially and adversely affect the Company's business,
results of operations and financial condition.


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
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


                                       21

<PAGE>

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 success with several of its products,
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 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.


                                       22

<PAGE>


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
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. In 2003, the PRC was the location of an outbreak of a


                                       23

<PAGE>

new deadly disease known as severe acute respiratory syndrome (SARS). The spread
of SARS has been rapid and is reaching epidemic proportions. The occurrence of
an earthquake, epidemic 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.


The Company may experience adverse economic risks associated with the terrorist
attacks of September 11, 2001 and subsequent counter terrorism initiatives.


         The terrorist attacks in New York and Washington, D.C. on September 11,
2001, and the subsequent anthrax attacks on the East Coast of the United States
appear to have had an adverse effect on business, financial and general economic
conditions in the United States. These conditions have continued through the
year ended December 31, 2002. In addition, the war in Iraq that commenced in
March 2003 and the outbreak of the SARS epidemic in Asia in the first quarter of
2003 have adversely affected international markets, including travel and
transportation. These effects also appear, in turn, to have had an adverse
effect on our business and on the results of our operations, as orders for
products have not returned to pre-September 11, 2001 levels. At this time we
cannot predict the nature, extent, or duration of these effects on overall
economic conditions generally, or on our business and operations specifically.


The Company's business is subject to risks related to importing products through
ports that may be associated with labor problems, 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's operations have also apparently been adversely affected
by the labor problems experienced at ports on the west coast of the United
States, through which most of its products are shipped or received. Future
lockouts or work slow-downs could affect the timely delivery of our products,
which could negatively impact our sales.


Item 7.  Financial Statements

         The Company's audited financial statements and associated notes are
included and set forth on pages F-1 through F-25 of this report.


                                    Part III


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


         The executive officers and directors of NEBO, as well as employees
expected by the Company to make a significant contribution to its business were
as follows as of March 31, 2003:

         Name, Age              Office

         Scott Holmes, 36       Director, President, CEO
         Jerry Mika, 38         Vice President Sales
         John Larsen, 37        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.
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.


                                       24

<PAGE>



         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 1988
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.


Compliance With Section 16(a) of the Exchange Act


         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. The Company had one director at December 31, 2002.


Meetings and Committees


         There were four regular meetings of the board of directors held during
the year ended December 31, 2002. No director attended fewer than 75 percent of
the meetings during the fiscal year. The board also acted during 2002 by
unanimous written consent in lieu of a meeting, as permitted by Utah law and the
Company's bylaws. Utah law requires the Company to have a minimum of three
directors. The Company intends to appoint directors to fill the vacancies
currently existing on the board during the next six months. Because it has only
one director at this time, the board has no audit committee and no independent
directors. The Company has not yet adopted a code of ethics for its executive
officers, but intends to do so during 2003.


Remuneration


         As of December 31, 2002, the Company has only one director, R. Scott
Holmes, who also serves as the Company's Chief Executive Officer and President.
While he is compensated for his role as CEO as disclosed in Item 10 of this
report, Mr. Holmes receives no additional compensation for his services as
director of the Company. No policy has been established regarding the
compensation of any independent directors who may join the Company in the
future.


                                       25

<PAGE>


Item 10.     Executive Compensation


         The following table sets forth the compensation paid in each of the
past three fiscal years to the only individual who served as the Company's chief
executive officer during the year ended December 31, 2002 (the "Named Executive
Officer"). None of the Company's executive officers or key employees is paid
more than $100,000 annually.


<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           2002            $96,000              $0                 $ 840                 0
                            2001            $96,000              $0                 $1,427                0
                            2000            $96,000              $0                 $1,164                0
</TABLE>

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


Employment Agreements


         In August 2002, the Company entered into an employment agreement with
R. Scott Holmes, its president and CEO. The term of the agreement provides for
an annual salary of $96,000, participation in employee benefit plans and
severance pay. The agreement expires August 20, 2007, subject to termination by
the Company. If employment is terminated by the Company without cause prior to
the expiration of the term and prior to repayment of any debt or obligation of
the Company personally guaranteed by the officer or the removal of the officer
from personal liability under such a guarantee, the Company is obligated to
continue payment of the salary and other benefits provided for under the
Agreement through the shorter of the remainder of the unexpired term of the
agreement or such date as the release of personal liability is obtained as
described above. If terminated by the Company prior to the expiration date
without cause but after repayment of the guaranteed debt or release of the
officer from personal liability under all such guarantees, the Company must pay
the officer his salary and benefits required by the agreement for a period of 12
months following the date of termination; provided, however, that if during such
12-month period the market price of the company's common stock exceeds $1.00 per
share, no additional payment shall be required to be made to the officer. The
officer is bound by covenants against solicitation of employees or customers of
the Company and against competing with the company during the term of the
agreement and for a period of one year following the termination of employment
or expiration of the agreement. The employee is also subject to restrictions on
the use of employee inventions and Company proprietary and confidential data and
information. A copy of the agreement is filed as an exhibit to this annual
report on Form 10-KSB.


Stock Option Plan


         Effective January 1, 2001, the board of directors adopted a Stock
Option Plan. The shareholders of the Company have not yet approved the 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.


                                       26

<PAGE>



         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
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


                                       27

<PAGE>

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.


         The following table contains certain information, including the fiscal
year-end value of unexercised stock options held by the Named Executive Officer
of the Company as of December 31, 2002.

                                                  Number of
                                                  Securities      Value of
                                                  Underlying     Unexercised
                                                  Unexercised    In the-Money
                                                    Options       Options At
                                                 12/31/2002 (#) 12/31/2002 ($)
                Shares Acquired  Value Realized   Exercisable/   Exercisable/
Name            on Exercise (#)      ($)         Unexercisable   Unexercisable
--------------  ---------------  --------------  --------------  ---------------
Scott Holmes                -     $          -    90,000/70,000       n/a

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


         The following table sets forth information as of December 31, 2002 with
respect to shares of common stock to be issued upon the exercise, and the
weighted-average exercise price, of all outstanding options and rights granted
under our equity compensation plans, as well as the number of shares available
for future issuance under those plans.

<TABLE>
<CAPTION>
                Number of Securities      Weighted-Average       Number of Securities Remaining
                Issued Upon Exercise       Exercise Price      Available for Fuiture Issuance Under
                Outstanding Options      Outstanding Option    Equity Compensation Plans (Excluding
Plan Category   Warrants and Rights      Warrants and Rights    Securities Reflected in Column A)

2001 Stock
<S>                  <C>                       <C>                          <C>
Option Plan          1,338,000                 $0.65                        None
                ---------------------    -------------------   ------------------------------------
Total                1,338,000                 $0.65                        None
</TABLE>



        During the year ended December 31, 2002, the Company granted
options to purchase a total of 7,211,692 shares under the 2001 Stock Option Plan
(the "Plan") to 18 option and warrant holders as follows:

o        100,000 shares at an exercise price of $0.70 per share

o        4,546,962 shares at an exercise price of $0.00 per share

o        110,000 shares at an exercise price of $0.50 per share

o        220,000 shares at an exercise price of $0.35 per share

o        200,000 shares at an exercise price of $0.23 per share

o        800,000 shares at an exercise price of $0.60 per share

o        1,090,000 shares at an exercise price of $0.10 per share


                                       28

<PAGE>


o        65,000 shares at an exercise price of $0.20 per share

o        30,000 shares at an exercise price of $0.55 per share, and

o        50,000 shares at an exercise price of $0.50 per share.


         These options and warrants vest over periods ranging from immediately
to four years from the date of grant. At December 31, 2002, the Company had
granted 504,692 options in excess of the number of shares registered under the
Plan. Options for the purchase of 974,500 shares expired during 2002.


         In addition, during 2002, the Company issued warrants to certain
creditors for the purchase of 1,278,189 shares of common stock at prices ranging
between $0.20 per share and $0.55 per share. These warrants expire on various
dates between October 2005 and October 2012.


         The following table sets forth information with respect to the
 beneficial ownership of the Company's voting securities as of March 31, 2003 by
 (1) each person, or group of affiliated persons, who is known by the Company to
 own beneficially more than five percent of the voting securities; (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:

Durham Jones & Pinegar
111 East Broadway, Suite 900
<S>                <C>                                    <C>                     <C>
Salt Lake City, UT 84111                                  1,500,000(3)            5.5%

Jason Crowe                                               1,500,000(4)            5.5%
1201 S.W. 12th Avenue, Suite 222
Portland, Oregon 97205

Officers and Directors

Scott Holmes                                              2,009,800(5)            7.3%
Jerry Mika                                                   93,750(6)              *
John Larsen                                                  76,000(7)              *

All directors and officers as a group (3 Persons)         2,179,550               7.9%
</TABLE>


* Less than one percent.

(1)      Based on a total of 21,777,741shares of common stock and 5,521,565
         shares of voting convertible preferred stock outstanding at March 31,
         2003.

(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)      All shares indicated are common shares. Excludes 2,000,000 shares
         pledged by the Company as security for a note payable to this
         shareholder, the voting rights to which have been retained by the
         Company; subject, however, to vesting in the shareholder upon the
         default of the Company under the note.


                                       29

<PAGE>


(4)      Includes 1,000,000 convertible preferred shares and 500,000 common
         shares.

(5)      Includes 1,919,800 common shares and options to purchase 90,000 common
         shares that are or become exercisable within 60 days of the date of
         this report. Excludes 2,000,000 shares for which the shareholder
         exercises sole voting power pursuant to a pledge and security agreement
         and secured promissory note. See footnote (3) above.

(6)      Includes 75,000 common shares and options to purchase 18,750 common
         shares that are or become exercisable within 60 days of the date of
         this report.


(7)      Includes 31,000 common shares and options to purchase 45,000 shares
         that are or become exercisable within 60 days of the date of this
         report.


Item 12.  Certain Relationships and Related Transactions


2001


         On August 21, 2001, the Company sold land for $20,800 to the Company's
president, Scott Holmes under a written sale agreement and promissory note,
payable upon demand. The Company has the right to repurchase the property from
Mr. Holmes at any time by cancellation of the promissory note. Mr. Holmes used
the property to borrow $27,000 which was advanced to the company. If the Company
repays the bank loan directly to the bank, Mr. Holmes is required to reconvey
the property to the Company. The Company intends to reacquire the property and
is currently making payments directly to the bank. The loan bears interest at
prime plus 4.5% and matures on September 1, 2016.


         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 former
affiliates; of which 29,749 shares were issued to Steve Holmes, the brother of
the Company's president, for debt and accrued interest totaling $22,312.


         The Company entered into a line of credit arrangement with Jeff Holmes,
the brother of the Company's president, pursuant to which the lender agreed to
provide up to $300,000 to facilitate the opening of letters of credit for the
purpose of purchasing product from the Company's suppliers.


2002


         During the year ended December 31, 2002, the Company cancelled
subscriptions receivable of $488,151 to purchase approximately 650,867 shares of
the Companies' common stock due from relatives of the Company's President and an
employee of the Company as follows (all shares had been previously issued to
these shareholders in 2001 and have since been cancelled):

o        Jeff Holmes, the brother of the president/CEO, $57,585 for the purchase
         of 76,780 shares

o        Jo Land and Cattle, owned by Kara Jo Holmes, sister-in-law of the
         Company's president/CEO, $304,680 to purchase 406,240 shares owed by an
         entity owned or controlled by Mrs. Holmes

o        Sam Bushman, an employee of the Company, $125,886 to purchase 167,847
         shares owed by Mr. Bushman and entities owned or controlled by Mr.
         Bushman.


         The Company continues to maintain the line of credit arrangement with
Jeff Holmes, the brother of the Company's President under which the Company may
borrow a maximum of $300,000 at 12% (24% on advances on letters of credit
outstanding over 90 days). At December 31, 2002, the line of credit had a
balance of $281,451, which is due November 2003. The remaining amount available
under the line of credit totaling $18,549 is reserved for outstanding letters of
credit.


         At December 31, 2002, the Company had a note payable to the President
totaling $208,083. The unsecured note payable is due January 2005 with interest
at 15% per annum.


                                       30

<PAGE>



         During the year ended December 31, 2002, Jeff Holmes, the brother of
the Company's president/CEO, received 500,000 shares of Series A Convertible
Preferred stock in exchange for the cancellation of 76,780 common shares and
canceling notes payable and accrued interest due to him totaling approximately
$66,000.


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.


Exhibit #         Description

3.1               Articles of Incorporation (1)
3.2               Amended Articles of Incorporation (1)
3.3               Amendment to Articles of Incorporation (2)
3.4               Bylaws (1)
4.1               Specimen of Common Stock Certificate (1)
4.2               Form of Employee Incentive Stock Option Agreement (3)
10.1              Credit and Security Agreement dated September 1, 2000 with
                  Wells Fargo (1)
10.2              First Amendment dated July 26, 2000 to Credit and Security
                  Agreement (1)
10.3              Second Amendment dated September 20, 2000 to Credit and
                  Security Agreement (1)
10.4              Third Amendment dated November 22, 2000 to Credit and Security
                  Agreement (1)
10.5              Lease for Draper, Utah corporate offices and warehouse
                  facility (1)
10.6              Exclusive Agreement for Manufacture of 13-in-1 (1)
10.7              SK Management Trust Note (1)
10.8              Feather River Trust Note (1)
10.9              Meyers Note (1)
10.10             Christensen Note (1)
10.11             Branch Note (1)
10.12             S&L Family Trust Note and Agreement (1)
10.13             New SK Management Trust Note dated September 30, 2001 (2)
10.14             New Branch Note dated September 1, 2001 (2)
10.15             New Meyers Note dated September 1, 2001 (2)
10.16             New Feather River Trust Note dated September 4, 2001 (2)
10.17             New S&L Family Trust Note dated September 30, 2001 (2)
10.18             Set-Off  and  Release  Agreement  between  NEBO Products, Inc.
                  and Pete Chandler dated as of December 28, 2001 filed
                  herewith (4)
10.19             Set-Off and Release  Agreement  between  NEBO  Products,  Inc.
                  and  Suzanne  Heaton  dated as of  December 28, 2001 filed
                  herewith (4)
10.20             Set-Off and Release Agreement  between NEBO Products,  Inc.
                  and Rodger Smith dated as of December  28, 2001 filed
                  herewith (4)
10.21             Management Agreement dated September 20, 2002 (5)
10.22             Termination Agreement dated October 17, 2002 (6)
10.23             Press Release of October 18, 2002 (6)
10.24.1.1         Press Release of November 14, 2002 (7)
10.24.1.2         Press Release of November 26, 2002 (7)
10.25             Employment Agreement dated August 21, 2002, between the
                  Company and its president/CEO
10.26             Secured promissory note payable to Durham Jones & Pinegar
99.1              2001 Stock Option Plan (1)
99.2              Certification under Sarbanes-Oxley Act
        -------------------

(1)      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.


                                       31

<PAGE>


(2)      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.

(3)      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.

(4)      Incorporated by reference to the same-numbered exhibit to the Company's
         annual report on Form 10-KSB for the year ended December 31, 2001,
         previously filed with the Securities and Exchange Commission.

(5)      Incorporated by reference to the same-numbered exhibit to the Company's
         report on Form 8-K filed with the Securities and Exchange Commission on
         September 23, 2002.

(6)      Incorporated by reference to the same-numbered exhibit to the Company's
         report on Form 8-K filed with the Securities and Exchange Commission on
         October 18, 2002.

(7)      Incorporated by reference to the same-numbered exhibit to the Company's
         report on Form 8-K filed with the Securities and Exchange Commission on
         November 26, 2002.


(b)      Reports on Form 8-K


         During the fourth quarter of 2002, specifically on October 17, 2002,
the Company filed a Current Report on Form 8-K to report the termination of the
proposed acquisition of Naviset Holding Corp. In addition, on November 26, 2002,
the Company filed a Current Report on Form 8-K to report the conversion of
certain debt and contingent liabilities in exchange for shares of the Company's
Series A Convertible Preferred Stock.


Item 14.    Controls and Procedures

         Our Chief Executive Officer and Principal Accounting Officer
(collectively, the "Certifying Officers") are responsible for establishing and
maintaining our disclosure controls and procedures. These officers have
concluded (based on their evaluation of these controls and procedures as of a
date within 90 days of the filing of this report) that our disclosure controls
and procedures are effective to ensure that information required to be disclosed
by the Company in this report is accumulated and communicated to management,
including its principal executive officers as appropriate, to allow timely
decisions regarding required disclosure. The Certifying Officers also have
indicated that there were no significant changes in the internal controls or
other factors that could significantly affect such controls subsequent to the
date of their evaluation, and there were no corrective actions with regard to
significant deficiencies and material weaknesses.



                                       32

<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, 2003
                                         -------------------------------------

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

Signature Name and Title                                  Date


/s/ Scott Holmes                                              April 15, 2003
-----------------------------------------------------         ------------------
Scott Holmes
Chief Executive Officer (Principal Executive Officer),
President and Director



/s/ Paul Larsen                                               April 15, 2003
-----------------------------------------------------         ------------------
Paul Larsen
Controller
(Principal Financial and Accounting Officer)



                                       33


<PAGE>


                                 CERTIFICATIONS

I, Scott Holmes, certify that:

1.                I have reviewed this annual report on Form 10-KSB of NEBO
                  Products, Inc.;

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

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

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

                  a)  designed such disclosure controls and procedures to ensure
                      that material information relating to the registrant,
                      including its consolidated subsidiaries, is made known to
                      us by others within those entities, particularly during
                      the period in which this annual report is being prepared;
                  b)  evaluated the effectiveness of the registrant's disclosure
                      controls and procedures as of a date within 90 days prior
                      to the filing date of this annual report (the "Evaluation
                      Date"); and

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

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

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

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

6.                The registrant's other certifying officers and I have
                  indicated in this annual report whether there were significant
                  changes in internal controls or in other factors that could
                  significantly affect internal controls subsequent to the date
                  of our most recent evaluation, including any corrective
                  actions with regard to significant deficiencies and material
                  weaknesses.

Date: April 15, 2003

/s/ Scott Holmes
Scott Holmes, Chief Executive Officer



<PAGE>


I, Paul Larsen, certify that:

1.                I have reviewed this annual report on Form 10-KSB of NEBO
                  Products, Inc.;

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

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

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

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

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

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

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

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

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

6.                The registrant's other certifying officers and I have
                  indicated in this annual report whether there were significant
                  changes in internal controls or in other factors that could
                  significantly affect internal controls subsequent to the date
                  of our most recent evaluation, including any corrective
                  actions with regard to significant deficiencies and material
                  weaknesses.

Date: April 15, 2003

/s/ Paul Larsen
-----------------------------------------------------
Paul Larsen, Principal Accounting and Financial Officer




<PAGE>




                                 NEBO PRODUCTS


                              Financial Statements
                           December 31, 2002 and 2001










<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>




                                                    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, 2002, and the related statements of operations, stockholders'
deficit and cash flows for the years ended December 31, 2002 and 2001. 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, 2002 and the results of its operations and its cash flows for the
years ended December 31, 2002 and 2001 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.



Salt Lake City, Utah
March 7, 2003



                                                                             F-1

<PAGE>

                                                             NEBO PRODUCTS, INC.
                                                                   Balance Sheet

                                                               December 31, 2002
--------------------------------------------------------------------------------




<TABLE>
<CAPTION>
             Assets

Current assets:
<S>                                                                                   <C>
     Cash                                                                             $            77,712
     Accounts receivable, net                                                                      60,759
     Inventory                                                                                    399,857
     Other current assets                                                                          30,060
                                                                                      --------------------

               Total current assets
                                                                                                  568,388

Property and equipment, net                                                                       152,205
Intangibles, net                                                                                  125,735
                                                                                      --------------------

                                                                                      $           846,328
                                                                                      --------------------

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

             Liabilities and Stockholders' Deficit

Current liabilities:
     Accounts payable                                                                 $           606,237
     Accrued liabilities                                                                          233,855
     Short-term notes payable                                                                     291,680
     Current portion of long-term debt - related party                                            281,451
     Current portion of long-term debt                                                             81,922
                                                                                      --------------------

               Total current liabilities                                                        1,495,145

Long-term debt                                                                                    471,704
Long-term debt - related party                                                                    213,442
                                                                                      --------------------

               Total liabilities                                                                2,180,291
                                                                                      --------------------

Commitments and contingencies                                                                           -

Redeemable convertible preferred stock                                                             62,803

Stockholders' deficit:
     Convertible preferred stock, no par value: stated value $.20 (Series A):
         100,000,000 shares authorized; 5,207,553 issued and outstanding with
         liquidation preference of $1,041,510                                                   1,041,510
     Common stock, no par value, voting; 100,000,000 shares
       authorized, 19,627,471 issued and outstanding                                            3,306,025
     Subscriptions receivable                                                                     (48,071)
     Accumulated deficit                                                                       (5,696,230)
                                                                                      --------------------

               Total stockholders' deficit:                                                    (1,396,766)
                                                                                      --------------------

                                                                                      $           846,328
                                                                                      --------------------
</TABLE>





--------------------------------------------------------------------------------
See accompanying notes to financial statements.


                                                                             F-2


<PAGE>


                                                             NEBO PRODUCTS, INC.
                                                          Statement of Operation

                                                        Years Ended December 31,
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                               2002              2001
                                                                         ------------------------------------

<S>                                                                      <C>                  <C>
Net sales                                                                $       3,572,817    $    3,925,996
Cost of sales                                                                    2,024,866         2,217,362
                                                                         ------------------------------------

                  Gross profit                                                   1,547,951         1,708,634

Expenses:
   Selling expense                                                                 618,322           755,686
   General and administrative expenses:
      Payroll and related expenses                                                 470,308           488,997
      Professional fees                                                          1,982,259           484,948
      Facilities expense, including depreciation                                   268,190           273,459
      Other general and administrative expenses                                    213,449           312,263
                                                                         ------------------------------------

             Total general and administrative expenses                           2,934,206         1,559,667
                                                                         ------------------------------------

             Total selling, general and
             administrative expenses                                             3,552,528         2,315,353
                                                                         ------------------------------------

                  Loss from operations                                          (2,004,577)         (606,719)
                                                                         ------------------------------------

Other income (expense):
   Interest expense                                                               (291,433)         (609,328)
   Interest income                                                                  35,488            10,202
   Loss on sale of receivables                                                    (131,436)           (6,200)
   Impairment loss on marketable securities                                              -           (28,410)
                                                                         ------------------------------------

             Total other income (expense)                                         (387,381)         (633,736)
                                                                         ------------------------------------

             Loss before benefit for income taxes                               (2,391,958)       (1,240,455)

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

             Net loss                                                    $      (2,391,958)   $   (1,240,455)
                                                                         ------------------------------------

Loss per common share - basic and diluted                                $           (0.14)   $        (0.11)
                                                                         ------------------------------------

Weighted average shares - basic and diluted                                     17,216,000        11,801,000
                                                                         ------------------------------------
</TABLE>



--------------------------------------------------------------------------------
See accompanying notes to financial statements.


                                                                             F-3


<PAGE>



                                                             NEBO PRODUCTS, INC.
                                     Combined Statement of Stockholders' Deficit

                                           Year Ended December 31, 2002 and 2001
--------------------------------------------------------------------------------

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

<S>                                                 <C>         <C>  <C>          <C>          <C>                <C>
Balance, January 1, 2001                            -          -     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 services                                        -         -              -      123,257             -                 -

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)                -

Issuance of common stock for:
  Cash
                                                    -          -      1,620,000      284,754             -                 -
  Services
                                                    -          -      4,546,692    1,401,584             -                 -

Cash received on subscriptions receivable
                                                    -          -              -            -        86,700                 -

Issuance of options for services
                                                    -          -              -      164,727             -                 -

Preferred stock issued for debt and accrued
interest                                    4,207,553    841,510              -            -             -                 -

Preferred stock issued for services
                                            1,000,000    200,000              -            -             -                 -

Write-off of subscriptions receivable
                                                    -          -       (246,666)    (966,151)      966,151                 -

Net loss
                                                    -          -              -            -             -                 -
                                            ------------------------------------------------------------------------------------

Balance, December 31, 2002                  5,207,553 $1,041,510     19,627,471  $ 3,306,025   $   (48,071)       $        -
                                            ------------------------------------------------------------------------------------
</TABLE>




<PAGE>




                                                             NEBO PRODUCTS, INC.
                                     Combined Statement of Stockholders' Deficit

                                           Year Ended December 31, 2002 and 2001
                                                                       Continued
--------------------------------------------------------------------------------


<PAGE>


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

<S>                                         <C>              <C>
Balance, January 1, 2001                       (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 services                                            -          123,257

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)

Issuance of common stock for:
  Cash
                                                        -          284,754
  Services
                                                        -        1,401,584

Cash received on subscriptions receivable
                                                        -           86,700

Issuance of options for services
                                                        -          164,727

Preferred stock issued for debt and accrued
interest                                                -          841,510

Preferred stock issued for services
                                                        -          200,000

Write-off of subscriptions receivable
                                                        -                -

Net loss
                                               (2,391,958)      (2,391,958)
                                            -------------------------------

Balance, December 31, 2002                  $  (5,696,230)      (1,396,766)
                                            -------------------------------
</TABLE>






--------------------------------------------------------------------------------
See accompanying notes to financial statements.


                                                                             F-4

<PAGE>



                                                             NEBO PRODUCTS, INC.
                                                         Statement of Cash Flows

                                                        Years Ended December 31,
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                            2002            2001
                                                                       --------------------------------

Cash flows from operating activities:
<S>                                                                    <C>              <C>
   Net Loss                                                            $ (2,391,958)    $   (1,240,455)

   Adjustments to reconcile net loss to net cash
     (used in) provided by operating activities:
       Depreciation and amortization expense                                 58,950             30,098

       Provision for losses on accounts receivable                           (8,367)             6,901

       Loss on sale of accounts receivable                                  131,436                  -

       Stock compensation for services and interest expense               1,601,584            251,250

       Stock option compensation for services and interest expense          164,727            123,257

       Loss on impairment of marketable securities                                -             28,410

       Proceeds from factored receivables                                 3,341,931            276,952

       Decrease (increase) in:
         Accounts receivable                                             (3,413,583)           571,916

         Inventory                                                          (47,674)           443,752
         Other assets                                                        (9,625)            14,456
       Increase (decrease) in:
         Accounts payable                                                  (208,341)           151,676
         Accrued liabilities                                                 63,015             79,889
                                                                       --------------------------------

           Net cash (used in) provided by operating activities             (717,905)           738,102
                                                                       --------------------------------

Cash flows from investing activities:
   Purchases of property and equipment                                       (8,645)            (6,367)
   Purchase of patents                                                       (3,505)                 -
                                                                       --------------------------------

           Net cash used in investing activities                            (12,150)            (6,367)
                                                                       --------------------------------

Cash flows from financing activities:
   Proceeds from long and short-term debt                                   360,818            490,249
   Principal payments on long and short-term debt                          (176,962)        (1,088,439)
   Offering costs                                                                 -           (127,353)
   Proceeds from subscriptions receivable                                   288,364                  -
   Proceeds from stock issuance                                             284,754             40,225
                                                                       --------------------------------

           Net cash provided by (used in) financing activities              756,974           (685,318)
                                                                       --------------------------------

   Net increase in cash                                                      26,919             46,417

           Cash and cash equivalents at beginning of year                    50,793              4,376
                                                                       --------------------------------

           Cash and cash equivalents at end of year                    $     77,712     $       50,793
                                                                       --------------------------------
</TABLE>





--------------------------------------------------------------------------------
See accompanying notes to financial statements.

                                                                             F-5

<PAGE>

                                                             NEBO PRODUCTS, INC.
                                                   Notes to Financial Statements

                                                      December 31, 2002 and 2001
--------------------------------------------------------------------------------

1.   Organization          Description of Business
                           NEBO Products, Inc. (dba 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            Concentration of Credit Risk
     Significant           Financial instruments which potentially subject the
     Accounting            Company to concentration of credit risk consist
     Policies              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.

                           The Company has substantially all of its products
                           manufactured in Asia and is therefore at risk to the
                           political and economic trends of those countries in
                           receiving product. The Company has not experienced
                           any losses as a result from activities in those
                           countries.

                           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.

                           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.



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



<PAGE>

                                                             NEBO PRODUCTS, INC.
                                                   Notes to Financial Statements
                                                                       Continued

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

2.   Summary of            Property and Equipment
     Significant           Property  and  equipment  are recorded at cost less
     Accounting            accumulated  depreciation.  Depreciation  and
     Policies              amortization on capital leases and property and
     Continued             equipment is determined  using the  straight-line
                           method over the estimated useful lives of the assets
                           or term of the lease.  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


                           Intangible Assets
                           Intangible assets consist primarily of patents
                           relating to the Company's hardware product lines
                           which were acquired in 2002 and 2001. The patents are
                           being amortized over the estimated life of the patent
                           or 5 years. Total amortization expense for patents
                           during the years ended December 31, 2002 and 2001 was
                           $12,955 and $162.

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

                           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 2,614,189 and 1,267,500 shares of common
                           stock at December 31, 2002 and 2001, respectively, at
                           prices ranging  from $.77 to $.05 per share  were
                           outstanding.  At December 31, 2002, common stock
                           equivalents would also arise from the  conversion of
                           convertible  notes payable  totaling $461,244 with a
                           conversion  price of $.20 per share.  Common stock
                           equivalents are not included in the diluted  earnings
                           per share calculation since their effect is
                           anti-dilutive.

                           Stock-Based Compensation
                           The Company accounts for stock options granted to
                           employees under the recognition and measurement
                           principles of APB Opinion No. 25, Accounting for
                           Stock Issued to Employees, and related
                           Interpretations, and has adopted the disclosure-only
                           provisions of Statement of Financial Accounting
                           Standards (SFAS) No. 123, "Accounting for Stock-Based
                           Compensation." Accordingly, no compensation cost has
                           been recognized in the financial statements on
                           options issued to employees, as all options granted
                           to employees had an exercise price equal to or
                           greater than the market value of the underlying
                           common stock on the date of grant. Had the Company's
                           option values been determined based on the fair value
                           method, the results of operations would have changed
                           to the pro forma amounts indicated below:


                                                           December 31
                                                    ----------------------------
                                                        2002           2001
                                                    ----------------------------


                           Net loss - as reported   $(2,391,958)   $ (1,240,455)


                           Deduct total stock based
                           employee compensation
                           expense determined under
                           fair value based method
                           for all awards, net of
                           related taxes               (168,060)        (76,802)
                                                    ----------------------------
                           Net loss - pro forma     $(2,560,018)   $ (1,317,257)
                                                    ----------------------------
                           Diluted loss per share -
                              as reported           $      (.14)   $       (.11)
                                                    ----------------------------
                           Diluted loss per share -
                              pro forma             $      (.15)   $       (.11)
                                                    ----------------------------

--------------------------------------------------------------------------------
                                                                             F-8



<PAGE>


                                                             NEBO PRODUCTS, INC.
                                                   Notes to Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------
2.   Summary of            Stock-Based Compensation - Continued
     Significant           The fair value of each option grant is estimated on
     Accounting            the date of grant using the Black-Scholes option
     Policies              pricing model with the following assumptions:
     Continued

                              Expected dividend yield       $      -  $      -
                              Expected stock price
                                volatility                     94.14%       141%
                              Risk-free interest rate           5.25%      4.75%
                              Expected option life          3-5 years  3-5 years


                            The weighted average fair value of each option and
                            warrant granted during 2002 and 2001 was $.15 and
                            $.45, respectively.

                            Advertising
                            Advertising costs are expensed as incurred.
                            Advertising expense was approximately $45,000 and
                            $19,000 for the years ended December 31, 2002 and
                            2001, 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 and disclosures in the
                            financial statements. Accordingly, actual results
                            could differ from those estimates.

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


--------------------------------------------------------------------------------
                                                                             F-9

<PAGE>


                                                            NEBO PROUDCUTS, INC.
                                                   Notes to Financial Statements
                                                                       Continued

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

3.   Going                 The  Company  has a working  capital  deficit,  a
     Concern               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.

                           Management's plans with regard to continuing as a
                           going concern, include expanding market share through
                           introduction of new products in order to become
                           profitable and obtaining equity financing through
                           sale of its common stock. However, there can be no
                           assurance management of the Company will be
                           successful in attaining equity financing or achieving
                           profitability.


4.   Accounts              Accounts receivable consist of the following at
     Receivable            December 31, 2002:

                           Trade receivables                    $   104,310
                           Allowance for doubtful accounts          (43,551)
                                                                ----------------
                                                                $    60,759
                                                                ----------------

5.   Loss on               During the year ended  December 31, 2001, the Company
     Marketable            recognized an impairment loss on its investment in
     Securities            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 considered impaired due to a lack of
                           marketability and because the decrease in value was
                           considered to be other than a temporary decrease in
                           the value of the stock. The Company owned  no
                           securities in 2002.

--------------------------------------------------------------------------------
                                                                            F-10


<PAGE>


                                                             NEBO PRODUCTS, INC.
                                                   Notes to Financial Statements
                                                                       Continued

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


6.   Property and          Property and equipment consists of the following at
     Equipment             December 31, 2002:

                                Computer equipment and software   $    146,662
                                Office and warehouse equipment          92,988
                                Furniture and fixtures                  30,755
                                Leasehold improvements                   4,376
                                                                  --------------
                                                                        274,781

                                 Less accumulated depreciation
                                 and amortization                      (122,576)
                                                                  --------------

                                                                  $     152,205
                                                                  --------------


7.   Short-term            The Company has the following short-term notes
     Notes                 payable at December 31, 2002:
     Payable
                           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 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 9.25% at December 31, 2002. The note is
                           secured by the receivables and inventory and is due
                           on demand.                             $     243,890


                           Notes payable to individuals, with interest ranging
                           from 15% 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, 2002
                           these notes were in default.
                                                                         47,790
                                                                  --------------

                                                                  $     291,680
                                                                  --------------


--------------------------------------------------------------------------------
                                                                            F-11


<PAGE>


                                                             NEBO PRODUCTS, INC.
                                                   Notes to Financial Statements
                                                                       Continued

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


8.   Long Term             The Company has the following long-term debt as of
     Debt                  December 31, 2002:

                           Convertible notes payable to various trusts and
                           investment groups with interest at 6% to 8%, secured
                           by 3,000,000 shares of authorized and unissued common
                           stock, and with aggregate monthly principal
                           installments ranging from $4,400 to $6,000 with a
                           balloon payment of $166,842 due October 2006. The
                           debt is convertible into common stock at $.20 per
                           share.
                                                                  $     333,898

                           Convertible notes payable to individuals, with
                           interest ranging from 5% to 24% and principal of
                           approximately $256 due monthly through December 2004,
                           and balloon payments of $19,000 on August 2003,
                           $3,000 December 2004, and $99,000 due November 2017.
                           The debt is convertible into common stock at $.20 per
                           share.
                                                                        127,346

                           Note payable to GMAC, with interest at 2.9%, with
                           payments of $700, including principal and interest
                           due monthly. The note is secured by a vehicle and
                           matures July 2007.
                                                                         36,065

                           Capital lease obligations (see Note 10)       56,317
                                                                  --------------

                           Total                                        553,626

                           Less current portion                         (81,922)
                                                                  --------------

                           Long-term debt                         $     471,704
                                                                  --------------


--------------------------------------------------------------------------------
                                                                            F-12


<PAGE>


                                                             NEBO PRODUCTS, INC.
                                                   Notes to Financial Statements
                                                                       Continued

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


8.   Long Term             Future maturities of long-term debt at December 31,
     Debt                  2002 are as follows:
     Continued

                                Year                     Amount

                                2003                  $     81,922
                                2004                        74,481
                                2005                        73,528
                                2006                       219,442
                                2007                         4,858
                                Thereafter                  99,395
                                                      -------------

                                                      $    553,626
                                                      -------------

9.   Long-Term             The Company has the following related party long-term
     Debt -                debt at December 31, 2002:
     Related Party
                           Note payable to an officer of the Company with
                           interest at 15%, principal due January 2005,
                           unsecured
                                                                  $     208,083

                           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% (24% for
                           advances on letters of credit outstanding over 90
                           days), is secured by assets of the Company and is due
                           November 2003. The remaining balance available on the
                           line of credit at December 31, 2002, of $18,549 is
                           reserved for outstanding letters of credit.

                                                                        281,451


                           Note payable to a former officer with interest at
                           10.75%, unsecured and principal due September 2016.

                                                                          5,359
                                                                  --------------

                           Total                                        494,893

                           Less current portion                        (281,451)

                           Long-term related party debt           $     213,442
                                                                  --------------

--------------------------------------------------------------------------------
                                                                            F-13


<PAGE>



                                                             NEBO PRODUCTS, INC.
                                                   Notes to Financial Statements
                                                                       Continued

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

9.   Long-Term             Future maturities of long-term debt at December 31,
     Debt -                2002 are as follows:
     Related Party
     Continued

                                Year                  Amount

                                2003                $      281,451
                                2004                             -
                                2005                       208,083
                                2006                             -
                                2007                             -
                                Thereafter                   5,359
                                                    ---------------

                                                    $      494,893
                                                    ---------------


10.  Capital Lease         The  Company leases equipment and software under
     Obligation            non-cancelable 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 $17,200 at December 31,
                           2002.

                           Depreciation expense for the equipment under capital
                           lease for the years ended 2002 and 2001 was
                           approximately $14,500 and $2,700, 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:

                                Year                    Amount


                                2003                $       29,081
                                2004                        20,156
                                2005                        19,321
                                                    --------------

                                                            68,558
                           Less interest                   (12,241)
                                                    ---------------

                           Present value of future
                           minimum lease payments   $       56,317
                                                    ---------------



--------------------------------------------------------------------------------
                                                                            F-14



<PAGE>



                                                             NEBO PRODUCTS, INC.
                                                   Notes to Financial Statements
                                                                       Continued

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

11.  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:


                                                           Years Ended
                                                           December 31
                                                    ----------------------------
                                                        2002          2001
                                                    ----------------------------
                           Income tax benefit at
                           statutory rate           $    892,000   $    463,000
                           Other                          (2,000)       (18,000)
                           Change in valuation
                           allowance                    (890,000)      (445,000)
                                                    ----------------------------
                                                    $          -   $          -
                                                    ----------------------------

                           Deferred tax assets (liabilities) are comprised of
                           the following as of December 31, 2002:


                                                                       2002
                                                                   -------------

                           Net operating loss carry-forwards       $  1,486,000
                           Allowance for doubtful accounts               16,000
                           Compensated absences                           6,000
                           Depreciation and amortization                (22,000)
                           Contribution carry-forward                     2,000
                           Valuation allowance                       (1,488,000)
                                                                   -------------
                                                                   $           -
                                                                   -------------

                           At December 31, 2002, the Company has net operating
                           loss carry-forwards available to offset future
                           taxable income of approximately $3,985,000, 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-15



<PAGE>


                                                             NEBO PRODUCTS, INC.
                                                   Notes to Financial Statements
                                                                       Continued

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


12.  Convertible           The Company has issued Series A Convertible Preferred
     Preferred             Stock (Series A) which consist of  20,000,000  shares
     Stock                 of the authorized and unissued shares of the
                           Company's  Preferred Stock, no par value per share
                           and a stated value per share of $.20.  Holders of
                           Series A are  entitled to receive a dividend out of
                           any of the Company's assets legally available, prior
                           to any declaration or payment of any dividend on the
                           Company's  Common Stock at a rate of 6% of the stated
                           value of Series A. Dividends are fully  cumulative.
                           At December 31, 2002,  dividends in arrears totaled
                           approximately $5,500.

                           Series A shares include voting rights at one vote per
                           share and have a liquidation preference of $.20 per
                           share plus all accrued and unpaid dividends. Holders
                           have the right to convert Series A in an amount
                           determined by dividing the original purchase price
                           paid per share of Series A ($.20 at December 31,
                           2002) by the conversion price, which is equal to the
                           original price paid per share adjusted for stock
                           dividends, stock splits, stock combinations,
                           distributions, or re-capitalizations.


13.  Redeemable            The Company issued 314,013 shares of Series A
     Convertible           convertible  preferred stock with  a  mandatory
     Preferred             redeemable obligation at $.20 per share.  On November
     Stock                 1, 2003, 62,365 shares are required to be redeemed
                           and on November 1, 2004,  251,648 shares are required
                           to be redeemed. The total obligation  to the Company
                           at December 31, 2002 is $62,803. The redeemable stock
                           has a liquidation reference of $62,803 and all other
                           terms are identical to that of Series A Stock
                           convertible preferred stock.


14.  Stock Options         The Company has a stock option plan (the Option
     and Warrants          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.


--------------------------------------------------------------------------------
                                                                            F-16





<PAGE>



                                                             NEBO PRODUCTS, INC.
                                                   Notes to Financial Statements
                                                                       Continued

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

14.  Stock Options         Information regarding stock options and warrants is
     and Warrants          summarized below:
     Continued


                                                     Number of
                                                      Options
                                                        and          Price Per
                                                     Warrants          Share
                                                    ----------------------------

                           Outstanding at January
                           1, 2001                             -   $          -
                              Granted                  1,487,000       .60 -.77
                              Expired or forfeited      (219,500)      .70 -.77

                           December 31, 2001           1,267,500       .60 -.77
                              Granted                  3,943,189       .05 -.70
                              Expired or forfeited      (974,500)      .60 -.75
                              Exercised               (1,620,000)      .10 -.50
                                                    ----------------------------

                           Outstanding at December
                           31, 2002                    2,616,189   $   .77 -.05
                                                    ----------------------------


                           The following table summarizes information about
                           stock options and warrants outstanding at December
                           31, 2002:



<TABLE>
<CAPTION>
                                          Outstanding                                  Exercisable
                                 -----------------------------------------     ----------------------------

                  ---------------- -------------- -------------- ------------- -------------- --------------
                                                    Weighted
                                                     Average
                                                    Remaining      Weighted                     Weighted
                                                   Contractual     Average                       Average
                      Range of        Number          Life         Exercise       Number        Exercise
                   Exercise Prices  Outstanding      (Years)        Price       Exercisable       Price
                  ---------------- -------------- -------------- ------------- -------------- --------------
<S>                    <C>            <C>                <C>      <C>              <C>           <C>
                       $  .05-.20     1,393,189          3.58     $       .19      1,393,189     $     .19
                          .55-.77     1,221,000          9.01             .70        855,000           .67
                  ---------------- -------------- -------------- ------------- -------------- --------------
                        $ .05-.77     2,614,189          6.47     $       .43      2,248,189     $     .38
                  ---------------- -------------- -------------- ------------- -------------- --------------
</TABLE>



--------------------------------------------------------------------------------
                                                                            F-17



<PAGE>



                                                             NEBO PRODUCTS, INC.
                                                   Notes to Financial Statements
                                                                       Continued

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

15.  Stock                 During the year ended December 31, 2001 the Company
     Subscriptions         issued  1,736,781 shares of its common  stock for
     Receivable            $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  had an original due
                           date of June 30, 2002. During the year ended December
                           31, 2002, the Company  determined  that only $48,071
                           of the  remaining  uncollected  subscriptions
                           receivable  including  those to  a relative  would be
                           collected.  The  Company  cancelled  246,666  shares
                           of its common  stock  related  to  the  uncollectible
                           subscriptions receivable. The remaining subscriptions
                           receivable  are now due  between  August 15, 2008 and
                           November 1, 2010, including interest at 8% per annum.


16.  Commitments           Operating Leases
     and                   The Company leases office  facilities  under
     Contingencies         non-cancelable  operating  leaseswhich expire in the
                           year 2005.  Rental expense  incurred under these
                           leases for the years ended December 31, 2002 and 2001
                           totaled approximately $115,000 and $97,000,
                           respectively. At December 31, 2002 the future minimum
                           lease payments under these operating leases are as
                           follows:


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

                                2003                   $    104,000
                                2004                        108,000
                                2005                         74,000
                                                       -------------

                           Total future minimum
                            lease payments             $    286,000
                                                       -------------



--------------------------------------------------------------------------------
                                                                            F-18


<PAGE>



                                                             NEBO PRODUCTS, INC.
                                                   Notes to Financial Statements
                                                                       Continued

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

16.  Commitments           Employment Agreement
     and                   During  the  year  ended  December  31,  2002,  the
     Contingencies         Company  entered  into  anemployment  agreement  with
     Continued             the President of the Company.  The agreement provides
                           the President with a salary,  participation  in
                           employee benefit plans and severance pay. The
                           employment agreement expires August 20, 2007.
                           However, the Company may terminate the President at
                           any time after all debts owed to him have been paid
                           off and all loans guaranteed by him have been paid
                           off or other guarantor substituted. Severance pay
                           shall be equal to one year's annual salary and
                           employee benefits, provided that such compensation
                           shall not be due in any month that the average daily
                           price of NEBO stock exceeds $1.00 per share.

                           Factored Receivables
                           The Company entered into agreement to sell its
                           accounts receivable to a financing company in
                           November 2002. The Company receives 90% of the face
                           value of receivables sold and is required to
                           repurchase receivables at face value upon request. At
                           December 31, 2002 the uncollected receivable balance
                           that the Company may be required to repurchase totals
                           $487,780. The Company has not been asked to
                           repurchase any accounts receivable to date. The
                           Company recorded a loss of $131,436 and $6,200 on the
                           sale of receivables to the financing company for the
                           years ended December 31, 2002 and 2001, respectively.

                           Litigation
                           The Company is involved in lawsuits ensuing out of
                           the normal course of business. The Company believes
                           it has adequately accrued for possible losses that
                           could have a material effect on its financial
                           position or results of operations.


17.  Supplemental          During the year ended December 31, 2002, the Company:
     Cash Flow
     Information           |X|      Issued 5,207,553 shares of convertible
                                    preferred stock and 314,013 of mandatorily
                                    redeemable shares of convertible preferred
                                    stock in exchange for debt with a value of
                                    $791,694, accrued interest of $112,619 and
                                    consulting compensation of $200,000.

                           |X|      Issued 4,546,692 shares of common stock in
                                    exchange for services of $1,401,584.


--------------------------------------------------------------------------------
                                                                            F-19



<PAGE>



                                                             NEBO PRODUCTS, INC.
                                                   Notes to Financial Statements
                                                                       Continued

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

17.  Supplemental          |X|      Acquired a vehicle for debt in the amount of
     Cash Flow                      $39,068.
     Information
     Continued             |X|      Eliminated stock subscriptions receivable of
                                    $966,151 in exchange for the return of
                                    6,666 shares of common stock

                           |X|      Acquired a patent in exchange for accrued
                                    royalty payable of $120,000.

                           During the year ended December 31, 2001, the Company:

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

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

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

                           |X|      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.

                           |X|      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.





                                                             Years Ended
                                                             December 31,
                                                        ------------------------
                                                            2002        2001
                                                        ------------------------

                           Interest                     $  208,945   $  517,058

                           Income taxes                 $        -   $        -
                                                        ------------------------


--------------------------------------------------------------------------------
                                                                            F-20


<PAGE>



                                                             NEBO PRODUCTS, INC.
                                                   Notes to Financial Statements
                                                                       Continued

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

18.  Related Party         Related party transactions are as follows:
     Transactions
     Not Otherwise         2002
     Disclosed
                           |X|      The  Company   during  2002   modified  the
                                    terms  of  certain  stock subscription
                                    agreements  and  cancelled  subscriptions
                                    receivable of $488,151 to purchase
                                    approximately  650,867  shares of the
                                    company's common stock due from  relatives
                                    of the  Company's  President and an employee
                                    of  the  Company.  Based  on  the  modified
                                    terms  for  the individual  subscriptions,
                                    the  price  ultimately  paid  by  certain
                                    related  parties for common stock  issued in
                                    2001 under  subscriptions  receivable  is as
                                    follows:  1)  relatives  of the  President
                                    received 570,114  shares at  $.06 per share;
                                    and 2) an  employee  including  entities
                                    controlled by the employee received 320,000
                                    shares at $.41 per share.

                           2001

                           |X|      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.

                           |X|      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
                                    shareholders of the Company.

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


19.  Retirement            The Company sponsors a defined  contribution 401(K)
     Plan                  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
                           $3,000 and $8,000 for the years ended December 31,
                           2002 and 2001, respectively.




--------------------------------------------------------------------------------
                                                                            F-21



<PAGE>



                                                             NEBO PRODUCTS, INC.
                                                   Notes to Financial Statements
                                                                       Continued

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

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


                                                          2002        2001
                                                        ------------------------

                           Customer A                   $ 619,000   $   571,098
                           Customer B                     438,000             -


21.  Fair Value of         The Company's  financial instruments consist of cash,
     Financial             receivables, payables, and notes payable.  The
     Instruments           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                In June 2001,  the Financial  Accounting  Standards
     Accounting            Board issued  Statement of Financial  Accounting
     Pronounce-            Standards No. 143, "Accounting for Asset Retirement
     ments                 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. The
                           Company does not believe that adoption of this
                           statement will have a mutual effect on the Company's
                           financial position.



--------------------------------------------------------------------------------
                                                                            F-22



<PAGE>



                                                             NEBO PRODUCTS, INC.
                                                   Notes to Financial Statements
                                                                       Continued

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

22.  Recent                In August 2001, the Financial  Accounting  Standards
     Accounting            Board issued  Statement of Financial  Accounting
     Pronounce-            Standards No.144 "Accounting for the Impairment of
     ments                 Long-Lived  Assets".  This Statement  addresses
     Continued             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.

                           The  adoption  of SFAS  No.  144  did  not  have a
                           significant  impact  on the financial position or
                           results of operations of the Company.

                           In April 2002, the FASB issued Statement of Financial
                           Accounting Standards (SFAS) No. 145, "Rescission of
                           FASB Statements No. 4, 44, and 64, Amendment of FASB
                           Statement No. 13, and Technical Corrections." This
                           statement requires the classification of gains or
                           losses from the extinguishments of debt to meet the
                           criteria of Accounting Principles Board Opinion No.
                           30 before they can be classified as extraordinary in
                           the income statement. As a result, companies that use
                           debt extinguishment as part of their risk management
                           cannot classify the gain or loss from that
                           extinguishment as extraordinary. The statement also
                           requires sale-leaseback accounting for certain lease
                           modifications that have economic effects similar to
                           sale-leaseback transactions. The Company does not
                           expect the adoption of SFAS No. 145 to have a
                           material impact on its financial position or results
                           of operations.



--------------------------------------------------------------------------------
                                                                            F-23


<PAGE>



                                                             NEBO PRODUCTS, INC.
                                                   Notes to Financial Statements
                                                                       Continued

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

22.  Recent                In June 2002, the FASB issued SFAS No. 146,
     Accounting            "Accounting  for Costs  Associated with Exit or
     Pronounce-            Disposal  Activities." This standard,  which is
     ments                 effective for exit or  disposal  activities initiated
     Continued             after  December  31, 2002,  provides  new guidance on
                           the recognition, measurement and reporting of costs
                           associated with these  activities.  The standard
                           requires  companies  to recognize  costs
                           associated with exit or disposal activities when they
                           are incurred rather than at the date the company
                           commits to an exit or disposal plan. The adoption of
                           SFAS No. 146 by the Company is not expected to have a
                           material impact on the Company's financial position
                           or results of operations.

                           In December 2002, the FASB issued SFAS No. 148
                           "Accounting for Stock-Based Compensation--Transition
                           and Disclosure--an amendment of FASB Statement No.
                           123," which is effective for all fiscal years ending
                           after December 15, 2002. SFAS No. 148 provides
                           alternative methods of transition for a voluntary
                           change to the fair value based method of accounting
                           for stock-based employee compensation under SFAS No.
                           123 from the intrinsic value based method of
                           accounting prescribed by Accounting Principles Board
                           Opinion No. 25. SFAS 128 also changes the disclosure
                           requirements of SFAS 123, requiring a more prominent
                           disclosure of the pro-forma effect of the fair value
                           based method of accounting for stock-based
                           compensation. The adoption of SFAS No. 148 by the
                           Company did not have a material impact on the
                           Company's financial position or results of
                           operations.



--------------------------------------------------------------------------------
                                                                            F-24


<PAGE>



                                                             NEBO PRODUCTS, INC.
                                                   Notes to Financial Statements
                                                                       Continued

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

22.  Recent                In January  2003, the Financial Accounting Standards
     Accounting            Board  (FASB)  issued Interpretation  No. 46,
     Pronounce-            Consolidation of Variable  Interest  Entities (FIN
     ments                 No. 46), which addresses consolidation by business
     Continued             enterprises of variable interest entities.  FIN  No.
                           46  clarifies  the  application  of  Accounting
                           Research  Bulletin  No.  51,  Consolidated  Financial
                           Statements,  to  certain entities in which equity
                           investors do not have the characteristics of a
                           controlling financial interest or do not have
                           sufficient equity at risk for the entity to finance
                           its activities without additional subordinated
                           financial support from other parties.  FIN No. 46
                           applies immediately to variable interest
                           entities created after January 31, 2003, and to
                           variable interest entities in which an enterprise
                           obtains an interest after that date. It applies in
                           the first fiscal year or interim period beginning
                           after June 15, 2003, to variable interest entities in
                           which an enterprise holds a variable interest that it
                           acquired before February 1, 2003. The Company does
                           not expect to identify any variable interest entities
                           that must be consolidated. In the event a variable
                           interest entity is identified, the Company does not
                           expect the requirements of FIN No. 46 to have a
                           material impact on its financial condition or results
                           of operations.

                           In November 2002, the FASB issued Interpretation No.
                           45, Guarantor's Accounting and Disclosure
                           Requirements for Guarantees, Including Indirect
                           Guarantees of Indebtedness of Others (FIN No. 45).
                           FIN No. 45 requires certain guarantees to be recorded
                           at fair value, which is different from current
                           practice to record a liability only when a loss is
                           probable and reasonably estimable, as those terms are
                           defined in FASB Statement No. 5, Accounting for
                           Contingencies. FIN No. 45 also requires the Company
                           to make significant new disclosures about guarantees.
                           The disclosure requirements of FIN No. 45 are
                           effective for the Company in the first quarter of
                           fiscal year 2003. FIN No. 45's initial recognition
                           and initial measurement provisions are applicable on
                           a prospective basis to guarantees issued or modified
                           after December 31, 2002. The Company's previous
                           accounting for guarantees issued prior to the date of
                           the initial application of FIN No. 45 will not be
                           revised or restated to reflect the provisions of FIN
                           No 45. The Company does not expect the adoption of
                           FIN No. 45 to have a material impact on its
                           consolidated financial position, results of
                           operations or cash flows.


--------------------------------------------------------------------------------
                                                                            F-25