<PAGE>

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


                                   Form 10-KSB

[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
    of 1934.

                  For the fiscal year ended December 31, 2002.
                                -----------------

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
    Exchange Act of 1934

For the transition period from __________ to __________

                        Commission File Number: 333-30914
                                                ---------

                             Xtreme Companies, Inc.
                  --------------------------------------------
                 (Name of small business issuer in its charter)

          Nevada                                                  88-0394012
-------------------------------                              -------------------
(State or other jurisdiction of                                (I.R.S. Employer
incorporation or organization)                               Identification No.)

                             9116 Covered Wagon Dr.
                             Las Vegas, Nevada 89117
                     --------------------------------------
                    (Address of principal executive offices)

                                 (702) 243-4199
                            -------------------------
                           (Issuer's telephone number)

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

Securities Registered Pursuant to Section 12(g) of the Act: Common

Stock, $0.001 par value per share, 50,000,000 shares authorized 30,820,065
issued and outstanding as of December 31, 2002.

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

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

State issuer's revenues for its most recent fiscal year: $0

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked price of such common equity, as of a
specified date within the past 60 days.
(See definition of affiliate in Rule 12b-2 of the Exchange Act.)

Note: If determining whether a person is an affiliate will involve an
unreasonable effort and expense, the issuer may calculate the aggregate market
value of the common equity held by non-affiliates on the basis of reasonable
assumptions, if the assumptions are stated.

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

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                                    CONTENTS

                                                   PAGE
PART I

Item 1. Description of Business...................... 2
Item 2. Description of Property .................... 10
Item 3. Legal Proceedings........................... 10
Item 4. Submission of Matters to a Vote of Security
        Holders..................................... 10

PART II

Item 5. Market for Common Equity and Related Stockholder
        Matters..................................... 10
Item 6. Management's Discussion and Analysis or Plan of
        Operation................................... 10
Item 7. Financial Statements........................ 11
Item 8. Changes in and Disagreements with Accountants on
        Accounting and Financial Disclosure......... 11

PART III

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

SIGNATURES   ........................................ 14

<PAGE>

                                     PART I

ITEM 1. Description of Business

XTREME COMPANIES INCORPORATED is a Nevada corporation designed to assist in the
acquisition development and finance of energy related issues. The primary
mission of XTRE has been to surround the company with scientists, executives,
operators and contractors with a history of success to forward the following
business plan. In addition to the personnel we have chosen, our flagship of
operations Waste Renewal Systems, Inc. will contribute to the cash flow yields
that facilitate the launch of this business plan.

Executive Summary

Background

Municipal solid waste disposal is one of the most serious environmental issues
facing the industrialized world today. The $180 billion cost of collection and
disposal of municipal solid waste continues to stretch government limits as
population and industrialization grows. Unfortunately, nearly half of the
worldwide costs for disposal and collection of municipal solid waste is paid for
by the already stretched thin state and local government systems in the United
States. Inefficient ways to solve the municipal solid waste problem in the past
have included landfill disposal (57 percent), material separation and recycling
(27 percent) and direct combustion (16 percent).

Meanwhile, governmental and social concerns about the effects of landfills and
solid waste incineration on the environment (leaks, spills and hazardous/toxic
emissions) have spawned a variety of state and federal regulations that have
dramatically increased disposal costs and municipal solid waste operator
liabilities. Increasingly, these regulations and others are severely limiting
the future use of landfills and incineration as a municipal solid waste
management option. Material separation, using both curbside recycling and
material recycling facilities, are proving to be costly operations, and on their
own, are not achieving the mandated government goals of recycling 50 percent of
all waste. A new cost effective, and environmentally friendly, way of disposing
of solid waste is desperately needed before the costly environmental problem
hits the crisis stage.

Waste Renewal Systems, Inc., a wholly owned subsidiary of the publicly traded
Xtreme Companies, Inc., provides an innovative and revenue generating patented
proprietary waste processing solution for this serious environmental issue. The
technology uses Thermo Reduction, a heat absorption process converting solid
waste (municipal and selected industrial refuse) into "char" and a low-grade
methane gas. "Char," an inert Carbon-based product, and natural gas created as a
by-product, provides all the energy required to run the self-sufficient process
plant. Further, the plant's efficiencies can produce revenue producing excess
energy for use and sale to others. Meanwhile, the separated recyclables such as
plastic, glass and metal can be sold into an existing marketplace.

This innovative Thermo Reduction process is economically viable well below
ordinary domestic disposal fees, otherwise known in the industry as "tip" fees,
of $28 per ton. The patented Waste Renewal Systems, Inc., technology converts
over 95 percent of the traditional municipal waste stream by weight, into
commercially marketable products such as natural gas and recyclables. The
implementation of this technology diverts over 95 percent of municipal solid
waste by volume from landfills and other disposal methods, handily exceeding all
mandated recycle rates set as goals for communities by law and practice.

Waste Renewal Systems, Inc., has assembled a core management team to expand the
company by taking advantage of the current market situation for alternative
waste processing systems. This allows the company to facilitate the adoption of
the technology by:

Using extensively favorable low-interest financing vehicles to build facilities
for cash-strapped municipal governments. (solid waste municipal bonds)

Assisting communities to achieve their goals of recycling more than 50 percent
of their waste, thereby cost-effectively exceeding the state and federal
mandates.

Reducing the impact of ever-increasing costs of landfill waste disposal as
reflected in escalating "tip" fees.

Maximizing the profitability of the technology through potential revenue
generating and commercially marketable uses of the processed waste.

Using conservative economic projections, Waste Renewal Systems, Inc. anticipates
becoming profitable and producing substantial cash flow within the first years
of operation. As it builds more plants, and potentially identifies higher value
uses for the commercial by-products, the company believes that its profitability
will rapidly increase, possibly achieving more than a 60 percent
return-on-investment on an annual basis.

                                       2
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The Business Model

Governments and societal stakeholders are mandating the rapid development of
landfill alternatives to dispose of municipal solid waste. This is causing
tremendous pressure, both domestically and internationally, to find
environmentally safe and cost effective solutions to address the global
municipal solid waste problem.

Waste Renewal Systems, Inc., is using technology to solve the municipal waste
problem in the following ways:

Waste Acquisition and Processing - Efficiently locates, constructs and operates
waste processing facilities.

Down-Stream Product Recovery - Identifies and positions the company, and its
municipal partners, to gain maximum revenue from the use of natural gas,
valuable recyclables and the char by-products produced.

Research and Development - Supports the above two initiatives through enhancing
and expanding the waste processing technology.

Waste Renewal Systems, Inc., through its highly skilled executive team, has
contracted with several partners that have the responsibility for the
identification and development of potential waste processing opportunities.
Further it has developed several synergistic joint venture arrangements, both
domestically and internationally, that may allow the company to enter and expand
into high value markets.

The company also has access to the fully equipped Johnson Environmental Research
Center that is utilizing a pilot application of different solutions. This is in
addition to the many commercial demonstration plans already developed by Waste
Renewal Systems, Inc. personnel.

The company has identified, and is in the process of negotiating favorable terms
for, potential waste-processing sites. Three are located in Canada, five sites
are in South America and 17 are located in the United States. Each meets the
economic and volume criteria to satisfy Waste Renewal Systems, Inc.'s financial
projections. In addition, the company will seek to form joint ventures, and will
negotiate revenue-producing opportunities, which may provide maximum value to
Waste Renewal Systems, Inc. for its commercially viable by-products.

The Market

In the mid-1990's, the major industrial countries of the world were generating
more than 450 million tons of municipal solid waste annually - with the United
States alone accounting for more than half of the total. The municipal solid
waste problem has more than doubled in the United States over the past 40 years,
with most of the growth coming in the past 20 years. By the year 2003, nearly
222 million tons of municipal solid waste will be generated in the United States
every year. Even worse, these trends are expected to accelerate as the
population expands.

Nearly 70 percent of municipal solid waste is composed of organic materials
(paper, yard wastes, wood and food waste). The balance is composed of
traditional recyclable material (plastic, glass and metal). Since the mid
1980's, recycling, combustion and composting have played larger roles in
municipal solid waste disposal strategies. This strategy was in direct response
to the mandate for municipal governments to reduce the amount of waste being
buried in landfills. In 1995, 57 percent of municipal solid waste was being
buried in landfills, 27 percent was being recycled and 16 percent was being
incinerated.

On a global basis, the municipal solid waste industry generated approximately
$180 billion in revenue. Of this, $37.5 billion was income from recyclables. The
United States portion is valued at $50 billion, with $1.5 billion coming
directly from recyclables.

Five principal competitors dominate the landfill, transfer and recycling
segments of the United States municipal solid waste industry. Further, these
competitors are spearheading the consolidation of the industry through
additional mergers and acquisitions. The balance of the industry is composed of
smaller collection, hauling and disposal companies.

During the last decade, several attempts have been made to bring fresh
approaches to the solid waste industry. Increasingly, the high costs and
difficult to manage aspects of these environmentally unfriendly alternative
technologies, such as incineration and chemical treatments, have made it
difficult or impossible to compete with traditional landfill approaches to
municipal solid waste management. High fuel prices and declining electricity
revenue, the economic underpinning of most incineration projects, have rendered
them uneconomic.

There are a number of changes forthcoming in this industry that potentially can
facilitate the advancement of the Waste Renewal Systems, Inc. approach. These
include the limited availability of the cost-effective and environmentally
friendly landfill alternative along with rapidly accelerating costs in the
municipal solid waste industry.

                                       3
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Landfill Issues

Significant regulatory changes are occurring at the state and federal levels.
The passage of Sub-Title "D" of the United States Environmental Protection
Agency (EPA) regulations in 1989, along with various other prohibitive state
statutes, have substantially increased landfill operation costs. Substantially
increasing capital costs have occurred from the mandates for multiple landfill
lines, which have extended owner/operator liability costs for leaks, spills and
other environmental damage. In addition, these regulations have attempted to
mitigate concerns about the effects of escaping methane and other
environmentally unfriendly gases into the atmosphere. Finally, many states are
passing statutes limiting the amount of the municipal solid waste stream that
can be buried in landfills.

Some industry experts have suggested that no new landfills will be permitted
beyond the year 2006. Because of this, research costs for expensive landfill
alternatives will have to be passed on to consumers in the form of higher tip
fees and taxes. Appendix A-8 profiles the major industrial countries most at
risk for this landfill usage crisis.

Recycling Issues

Many recycling operations continue to be costly and inefficient. Curbside
recycling programs are less than effective and their segregation and recovery
sorting methods continue to be unpopular with even eco-conscience consumers.
Furthermore, these programs also experience high costs because of the redundant
workers and vehicles required to support the highly labor intensive method of
traditional recycling. Material recovery facilities are currently the most
advanced municipal solid waste processing and treatment facilities being built
today.

Clearly, the advantage in this changing paradigm will belong to those
competitors that develop technologies and strategies that provide
environmentally friendly and cost effective alternatives to landfills. Waste
Renewal Systems, Inc. believes that it is best positioned to take advantage of
this profitable shift in the municipal solid waste industry.

New Technical and Commercial Processes

Since the early 1980's, a number of companies have been involved in the attempt
to treat municipal solid waste with heat and pressure. This research has
developed into a handful of patents, pending patents and proprietary and
intellectual property rights. Several pilot plants were built to demonstrate the
concept, and out of those initial efforts and refinements, a prototype
commercial sized facility was built and has been in operation for over two
years. The development of a prototype facility, along with the changing economic
conditions (increasing tip fees, liabilities and regulations), proved this
process to be economically and technically viable.

Thermo Reduction is a patented technology that vastly reduces the mass of solid
waste by 80 percent while recovering significant energy. Waste Renewal Systems,
Inc. believes the process, unlike incineration, does not produce any air
pollutants. The process is both modular and scaleable and can be used in small
remote locations, or in large cities, with no potential impact on the
environment or local infrastructure. Thermo Reduction is a heat absorption
process converting solid waste (municipal and selected industrial refuse) into
"char" and a low-grade methane gas. "Char" is an inert Carbon-based product that
has many commercial applications and the natural gas by-product provides all the
energy required to run the Thermo Reduction Process Plant. Further the natural
gas by-product can create excess revenue generating energy.

The core piece of the Thermo Reduction process is called the "retort" and it
serves as the key to the process. Solid waste is first collected, then sorted by
removing valuable recyclables and finally is shredded before being fed into the
retort. The retort is where waste is metered and injected inside an air tight
stainless tube for heating to 850 to 1200 degrees Farenheight, depending on the
nature of the waste stream. As the internal energy from heat builds inside the
tube, the solid waste breaks down into steam, Carbon oxides, volatile vapors and
char. Meanwhile, the airtight canister eliminates the Oxygen needed to create a
flame. Steam started, the process becomes anaerobic and the waste is heated
further to the point where volatile natural gases such as Hydrogen, Methane and
Ethane are distilled. Each pound of solid waste processed by Thermo Reduction
can potentially yield 12 cubic feet of gas. The energy value of the natural
gases produced varies depending on the type of waste being processed.

Intellectual Property

Several patents currently exist for this type of solid waste removal technology
and other patents are currently pending. Waste Renewal Systems, Inc., has
consolidated, under license and assignment, not only the intellectual property
that represents this unique technological process, but also all prior patents
that could be used to develop a similar process. The company has strategically
positioned itself to protect and defend its intellectual property and
financially capitalize on it to the maximum extent of the law.

                                       4
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Description of XTRE Current Business

XTRE has a wholly owned company named Waste Renewal Systems, Inc., with the
ability to answer our cities needs to find an alternative to the current
available environmentally harmful waste disposal systems. It processes waste
without creating harmful residues and it produces valuable end products. WRSI is
a perfect partner to existing waste disposal or recycling systems. In con
junction with a landfill, WRSI can extend the life of the landfill while
providing an additional source of profits. The WRSI plant can be built in
various sizes. A small. Plant such as a 100-ton plant can be built for a
factory. Municipal waste plants can be built to any size. WRSI will create jobs,
produce aggregate products that could reduce costs and supply valuable
electrical production revenues, while generating significant profits for WSRI
and XTRE. These renewal systems are the system of the future in the waste
management industry.

History of IPF
--------------
Independent Power Finance Corporation was formed in January 2002 and will be
merged into XTRE to create a new energy bond issue sculptured to supply adequate
collateral and equity protection by use of new CMO and CDO issues. Recent events
in the energy industry have created a shortage of financial institutions capable
of delivering structured finance packages to its borrowers. During the
development of the energy issues, IPF will maintain a mortgage banking operation
with a warehouse line of $400 million and expected gross mortgage loans of $500
million per year. Contracts for sources financing are being negotiated with
production home builders on a national level.

XTRE will fund the XTRE Tech Corporation and IPF will cause the exit strategy
for all debt issues of the parent company. XTRE Tech has a patented and tested
oil treatment technology, with applications in Refinery, Field Production, and
Pipeline transportation, primarily impacting the use and profitability of heavy
crudes. In addition to oil technology, the tech-company has been licensed to use
certain geothermal power production technology.

XTRE Tech Corporation (in organization) Targeted Acquisitions
-------------------------------------------------------------
XTRE Tech will negotiate the rights to acquire the Intellectual Property,
including Patents, know-how, and working mechanisms, and the commitment of the
science team to develop and market the oil treatment technology and geothermal
technologies. The oil technology can be deployed in Refinery systems, at the
field production level, and to enhance pipeline transportation of heavy crudes.
Independent review of the technology by a former top research and development
executive from a major oil company indicates that the expected benefit to a
Refinery per barrel of heavy crude will range between $3 to $4 net of costs.
Unlike most process enhancement devices causing major changes in the mechanical
stream and elevating retrofit costs, this technology deploys a single moving
part, which can be readily fitted in the existing pumping network of the
refinery. Every petroleum engineer who has learned or witnessed this technology
has requested some form of marketing/use contract to enjoy the cash flow
enhancements that are as substantial as they are obvious.
The tested and proven mechanism and volume is adequate to deploy in the
refineries in an extensive manifold system. Resizing the mechanism in a scale up
version will occur and independent scientists anticipate no obstacles will
present themselves in the increase in capacity for retrofitting the devices to
accommodate production volumes of the industry.

Geothermal
----------
The Bottle Rock Power Corporation (BRPC), a California corporation, has been
established and purchased a power plant and steam field from the California
Department of Water Resources (DWR) to generate electric power (the Project)
from a renewable and environmentally friendly source of energy. The viability of
the Project is predicated on certain regional factors that have created a
"niche" opportunity. These factors include a concentrated, rapidly growing
market that supplies power to the California grid that already has limited
sources.

The Project benefits from a pristine facility equipped with the best
turbine-generator available in the industry. The electric power generation
industry affords competitive fixed and variable operating costs. The Project is
further enhanced by the opportunity to sell electric power to the power grid
with a controlled minimum margin guarantee (MMG) to meet financing requirements.
The following is an overview of the Project, which leads to the conclusion that
BRPC has the potential to be a highly profitable and competitive supplier to the
power grid.

Technology
----------
XTRE Tech has opened negotiations to acquire at least 80% of a heavy crude
refinery(ies) and some field production in Bakersfield. The primary testing of
the technology was conducted on Kern River (Bakersfield) crude. The very wells
that provided the crude oil that yielded the technology test results supply the
facilities under negotiation for acquisition. The technology will be deployed at
wellhead on a skid mounted transportation fuel micro-refinery, deployed to
enhance pipeline transportation, and Refineries. The anticipated acquisition is
favorable to the current owners/operators who would retain a 20% interest,
continue management of the profitable operations, and participate in the
increased profitability due to applications of the technology. XTRE anticipates
an acquisition price at or below a multiple of 5 times IBIT, without acquiring
any environmental liabilities. In addition to providing an internal applications
arena, prior to XTRE TECH generating revenues, the targeted acquisitions will
afford significant available cash flow to service the XTRE Tech debt from
current profitability.

                                       5
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XTREME COMPANIES Debt Proposal
------------------------------
XTRE has structured the debt proposal into two primary tiers. The first tier
consists of the initial loan package featuring bonded securitization on
principal payback combined with cash reserves and multiple coverages on the debt
carrying costs. The second tier capitalizes on the ability to leverage mortgage
holdings and ongoing income streams in the current financial markets, utilizing
known fixed income financial instruments (CMOs and CDOs), to cover and
ultimately release the Financial Guarantee Insurance Policy liability.

Tier One
--------
In rough numbers, XTRE seeks a gross funding of $175,000,000 from a bank or
other financing source. XTRE will place $7,000,000 as cash deposits in interest
bearing Trust accounts to cover the first 1+ year of interest only carrying
costs.

The funding Bank or other source will hold UCC-1 positions on all acquisitions.
Anticipated cash flows from WRSI and from XTRE TECH are projected to contribute
in excess of $80,000,000 net of operations prior to debt service and taxes
commencing in year 3. In addition, to the current cash flow of approximately
$37,000,000 (prior to any application of technology) coverage of the annual
interest only debt service carrying costs is at a margin of approximately 400%.

Tier Two
--------
Take an existing set of financial conditions and offer a clearer finance
scenario enlisting the insurance companies as the rating entity for interim
loans. The collateralized mortgage obligations (CMO) and collateralized debt
obligation (CDO) market is the fastest growing sector in the fixed income
securities market. Its major financial innovation, which is responsible for the
rapid growth of this market, is that the CMO/CDO provides for redirecting
underlying cash flows to create rated bond classes that much more closely
satisfy the asset/liability needs of institutional investors. As Wall Street is
quick to point out, these securities are truly "custom designed." Subject to
acceptance and approval of the lending source Independent Power Finance
Corporation utilizing its assets will create the first rated Energy CMO market
issue domiciled with the Trustee and allocated subject to mutual agreement by
the parties. If and when activated, the issue will be listed in IRS Publication
938 of mortgage-backed securities.
Similarly, but to a much larger dollar amount which increases dramatically each
year, revenue streams for CDOs (Collateralized Debt Obligations) based on proven
and long term Oil Technology Royalty revenues, will, subject to their own
pre-approval, provide the lending source additional security and liquidity in
this transaction.

Waste Renewal Systems, Inc. currently offers 3 products:
100 Ton Thermal Reduction System
200 Ton Thermal Reduction System
300 Ton Thermal Reduction System

Our Thermal Reduction Systems, our principal product, consists of Thermal
Reduction; witch describes a technology that vastly reduces the mass of solid
waste (by over 80%), while recovering significant energy. The process, unlike
incineration, does not produce any air pollutants. The process is both modular
and scaleable and can be used in small remote locations, or in large cities,
with no impact on the environment or local infrastructure. Thermal Reduction is
a heat absorption process converting solid waste (municipal and selected
industrial refuge) into "char" and a low-grade methane gas. "Char" is an inert
carbon product, which has many commercial applications and the methane gas
provides all the energy required to run a Thermal Reduction Process Plant and
has excess energy for use and or sale to others.

Thermal Reduction System: The core of the Thermal Reduction process is called
the Retort and is the key to the process. Solid waste is first collected, sorted
(removing other valuable recyclables) and then shredded before being fed into
the Retort. The Retort is a large stainless cylinder, where waste is metered and
injected inside the Retort cylinder. The waste is then heated from 850 to 1200
degrees F, depending on the nature of the waste stream. The Retort is air tight
and sealed from the outside atmosphere. As the internal energy from heat builds,
without any oxygen it can not naturally burn and it breaks down in the Thermal
process (decomposes) into steam, carbon oxides, volatile vapors and char. Steam,
carbon dioxide and carbon monoxide are present only during the startup phase.
Once started, the process becomes anaerobic and as the waste is heated further,
volatile gases are distilled. These gases include hydrogen, methane and ethane,
with each pound of wasted process yielding about 12 cubic feet of gas. The
energy value of the gasses varies depending on the waste being recycled.

                                       6
<PAGE>

Intellectual Property
---------------------
Several patents currently exist for this type of solid waste removal technology
and other patents are currently pending. Waste Renewal Systems, Inc., has
consolidated, under license and assignment, not only the intellectual property
that represents this unique technological process, but also all prior patents
that could be used to develop a similar process. The company has strategically
positioned itself to protect and defend its intellectual property and
financially capitalize on it to the maximum extent of the law.

Overall our existing product line is perfect for the current market demand. Our
Thermal Reduction Systems have solutions to many of the problems that the
current waste management methods present.

Development of additional thermal reduction and other waste reduction products
is in progress and future products are planned.

Research and Development
------------------------
In response to the demonstrated needs of our market, new products being
developed in the near future include reduction of medical waste.

In addition to our existing products, we have plans to introduce follow-on or
next generation products including nuclear waste reduction.

Service Strategy
----------------
Current Service:

Thermal Reduction System Management
-----------------------------------

Thermal Reduction System Management, our principal service, consists of
maintaining all aspects of the Thermal Reduction System, including human
resources, day-to-day operations, and overall plant maintenance.

Overall our existing service line is sound and thriving and well developed.


(B) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS.

The municipal solid waste market is growing at a rapid rate. The market for
these products amounted to $50,000,000,000 in 2000. This represents 123% growth
over the last 20 years.

According to market research and industry sources, the overall municipal solid
waste market for the Solid Waste industry is projected to be $180,000,000,000 by
the end of 2002.

The area of greatest growth in the municipal solid waste market is in the area
of the United States. With more and more people entering the United States each
year, and the growing population of current residents, this segment will produce
the most waste each year.

Currently, the market is shared by incinerators and landfills which are very
hazardous to the surrounding environment and the people who inhabit it, with
Waste Management, Inc. considered the market leader.

In the next 2-5 years it is estimated that there will be more than 42 Thermal
Reduction Systems of products distributed by Waste Renewal Systems, Inc. The
market potential for these products in these quantities--with a current retail
price of $13,000,000 per unit--is approximately $50,000,000,000. This translates
to a market share of 2% of the overall market.

Customer Profile
----------------
Waste Renewal Systems, Inc.'s target market includes the United States, Canada
and Europe. The Company plans to first establish itself locally, (U.S.) and then
penetrate the markets of Canada and Europe. More specifically, WRSI will focus
on municipalities in the Southwest region of the United States because of the
current waste and economic issues . The most typical customer for our product is
someone who is in the municipal solid waste field, and who currently uses our
product for municipal solid waste management.

                                       7
<PAGE>

Competition
-----------
Companies that compete in this market are any companies that produce or develop
landfills and or incinerators. All companies mentioned charge competitive prices
as follows: Until the population increased drastically and land prices rose to
recent levels, landfills were convenient and cheap. Now inexpensive landfill
space is disappearing. The present cost of disposing of one ton of trash will
probably quadruple from $25 to $100 per ton in the next 4-5 years. Many east
coast cities are already paying over $100 per ton for trash disposal. To put
that into perspective, in Los Angeles County 38,000 tons of trash are thrown
away each day. One of the largest landfills, the B.K.K., which accepted 10,000
tons per day in Covina, closed in September 1996. Besides the increased cost how
much more pollution will be created by trucks and trains that will ship the
trash more than 100 miles to new landfills. How much more fuel will be burned
daily just to move trash? And how will this affect the desert communities that
contract to accept more solid waste? As for Incinerators, experts feel that
modernizing the air pollution controls on a 3000-ton-per-day trash incinerator
will cost somewhere between $100 million and $200 million, including lost
electricity revenue and disposal fees while the plant is down.

That could force a county to double its disposal fee from an average of $37.50 a
ton.

Key factors that have resulted in the present competitive position in this
industry are the focus on non-polluting solutions to waste management.

In all comparisons, Waste Renewal Systems, Inc.'s products provide more features
and have superior performance than do competitive products. In most cases, the
number of differences is substantial. A complete technical comparison is
available.

Waste Renewal Systems, Inc.'s products perform in virtually all situations. The
ability to dispose of municipal solid waste with full capability on the system
design is unique to Waste Renewal Systems, Inc.'s products. The ability to
resale the remaining by-products after thermal reduction is unique to this
product, and our research indicates its performance are superior to anything
else on the market today.

Risk
----
The top business risks that Waste Renewal Systems, Inc. faces are those similar
to other companies in the municipal solid waste industry.

The economic risks affecting Waste Renewal Systems, Inc., are similar to those
found in companies who have not penetrated their market.

Marketing Plan
--------------
Responses from customers indicate that our product is enjoying an excellent
reputation and we fully intend to continue this trend. Inquiries from
prospective customers suggest that there is considerable demand for it.
Relationships with leading OEMs (original equipment manufacturers), retailers,
Fortune 500/1,000 companies, major accounts, manufacturers and distributors
substantiate the fitness of Waste Renewal Systems, Inc. for considerable growth
and accomplishment in our industry / area.

Waste Renewal Systems, Inc.'s marketing strategy is to enhance, promote and
support the fact that our products continue to grow as it establishes market
presence.

The first strategy was to secure its intellectual property position that will
allow the Company to enter the waste processing and recycling industry without
encumbrances associated with its right to practice the technology. This has been
achieved.

The second strategy is to recruit the individuals and associates with the
organizations that would allow for the penetration and expansion in the
traditional waste industry. Most of the individuals on staff have research and
bone fide experience in the practice of this technology. In addition, the staff
includes persons with significant years of experience in the waste collection
and disposal business. This activity is continuing.

The third strategy is to associate with individuals and institutions that would
enhance the Company's ability and efficiency in sitting waste processing
facilities. Contractual associations will be established with organizations in
the United States and around the globe.

                                       8
<PAGE>

The fourth strategy is to create and participate in joint venture organizations
that have the capability and markets to yield high value for the output of the
waste processing technology.

The fifth strategy is to construct commercial plants that will showcase the
waste processing technology and produce sufficient quantities of by-products to
serve selected high value markets.

The sixth strategy is to begin the process of locating and entering into
negotiation for the sitting, construction and operation of waste processing
sites.

Lastly, the strategy is to advance the technology and the Company's reputation
within the industry and with the general public and its governmental
representatives. The Company will engage relationships with public relations
firms and is currently in negotiation with legislative lobbying organizations
that will accelerate the recognition of its accomplishments and emphasize the
practice of the Company's technology to achieve the desired goals of waste
treatment and recycling. The Company's personnel are actively engaged in
presenting and demonstrating the technology to both governmental and
environmentally orientated community groups.

Advertising and Promotion
-------------------------
Waste Renewal Systems, Inc.'s overall advertising and promotional objectives are
to position Waste Renewal Systems, Inc. as the leader in the market.

We will develop an advertising campaign built around high-performance, beginning
with a "who we are" statement and supporting it with ads that reinforce this
message. Additionally, we will develop a consistent reach and frequency
throughout the year. In addition to standard advertising practices, we will gain
considerable recognition through trade magazines and press releases.

For the next year, advertising and promotion will require $10,000. On an ongoing
basis we will budget our advertising investment as 1% of total sales.

Public Relations
----------------
During 2003, Waste Renewal Systems, Inc. will focus on the following publicity
strategies:

Public Relations and Internet Advertising

We will track, wherever possible, the incremental revenue generated from our
advertising, promotion and publicity efforts. We anticipate at least $1 of sales
will be generated directly from our publicity, and possibly and additional $1 of
indirect increase in sales throughout our various channels.

Financial Plan

The financial projections indicate that exit of the investor will be achievable
in less than 1 year. The exit settlement will be in the form of cash or stock
equivalent to the investment.

The increase in profits generated by this investment, specifically from
operating cash flow will allow us to have the funds to repay the loan in 90
days.

Conclusion
----------
Waste Renewal Systems, Inc. enjoys an established track-record of excellence
with our customers. Their expressions of satisfaction and encouragement are
numerous, and we intend to continue our advances and growth in the marketplace
with more unique and effective products.

                                       9
<PAGE>

ITEM 2. DESCRIPTION OF PROPERTY

The Company's corporate offices are located at 9116 Covered Wagon Dr., Las
Vegas, NV 89117. The Company does not have any additional facilities.

ITEM 3. LEGAL PROCEEDINGS
None

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

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

On May 14, 2001 the National Association of Securities Dealers (NASD) granted
clearance for Xtreme Webworks to be listed on the NASD Over- the-Counter-Board
(NASD OTCBB) under the symbol "XWEB".

Recent Sales of Unregistered Securities

None

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

GENERAL OVERVIEW
----------------
The Company's key focuses will be on waste reduction, nuclear waste containment
and innovative sensing and cleaning systems. These markets represent a
cumulative $3 to $5 billion dollars per year of which $2 billion is identified
with no competitor in place.

RESULTS OF OPERATIONS
---------------------
YEAR ENDED DECEMBER 31, 2002 COMPARED TO YEAR ENDING DECEMBER 31, 2001.

REVENUES. For the year ended December 31, 2002, revenues were approximately
$188,704, a decrease of approximately $471,623 or 71%, versus revenues of
approximately $660,327 for the year ended December 31, 2001. The decrease in
revenues for the 2002 period was due primarily to 1) the Company sustained a
down turn in revenues due to the tragic events of September 11 2001, 2) the
Company discontinued its operations of Xtreme Webworks due to the downturn in
the economy, 3) the publication services were discontinued due to clients slow
down in revenues, and 4) the shift in the companies overall direction of
products and services.

COST OF REVENUES. Cost of revenues for the year ended December 31, 2002
decreased by $310,173 or 74%, from the year ended December 31, 2001 due
primarily to decrease in revenues.

GROSS PROFIT. Gross profits for the year ended December 31, 2002 equaled
approximately $80,667 versus $242,117 in the year ended December 31, 2001. This
was due primarily to a decrease in revenues for the first three-quarters of the
year 2002 and the discontinuous of Xtreme Webworks operations.

OPERATING, GENERAL AND ADMINISTRATIVE EXPENSES. Operating, general and
administrative expenses increased to approximately $14,023,036 a increase of
$13,286,988 or 1,805% for the year ended December 31, 2002 as compared to
approximately $736,048 for the year ended December 31, 2001. The increase in
operating expenses for the year ended December 31, 2002 occurred primarily and
due to 1) the result of the Company's acquisition of two new technologies and
the issuance of stock for those licensed technologies that later resulted in
compensation expense (see note 6 to the Financial Statements - Licensed
technology) and 2) the operating expenses incurred during the development stage
of the two new acquisitions due to the shift in the companies overall direction
of products and services.

NET PROFIT (LOSS). Net loss for the year ended December 31, 2002 increased by
approximately $ 13,568,732 from the comparable period in the prior year as a
result of the aforementioned increase in overhead expenses due to 1) closing
cost from the discontinuing of operations of Xtreme Webworks, 2) the overhead
expenses incurred during the development stages of the acquired two new
technologies, and 3) compensation expense resulting from the acquisitions of the
two new technologies.

                                       10
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
OVERVIEW. Even though the Company sustained a down turn in revenues due to the
tragic events of September 11, 2001 management believes that the Company will be
able to meet it's current and future obligations primarily with their new
direction of products and services coming on line.

As the nation recovers from the events of September 11, 2001, and the brief
economic down turn since that time so does the Company, and management believes
that sales of the newly acquired technologies will begin to develop in the year
2003.

ASSETS AND LIABILITIES. As of December 31, 2002, the Company has assets of
approximately $117,544, compared to $162,114 as of December 31, 2001. The
decrease of approximately $44,570 was primarily due to a decrease in cash and
equivalents, a decrease in accounts receivable and a decrease of notes
receivable. The Company's current liabilities increased from $481,145 as of
December 31, 2001 to approximately $1,017521 as of December 31, 2002. This was
due primarily to an increase in accounts payable, and notes payable due to the
decrease in revenues and increase in borrowed funds caused by the acquisition of
two new technologies.

STATEMENT ON FORWARD-LOOKING INFORMATION
----------------------------------------
Certain information included herein contains statements that may be considered
forward-looking, such as statement relating to anticipated performance and
financing sources. Any forward-looking statement made by the Company necessarily
is based upon a number of estimates and assumptions that, while considered
reasonable by the Company, is inherently subject to significant business,
economic and competitive uncertainties and contingencies, many of which are
beyond the control of the Company, and subject to change. Actual results of the
Company's operations may vary materially form any forward-looking statement made
by or on behalf of the Company. Forward-looking statements should not be
regarded as a representation by the Company or any other person that the
forward-looking statements will be achieved. Undue reliance should not be placed
on any forward-looking statements. Some of the contingencies and uncertainties
to which any forward-looking statement contained herein is subject include, but
are not limited to, those relating to dependence on existing management,
Internet regulation, leverage and debt service, domestic or global economic
conditions and changes in federal or state tax laws or the administration of
such laws.

ITEM 7. FINANCIAL STATEMENTS

See attached financials.


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

The Company has had several changes in its accountants during the last year as
disclosed in earlier filed 8k's. Beckstead and Watts are the company's current
auditors.


                                    PART III

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

Executive Officers and Directors

Our executive officers and directors are as follows:

    Name                     Title
----------------           ----------
As of Dec 31-2002

Donald C. Bradley          CEO/Secretary/Director

Shaun Hadley               President/Director

Sherri Kresser             Treasuer/Director

Jeff Bradley               Director

Clayton Kass               Director


Present:
--------

Richard Scoble             CFO/Treasure

Garrett J. Oberle          Director

                                       11
<PAGE>

General

Our directors are elected to hold office until the next annual meeting of
shareholders and until their respective successors have been elected and
qualified, or until his prior resignation or removal. Our executive officers are
elected by the Board of Directors and hold office until resignation or removal
by the Board of Directors.

All officer and director bios are attached hereto as exhibits.

Item 10. EXECUTIVE COMPENSATION

The following table sets forth information concerning the compensation of the
executive officers of Xtreme Webworks for the fiscal year ended December 31,
2002:
                                     Annual
Name/Title        Year     Salary    Bonus        Common Stock
--------------  -------   --------   -------      ------------
Shaun Hadley,     2002    $39,736
President         2001    $80,810    $16,733.10          -0-
                  2000    $36,956     -0-             350,000
                  1999    $10,000     -0-                -0-

Paul Hadley,      2002       $29,829
Secretary         2001    $83,658     $16,733.10         -0-
                  2000    $36,817     -0-             350,000
                  1999    $50,000     -0-                -0-

None of the officers or directors of the Registrant received compensation for
their services during the fiscal year ended December 31,1998. The bonuses paid
in the year ended December 31, 2001 were in consideration of outstanding loans
and for services performed since incorporation in February of 1994.

Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information as of the end of 2001, concerning
beneficial ownership of the Company's Common Stock by (i) each director, (ii)
each executive officer, (iii) the directors and officers of the Company as a
group (iv) and each person known by the Company to own beneficially more than
five percent (5%) of the Common Stock.

Except as otherwise indicated, the persons or entities listed below have sole
voting and investment power with respect to all shares of common stock
beneficially owned by them, except to the extent such power may be shared with a
spouse. No change in control is currently being contemplated.

As of December 31, 2001, there were 43 stockholders of record and 5 beneficial
owners of the Company's Common Stock.

Item 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Xtreme Webworks currently occupies office space under a lease agreement between
the Company and Shogun Investment Group, Ltd., of Las Vegas, County of Clark,
Nevada. Donald C. Bradley, a co-owner of Shogun Investment Group, is a
shareholder of Xtreme Webworks.

The parties have agreed to allow Xtreme Webworks to accrue rental payments owed
to Shogun Investment Group, Ltd. until the Company is in a position to submit
all rental payments due.

World Stock Watch is a primary client of Xtreme Webworks. The co- owner of World
Stock Watch, Donald C. Bradley, is a shareholder of Xtreme Webworks.


SHAREHOLDER                                                 SHARES
-----------                                                 ------

   C. BLAKE BRADLEY                                         25,000

   CAROL BRADLEY                                           250,000

   DONALD C & SHIRLENE BRADLEY                           5,950,000

   HILLARY BRADLEY                                         250,000

   JEFF BRADLEY                                            250,000
                                                         2,250,000
                                                         ---------
TOTAL SHARES:                                            2,500,000

   SHAFFER W. BRADLEY                                       10,000

   SPENCER BRADLEY                                          25,000

   SPENCER BRADLEY CUST FOR KONNER                          10,000

   SPENCER BRADLEY CUST FOR TAYLOR                          10,000

   SPENCER BRADLEY CUST. FOR AUSTIN                         10,000


                                       12
<PAGE>

SHAREHOLDER                                                 SHARES
-----------                                                 ------

   CAMBRO INVESTMENT GROUP, INC.                           225,000
                                                         1,000,000
                                                         1,000,000
                                                         1,000,000
                                                           500,000
                                                         1,000,000
                                                           750,000
                                                         1,000,000
                                                         ---------
TOTAL SHARES:                                            6,475,000

   TERA DAWN CONNELL                                        10,000

   TERA DAWN CONNELL CUST FOR KENADEE                        1,000

   TERA DAWN CONNELL CUST FOR ZOEY                           1,000

   CHARLES BERNEY                                          100,000

   CHRIS BERNEY                                            100,000

   JESSICA BERNEY                                          100,000

   BRITNI HADLEY                                           250,000

   HARLEY HADLEY                                           500,000
                                                           625,000
                                                         ---------
TOTAL SHARES:                                            1,125,000

   LINDSI HADLEY                                           250,000

   PAUL & SHAUN HADLEY                                     625,000
                                                         1,993,000
                                                         ---------
TOTAL SHARES:                                            2,618,000

   PAUL HADLEY                                              70,000

   SHAUN HADLEY                                             70,000

   CLAYTON KASS                                          1,000,000
                                                         4,500,000
                                                         ---------
TOTAL SHARES:                                            5,500,000

   SHERRI  KRESSER                                          50,000

   SHERRI KRESSER CUST. FOR BRADLEY                         10,000

   SHERRI KRESSER CUST. FOR CHELSEE                         10,000

   SHERRI KRESSER CUST. FOR MIQUEL                          10,000

   SHOGUN INVESTMENT GROUP                                     800
                                                               200
                                                             1,400
                                                             3,600
                                                           163,000
                                                         ---------
TOTAL SHARES:                                              169,000

                                       13
<PAGE>

Item 13. EXHIBITS AND REPORTS ON FORM 8-K.

        (a) Exhibits and Index of Exhibits

Exhibit
Number  Description
-------------------------------------------------------------
3.1     Articles of Incorporation of Xtreme Webworks,
        formerly known as Shogun Advertising, Inc.
        (Incorporated by reference from Exhibit 3.1 of Form
        10-SB12G/A filed November 7, 2000).

3.2     Bylaws of Xtreme Webworks,
        formerly known as Shogun Advertising, Inc.

        (Incorporated by reference from Exhibit 3.2 of Form 10-SB12G/A filed
        November 7, 2000).


                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this amended report to be
signed on its behalf by the undersigned, thereunto duly authorized.

                                                     XTREME COMPANIES, INC.
(Registrant)


Date: April 14, 2003                        By:    /s/ Donald C. Bradley
                                                 -------------------------------
                                                 Chief Executive Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.


Date: April 14, 2003                        By:    /s/ Donald C. Bradey
                                                 -------------------------------
                                                  Director


Date: April 14, 2003                        By:    /s/ Shaun Hadley
                                                 -------------------------------
                                                   Director


Date: April 14, 2003                        By:    /s/ Clayton Kass
                                                 -------------------------------
                                                   Director


Date: April 14, 2003                        By:    /s/ Jeff W. Bradley
                                                 -------------------------------
                                                   Director


Date: April 14, 2003                        By:    /s/ Garrett J. Oberle
                                                 -------------------------------
                                                   Director


Date: April 14, 2003                        By:    /s/
                                                 -------------------------------
                                                  Director


Date: April 14, 2003                        By:    /s/ Richard Scoble
                                                 -------------------------------
                                                 Principal Financial Officer/
                                                 Chief Accounting Officer

                                       14
<PAGE>

                                   CERTIFICATION

     I, Garrett J. Oberle, certify that:

1. I have reviewed this transition report on Form 10-K of Xtreme Companies
Inc..;

2. Based on my knowledge, this transition 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 transition
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this transition 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 transition 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 we 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 transition 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 transition report (the "Evaluation
                  Date"); and

         c.       presented in this transition 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

         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
transition report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

DATED this 14th day of April 2003.


                                                  /s/  Garrett J. Oberle
                                                 -------------------------------
                                                 Director


                                       15
<PAGE>

                                  CERTIFICATION

     I,  Donald C. Bradley, certify that:

1. I have reviewed this transition report on Form 10-K of Xtreme Companies Inc.;

2. Based on my knowledge, this transition 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 transition
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this transition 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 transition 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 we 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 transition
          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 transition report (the "Evaluation Date"); and

     c.   presented in this transition 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 function):

     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
transition report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

DATED this 14th day of April 2003.


                                                  /s/  Donald C. Bradley
                                                 -------------------------------
                                                 Chief Executive Officer


                                       16
<PAGE>


A signed original of this written statement required by Section 906 has been
provided to Xtreme Companies, Inc.and will be retained by Xtreme Companies,
Inc.and furnished to the Securities and Exchange Commission or its staff upon
request."



                                       17
<PAGE>

BECKSTEAD AND WATTS, LLP
CERTIFIED PUBLIC ACCOUNTANTS
                                                           3340 Wynn Rd., Ste. B
                                                             Las Vegas, NV 89102
                                                                    702.257.1984
                                                              702.362.0540 (fax)

                          INDEPENDENT AUDITORS' REPORT


Board of Directors
Xtreme Companies, Inc.
Las Vegas, NV

We have audited the Balance Sheet of Xtreme Companies, Inc. (the "Company"), as
of December 31, 2002, and the related Statements of Operations, Stockholders'
Equity, and Cash Flows for the year ended December 31, 2002. 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 audit.

We conducted our audit in accordance with generally accepted auditing standards
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
statement presentation. 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
audit provides a reasonable basis for opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the balance sheet of Xtreme Companies, Inc., as of
December 31, 2002, and its related statements of operations, equity and cash
flows for the year ended December 31, 2002, in conformity with generally
accepted accounting principles in the United States of America.

The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 4 to the financial
statements, the Company has had limited operations and have not commenced
planned principal operations. This raises substantial doubt about its ability to
continue as a going concern. Management's plan, in regard to these matters are
also described in Note 4. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.


Signed,




April 8, 2003

                                      F-1
<PAGE>







                             XTREME COMPANIES, INC.


                                 BALANCE SHEETS
                                      AS OF
                                DECEMBER 31, 2002

                                       AND

                            STATEMENTS OF OPERATIONS,
                            STOCKHOLDERS' EQUITY, AND
                                   CASH FLOWS
                               FOR THE YEAR ENDED
                                DECEMBER 31, 2002





                                      F-2
<PAGE>



BECKSTEAD AND WATTS, LLP
CERTIFIED PUBLIC ACCOUNTANTS
                                                          3340 Wynn Road, Ste B.
                                                             Las Vegas, NV 89102
                                                                    702.257.1984
                                                              702.362.0540 (fax)







To Whom It May Concern:

The firm of Beckstead and Watts, LLP, consents to the inclusion of its report of
April 8, 2003, on the Financial Statements of Xtreme Companies, Inc. for the
year ended December 31, 2002, in its Form 10SB to be filed with the US
Securities and Exchange Commission.

Signed,





April 8, 2003











                                      F-3
<PAGE>



                                TABLE OF CONTENTS





                                                                            PAGE

Independent Auditors' Report                                                 F-1

Balance Sheet                                                                F-5

Statement of Operations                                                      F-6

Statement of Stockholders' Equity                                            F-7

Statement of Cash Flows                                                      F-8

Footnotes                                                                    F-9




                                      F-4
<PAGE>


                             XTREME COMPANIES, INC.
                           Consolidated Balance Sheet


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

Current assets:
    Cash and equivalents                            $        373
    Officers receivable                                   74,753
                                                    -------------
                                                          75,126
                                                    -------------

Fixed assets, net                                         12,418

Licensed technology                                       30,000
                                                    -------------

                                                    $    117,544
                                                    =============


LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
    Notes payable - related parties                 $    204,785
    Notes payable                                         58,606
    Accounts payable                                     632,074
    Payroll tax liabilities                              122,056
                                                    -------------
                                                       1,017,521

Stockholders' equity:

    Common stock, $0.001 par value, 50,000,000
      shares authorized,                              30,790,063
      shares issued and outstanding                       30,790
    Additional paid-in capital                        14,743,104
    Treasury stock                                       (20,763)
    Retained (deficit)                               (15,653,108)
                                                    -------------
                                                        (899,977)
                                                    -------------

                                                    $    117,544
                                                    =============


   The accompanying Notes are an integral part of these financial statements.

                                      F-5
<PAGE>
<TABLE>

                                       XTREME COMPANIES, INC.
                                Consolidated Statements of Operations
                           For the years ended December 31, 2002 and 2001
<CAPTION>

                                                                                  For the Years Ended
                                                                            --------------------------------
                                                                             December 31,       December 31,
                                                                                 2002               2001
                                                                            -------------      -------------
<S>                                                                         <C>                <C>
Revenue                                                                     $         --       $    660,327
Cost of revenues                                                                      --            418,210
                                                                            -------------      -------------
                                                                                      --            242,117

Expenses
   General and administrative expenses                                            56,402                 --
   Payroll and related expenses                                                       --            260,618
   Professional fees                                                              79,393                 --
   Consulting fees                                                               345,267            235,005
   Compensation expense                                                       13,520,000                 --
   Other operating expenses                                                           --            233,829
   Depreciation                                                                    1,536              6,596
                                                                            -------------      -------------
   Total expenses                                                             14,002,598            736,048
                                                                            -------------      -------------

Net operating (loss)                                                         (14,002,598)          (493,931)

Other income (expense)
   Interest income                                                                    --             12,005
   Reduction in fair value of non-marketable securities                               --            (40,898)
   Interest expense                                                                   --            (18,627)
                                                                            -------------      -------------
Net loss before discontinued operations                                      (14,002,598)          (541,451)

(Loss) from discontinued operations                                             (107,585)                --
                                                                            -------------      -------------

Net (loss)                                                                  $(14,110,183)      $   (541,451)
                                                                            =============      =============

Stockholders' Equity:
Weighted average number of common
   shares outstanding - basic and fully diluted                               15,395,032            790,063
                                                                            =============      =============

Net (loss) before disc. operations per share - basic and fully diluted      $      (0.91)      $      (0.69)
                                                                            =============      =============
(Loss) per share from discontinued operations                               $      (0.01)      $         --
                                                                            =============      =============
Net (loss) per share                                                        $      (0.92)      $      (0.69)
                                                                            =============      =============

             The accompanying Notes are an integral part of these financial statements.
</TABLE>

                                                F-6
<PAGE>
<TABLE>

                                                 XTREME COMPANIES, INC.
                                      Statements of Changes in Stockholders' Equity
<CAPTION>


                                             Common Stock
                                       -------------------------  Additional                                     Total
                                                                   Paid-in       Treasury      Retained      Stockholders'
                                         Shares       Amount       Capital         Stock       (Deficit)        Equity
                                       -----------  ------------ -------------  ------------ --------------  --------------
<S>                                    <C>           <C>          <C>            <C>          <C>             <C>
Balance as of 12/31/00                    758,013    $    3,790   $ 1,079,086    $        -   $ (1,001,474)   $     81,402

Shares issued for services                  1,400             7         6,993                            -           7,000

Shares issued for cash pursuant
   to Rule 506 Private Placement            5,000            25        49,975                                       50,000

Shares issued for conversion of loan       10,000            50        52,821                                       52,871

Shares issued for cash                      8,200            41        20,463                                       20,504

Reinstate common stock                      7,450            37        10,606                                       10,643

Net (loss) for the
   year ended 12/31/01                                                                            (541,451)       (541,451)
                                       -----------  ------------ -------------  ------------ --------------  --------------

Balance as of 12/31/01                    790,063         3,950     1,219,944             -     (1,542,925)       (319,031)

Adjustment for reverse split                             (3,160)        3,160                                            -

Shares issued for licensed technology   5,000,000         5,000       795,000                                      800,000

Shares issued for licensed technology  25,000,000        25,000     12,725,000                                  12,750,000

Shares returned to treasury                                                         (20,763)                       (20,763)

Net (loss) for the
   year ended 12/31/02                                                                          (14,110,183)   (14,110,183)
                                       -----------  ------------ -------------  ------------ --------------- --------------

Balance as of 12/31/02                 30,790,063   $    30,790  $  14,743,104  $   (20,763) $  (15,653,108) $    (899,977)
                                       ===========  ============ =============  ============ =============== ==============


                       The accompanying Notes are an integral part of these financial statements.
</TABLE>

                                                          F-7
<PAGE>
<TABLE>

                                                 XTREME COMPANIES, INC.
                                          Consolidated Statements of Cash Flows
                                     For the years ended December 31, 2002 and 2001
<CAPTION>

                                                                                         For the Years Ended
                                                                            -----------------------------------------------
                                                                                December 31,             December 31,
                                                                                     2002                    2001
                                                                            ---------------------   -----------------------
<S>                                                                         <C>                     <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net (loss)                                                               $        (14,110,183)   $             (541,451)
   Shares issued as compensation                                                      13,520,000                    17,643
   Reduction in fair value of non-marketable securities                                        -                    40,898
   Depreciation expense                                                                    1,536                     6,596
   Allowance for doubtful accounts                                                         2,439                   (20,000)
   Adjustments to reconcile net (loss)
   to cash (used) by operating activities:
     Decrease in accounts receivable                                                       4,877                    19,448
     Decrease in officers and notes receivable                                            30,332                    42,232
     Increase in accounts payable                                                        396,177                   209,237
     (Decrease) in unearned revenue                                                      (66,157)                        -
     Increase in payroll tax liabilites                                                   53,551                    79,883
                                                                            ---------------------   -----------------------
Net cash (used) by operating activities                                                 (167,428)                 (145,514)
                                                                            ---------------------   -----------------------

CASH FLOWS FROM INVESTING ACTIVITIES
   Net borrowing (payments to) related parties                                            94,199                    87,704
   Proceeds from notes payable                                                            58,606                         -
   Purchases of fixed assets                                                                   -                    (3,182)
                                                                            ---------------------   -----------------------
Net cash (used) by investing activities                                                  152,805                    84,522
                                                                            ---------------------   -----------------------

CASH FLOWS FROM FINANCING ACTIVITIES
   Issuance of common stock                                                                    -                    70,504
                                                                            ---------------------   -----------------------
Net cash provided by financing activities                                                      -                    70,504
                                                                            ---------------------   -----------------------

Net increase in cash                                                                     (14,623)                    9,512
Cash and equivalents - beginning                                                          14,996                     5,484
                                                                            ---------------------   -----------------------
Cash and equivalents - ending                                               $                373    $               14,996
                                                                            =====================   =======================

Supplemental disclosures:
   Interest paid                                                            $                  -    $                    -
                                                                            =====================   =======================
   Income taxes paid                                                        $                  -    $                    -
                                                                            =====================   =======================
   Non-cash transactions:
     Shares issued for services, net                                        $                  -    $                7,000
                                                                            =====================   =======================
     Shares issued as compensation                                          $         13,520,000    $               17,643
                                                                            =====================   =======================
     Shares issued in settlement of note payable to shareholders            $                  -    $               52,871
                                                                            =====================   =======================
     Reinstatement of common stock cancelled                                $                       $               10,643
                                                                            =====================   =======================
     Conversion of note receivable from related
       party for common stock                                               $                  -    $               15,000
                                                                            =====================   =======================


                       The accompanying Notes are an integral part of these financial statements.
</TABLE>

                                                          F-8
<PAGE>

                             XTREME COMPANIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES AND PROCEDURES

Organization
------------
  Xtreme Webworks was organized August 14, 1994 under the laws of the State of
  Nevada, under the name Shogun Advertising, Inc. On May 10, 1998, the Company
  changed it name to Xtreme Webworks. As Xtreme Webworks, the Company offered
  services to Internet companies, assisting in higher recognition placement
  with search engines. It also designed and hosted Internet web sites, and
  designed and published online and printed newsletters. On April 24, 2002, the
  Company changed its name to Xtreme Companies, Inc. (the "Company"). Effective
  November 30, 2002, the Company discontinued its operations of Xtreme
  Webworks.

  As of December 31, 2002, the Company had no significant revenues or expenses
  from operations.

Cash and cash equivalents
-------------------------
  The Company maintains a cash balance in a non-interest-bearing account that
  currently does not exceed federally insured limits. For the purpose of the
  statements of cash flows, all highly liquid investments with an original
  maturity of three months or less are considered to be cash equivalents. There
  are no cash equivalents as of December 31, 2002.

Investments
-----------
  Investments in companies over which the Company exercises significant
  influence are accounted for by the equity method whereby the Company includes
  its proportionate share of earnings and losses of such companies in earnings.
  Other long-term investments are recorded at cost and are written down to
  their estimated recoverable amount if there is evidence of a decline in value
  which is other than temporary.

Property, plant and equipment
-----------------------------
  Property, plant and equipment are stated at the lower of cost or estimated net
  recoverable amount. The cost of property, plant and equipment is depreciated
  using the straight-line method based on the lesser of the estimated useful
  lives of the assets or the lease term based on the following life expectancy:

                     Computer equipment                   5 years
                     Office furniture and fixtures        7 years

  Repairs and maintenance expenditures are charged to operations as incurred.
  Major improvements and replacements, which extend the useful life of an asset,
  are capitalized and depreciated over the remaining estimated useful life of
  the asset. When assets are retired or sold, the costs and related accumulated
  depreciation and amortization are eliminated and any resulting gain or loss is
  reflected in operations.

Revenue recognition
-------------------
  Revenue from proprietary software sales that does not require further
  commitment from the company is recognized upon shipment. Consulting revenue is
  recognized when the services are rendered. License revenue is recognized
  ratably over the term of the license.

  The cost of services, consisting of staff payroll, outside services, equipment
  rental, communication costs and supplies, is expensed as incurred.

Advertising costs
-----------------
  The Company expenses all costs of advertising as incurred. There were no
  advertising costs included in general and administrative expenses as of
  December 31, 2002.


                                      F-9
<PAGE>

                             XTREME COMPANIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Use of estimates
----------------
   The preparation of financial statements in conformity with generally accepted
   accounting principles 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 revenue and expenses during the reporting period.
   Actual results could differ from those estimates.

Fair value of financial instruments
-----------------------------------

   Fair value estimates discussed herein are based upon certain market
   assumptions and pertinent information available to management as of December
   31, 2002. The respective carrying value of certain on-balance-sheet financial
   instruments approximated their fair values. These financial instruments
   include cash and accounts payable. Fair values were assumed to approximate
   carrying values for cash and payables because they are short term in nature
   and their carrying amounts approximate fair values or they are payable on
   demand.

Impairment of long-lived assets
-------------------------------
   The Company reviews its long-lived assets and intangibles periodically to
   determine potential impairment by comparing the carrying value of the
   long-lived assets with the estimated future cash flows expected to result
   from the use of the assets, including cash flows from disposition. Should the
   sum of the expected future cash flows be less than the carrying value, the
   Company would recognize an impairment loss. An impairment loss would be
   measured by comparing the amount by which the carrying value exceeds the fair
   value of the long-lived assets and intangibles. There were no impairment
   losses recognized in 2002.

Reporting on the costs of start-up activities
---------------------------------------------
   Statement of Position 98-5 (SOP 98-5), "Reporting on the Costs of Start-Up
   Activities," which provides guidance on the financial reporting of start-up
   costs and organizational costs, requires most costs of start-up activities
   and organizational costs to be expensed as incurred. SOP 98-5 is effective
   for fiscal years beginning after December 15, 1998. With the adoption of SOP
   98-5, there has been little or no effect on the Company's financial
   statements.

Loss per share
--------------
   Net loss per share is provided in accordance with Statement of Financial
   Accounting Standards No. 128 (SFAS #128) "Earnings Per Share". Basic loss per
   share is computed by dividing losses available to common stockholders by the
   weighted average number of common shares outstanding during the period. As of
   December 31, 2002, the Company had no dilutive common stock equivalents, such
   as stock options or warrants.

Dividends
---------
   The Company has not yet adopted any policy regarding payment of dividends. No
dividends have been paid or declared since inception.

Comprehensive Income
--------------------
   SFAS No. 130, "Reporting Comprehensive Income", establishes standards for the
   reporting and display of comprehensive income and its components in the
   financial statements. The Company had no items of other comprehensive income
   and therefore has not presented a statement of comprehensive income.

Segment reporting
-----------------
   The Company follows Statement of Financial Accounting Standards No. 130,
   "Disclosures About Segments of an Enterprise and Related Information." The
   Company operates as a single segment and will evaluate additional segment
   disclosure requirements as it expands its operations.

                                      F-10
<PAGE>

                             XTREME COMPANIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Income taxes
------------
   The Company follows Statement of Financial Accounting Standard No. 109,
   "Accounting for Income Taxes" ("SFAS No. 109") for recording the provision
   for income taxes. Deferred tax assets and liabilities are computed based upon
   the difference between the financial statement and income tax basis of assets
   and liabilities using the enacted marginal tax rate applicable when the
   related asset or liability is expected to be realized or settled. Deferred
   income tax expenses or benefits are based on the changes in the asset or
   liability each period. If available evidence suggests that it is more likely
   than not that some portion or all of the deferred tax assets will not be
   realized, a valuation allowance is required to reduce the deferred tax assets
   to the amount that is more likely than not to be realized. Future changes in
   such valuation allowance are included in the provision for deferred income
   taxes in the period of change.

   Deferred income taxes may arise from temporary differences resulting from
   income and expense items reported for financial accounting and tax purposes
   in different periods. Deferred taxes are classified as current or
   non-current, depending on the classification of assets and liabilities to
   which they relate. Deferred taxes arising from temporary differences that are
   not related to an asset or liability are classified as current or non-current
   depending on the periods in which the temporary differences are expected to
   reverse.

Recent pronouncements
---------------------
   In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
   with Exit or Disposal Activities", which addresses financial accounting and
   reporting for costs associated with exit or disposal activities and
   supersedes EITF No. 94-3, "Liability Recognition for Certain Employee
   Termination Benefits and Other Costs to Exit an Activity (including Certain
   Costs Incurred in a Restructuring)." SFAS No. 146 requires that a liability
   for a cost associated with an exit or disposal activity be recognized when
   the liability is incurred. Under EITF No. 94-3, a liability for an exit cost
   was recognized at the date of an entity's commitment to an exit plan. SFAS
   No. 146 also establishes that the liability should initially be measured and
   recorded at fair value. The provisions of SFAS No. 146 will be adopted for
   exit or disposal activities that are initiated after December 31, 2002.

   In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
   Compensation--Transition and Disclosure--an amendment of SFAS No. 123." This
   Statement amends SFAS No. 123, "Accounting for Stock-Based Compensation", to
   provide 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 SFAS No. 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. The
   adoption of SFAS No. 148 is not expected to have a material impact on the
   company's financial position or results of operations.

   In November 2002, the FASB issued FASB Interpretation ("FIN") No. 45,
   "Guarantors Accounting and Disclosure Requirements for Guarantees, Including
   Indirect Guarantees and Indebtedness of Others", an interpretation of FIN No.
   5, 57 and 107, and rescission of FIN No. 34, "Disclosure of Indirect
   Guarantees of Indebtedness of Others". FIN 45 elaborates on the disclosures
   to be made by the guarantor in its interim and annual financial statements
   about its obligations under certain guarantees that it has issued. It also
   requires that a guarantor recognize, at the inception of a guarantee, a
   liability for the fair value of the obligation undertaken in issuing the
   guarantee. The initial recognition and measurement provisions of this
   interpretation are applicable on a prospective basis to guarantees issued or
   modified after December 31, 2002; while, the provisions of the disclosure
   requirements are effective for financial statements of interim or annual
   periods ending after December 15, 2002. The company believes that the
   adoption of such interpretation will not have a material impact on its
   financial position or results of operations and will adopt such
   interpretation during fiscal year 2003, as required.

   In January 2003, the FASB issued FIN No. 46, "Consolidation of Variable
   Interest Entities", an interpretation of Accounting Research Bulletin No. 51.
   FIN No. 46 requires that variable interest entities be consolidated by a
   company if that company is subject to a majority of the risk of loss from the
   variable interest entity's activities or is entitled to receive a majority of
   the entity's residual returns or both. FIN No. 46 also requires disclosures
   about variable interest entities that companies are not required to
   consolidate but in which a company has a significant variable interest. The
   consolidation requirements of FIN No. 46 will apply immediately to variable
   interest entities created after January 31, 2003. The consolidation
   requirements will apply to entities established prior to January 31, 2003 in
   the first fiscal year or interim period beginning after June 15, 2003. The
   disclosure requirements will apply in all financial statements issued after
   January 31, 2003. The company will begin to adopt the provisions of FIN No.
   46 during the first quarter of fiscal 2003.

                                      F-11
<PAGE>

                             XTREME COMPANIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Stock-Based Compensation
------------------------
   The Company accounts for stock-based awards to employees in accordance with
   Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
   Employees" and related interpretations and has adopted the disclosure-only
   alternative of SFAS No. 123, "Accounting for Stock-Based Compensation."
   Options granted to consultants, independent representatives and other
   non-employees are accounted for using the fair value method as prescribed by
   SFAS No. 123.

Year end
--------
   The Company has adopted December 31 as its fiscal year end.

NOTE 2 - GOING CONCERN

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern, which contemplates the recoverability
of assets and the satisfaction of liabilities in the normal course of business.
As noted above, the Company is in the development stage and, accordingly, has
not yet generated a proven history of operations. Since its inception, the
Company has been engaged substantially in financing activities and developing
its product line, incurring substantial costs and expenses. As a result, the
Company incurred accumulated net losses through the year ended December 31, 2002
of $15,653,108. In addition, the Company's development activities since
inception have been financially sustained by capital contributions.

The ability of the Company to continue as a going concern is dependent upon its
ability to raise additional capital from the sale of common stock and,
ultimately, the achievement of significant operating results. The accompanying
financial statements do not include any adjustments that might be required
should the Company be unable to recover the value of its assets or satisfy its
liabilities.

NOTE 3 - FIXED ASSETS

Fixed assets consists of the following:

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

         Computer and office equipment               $    25,211
                                                     ------------

         Less accumulated depreciation                  (12,793)
                                                     ------------

         Total                                       $    12,418
                                                     ============

Depreciation expense totaled $1,536 for the year ended December 31, 2002.

NOTE 4 - OFFICERS RECEIVABLE

The Company loaned the officers of Xtreme Webworks, Inc., a wholly-owned
discontinued subsidiary, the sum of $74,753 as of December 31, 2002.
Compensation to the officers is expensed as services are performed. The loans
are bear interest at 10% per annum and are due on demand.

NOTE 5 - LICENSED TECHNOLOGY

On April 26, 2002, the Company executed an Acquisition Agreement ("Agreement")
with Waste Renewal Systems, Inc. ("Waste"), a Nevada Corporation. Under the
terms of the Agreement, the Company exchanged 5,000,000 shares of $0.001 par
value restricted common stock for 5,000,000 shares of Waste, representing all of
the issued and outstanding shares of Waste. The value of the licensed technology
held by Waste on the date of the Agreement was deemed to be $5,000. The fair
market value of the common shares issued on April 26, 2002 was $0.16 per share,
resulting in compensation expense of $795,000.

                                      F-12
<PAGE>

                             XTREME COMPANIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


On May 15, 2002, the Company executed an Acquisition Agreement ("Agreement")
with Nucon International, Inc. ("Nucon") a Nevada Corporation who later changed
its name to Nuclear Reduction Systems, Inc., Under the terms of the Agreement,
the Company exchanged 25,000,000 shares of $0.001 par value restricted common
stock for 25,000,000 shares of Nucon, representing all of the issued and
outstanding shares of Nucon. The value of the licensed technology held by Nucon
on the date of the Agreement was deemed to be $25,000. The fair market value of
the common shares issued on May 15, 2002 was $0.51 per share, resulting in
compensation expense of $12,725,000.

NOTE 6 - RELATED AND UNRELATED NOTES PAYABLE


  Note payable, unsecured, 8% interest, due on demand to a
  shareholder of the Company                                           $ 32,275


  Note payable, unsecured, 10% interest, due on demand to two
  companys controlled or owned by directors or officers of the
  Company                                                               172,510
                                                                       ---------
  Total notes payable, secured and unsecured                           $204,785

Accrued interest on related party notes payable, included in accrued expenses as
of December 31, 2002 was $13,750.

NOTE 7 - INCOME TAXES

The Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" ("SFAS No. 109"), which
requires use of the liability method. SFAS No. 109 provides that deferred tax
assets and liabilities are recorded based on the differences between the tax
bases of assets and liabilities and their carrying amounts for financial
reporting purposes, referred to as temporary differences. Deferred tax assets
and liabilities at the end of each period are determined using the currently
enacted tax rates applied to taxable income in the periods in which the deferred
tax assets and liabilities are expected to be settled or realized.

The provision for income taxes differs from the amount computed by applying the
statutory federal income tax rate to income before provision for income taxes.
The sources and tax effects of the differences are as follows:

                                      U.S federal statutory rate      (34.0%)

                                      Valuation reserve                34.0%
                                                                       -----

                                      Total                               -%
                                                                       ======

As of December 31, 2002, the Company has a net operating loss carry forward of
approximately $15,653,108. The related deferred asset has been fully reserved.

NOTE 8 - STOCKHOLDER'S EQUITY

Common stock
------------
The authorized common stock of the Company consists of 50,000,000 shares with
par value of $0.001. On April 24, 2002, the Company effected a 5-for-1 reverse
split of its $0.001 par value common stock. All share issuances prior to April
24, 2002 have been retroactively restated to reflect the reverse split.

On April 26, 2002, the Company issued 5,000,000 shares of its $0.001 par value
common stock pursuant to an acquisition agreement with Waste Renewal Systems,
Inc. (see Note 5 above).

                                      F-13
<PAGE>

                             XTREME COMPANIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


On May 15, 2002, the Company issued 25,000,000 shares of its $0.001 par value
common stock pursuant to an acquisition agreement with Nucon International, Inc.
(see Note 5 above).

There have been no other issuances of common stock.

Treasury stock
--------------

The Company received $20,763 worth of $0.001 par value common stock from a
related party in exchange for certain investments held in third-party companies.

NOTE 9 - RELATED PARTY TRANSACTIONS

Pursuant to a Consulting Agreement ("Agreement"), dated June 1, 1999, with
Shogun Investment Group, Ltd. ("Shogun"), the Company incurred expenses with
regard to the Private Placement Memorandum and other work performed by Shogun
under the terms of the Agreement. Shogun and its officers constructively own
42.7% of the Company. Expenses pursuant to the Agreement were $205,080 for the
year ended December 31, 2002. Included in accounts payable for the consulting
fees are $237,580, December 31, 2002.

The Company rents office space from Shogun under a sublease agreement dated
January' 1, 2000. Effective January 1, 2002, the Company signed a new sublease.
The lease is for two years with a monthly rent of $1,859 during the first year
and $1,970 the second year. The Company has negotiated an early release from any
lease obligations for the Company. Any and all further obligations due for the
balance of the year ending December 31, 2002 and 2003 have been canceled.

NOTE 10 - DISCONTINUED OPERATIONS

On November 30, 2002, the Company determined that its internet hosting and
marketing business was not strategic to the Company's ongoing objectives and
discontinued capital and human resource investment in the business. Accordingly,
the Company has elected to report its internet hosting and marketing business as
discontinued operations by early adopting SFAS 144. The financial statements
have been reclassified to segregate the net assets and operating results of the
discontinued operations for the year ended December 31, 2002.

Summary operating results of the discontinued operations are as follows:

                                                              For the year ended
                                                              December 31, 2002
                                                              -----------------
Revenue.......................................                   $   188,704
                                                                 ============
Gross profit..................................                        80,667
                                                                 ============
Operating loss................................                      (102,654)
Interest income...............................                         2,247
Interest expense..............................                        (2,498)
Other income..................................                        12,004
Other expense.................................                       (10,706)
                                                                 ------------
Loss from discontinued operations.............                   $  (101,607)
                                                                 ============

Assets of discontinued operations were written off of the books as uncollectible
and all liabilities of discontinued operations were assumed by the Company.

                                      F-14