**XRAYMEDIA.COM INC**
 
 
 
 FILING TYPE: 10QSB
 DESCRIPTION: QUARTERLY REPORT
 FILING DATE: MAY 23, 2003
 
 PERIOD END: MAR 31, 2003
 PRIMARY EXCHANGE: OVER THE COUNTER INCLUDES OTC AND OTCBB
 
 SECURITIES AND EXCHANGE COMMISSION
 
 Washington, D.C. 20549
 
 **FORM 10-QSB**
 
 (Mark One)
 
 x Quarterly report under Section 13 or 15(d) of the Securities Exchange
 Act of 1934 for the quarterly period ended March 31, 2003
 
 
 o Transition report under Section 13 or 15(d) of the Securities Exchange
 Act of 1934 for the transition period from to . ------------ --------------
 
 
 Commission file number:33-24108D
 
 
 
 XRAYMEDIA.COM, INC.
 
 (Exact name of small business issuer as specified in its charter)
 
 
 Minnesota 41-0951123
 (State or other jurisdiction of (I.R.S. Employer Identification No.)
 incorporation or organization)
 
 
 555 West Hastings Street, Suite 1560, Vancouver, B.C., Canada V6B4N6
 (Address of principal executive office) (Zip Code)
 
 (888) 777-0658
 (Issuer's telephone number)
 
 
 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 o
 
 
 The number of outstanding shares of the issuer's common stock, $0.001 par value (the only class of voting stock), as of March 31, 2003 was 83,130,778.
 
 The number of outstanding shares at the date of completion of this report, (May 15, 2003), was 87,263,000
 
  The issuer is not using the Transitional Small Business Disclosure format.
   Page - 1
 
 TABLE OF CONTENTS
  PART IITEM 1. FINANCIAL STATEMENTSITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONITEM 3. CONTROL PROCEDURESPART IIITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDSITEM 6. EXHIBITS AND REPORTS ON FORM 8-KSIGNATURESINDEX TO EXHIBITS
  Page - 2
 
 PART 1
 
 ITEM 1. FINANCIAL STATEMENTS
 
 
 As used herein, the term "Company" refers to XRAYMEDIA.COM, Inc., a Minnesota corporation, and its subsidiaries and predecessors unless otherwise indicated. Consolidated, unaudited, condensed interim financial statements
 including a balance sheet for the Company as of the quarter ended March 31, 2003 and statements of operations, and statements of cash flows for the interim period up to the date of such balance sheet and the comparable period
 of the preceding year are attached hereto as Pages F-1 through F-9 and are incorporated herein by this reference.
 
 
 [THIS SPACE LEFT BLANK INTENTIONALLY]
 
 Page - 3
  
 XRAYMEDIA.COM, INC.
 (A COMPANY IN THE DEVELOPMENT STAGE)
 BALANCE SHEET (Unaudited)
 MARCH 31, 2003
 
 
 MARCH 31,ASSETSCURRENT ASSETSCash
$
11,540Accounts receivable

0Prepaid expenses

0TOTAL CURRENT ASSETS

11,540FIXED ASSETSFurniture and equipment (Note B)Cost

289,611Accumulated depreciation

(158,373
)Net

131,238Software License (Note B)Cost

25,000Accumulated amortization

(10,415
)Net

14,585TOTAL FIXED ASSETS

145,823OTHER ASSETSSecurity deposit

2,092TOTAL ASSETS
$
159,455CURRENT LIABILITIESAccrued expenses (Note C)
$
710,578Accrued wages payable

190,850Advance from related party (Note D).

775,734Advances  other

26,565TOTAL CURRENT LIABILITIES

1,703,727TOTAL LIABILITIES

1,703,727STOCKHOLDERS' (DEFICIT) (Note F)Common Stock, par value $.001; 100,000,000shares authorized; issued and outstanding 83,130,778at March 31, 2003

83,131Additional paid in capital

6,021,905Deficit at inception date

(746,875
)Accumulated deficit during the development stage

(6,872,338
)Common stock note receivable

(30,095
)TOTAL STOCKHOLDERS'(DEFICIT)

(1,544,272
)TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT)
$
159,455
 
 See Notes to Financial Statements.
 
 Page - 4
  
 XRAYMEDIA.COM, INC.
 (A COMPANY IN THE DEVELOPMENT STAGE)
 STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT (Unaudited)
 FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002
 AND THE PERIOD MARCH 1, 1994 (INCEPTION OF THE DEVELOPMENT STAGE)
 TO MARCH 31, 2003
 
 
  March 1, 1994(inception ofThree Months Ended March 31,

development2003


2002


stage to(as restated)


March 31, 2003(as restated)REVENUE

$
0

$
0

$
45,416COSTS AND EXPENSESPersonnel Costs


21,000


21,000


625,871Compensation expense


0


614,500


2,170,000Occupancy costs


17,471


16,314


305,091Professional fees


18,000


31,054


1,035,344Computer costs


0


0


94,840Marketing


11,860


2,126


121,062Travel


8,499


7,214


219,984Consulting


20,000


18,750


363,314Bank charges


285


302


7,401Office supplies & administration


15,535


13,449


229,023Communication


3,995


6,069


132,968Insurance


0


0


77,089Miscellaneous


1,673


205


25,841Transfer fees


50


2,300


16,334Depreciation & amortization


16,561


16,732


187,999Bad debt expense


0


0


6,343Research & Development


47,176


84,433


482,016Investor relations


4,513


5,394


104,108TOTAL EXPENSES


186,618


839,842


6,204,628OTHER INCOME (LOSS)Dissolution of Corp Reports


0


0


(503,507
)Other (Note H)


0


0


(138,774
)0


0


(642,281
)OTHER EXPENSESInterest & Penalties


6,312


287


29,121Other Interest


10,065


343


41,72416,377


630


70,845NET (LOSS).


( 202,995
)

( 840,472
)Accumulated Deficit: Beginning


(6,669,343
)

(4,989,426
)

6,872,338Ending

$
(6,872,338
)
$
(5,829,898
)
$
6,872,338BASIC AND DILUTEDLOSS PER SHARE (NOTE A).

$
( 0.0025
)
$
(0.01
)WEIGHTED AVERAGE NUMBER OFCOMMON SHARES OUTSTANDING


83,130,778


79,764,111
 
 
 See Notes to Financial Statements.
  Page - 5
 
 
 
 XRAYMEDIA.COM, INC.
 (A COMPANY IN THE DEVELOPMENT STAGE)
 STATEMENTS OF CASH FLOWS (Unaudited)
 FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002
 AND THE PERIOD MARCH 1, 1994 (INCEPTION OF THE DEVELOPMENT STAGE)
 TO MARCH 31, 2003
 March 1, 1994(inception ofThree Months ended March 31,

development stage
)2003


2002


to March 31, 2003( as restated)


(as restated
)CASH FLOWS FROM OPERATING ACTIVITIES:Net loss

$
(202,995
)
$
(840,472
)
$
(6,872,338
)Adjustments to reconcile net lossto net cash used by operatingactivities:Depreciation.


16,562


16,732


187,999AmortizationShares issued in exchange for servicescharged to Professional fees


0


0


72,000Shares issued for stock performance Plan


0


89,500


1,144,250Shares issued under section144-control position


0


525,000


1,050,000Shares issued for services





90,000


305,000Abandonment of furniture & equipment


0


0


30,809Bad debt expense


0


0


6,343Write-off of goodwill


0


0


464,831CHANGES IN CURRENT ASSETS AND CURRENT ASSETSAND CURRENT LIABILITIES:(Increase) decrease in current assets:Prepaids expenses


0


3,793


0Accounts receivable


0


0


(6,343
)Increase (decrease) in currentliabilities:Accrued expenses


70,464


7,501


552,231Accrued wages payable


21,000


21,000


190,850NET CASH USED FOR OPERATING
ACTIVITIES


(94,969
)

(86,946
)

(2,874,368
)CASH FLOWS FROM INVESTING ACTIVITIES:Acquisition of furniture and equipment


0


(3,400
)

(339,631
)Acquisition of software


0


0


( 25,000
)<Increase> decrease in security
deposit


10,849


( 94
)

( 2,092
)<Purchase> of goodwill








(464,831
)NET CASH (USED) FOR INVESTING
ACTIVITIES


10,849


( 3,494
)

(831,554
)CASH FLOWS FROM FINANCING ACTIVITIES:Issuance <repayment> of notes payable


95,194


90,131


2,693,957Shares issued for note


0


0


( 95
)Sale of common stock


0


0


1,023,600NET CASH PROVIDED BY FINANCING
ACTIVITIES . . . . . . . . . . . . .


95,194


90,131


3,717,462NET INCREASE <DECREASE> IN CASH


11,074


( 309
)

11,540CASH, beginning of period


466


2,535


0CASH, end of period

$
11,540

$
2,226

$
11,540SUPPLEMENTAL DISCLOSURE:
Interest expense

$
14,273

$
534Noncash investing and financing
activitiesShares issued for debt

$
-

$
30,000

$
-Shares issued for services


0


90,000


0Shares issued for stock performance plan


0


89,500


78,750Shares issued under section 144
control position


0


525,000


0$
0

$
734,500

$
78,750
 
 
 No significant amounts of interest or taxes
 were paid during the periods shown above.
 
 
 See Notes to Financial Statements.
 
 
 Page - 6
  
 
 XRAYMEDIA.COM, INC.
 (A COMPANY IN THE DEVELOPMENT STATE)
 NOTES TO THE FINANCIAL STATEMENTS (Unaudited)
 FOR THE THREE MONTHS ENDED MARCH 31, 2003
 
 NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
  
  
  
  
  
 Organization
 
 
 In April 2000, the Company changed its name to XRAYMEDIA.COM.
 
 The Company was incorporated in the State of Minnesota in the United States and operates in Vancouver, British Columbia and New York state. The Company's principal business, at present, is a general media Internet supersite portal currently under development. The website XRAYMEDIA.COM, when completed, will be comprised of a main general media supersite portal that will branch out into three media specific business portals: Buy & Sell Services; Public Relations Services; and Advertising Agency Services. The Company intends to sell conventional media advertising space, online advertising, and advertising and public relations services via its internet site. Because the Company is in the development stage, the accompanying financial statements should not be regarded as typical for normal operating periods.
 
 In January 2000 the Company completed a private placement offering in the amount of $810,000. Management used the offering proceeds for working capital purposes.
 
 Summary of Significant Accounting Principles
 
 a. Accounting estimates
 
 The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
 
 Page - 7
  
 
 XRAYMEDIA.COM, INC.
 (A COMPANY IN THE DEVELOPMENT STATE)
 NOTES TO THE FINANCIAL STATEMENTS (Unaudited)
 FOR THE THREE MONTHS ENDED MARCH 31, 2003
 
 
 NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 Summary of Significant Accounting Principles (Continued)
 
 b. Basic earnings per share
 
 Basic earnings <loss> per share have been calculated in conformity with Financial Accounting Standards Board Statement No. 128 "Earnings per Share". The Company has a simple capital structure with no significant potential common
 shares. Basic earnings <loss> per share is calculated weighted on the average number of common shares outstanding.
 
 c. Office furniture and equipment
 
 Office furniture and equipment purchases are capitalized and the cost depreciated over the estimated useful lives of the related assets, generally five to seven years under the straight-line method. Office furniture and equipment abandoned is written off at the time of the abandonment.
 
 d. Software license
 
 Software license purchases are capitalized and the cost amortized over the estimated useful lives of the related assets, generally three to five years under the straight-line method.
 
 e. Issuance of Common Stock
 
 The issuance of common stock for other than cash is recorded by the Company at managements estimate of the fair value of the assets acquired or service rendered.
 
 f. Income taxes
 
 In 2002 and the first quarter of 2003, only the minimum state taxes were paid. No income taxes are payable for the three months ended March 31, 2003. The Company has net operating losses of approximately $7,000,000, which will expire in the 20th year from the date the losses were incurred, i.e. from 2014 to 2023.
 
 
 Page - 8
  
 
 XRAYMEDIA.COM, INC.
 (A COMPANY IN THE DEVELOPMENT STATE)
 NOTES TO THE FINANCIAL STATEMENTS (Unaudited)
 FOR THE THREE MONTHS ENDED MARCH 31, 2003
 
 g. Functional Currency
 
 The financial statements are stated in U. S. dollars, which is the functional currency of the Company.
 
 The company maintains their financial records in U.S. dollars. If transactions had been recorded in foreign currency (Canadian dollars) and then translated into U.S. dollars using a weighted-average translation rate the difference between that amount and the activities expressed in U.S. dollars is immaterial.
 
 NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 Summary of Significant Accounting Principles (Continued)
 
 i. Impact of Accounting Standards
 
 In July 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 141, "Business Combinations", which establishes financial accounting and reporting for business combinations and supersedes APB Opinion No. 16, Business Combinations, and FASB statement No. 38, Accounting for Preacquisition Contingencies of Purchased Enterprises. SFAS No.141 requires that all business combinations be accounted for using one method, the purchase method. The provisions apply to all business combinations initiated after June 30, 2001.
 
 
 In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible Assets," which establishes financial accounting and reporting for acquired goodwill and other intangible assets and supersedes APB Opinion No.17 Intangible Assets. SFAS No. 142 addresses how intangible assets that are acquired individually or with a group of other assets (but not those acquired in a business combination) should be accounted for in financial statements upon their acquisition, and after they have been initially recognized in the financial statements. The provisions of SFAS No.142 were effective for fiscal years beginning after December 15, 2001. We adopted SFAS No. 142 during the first quarter of fiscal 2002, and the adoption of SFAS No.142 had no material impact on our financial reporting and related disclosures.
 
 In August 2001, the FASB issued SFAS No.143, Accounting for Asset Retirement Obligations, which is effective for us beginning fiscal 2003. SFAS No. 143 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made, with the associated asset retirement costs capitalized as part of the carrying amount of the long-lived assets. We do not expect the adoption of SFAS No. 143 to have a material impact on our financial position and results of operations.
 In October 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-lived Assets, which is effective for fiscal years beginning after December 15, 2001 and interim periods within those fiscal periods. SFAS N0.144 supersedes FASB Statement NO. 121 and parts of APB opinion NO. 30, Reporting the Results of Operations  Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions Relating to Extraordinary Items. However, SFAS No. 144 retains the requirement of APB Opinion No. 30 to report discontinued operations separately from continuing operations and extends that reporting to a component of an entity that either has been disposed of (by sale, by abandonment or in a distribution to owners) or is classified as held for sale. SFAS No. 144 addresses financial accounting and reporting for the impairment of certain long-lived assets and for long-lived assets to be disposed of. We do not expect the adoption of SFAS No. 144 to have a material impact on our financial positions and results of operations.
 
 In June 2002, the FASB issued SFAS No.146, Accounting for Costs Associated with Exit or Disposal Activities, which nullifies EITF Issue 94-3. SFAS No.146 is effective for exit and disposal activities that are initiated after December 31, 2002 and requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred in contrast to the date of an entitys commitment to an exit plan, as required by EITF Issue 94-3. We do not expect the adoption of SFAS No. 146 to have a material impact on our financial position and results of operations.
 
 In December 2002, the FASB issued SFAS No. 148 Accounting for Stock-Based Compensation an amendment to SFAS No.123. 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. In addition, this Statement amends the disclosure requirements of Statement 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. This statement is effective for fiscal years ending after December 15, 2002 for transition guidance and annual disclosure provisions; for financial reports containing financial statements for interim periods beginning after December 15, 2002 for interim disclosure provisions. The adoption of SFAS No. 148 did not have a material impact on our financial position and results of operations.
 
 j. Deferred tax assets
 
 Differences between accounting rules and tax laws cause differences between the bases of certain assets and liabilities for financial reporting purposes and tax purposes. The tax effects of these differences, to the extent they are temporary, are recorded as deferred tax assets and liabilities under SFAS 109 and consist primarily of net operating loss carryforward amounting to approximately $7,000,000. Because of the uncertainty of utilizing the net operating loss carryforward, a valuation allowance of the maximum has been provided against the deferred tax asset (See Note F).
 
 
 
 Page - 9
  
 XRAYMEDIA.COM, INC.
 (A COMPANY IN THE DEVELOPMENT STATE)
 NOTES TO THE FINANCIAL STATEMENTS (Unaudited)
 FOR THE THREE MONTHS ENDED MARCH 31, 2003
 
 NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 
 Summary of Significant Accounting Principles (Continued)
 
 
 k. Reclassification
 
 
 Certain 2002 amounts have been reclassified to conform with 2003 classifications.
 
 l. Fair Value of Financial Instruments
 
 The Company estimates that the fair value of all financial instruments at March 31, 2003, as defined in FASB 107, does not differ materially from the aggregate carrying values of its financial instruments recorded in the accompanying balance sheet. The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. Considerable judgment is required in interpreting market data to develop the estimates of fair value, and accordingly, the estimates are not necessarily indicative of the amounts that the Company could realize in a current market change.
 
 m. Revenue Recognition Policy
 
 Revenue is recognized when the earning process is complete and the risk and rewards of ownership have transferred to the customer, which is generally considered to have occurred upon the delivery of the media to our customer.
 
 
 NOTE B - FURNITURE AND EQUIPMENT
 
 
 Property and equipment at March 31, 2003 consisted of:
  Furniture and equipment

$
289,611Software License


25,000Less: Accumulated depreciation


(158,373
)Accumulated amortization


( 10,415
)Furniture and equipment, net

$
145,823
 
 
 Depreciation expense for the quarters ended March 31, 2003 and March 31, 2002 was $14,480 and $14,650 respectively. Amortization expense was $2,082 for both quarters.
 
 
 
 
 NOTE C - ACCRUED EXPENSES
 ---------------------------
 Accrued expenses at March 31, 2003 consisted of the
 following categories:
  Accrued Consulting expense

$
306,397Accrued Office expense


121,905Accrued Professional fees expense


127,053Accrued Website/Internet expense


144,158Accrued Other expenses


11,065Total Accrued Expense

$
710,578
  
  
 Accrued wages payable at March 31, 2003 was $190,850. This amount represents accrued wages payable for staff in the New York office.
 
 
 NOTE D - RELATED PARTY TRANSACTIONS
 
 A shareholder and close friend of the President has advanced money without interest and are payable on demand to the Company during the present quarter and the years ended 2002 and 2001 to be used in daily operations.
 
 Page - 10
  
 XRAYMEDIA.COM, INC.
 (A COMPANY IN THE DEVELOPMENT STATE)
 NOTES TO THE FINANCIAL STATEMENTS (Unaudited)
 FOR THE THREE MONTHS ENDED MARCH 31, 2003
 
 NOTE E - STOCK PERFORMANCE PLAN
 
 There were no shares issued under this plan during the quarter under review. However, the Board of Directors does offer common stock, on a discretionary basis, to certain individuals who have been instrumental in the Company's continuance. During the quarter ended March 31, 2002, a net of 1,750,000 shares were issued of common stock under the stock performance plan, respectively. Compensation expense in the amount of $85,500 was recorded in the Statement of Operations and Accumulated Deficit for the issuance.
 
 
 NOTE F - COMMON STOCK
 
 There was no common stock issued in the quarter under review. There was 3,732,222 restricted common stock issued for private placement financing at $0.025 (issued after the quarter under review.)
 
 In 1999 the Company executed a 1000 for 1 reverse stock split. This stock split has been reflected retroactively in the financial statements and notes thereto.
 
 In February 2000 the Company issued 20,000,000 restricted shares to its President and Director, Raymond Dabney in exchange for the Extended Business Model. The value assigned to the Extended Business Model has been recorded at $0.00 based on AIN-APB 16, #39 requiring the valuation be recorded as such for transactions between entities under common control.
 
 During the quarter ended March 31, 2002 stock was issued to parties to whom the Company owed money for debt and services. The stock was issued for a value of $0.03 to $0.07 per share for a total relief of debt of $30,000 and $177,000.
 
 During the quarter ended March 31, 2002 stock was issued to its President and Director, Raymond Dabney in recognition of services performed. The total number of shares issued was 7,500,000. The issued shares were valued at $0.03. The issuance was recognized in compensation expense in the Statements of Operations and Accumulated Deficit.
 
 
 
 NOTE G - NET OPERATING LOSS CARRY FORWARD
 
 The Company's net operating loss for the quarter ended March 31, 2003 of $202,995 may be utilized through the year ended December 31, 2023. The Company's net operating loss for the year ended December 31, 2002 of $1,679,917 may be utilized through the year ended December 31, 2022. The Companys net operating loss for the year ended December 31, 2001 of $1,571,200 may be utilized through the year ended December 31, 2021. The Company's net operating loss for the year ended December 31, 2000 of $1,671,139 may be utilized through the year ended December 31, 2020. The Company's net operating loss for the year ended December 31, 1999 of $205,851 may be utilized through the year ended December 31, 2019. The net operating loss created during the years ended December 31, 1994 through 1998 of $1,541,236 may be utilized through the years ended 2014 and 2018, respectively. SFAS No. 109 requires a valuation allowance be recorded when it is more likely than not that some or all of the deferred tax assets will not be realized. At March 31, 2003 a valuation allowance for the full amount of the net deferred tax asset was recorded because of uncertainties as to the amount of taxable income that would be generated in future years. The valuation allowance which was increased by approximately $81,000 for the three months ended March 31, 2003 and $202,500 for the same period in 2002, using an anticipated income tax rate of 40 percent in both instances.
  Page - 11
 
 NOTE H -OTHER INCOME
 
 The other income occurred in the year ended December 31, 1999 arose from the forgiveness of certain indebtedness to an unrelated stockholder.
 
 NOTE I - GOING CONCERN
 
 The Company has had minor sales and suffered recurring losses from operations that raise substantial doubt about its ability to continue as a going concern. However, the financial statements do not include any adjustments that might
 result from the outcome of this uncertainty.
 
 The Company has been in the development stage since March 1, 1994. It is the Company's intention to grow through generating sales. However, in order to support existing operations, the Company plans to seek additional financing, form strategic partnerships to increase market share, and acquire additional shareholder capital. The ability to achieve these objectives raises substantial doubt about the company's ability to continue as a going concern.
 
 
 
 
 
 NOTE J  STATUTORY VIOLATION
 
 During the quarter ended March 31, 2003 and the year ended December 31, 2002 the Company did not remit required payroll taxes for employee withholdings and Company related payroll tax expenses. These withholdings and expenses have been accrued at quarter-end in the amount of $61,498. Estimates were made for violation penalties and interest in the amount of $29,121 and this amount is listed in the appropriate expense category in the Statement of Operations and Accumulated Deficit.
 
 NOTE K  THREATENED LITIGATION
 
 Due to the on-going negative cash flow the Company has been unable to pay certain vendors for services. Certain items have been forwarded to collection agencies and legal action has been threatened. No additional liability has been accrued beyond the original amount payable.
 
 NOTE L  LONG TERM COMMITMENTS
 
 
 In February 2003, the Company signed a three-year lease for office space in Vancouver, British Columbia. The term of the lease extends from March 2003 through April 2006. The minimum monthly rent payments are $2,869. Future minimum lease payments are as follows:
   2003

$
20,0832004


34,4282005


34,4282006


14,345Total

$
103,284
  
 NOTE M  SIGNIFICANT FOURTH QUARTER ADJUSTMENTS
 
 During the year ended December 31, 2002 there were significant fourth quarter adjustments with regard to the valuation of compensation expense. The stock issuance during the first, second and fourth quarters were valued at less than fair market value at the time of issuance. The financial statements were adjusted to reflect this and those adjustments are reflected in the restated unaudited financial statements for the three months ended March 31, 2002.
   Page - 12
 
 NOTE N  SUBSEQUENT EVENTS
 
 On May 5 2003, the Company issued 3,732,222 non-registered 1-year restricted shares for a private placement financing totaling $93,305.55. The offering is restricted to the amount of the authorized share capital of 100 million. An immediate registration statement is not required for this form of financing, as the shares issued are not registered or freely tradable. The company anticipates raising additional funds using this form of financing at prices to be determined.
 
  Page - 13
 
 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
 
 General
 
 As used herein the terms "XRAY" and "XRAYMEDIA " refers to Xraymedia.com, Inc., A Minnesota corporation, its subsidiaries and predecessors, unless the context Indicates otherwise. On June. 28, 2000 the name was changed from e-bidd.com, Inc., to xraymedia.com inc. To avoid a potential conflict with another totally separate and unrelated company by a similar name, www.ebid.com, that also operated as an internet auction site.
 
 Xraymedia's principal business, at present, is a recently launched general media internet SuperPortal which is already under redevelopment and expansion The website, www.xraymedia.com, when completed, will be comprised of a main
 general Media Superportal that will branch out into three media specific portals: Corporate Culture; Media Commerce; and Community Resources. Xraymedia intends to sell conventional media advertising space, online advertising, and
 advertising and public relations services via its internet website.
 
 On May 29th 2001 The Company announced that it has acquired from a European Company called TS4U LTD a breakthrough, dynamically interactive streaming-auction / inventory implementing software system. The transaction allows for XRAYMEDIA to retain ownership of the revised software "XRMD System" with all the necessary Advertising/Media Industry categories and database structures required for the launch of its Media Auction. Under the terms of the Agreement XRAYMEDIA is not to sell, license or distribute the software to any third parties for business use at anytime. The deal also calls for the TS4U LTD not to compete in the Advertising/Media Industry worldwide. XRAYMEDIA Can only use the technology for the Advertising/Media Industry worldwide. The company then proceeded to make the necessary changes to the software to launch a full real-time advertising/media inventory negotiating system for the media industry.
 
 On August 21st 2001 the company officially launched v1.0 of it's newly acquired Software called the XRAYMEDIA Live Media Marketplace. Through the newly launched site, media buyers and sellers will be able to register, list media buy and sell orders, track inventory changes, add private members to their personal groupings, negotiate and close deals, in an online, real-time dynamically streaming marketplace. The site offers a powerful tool not only for those bidding on and selling ad space, but also for companies who need to be able to manage their inventory more efficiently. We encourage media professionals to test it for this use, as well as for regular online media auctions. The XRAYMEDIA Live Media Marketplace is a system capable of providing one-on-one negotiations while dynamically loading inventory changes. It has a simple format within a live, public/private market forum. The dynamics of streaming all media inventory, multiple bidding capabilities, targeting, as well as analyzing inventory, it is robust enough to handle high volume and has much practical use in addition to its function as a pure auction site.
  Page - 14
 
 On October 29th 2001 the company launched v2.0 of its Live Media Marketplace. The upgraded system allows buyers and sellers of advertising inventory to manage, source, target, analyze, negotiate and transact multiple media/advertising purchases and sales in real time. Version 2.0, as in the launch version, is an online trading floor that is dynamic, private and secure. The upgrade adds powerful tracking mechanisms. These include the ability to select and pinpoint specific matches within a larger trading environment, allowing for greater flexibility in displaying and following specific orders. Version 2.0 makes it easier for companies who have hundreds or thousands of pieces of inventory or orders to track specific ones at any given time.
 
 On July 17 2002 the company announced that it launched a worldwide financial services division specializing in Media /Advertising buyers credit facilities. Reporting it had secured worldwide funding sources for Media /Advertising purchases. On October 9, 2002 the company announced that it launched the "XR2 System" it will offer sales/marketing-oriented individuals regardless of their experience the opportunity to receive commissions and bonuses, while using the "Live Media Marketplace". The company is creating jobs & Agency Branches offering licensed Independent Media Managers and Independent Media Traders full time or part-time opportunities in the media industry. The goal is to bring on 10 or more IMM's or IMT's in each major city across North America. Providing licensees, with full training and course manuals, presentations, sales techniques, brochures, lead generation, on going customer support & training.
 
 On December 3, 2002 the company announced that it launched an Entertainment Division The new division will undertake projects that are expected to include production of major motion pictures, music and artist representation. The new division was in response to several opportunities with which have been presented including the possibility of engaging in ventures with groups that produces and markets popular recording artists and movies geared to the lucrative urban youth market. The company is in negotiations for future projects and believes it could lead to some exciting new ventures. On December 6, 2002 the company announced that it had received a $4 Million USD Mainstream Media Contract for Listing in the Live Media Marketplace. This contract represents one of the largest wholesale ad buying opportunities listed in the Live Media Marketplace. Live negotiations are open to the general public on a first come first served basis; significant discounts can be negotiated on this $4 million USD advertising campaign. The contract covers most mainstream medias available on the market today. Upon purchase, coverage can be targeted to your specific demographics through TV, Radio, Print, Online and Out-of Home; free media planning will be provided by one of the largest US media-buying firms.
 
 On March 5, 2003 the company announced that it will release Version 3.0 of The Live Media Marketplace adding new media trade modules giving all registered users of the ability to negotiate media purchases in real-time for either cash, or a cash/trade blend. This includes the ability to negotiate the cash value of the media as well as the cash values of the trade items, allowing users to select the number of items being negotiated on in each purchase, and allowing all users to negotiate and change values with cash or a cash/trade blend in real-time. Users can input any percentage blend of cash or trade, from a 100% cash deal, to an 80/20-cash/trade blend or 35/65, 70/30 etc. The company anticipates these new trade modules will expedite discussions with various registered companies looking to use the LMM v3.0 technology under private label agreements to market to their client bases.
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 On March 13, 2003 the company announced that IMC & XRAYMEDIA Secured a Major Joint Venture Agreement, with Total Media Value in Excess of $1.1 Billion Founded in 1929 and comprises 21 entities and 463 joint ventures devoted to Multi-Media/Direct Response Marketing. With 1,250 employees, IMC is a leading Multi-Media/Direct Response Marketing company providing services to 175 of the nation's leading companies as well as other emerging businesses. The goal of the Joint Venture is to create a mass media trading center using IMC's media inventory and target-marketing programs with XRAYMEDIA's live media negotiating platform.
 
 On March 18, 2003 the company released the new LMM v3.0 uniting live media negotiating with trade/barter modules giving all registered buyers and sellers flexibility and negotiating power, enabling the general public to choose the way they wish to purchase advertising in a powerful and cost effective manner. All media trading activity takes place on each users private "Media Trading Floor" screen. Users can enter new media buy and sell orders, negotiate in real-time choosing currencies from around the world or use the new trade/barter modules to instantly change cash/trade values and percentage blends. The live updating technology automatically creates "Media Matches" with "Media Orders" appearing on the personal "Media Trading Floor". These matches are "Media Orders" placed by other users that match the users' Media Buy and/or Sell Order criterion. Once these matches are generated, all users can review the details and begin to negotiate in real-time. At any point both negotiating parties agree upon a price and close the deal online, simultaneously deleting the sold media orders from all other users screen.
 
 Since January 2002 until now the company has been in transition from the research and development stage into reporting revenues and sustained growth. The interest our technology from the general public and the media industry has grown considerably in the last quarter of this year, evidenced from the agreements the company has entered into and the new clients registering in the Live Media Marketplace. The company has also received several inquiries for media partnership opportunities; these companies are looking to pursue additional revenue streams through the use of the Live Media Marketplace v3.0.
 
 Marketing efforts will be the focus for the remainder of the year, including releasing incentive plans for our partners' clients and for the general public. Listing advertising opportunities in the Live Media Marketplace will be the parallel focus, as new opportunities become available. Compounding our various Joint Venture Partners' success is our goal; IMC is a prime example to personify the success that compounded JV's can have. When we launch the campaigns for IMC, we are preparing for mass interest and registrations; IMC alone has hundreds of partners and literally thousands of opportunities for us to work with. We have made major strides to build a unique venue for buyers and sellers of advertising around the world. This joint venture with IMC represents another landmark in our Company's history, and the future has never looked brighter. Based on the new Joint Venture Agreements and the heightened interest from the general business community the company anticipates closing its first deals through the system within the second quarter of 2003.
 
 PLAN OF OPERATIONS;
 
 XRAYMEDIA's plan of operation for the remainder of the year 2003 consists of commencing operations of its Media Auction. XRAYMEDIA feels that commenced operations will enable it to engage in the business of selling conventional
 media advertising space, online advertising, and advertising and public relations services via its Internet site. XRAYMEDIA will also continue to develop strategic relationships to help it reach its initial revenue goals.
 
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 A. RESULTS OF OPERATIONS;
 
 Three months ended March 31, 2003, compared to three months ended March 31, 2002.
  Sales
 
 There were no revenues during the three months ended March 31, 2003. XRAYMEDIA generated minor revenues from operations during 2002.
 
 Losses
 
 Net losses for the quarter ended March 31, 2003, decreased to $202,995 from $840,472 for the quarter ended March 31, 2002. The decrease in losses was primarily attributable to decreased compensation expense, a new costing category
 introduced retroactively in 2001, to reflect a reporting change to share pricing at market value XRAYMEDIA expects to continue to incur losses at least through fiscal year 2003 and there can be no assurance that XRAYMEDIA will achieve or maintain profitability or that revenues will be generated or that growth can be sustained in the future.
 
 
 
 Expenses
 Selling, general and administrative expenses for the three months ended March 31, 2003, decreased to $139,442 from $755,409 for the three months ended March 31, 2002. The decrease in selling general and administrative expenses was directly attributable to the fact that there were no shares issued during the three months ended March 31, 2003 and thus no compensation expense. Depreciation and amortization expenses for the three months ended March 31, 2003 and 2002 were $16,562 and $16,732, respectively. Research and Development expenses decreased during the three months ended March 31, 2003 to $47,176 from $84,433 for the three months ended March 31, 2002. The Companys expenditures for research and development are decreasing as the Company gets closer to ending the development stage of business.
 
 B. Liquidity and Capital Resources
 
 Cash flows used by operations was $94,969 for the quarter ended March 31, 2003, and used by operations for the quarter ended March 31, 2002 was $86,946. The decrease in negative cash flow for the quarter ended March 31, 2003 was attributable to the offsetting of expenses by short term borrowed capital.
 
 Cash flows generated by investing activities were $10,849 for the quarter ended March 31, 2003, and $(3,494) for the quarter ended March 31, 2002. The positive increase in cash flow for the quarter ended March 31, 2003, is primarily attributable to the limited refund of a rental deposit.
 
 Cash flows generated from financing activities was $95,194 for the quarter ended March 31, 2003 and $90,131 for the quarter ended March 31, 2002. XRAYMEDIA's financing activities for the quarter ended March 31, 2003 primarily consisted and for the quarter ended March 31, 2002 consisted of increased advances from related parties although, in 2002 a portion of the financing activities included the issuance of XRAYMEDIA's common stock to retire a portion of it's debt.
 
 XRAYMEDIA has funded its cash needs over the periods covered by this Form 10-QSB through the advances from outside parties . XRAYMEDIA anticipates that this is not sufficient working capital to cover its cash needs over the next
 three quarters. XRAYMEDIA intends to cover its cash needs over the next nine months in part through outside advances, but also through the sale of additional shares of its common stock pursuant to a registration statement or an appropriate exemption from registration. However, there is no guarantee hat XRAYMEDIA will be able to raise additional funds from the sale of
 its securities.
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 On January 18, 2000, XRAYMEDIA negotiated a private placement with two separate investment groups in the amounts of $500,000.00 and $360,000.00 for netted proceeds of $810,000.00 to be used as general working capital. These total
 gross proceeds bought 4,200,000 units at a price of $.20 per unit. Each unit consisted of one share ("Share") of common stock of XRAYMEDIA and one warrant to purchase an additional share of common stock at a price of $.30 for
 a period of one year from the date of issuance ("First Hold Period") and at a price of $.50 for a period of one year from the end of the First Hold Period ("Second Hold Period"). A portion of the shares were offered to 22 non-US
 residents outside the United States in reliance upon Regulation S promulgated under the Securities Act of 1933 and the remainder of the shares offered to 4 investors in the United States in reliance upon Regulation D.
 
 C. Capital Expenditures
 
 XRAYMEDIA made no significant capital expenditures on property or equipment for the development of our website, computers and servers over the periods covered by this report. The only planned capital expenditure is ongoing website development and operating costs. XRAYMEDIA has budgeted $150,000 for this expenditure.
 
 A year ago, XRAYMEDIA's website has passed its test stage and became operational to handle the real-time interactive business then expected. The newest developments have resulted in numerous new modifications and will need other change as it explores the different pathways.
  XRAYMEDIA's estimated cash requirements are approximately $800,000 annually. The majority of our cash requirements will be used for personnel costs, professional fees and further website development.
 
 D. Income Tax Expense (Benefit)
 
 XRAYMEDIA has net operating loss carry forwards of approximately $7,000,000 which will expire between 2013 & 2023.
 
 
 
 E. Impact of Inflation
 
 XRAYMEDIA believes that inflation has had a negligible effect on operations Over the past three years. XRAYMEDIA believes that it can offset inflationary Increases in the cost of materials and labor by increasing sales and improving Operating efficiencies.
 
 
 F. Critical accounting policies
 
 Our discussions and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. In consultation with our Board of Directors, we have identified accounting policies that we believe are key to an understanding of our financial statements. These are important accounting policies that require managements most difficult, subjective judgments.
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 Revenue Recognition
 
 Revenue is recognized from product sales upon delivery of the media to the customer.
 
 Research and Development Expenses
 
 All research and development expenses are expensed as incurred. Costs incurred to establish the technological feasibility of our web site is expensed as incurred and included in Research and Development expenses. There are no production costs to capitalize as defined in Statement on Financial Accounting Standards NO.86.
 
 Functional Currency
 
 The financial statements are stated in U. S. dollars, which is the functional currency of the Company.
 
 The company maintains their financial records in U.S. dollars. If transactions had been recorded in foreign currency (Canadian dollars) and then translated into U.S. dollars using a weighted-average translation rate the difference between that amount and the activities expressed in U.S. dollars is immaterial.
 
 
 ITEM 3. CONTROL PROCEDURES
 
 Evaluation of Disclosure Controls and Procedures. The Companys Chief Executive Operating Officer/Chief Financial Officer, after evaluating the effectiveness of the Companys disclosure controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c) under Securities Exchange Act of 1934, as amended (the Exchange Act)), have concluded that, as of the Evaluation date, the Companys disclosure controls and procedures were effective to ensure the timely collection, evaluation and disclosure of information relating to the Company that would potentially be subject to disclosure under the Exchange Act and the rules and regulations promulgated therein. 
 Changes in Internal Controls. There were no significant changes in theCompanys internal controls or in other factors that could significantly affect the internal controls subsequent to the Evaluation date. 
 
 PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings. Not applicable
 
 Item 2. Changes in Securities. Not applicable.
 
 Item 3. Defaults Upon Senior Securities. Not applicable.
 
 Item 4. Submission of Matters to a Vote of Security Holders. Not applicable.
 
 Item 5. Other Information. On or about August 4, 1999, we issued 10,000,000
 shares of our common stock to Laurier Limited to acquire a license for certain
 computer software related to our auction website. Because we never received the
 computer software from Laurier Limited, our management has cancelled those
 10,000,000 shares of our common stock.
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 Item 6. Exhibits and Reports on Form 8-K.
 
 (a) Exhibits required by Item 601 of Regulation S-B.
 
 Exh. 2 - not applicable
 Exh. 3 - previously filed with Commission
 Exh. 4 - previously filed with Commission
 Exh. 10 - previously filed with Commission
 Exh. 11 - included in financial statements filed in Part I
 Exh. 15 - not applicable
 Exh. 18 - not applicable
 Exh. 19 - not applicable
 Exh. 22 - not applicable
 Exh. 23 - not applicable
 Exh. 24 - not applicable
 Exh. 27 - Financial Data Schedule
 
 (b) Reports on Form 8-K. No reports on Form 8-K were filed by us during
 this quarter.
 
 
 
 SIGNATURES
 
 Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this Report on Form 10-QSB to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
 XRAYMEDIA.COM, INC.
 
 
 DATED: May 21, 2003
 By: /s/ Raymond C. Dabney
 Raymond C. Dabney,
 President and CEO
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