U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   FORM 10-KSB

                 ANNUAL REPORT UNDER SECTION 13 OR 15 (d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 2002

                        Commission file number 333-62690

                                 CYBERADS, INC.
                                 --------------
                 (Name of Small Business Issuer in its Charter)

                  Florida                                    65-1000634
                  -------                                    ----------
   (State or Other Jurisdiction of                        (I.R.S. Employer
    Incorporation or Organization)                      Identification No.)

           6001 Park of Commerce Boulevard, Boca Raton, Florida 33487
           ----------------------------------------------------------
               (Address of Principal Executive Offices) (Zip Code)

                                 (561) 237-4001
                                 --------------
                           (Issuer's Telephone Number)

              Securities registered under Section 12(b) of the Act:
          Title of Each Class Name of Each Exchange on Which Registered
          -------------------------------------------------------------
                                      None

         Securities registered under Section 12(g) of the Exchange Act:
                         Common Stock, $.0001 par value
                         ------------------------------
                                (Title of Class)

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

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

State issuer's revenues for its most recent fiscal year. $4,968,550


<PAGE>
State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days. ($2.45 as of April 2, 2002) $18,294,828.65

                   (APPLICABLE ONLY TO CORPORATE REGISTRANTS)

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: April 2, 2002: 13,758,777 Shares of
Common Stock.

                       DOCUMENTS INCORPORATED BY REFERENCE

- None -

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



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<TABLE>
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                                Table of Contents


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<S>           <C>                                                                          <C>
PART I                                                                                      3
Item 1.       Description of Business                                                       3
Item 2.       Description of Property                                                       8
Item 3.       Legal Proceedings                                                             8
Item 4        Submission of Matters to a Vote of Security Holders                           8

PART II                                                                                     8
Item 5.       Market for Common Equity and Related Stockholder Matters                      8
Item 6.       Management's Discussion and Analysis or Plan of Operation                     11
Item 7.       Financial Statements                                                          13
Item 8.       Changes in and Disagreements With Accountants on Accounting and
              Financial Disclosure                                                          13
PART III                                                                                    13
Item 9.       Directors, Executive Officers, Promoters and Control Persons;
              Compliance With Section 16(a) of the Exchange Act                             13
Item 10.      Executive Compensation                                                        16
Item 11.      Security Ownership of Certain Beneficial Owners and Management                19
Item 12.      Certain Relationships and Related Transactions                                20
Item 13.      Exhibits, Lists and Reports on Form 8-K                                       22
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<PAGE>
PART I

Item 1.  Description of Business

Summary

         Organized under the laws of the State of Florida on April 12, 2000,
CyberAds, Inc. began in December 2000 by utilizing member lists internally
through our wholly-owned subsidiary, IDS Cellular, Inc. to market cellular phone
services. When we began generating revenues from our cellular phone marketing
services, we decided to focus exclusively on this line of business. We started
an affiliate program to expand our potential customer base. Our affiliate
program works by paying participating third party websites commissions for
referring cellular phone customers to our "freecellular-phone.com" website. A
third party website will receive a commission if a customer it refers to us
purchases a cellular phone or cellular services.

         The majority of our revenues are derived from our cellular phone
marketing services. Our business focuses primarily on marketing cell phone
services to potential consumers we are introduced to through our affiliate
program and other third party telemarketing services. We have begun to diversify
outside of our core cellular business.

Background and History

         We were incorporated under the laws of the State of Florida in April
2000. Our wholly owned subsidiary, IDS Cellular, Inc., which we acquired through
a stock purchase effective December 31, 2000, was formed in December 2000 under
the laws of the State of Florida. We no longer use the name IDS Cellular.

         Our executive offices are located in Boca Raton, Florida and our
telephone number is (561) 237-4001.

Strategy

         Our goal is to become a leader in direct marketing and sales on the
Internet. We currently focus our marketing efforts primarily towards the
marketing and sale of cellular telephones and services. With our recent increase
in revenues and third party financing, we intend to implement our strategy
through the following:

         o        Expand Affiliate Program. By offering participating third
                  party websites commissions for directing potential customers
                  to our website, we believe our affiliate program will continue
                  to supply us with a substantial customer base.

                                        3

<PAGE>
         o        Developing Additional Products/Services. Based on the fact
                  that we have a strong distribution network we wanted to
                  diversify our product line. We launched a secured credit card
                  www.approvedbankcard.com in the 3rd quarter and
                  www.beneficialhealthcare.com in the 4th quarter. We have plans
                  to launch additional products that have a broad based appeal,
                  require little or no COGS and provide residual income.

Cyberads, Inc Overview

         Cyberads markets cellular phone services and plans to consumers. Our
cellular phone services are marketed through an affiliate program. We attract
third party websites to become part of our affiliate program by offering
commissions for sales of cell phones and cell phone services in which they
initiated the contact with the consumer. A website becomes an affiliate of our
company by placing freecellular-phone.com advertising materials and banners on
their websites. These advertisements and banners promote our cellular phone
services. When a consumer on an affiliate's site clicks on our banner or
advertising they are directed to freecellular-phone.com.

         When a visitor enters our website, they are asked to provide personal
credit information in order to qualify for a cellular phone service. In
addition, this information determines whether the visitor is in a coverage area
for any of the cell phone carriers that we refer applicants to. Once a coverage
area is determined, the applicant will choose a respective calling plan and
telephone. If the consumer provides this information, it is delivered to our
executive offices where it is processed and a credit check is made. Depending on
the consumer's credit history, the application is either approved or denied. An
approved application is then further processed and directed to one of the
carriers with whom we are associated. We currently have access to the following
cell phone carriers:

         Cingular
         T-Mobile
         Alltel Communications

         We believe that we have access to enough carriers that the loss of any
carrier would not materially effect our business. In addition, we signed a
partnership with Inphonic that will increase the amount of carriers that we are
able to market.

         The above service providers have distinct standards and qualifications
regarding the credit history of individuals in which they will provide services.
We attempt to match a consumer's credit history with a service provider that
will provide services to the individual and forward the applicant's information
to the potential carrier's credit service. If the applicant is approved by any
carrier credit service, we contact the consumer directly to verify his order. We

                                        4
<PAGE>
then activate and ship the telephone to the consumer. The consumer will receive
a bill for the telephone and service within 30-45 days of delivery.

Cyberads Cellular Operations

Direct Suppliers

         On March 10th, 2003, Cyberads, Inc entered into an agreement with
Inphonic, Inc that allows Cyberads to utilize all of Inphonic's cellular
agreements. They include AT&T, Cingular, T-Mobile, Verizon and Alltel. This in
effect increased the coverage area and provides our customers greater choices
when selecting cellular service.

         As a result of this agreement Cyberads, Inc. will no longer continue a
direct relationship with the carriers. Instead we will work as a sales agent of
Inphonic. Inphonic will be responsible for all order fulfillment including
shipping, customer care, sales and verification. They will also provide
Marketing and Creative support if required.

Customer Base

         The majority of our potential customers are identified through our
affiliate program. To build our potential consumer base, we started an affiliate
based marketing program which allows other Internet based businesses to refer
potential consumers to our cellular website, www.freecellular-phone.com. If a
customer purchases and receives cellular phone service, the affiliate whom
provided the referral will receive a commission from the sale. All visitors and
sales are tracked through an administration portion of a site. Each affiliate
has their own linking code to track their statistics. We presently have
approximately 1,000 affiliates. Affiliate websites include, but are not limited
to, the following:

         email.com
         Precisionplaymedia.com
         Mailsweeps.com
         Advertising.com
         Beam.to
         Euniverse.com

         There are no contractual obligations under our affiliate program and we
have not entered into written contracts with our affiliates. Third party
websites elect to join our affiliate program by submitting to us an e-mail
information form found on our freecellular-phone.com website. Upon submitting
the form via e-mail, the third party website receives a banner to place on its
website describing our services and linking our services to its website. The
affiliate will receive a commission for each sale initiated through the banner
on its website. Commissions are paid to our affiliates on a monthly basis, 20
days after the month's end.

         The average commission paid to an affiliate for an approved cellular
sale ranges between $40.00-$55.00.

                                       5
<PAGE>
         Since we derive the majority, if not all of our customers, from our
affiliate program, commissions paid will continue to be a material cost for our
company. We have historically paid high commissions in order to attract websites
to our affiliate program.

         In 2002 Cyberads sent out over 1 billion marketing messages resulting
in over 21,000,000 visitors and 53,823 sales. This represents a 53% increase in
sales from the previous year.

Cellular Phone Inventory

         As a result of the agreement with Inphonic we are no longer required to
purchase Phones or maintain inventory. Inphonic assumes that responsibility.

Related Parties and Reliance on Certain Cellular Providers

         We rely on Inphonic as our provider for equipment for all of the
carriers they have an affiliation with.

Factoring Plan

         On October 17, 2001 we entered into a nine month master factoring
agreement with Rockland Credit Financial LLC. The master factoring agreement was
subsequently terminated on January 15, 2002, when the master factoring agreement
was assumed by Webbank, a Utah industrial loan corporation. We entered into a
new master factoring agreement with Webbank on January, 15, 2002 under
materially the same terms as our initial agreement with Rockland. Under the
terms of the agreement we may assign our weekly accounts receivable to Webbank
and receive immediate payment equal to 70% of the weekly accounts receivable.
When Webbank collects the assigned accounts receivable we receive the remaining
balance on our weekly accounts receivable assigned to Webbank minus a discount
ranging from 1.75% to 6.75% based on days elapsed between the initial assignment
and Webbank's collection of the assigned weekly accounts receivable. Under the
agreement we are obligated to factor $70,000 of our accounts receivable per
month. In connection with the agreement we have granted Webbank a security
interest in the following collateral: accounts receivable, inventory and
computer equipment. In addition, we have granted Webbank a security interest in
the proceeds from the sale of the above collateral. Through December 31, 2002 we
factored approximately $547,000 of our accounts receivable.

Recent Events

         As noted above we entered into a partnership with Inphonic, Inc. on
March 10, 2003 to handle all order fulfillment, sales, customer service,
verification and marketing. As a result of this agreement, Cyberads was able to
reduced staffing levels by 66% and reduce payroll by over 50%. Furthermore,
commissions - net of cost of goods sold - were at a comparable level. Our
cellular footprint increased due to Inphonic having agreements with more
cellular carriers. Cash flow improved significantly because Inphonic pays every
15 days and the carriers an average of every 45 days.

                                        6
<PAGE>
Competition

         The market for cellular phone marketing services is characterized by
intense price competition. We compete with numerous well-established retailers,
carriers, wholesale distributors and suppliers of cellular products and
services, including AT&T, CingularWireless and Verizon. Substantially all of our
competitors market the same or similar services directly to our customers and
most have the financial resources to withstand substantial price competition and
implement extensive advertising and promotional programs. In recent years, the
price for services that we and our competitors have been able to charge
customers has decreased, primarily as a result of lower costs and greater
competition in the industry. We believe that significant price base competition
will continue to exist for the foreseeable future. The cellular service industry
is characterized by low barriers to entry. Our ability to continue to compete
successfully will be largely dependent on our ability to maintain and establish
relationships with our web affiliated and Inphonic.

         The Internet, in general, and our e-messaging solutions in particular,
also must compete for a share of advertisers' total advertising budgets with
traditional advertising media such as television, radio, cable and print.
Consequently, we compete with advertising and direct marketing agencies. To the
extent that e-messaging is perceived to be a limited or ineffective advertising
medium, companies may be reluctant to devote a significant portion of their
advertising budget to our e- messaging solutions, which could limit the growth
of e-messaging and negatively affect our business.

Trademarks and Patents

         We do not hold any trademark, copyright or patent protection.

Government Regulation

         At present, there are no specific regulations or approvals required by
or from the Federal Government or state agencies for marketing the cellular
services we offer. We are aware no proposed regulations that may have effect
upon our business as a seller of cellular phone services.

         Laws and regulations that apply to Internet communications, commerce
and advertising are becoming more prevalent. These regulations could affect the
cost of communicating on the Internet and negatively affect the demand for our
direct marketing solutions or otherwise harm business. Laws and regulations may
be adopted covering issues such as user privacy, pricing, libel, acceptable
content, taxation, and quality of products and services. This legislation could
hinder growth in the use of the Internet generally and decrease the acceptance
of the Internet as a communications, commercial, and direct marketing medium.

         The laws governing the Internet remain largely unsettled, even in areas
where there has been some legislative action. It may take years to determine
whether and how existing laws apply to the Internet and Internet advertising. In
addition, the growth and development of the market for Internet commerce may

                                       7
<PAGE>
prompt calls for more stringent consumer protection laws, both in the United
States and abroad. This may impose additional burdens on companies conducting
business over the Internet.

Employees

         We currently employ 12 people, all of whom are full-time employees, in
the following capacities: 2 executive officers, 2 administrative, 1 operations,
2 marketing, 3 sales and 2 finance. Our employees are not represented by a
collective bargaining unit. We believe relations with our employees are very
good.

Item 2.  Description of Property

         On April 6, 2002 we relocated all of our operations to a 10,000 square
foot facility located at 6001 Park of Commerce Blvd., Boca Raton, Florida. This
property is leased from 6001, LLC. The term of the lease is through April 1,
2005. We pay approximately $11,925 per month for the lease.

Item 3.  Legal Proceedings

         We are not a party to any material legal proceeding, nor are any of our
officers, directors or affiliates currently a party in any legal proceeding
adverse to our company.

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

         None.

PART II

Item 5.  Market for Common Equity and Related Stockholder Matters

Market for Common Equity

         Our shares of common stock commenced trading on the OTC Bulletin Board
on December 20, 2001 under the symbol "CYAD." Our closing price on May 14, 2002
was $0.02. During fiscal 2002, the closing price of our common stock reached a
high of approximately $0.90 and a low of $0.02.

         There are currently approximately 76 holders of record of our common
stock.

         We have never paid cash dividends on our common stock. We intend to
keep future earnings, if any, to finance the expansion of our business, and we
do not anticipate that any cash dividends will be paid for the foreseeable
future. The future dividend policy will depend on our earnings, capital
requirements, expansion plans, financial condition and other relevant factors.

                                       8
<PAGE>
Related Stockholder Matters

Common Stock and Options

         On January 5, 2002 we issued 50,000 shares of common stock and options
to purchase 50,000 shares of our common stock exercisable at $1.00 to Atlas
Pearlman, P.A. as consideration for legal services provided to our company. The
shares were issued under an exemption from registration pursuant to Section 4(2)
of the Securities Act. The shares issued contain a legend restricting their
transferability absent registration or an available exemption. Atlas Pearlman,
P.A. had access to information about our company and had the opportunity to ask
questions about our company.

         On January 6, 2002 we entered into a business consulting agreement with
Gene Foland, under which Mr. Foland will provide our company with business
consulting services. Mr. Foland received options to purchase 1,300,000 shares of
our common stock exercisable at $1.00 per share in exchange for these services.
The options are exercisable for a six month period commencing on the date of the
agreement. The options were issued under an exemption from registration pursuant
to Section 4(2) of the Securities Act. The options issued contain a legend
restricting their transferability absent registration or available exemption.
Mr. Foland had access to information about our company and had the opportunity
to ask questions about our company.

         On January 6, 2002 we entered into a product and sales development
consulting agreement with James L. Ricketts, under which Mr. Ricketts received
options to purchase 200,000 shares of our common stock exercisable at $1.00 per
share and options to purchase 1,100,000 shares of our common stock exercisable
at $2.00 per share in exchange for these services. The options are exercisable
for a six month period commencing on the date of the agreement. The options were
issued under an exemption from registration pursuant to Section 4(2) of the
Securities Act. The options issued contain a legend restricting their
transferability absent registration or available exemption. Mr. Ricketts had
access to information about our company and had the opportunity to ask questions
about our company.

         On January 6, 2002 we entered into a product and sales development
consulting agreement with James L. Copley, under which Mr. Copley received
options to purchase 300,000 shares of our common stock exercisable at $2.00 per
share in exchange for these services. The options are exercisable for a six
month period commencing on the date of the agreement. The options were issued
under an exemption from registration pursuant to Section 4(2) of the Securities
Act. The options issued contain a legend restricting their transferability
absent registration or available exemption. Mr. Copley had access to information
about our company and had the opportunity to ask questions about our company.

                                       9
<PAGE>
         On January 7, 2002 we issued an option to purchase 50,000 shares
exercisable at $1.00 per share to our controller. Our controller received these
options for services performed. The options were issued under an exemption from
registration pursuant to Section 4(2) of the Securities Act. The options issued
contain a legend restricting their transferability absent registration or
available exemption. Our controller had access to information about our company
and had the opportunity to ask questions about our company.

         On January 7, 2002 we issued options to purchase an aggregate of
100,000 shares of our common stock exercisable at $.25 per share to Daniel P.
Johnson and John C. Redmond. These options were issued to Messrs. Johnson and
Redmond as consideration for third party loans they made to International
Dialing Services, Inc., an affiliate of our company. The loans made to
International Dialing Services, Inc. were subsequently advanced to our company.
The options were issued under an exemption from registration pursuant to Section
4(2) of the Securities Act. The options issued contain a legend restricting
their transferability absent registration or available exemption.

         On January 8, 2002 we issued options to purchase an aggregate of
125,000 shares of our common stock exercisable at $1.00 per share to our current
officers and directors. The options were issued under an exemption from
registration pursuant to Section 4(2) of the Securities Act. The options issued
contain a legend restricting their transferability absent registration or
available exemption.

         On January 8, 2002 we issued an option to purchase 5,000,000 shares of
our common stock exercisable at $1.00 per share to Lawrence Levinson. This
option was issued in consideration for the advances that Mr. Levinson and his
affiliates have made to our company and personal guarantees Mr. Levinson has
made in favor of our company. The options were issued under an exemption from
registration pursuant to section 4(2) of the Securities Act. The options issued
contain a legend restricting their transferability.

Preferred Stock

         We currently have no preferred stock issued and outstanding.

         However, on January 21, 2002 we filed a certificate of designation
designating 625,000 of our 5,000,000 shares of preferred stock as series A
convertible preferred stock. The 625,000 shares of series A convertible
preferred stock have a stated value of $1.00 per share. The shares were issued
to our chief executive officer. The preferred stock has the following rights,
preferences and privileges:

         Conversion. Each share of series A convertible preferred stock is
convertible into one share of our common stock, at the option of the holder. The
conversion rate is subject to adjustment upon the occurrence of certain events,
including the issuance of our stock as a dividend or distribution on our common
stock.

         Redemption. The shares are redeemable at our sole option for $1.00 per
share.

         Voting. Each share of preferred stock is entitled to eight votes.

         Preference on Liquidation. Series A convertible preferred shares will
be entitled to a preference on liquidation.

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

General

         Management's discussion and analysis contains various forward looking
statements within the meaning of the Securities and Exchange Act of 1934. These
statements consist of any statement other than a recitation of historical fact
and can be identified by the use of forward looking terminology such as "may,"
"expect," "anticipate," "estimates" or "continue" or use of negative or other
variations of comparable terminology. We caution that these statements are
further qualified by important factors that could cause actual results to differ
materially from those contained in our forward looking statements, that these
forward looking statements are necessarily speculative, and there are certain
risks and uncertainties that could cause actual events or results to differ
materially from those referred to in our forward looking statements. Factors
that might cause a difference include, but are not limited to, those discussed
in "Risk Factors" and elsewhere in this prospectus.

Overview

         Through our IDS Cellular, Inc. subsidiary (d/b/a "Wireless Choices"),
commencing in the fourth quarter of 2001, we began submitting contracts directly
to several major wireless providers and began maintaining an inventory and ship
phones directly to customers. Under these circumstances, we bear the risk of
loss on the cellular phones and recognize a gross commission and related cost of
goods sold for the cellular phone at the time the phone is shipped. Our gross
margin will vary depending on the percentage of revenue received directly or
indirectly from wireless providers. In late January 2002, we commenced the
operations of Cyad Cellular Distributors, Inc. and 80% owned subsidiary. Cyad is
a wholesale distributor of cellular telephones to retail operations. Revenues
from Cyad were approximately $430,000. Cyad operations ceased as of August 2002.

Results of Operations

         Revenues were $8,326,211 for the year ending December 31, 2002 and
$4,968,550 for the year ended December 31, 2001. The $3,357, 661 increase in
revenues for the year ended December 31, 2002 as compared to December 31, 2001
reflects the change in business structure where the Company's revenues for 2002
were from direct contracts with the wireless carriers (that commenced in the
fourth quarter of 2001). Cost of sales for the year ended December 31, 2002 were
$3,939,359 an increase of $2,791,691 from $1,147,668 for the year ending
December 31, 2001. Materially all of our revenues were generated from the sale
of cellular telephones and services. The increase in cost of sales results from
the Company now providing the cellular telephones as part of each sale.

         Expenses for the year ended December 31, 2002 were $19,157,662 as
compared to $4,473,260 for the year ended December 31, 2001. Expenses for the
year ended December 31, 2002, were related to the growth of our business
operations and other costs including, but not limited to, sales commissions for
cellular phone services sales of $2,506,943; general and administrative expense
of $14,212,133 and payroll expense of $2,438,586.

         Accounts receivable decreased $961,167 to $1,073,760 as of December 31,
2002 from $2,034,927 as of December 31, 2001. This decrease is a result of
improved collection of receivables. We wrote off accounts receivable totaling
$399,869 during the year ended December 31, 2001 that were deemed uncollectible
as of the end of the period. We wrote off $61,038 in 2002 and reserved another
$512,172.

Liquidity and Capital Resources

         Since our inception we have experienced negative cash flow and have met
our cash requirements by issuing, through a private placement, our common stock
and by issuing stock as compensation for services provided. We have also funded
current obligations through the issuance of common stock and related party
loans. We generated additional funds through borrowings from an unrelated party.
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         From inception until December 31, 2000, we relied on the proceeds from
the private sales of our equity securities of $365,055 and loans from related
parties to meet our cash requirements. For the year ended December 31, 2001, we
raised an additional $53,800 through the private sale of our equity securities.
As of December 31, 2000 we had an accumulated deficit of $613,055 and cash in
the bank of $49,362.

         At December 31, 2002, we had an accumulated deficit of $17,512,915 and
$0 cash in the bank. For the year ended December 31, 2002, the deficit has been
partly funded through the sale of common stock and convertible debentures
totaling $115,000, increases in accounts payable and accrued expenses of
$2,336,538 and reductions in accounts receivable and inventory of $965,295.

         The Company's business method continues to evolve during the early part
of 2003. Early in March 2003, the Company entered into a contract with Inphonic
whereby the Inphonics will be responsible for handling all order fulfillment
processes, customer service, verification and shipping. The Company anticipates
reducing operational staff by up to 66% within a short term after the inception
of the agreement. The Company will also reduce its costs by eliminating its
requirement for factoring accounts receivable as Inphonics will pay every two
weeks. The improved cash flow resulting from the implementation of the Inphonics
contract and other cost cutting measures including the restructuring of the real
estate facilities lease will further assist the Company's steps to reach
positive cashflow.

         Our cash expenditures over the next 12 months are anticipated to be
approximately $4,000,000, consisting primarily of commission expenses, payroll
expenses and consulting fees. The following sources, in addition to funds
generated from operations, are available to fund current operations: net
advances from related parties ($963,671 since inception); net loans from third
party lenders ($125,000) and private placement of our common stock for cash
($53,800 during the year ended December 31, 2001). We anticipate that cash
generated from operations, and the benefits from the improved cashflow from the
Inphonics contract should be sufficient to provide us adequate liquidity and
capital resources for the next 12 months.

         While our auditors have expressed substantial doubt as to our ability
to continue as a going concern, we anticipate that funds received from loans and
cash generated from our operations should be sufficient to satisfy our
contemplated cash requirements for the next 12 months. We intend to take several
steps that will provide the capital resources required to insure our viability
over the next 12 months. These steps include the reduction of operating costs
including rent, payroll and factoring expenses. These saving added to the
benefits of the Inphonic's contract should provide all of the liquidity the
company requires.

         The number and level of our employees at December 31, 2002 will be
reduced during 2003 as a result of the implementation of the Inphonic's
contract.

Plan of Operations

         Over the next twelve months, we plan to expand our cellular phone
marketing business. In August 2001 and April 2002 we leased additional office
space to expand our operations, which we believe will enable us to process all
credit applications for wireless service with carriers' credit departments more
efficiently. We anticipate hiring additional employees as the workload dictates.
We do not anticipate any significant purchase of equipment unless we expand our
business. However, an anticipated increase in business from direct contracts
with cellular providers may effect the number of cellular phones we keep in
inventory, as contractual arrangements with cellular providers in some instances

                                       12
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will require us to keep cellular phones for anticipated sales in inventory at
all times. As our cellular phone inventory increases, we may need additional
space to maintain this inventory. The number and level of our employees at
December 31, 2001 is adequate to maintain our business.

Item 7.  Financial Statements

         The financial information required in this report is included herein,
commencing on page F-1.

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

         None.

PART III

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

         The following table includes the names, positions held and ages of our
executive officers and directors. All directors serve for one year and until
their successors are elected and qualify. Directors do not presently receive
compensation for their services as directors. Officers are elected by the Board
and their terms of office are, except as otherwise stated in employment
contracts, at the discretion of the Board.
<TABLE>
<CAPTION>
Name                    Age               Position
----                    ---               --------
<S>                     <C>         <C>
Lawrence Levinson       55          Chairman of the Board and Chief Executive Officer
Robert B. Kline         44          President, Treasurer and Director
Robert Modansky         48          Director
Michael Zimmerman       57          Director
</TABLE>
         Lawrence Levinson has served as our chief executive officer and
director since inception. Since June 1999, he has been consultant to
International Dialing Services, Inc., an international facilities-based
telephone circuit provider, whose major customer is a cable and wireless
industry leader. From 1990 until June 1999, Mr. Levinson was a founder and
executive officer of Communication Concepts & Investments, Inc., Crown
Communications Two, Inc. and Global Collections, Inc. (collectively
Communications & Collections), communications companies with switches and
billing contracts with major local telcos in the United States. In March 2000,
Mr. Levinson, Communications & Collections and two other principals of these
companies were subject to a Federal Trade Commission Stipulated Final Judgement
and Order for Permanent Injunction and Other Equitable Relief. Under this
injunction, Mr. Levinson and the other defendants agreed to each pay fines of
$210,000 and in addition, forgive approximately $36 million in unpaid charges
for services billed. This judgement was not an omission of guilt. From 1986
until 1990, Mr. Levinson held various sales positions with major companies in
the communications industry. During this time, he sold long distance service and
network provisions to various businesses in South Florida, including WorldCom.
From 1982 until 1986, Mr. Levinson was the owner/operator of two restaurants in

                                       13
<PAGE>
the Chicago area. From 1976 to 1982, Mr. Levinson owned and operated a temporary
help services company in Chicago with over 200 corporate clients.

         Robert B. (Brad) Kline has served as our president, treasurer and
director since inception. Since January 2000, he has been consultant to
International Dialing Services, Inc., an international facilities- based
telephone circuit provider, whose major customer is a cable and wireless
industry leader. From June 1998 until January 2000, Mr. Kline served as
President and Treasurer of International Dialing Services, Inc. From January
1995 until June 1998, Mr. Kline served as the operations manager for
Communication Concepts & Investments, Inc., Crown Communications Two, Inc. and
Global Collections, Inc. (collectively "Communications & Collections"),
communications companies with switches and billing contracts with major local
telcos in the United States. Between June 1990 and January 1998, Mr. Kline was
founder and President of Concepts By Kline, Inc., an advertising firm for the
Audiotext Industry. From 1981 until June 1990, Mr. Kline was a district manager
for American Frozen Foods, a nationwide direct to home food service. Mr. Kline
worked his way through American Foods, starting as a telemarketing
representative and advanced upward to the management side of the business.

         Robert Modansky has served as a director of our company since January
8, 2002. Since 1991 Mr. Modansky has worked as an accountant for Strauss, Comas
& Modansky, LLP. He has been a partner with Strauss, Comas & Modansky since
1994. Prior to working with Strauss, Comas & Modansky, Mr. Modansky was employed
by Arthur Anderson in Washington, D.C. and New York. Mr. Modansky currently
serves as a member of the board of directors of Internet Cable Corporation, a
NASD listed company. Mr. Modansky is a member of the American Institute of
Certified Public Accountants, as well as the New York State Society of Certified
Public Accountants. He received a bachelor of science in business administration
from the American University in Washington, D.C. Mr. Modansky is a certified
public accountant.

         Michael Zimmerman has served as a director of our company since January
8, 2002. Mr. Zimmerman is a certified public accountant, currently practicing in
Arizona. He has maintained his own private practice since 1977, providing tax
and auditing services as well as other financial services. Mr. Zimmerman
received a bachelor of science degree from Roosevelt University in Chicago,
Illinois.

         Board Committees. Our audit committee consists of Robert Modansky and
Michael Zimmerman. Our audit committee will review the work of the audit staff
and direct reports recovering such work to be prepared. Our audit committee will
oversee our continuous audit program to attempt to protect against improper and

                                       14
<PAGE>
unsound practices and attempt to furnish adequate protection for our assets and
records. Our audit committee will act as liaison to our independent certified
public accountants and will conduct such work as necessary and will receive
written reports, supplemented by oral reports as it deems necessary, from our
independent certified public accountants.

Indemnification of Directors and Officers

         The Florida Business Corporation Act (the "Corporation Act") permits
the indemnification of directors, employees, officers and agents of Florida
corporations. The Company's Articles of Incorporation and Bylaws provide that
the Company shall indemnify its directors and officers to the fullest extent
permitted by the Corporation Act.

         The provisions of the Corporation Act that authorize indemnification do
not eliminate the duty of care of a director, and in appropriate circumstances
equitable remedies such as injunctive or other forms of non-monetary relief will
remain available under Florida law. In addition, each director will continue to
be subject to liability for (a) violations of criminal laws, unless the director
had reasonable cause to believe his conduct was lawful or had no reasonable
cause to believe his conduct was unlawful, (b) deriving an improper personal
benefit from a transaction, (c) voting for or assenting to an unlawful
distribution and (d) willful misconduct or conscious disregard for the best
interests of the Company in a proceeding by or in the right of a shareholder.
The statute does not affect a director's responsibilities under any other law,
such as the Federal securities laws.

         The effect of the foregoing is to require the Company to indemnify the
officers and directors of the Company for any claim arising against such persons
in their official capacities if such person acted in good faith and in a manner
that he reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.

         Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling the
Company pursuant to the foregoing provisions, the Company has been informed that
in the opinion of the Securities and Exchange Commission, such indemnification
is against public policy as expressed in the act and is therefore unenforceable.

                                       15
<PAGE>
Item 10. Executive Compensation

Summary Compensation Table

         The following table sets forth information relating to salary and stock
options we paid during the past three fiscal years to our chief executive
officer; and to each of our executive officers who earned more than $100,000
during the fiscal year ended December 31, 2002. Other than salary and stock
options, we paid no other form of compensation to our executive officers and
directors. No stock options were exercised during the fiscal year ended December
31, 2002

Name                        Position           Salary          Stock Options
----                        --------           ------          -------------

Lawrence Levinson             CEO                     0          5,025,000

Robert Kline                  Pres             $133,726             25,000

Robert Modansky               Dir                     0             25,000

Michael Zimmerman             Dir                     0             25,000

James Baumhart                COO              $ 92,331                  0

Yannick Tessier               CTO              $ 72,626                  0

Incentive and Non-Qualified Stock Option Plan

         On November 1, 2001, we implemented a 2001 Incentive and Non-Qualified
Stock Option Plan. We have reserved 500,000 shares of our common stock for
issuance under this plan. This plan authorizes the granting of awards of up to
500,000 shares of common stock to our key employees, officers, directors and
consultants. Awards consist of stock options (both nonqualified options and
options intended to qualify as incentive stock options under Section 422 of the
Internal Revenue Code of 1986), restricted stock awards, deferred stock awards,
stock appreciation rights and other stock-based awards, as described in the
plan. As of the date of this prospectus, no stock options are outstanding under
the plan.

         The plan is administered by our board of directors which determines the
persons to whom awards will be granted, the number of awards to be granted and
the specific terms of each grant, including their vesting schedule, subject to
the provisions of the plan.

                                       16
<PAGE>
         In connection with incentive stock options, the exercise price of each
option may not be less than 100% of the fair market value of the common stock on
the date of grant (or 110% of the fair market value in the case of a grantee
holding more than 10% of our outstanding stock). The aggregate fair market value
of shares for which incentive stock options are exercisable for the first time
by an employee during any calendar year may not exceed $100,000. Nonqualified
stock options granted under the plan may be granted at a price determined by the
board of directors, not to be less than the fair market value of the common
stock on the date of grant.

Option Exercises and Holdings

         The following tables set forth information with respect to the exercise
of options to purchase shares of common stock during the fiscal year ended
December 31, 2002 to our chief executive officer and to each of our executive
officers who earned more than $100,000 during the fiscal year ended December 31,
2001.

         Employment Agreements. We have entered into employment agreements with
several of our officers, directors and key employees. The initial agreements
were entered into in 2000 and expired on various dates between September and
November 2001. The agreements have been orally extended. A summary of the
material agreements is as follows:

         Larry Levinson. Commencing September 2000, we agreed to pay Mr.
Levinson $120,000 per year, payable monthly. In addition, Mr. Levinson has
received options to purchase 50,000 shares of common stock exercisable for a 5
year term at $1.00 per share. Also, Mr. Levinson will be reimbursed for all
travel expenses. Effective January 1, 2002, we have orally agreed to extend Mr.
Levinson's employment agreement through December 31, 2002. Under this oral
agreement, Mr. Levinson will be paid an annual salary of $240,000, payable
weekly.

         Robert B. Kline. Commencing September 1, 2000, we agreed to pay Mr.
Kline $48,000 per year, payable monthly. In addition, Mr. Kline has received
options to purchase 50,000 shares of common stock exercisable for a 5 year term
at $1.00 per share. Mr. Kline will be reimbursed for all traveling expenses.
Effective February 1, 2002, we have orally agreed to extend Mr. Kline's
employment agreement through February 1, 2003. Under this oral agreement, Mr.
Kline will be paid an annual salary of $104,000, payable weekly.

         Michael Magno. Commencing November 1, 2000, we agreed to pay Mr. Magno
$42,000 per year, payable monthly. In addition, Mr. Magno has received options

                                       17
<PAGE>
to purchase 50,000 shares of common stock exercisable for a 5 year term at $1.00
per share. Mr. Magno will be reimbursed for all traveling expenses. Effective
January 1, 2002, we have orally agreed to extend Mr. Magno's employment
agreement through December 31, 2002. Under this oral agreement, Mr. Magno will
be paid an annual salary of $60,000, payable weekly.

         Director Compensation. On January 8, 2002, our board of directors
agreed to issue options to purchase 25,000 shares of common stock exercisable at
$1.00 per share to each member of our board and our corporate secretary.
Effective January 8, 2002, we issued options to purchase an aggregate of 125,000
shares of our common stock exercisable at $1.00 per share to Messrs. Levinson,
Kline, Zimmerman, Modansky and Magno. In addition, effective January 8, 2002,
members of our board of directors will be paid $500 and reimbursed travel
expenses for attendance at each meeting of our board of directors.

Limitation on Liability and Indemnification Matters

         As authorized by the Florida Business Corporation Law, our articles of
incorporation provides that none of our directors shall be personally liable to
us or our shareholders for monetary damages for breach of fiduciary duty as a
director, except for liability for:

        o         any breach of the director's duty of loyalty to our company or
                  its shareholders;
        o         acts or omissions not in good faith or which involve
                  intentional misconduct or a knowing violation of law
        o         unlawful payments of dividends or unlawful stock redemptions
                  or repurchases;
        o         any transaction from which the director derived an improper
                  personal benefit

         This provision limits our rights and the rights of our shareholders to
recover monetary damages against a director for breach of the fiduciary duty of
care except in the situations described above. This provision does not limit our
rights or the rights of any shareholder to seek injunctive relief or rescission
if a director breaches his duty of care. These provisions will not alter the
liability of directors under federal securities laws.

         Our articles of incorporation further provides for the indemnification
of any and all persons who serve as our director, officer, employee or agent to
the fullest extent permitted under Florida law.

                                       18
<PAGE>
         Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to our directors, officers and controlling persons pursuant
to the foregoing provisions, or otherwise, we have been advised that in the
opinion of the SEC, this indemnification is against public policy as expressed
in the securities laws, and is, therefore unenforceable.

Item 11. Security Ownership of Certain Beneficial Owners and Management

         The following table sets forth information known to us, as of the date
of this report, relating to the beneficial ownership of shares of common stock
by: each person who is known by us to be the beneficial owner of more than five
percent of the outstanding shares of common stock; each director; each executive
officer; and all executive officers and directors as a group. Unless otherwise
indicated, the address of each beneficial owner in the table set forth below is
care of CyberAds, Inc., 6001 Park of Commerce Boulevard, Boca Raton, Florida
33487.

         We believe that all persons named in the table have sole voting and
investment power with respect to all shares of common stock shown as being owned
by them.

         Under securities laws, a person is considered to be the beneficial
owner of securities owned by him, his spouse and others to whom the law
attributes ownership, as well as securities that can be acquired by him within
60 days from the date of this prospectus, including upon the exercise of
options, warrants or convertible securities. We determine a beneficial owner's
percentage ownership by assuming that options, warrants or convertible
securities that are held by him, but not those held by any other person, and
which are exercisable within 60 days of the date of this prospectus, have been
exercised or converted.

Name and Address of             Amount and Nature of            Percentage
Beneficial Owner                Beneficial Ownership             Of Class
----------------                --------------------             --------

Lawrence Levinson                  10,732,000 (1)(2)              56.3%

Gene Foland                         1,365,000 (3)                  9.3%
5060 N.E. 23rd Terrace
Lighthouse Point, FL 33064

James Ricketts                      1,300,000 (4)                  8.8%
14741 Lewis Road
Miami, FL 33014

Robert B. Kline                     1,025,000 (2)                  7.6%

Michael Magno                         349,000 (5)                  2.4%

Robert Modansky                        25,000 (6)                    *

Michael Zimmerman                      60,000 (6)(7)                 *

Executive Officers and
Directors (as a group of 5)         6,291,500 (8)                 46.8%

                                       19
<PAGE>
(1)   Includes 625,000 shares of series A preferred stock that are convertible
      into 625,000 shares of our common stock and an option to purchase
      5,000,000 shares of our common stock exercisable at $1.00 per share.
(2)   Includes options to purchase 75,000 shares of common stock exercisable
      at $1.00 per share.
(3)   Includes 65,000 shares of common stock issued acquired in a third party
      transaction. Includes 1,300,000 shares of common stock underlying options
      exercisable at $1.00.
(4)   Includes options to purchase 1,300,000 shares of common stock exercisable
      at either $1.00 or $2.00 per share.
(5)   Includes 100,000 shares of common stock underlying options and warrants
      exercisable at $1.00 per share.
(6)   Includes options to purchase 25,000 shares of common stock exercisable at
      $1.00 per share.
(7)   Includes 35,000 shares purchased under a private placement. (8) Excludes
      common stock underlying convertible securities.
 *  Less than 1%

Item 12. Certain Relationships and Related Transactions

         In a stock purchase agreement effective December 31, 2000, we acquired
all of the issued and outstanding shares (an aggregate of 1,000,000 shares) of
IDS Cellular, Inc. in return for 7,500,000 shares of our common stock. We
acquired the IDS Cellular shares directly from each of IDS Cellular's
shareholders. These shareholders were Lawrence Levinson, Robert Kline and Barry
Garlin, who were serving as our executive officers, directors and principal
shareholders at the time of the transaction. We believe the consideration paid
for the outstanding shares of IDS Cellular was fair and reasonable at the time
of the stock purchases.

         We have received advances in the aggregate of $598,100 through December
31, 2001 from International Dialing Services, Inc., a company wholly owned by
Lawrence Levinson. In addition, we have received advances in the aggregate of
$433,100 from Mr. Levinson, individually. The loans are unsecured, non-interest
bearing and payable on demand. In addition, under the terms of the loans we have
agreed to make the lease payments on Mr. Levinson's automobile which are
approximately $1,020 per month. Mr. Levinson is the beneficial owner of
approximately 85% of our outstanding common stock. Lawrence Levinson and Robert
Kline, our executive officers, directors and principal shareholders, are also
officers and directors of International Dialing Services, Inc. In connection
with the loans from Lawrence Levinson, effective December 18, 2001 we issued
options to purchase an aggregate of 100,000 shares of our common stock
exercisable at $.25 per share to Daniel P. Johnson and John C. Redmond. The
options were issued to Messrs. Johnson and Redmond as compensation for third
party advances by Johnson and Redmond to International Dialing Services, which
were subsequently advanced to our company.

         In addition, we have received a $5,000 loan from Robert Kline,
individually, and a $50,000 loan from Lawrence Levinson, individually. The
advance from Mr. Kline was repaid during the third quarter 2001. Mr. Levinson's
advance is payable on demand.
                                       20
<PAGE>
         As of December 31, 2001, the amount due on the related party advances
was $1,031,200.

         On January 8, 2002 we issued a five year option to purchase 5,000,000
shares of our common stock exercisable at $1.00 per share to Lawrence Levinson.
This option was issued in consideration for the advances that Mr. Levinson and
his affiliates have made to our company and personal guarantees Mr. Levinson has
made in favor of our company.

         On June 22, 2001, we entered into a loan and security agreement with
Four Star Financial Services, LLC, a California limited liability company. Under
this agreement we received a loan in the amount of $150,000. The term of the
loan was for a period commencing on June 22, 2001 and ending on December 17,
2001. Under the terms of the loan and security agreement we paid interest to
Four Star Financial Services, LLC on the daily outstanding principal balance of
the loan at a rate of 33% per annum. The loan was secured by all of our assets
and accounts receivable. In addition, our chairman and his wife personally
guaranteed payment of the principal amount of the loan and interest. The
personal guarantee included a mortgage on our chairman's principal residence. As
a further consideration for entering into the loan and security agreement, we
issued Four Star Financial Services, LLC an option to acquire 300,000 shares of
our common stock exercisable at $.50 per share for a term of five years. The
option expires on June 22, 2006. The loan has been repaid in accordance with its
terms.

         We sublease office space in Boca Raton from International Dialing
Services, Inc. We use this space for our servers and IT operations. The lease
term is through July 30, 2002. We occupy this space for approximately $975 per
month.

         In addition, commencing April 2001 we entered into an oral sublease
agreement with International Dialing Services for facilities for our cellular
phone division. The lease terminated April 2002. We subleased these facilities
for $1,500 per month, under the same terms of the lease agreement International
Dialing Services entered into with the landlord.

         We have entered into a business to business cellular phone marketing
program with American Cellular, Inc. This relationship has historically
accounted for the majority of our revenues. The shareholders of American
Cellular are Steven Krause (51%), Lawrence Levinson (24.5%) and Nicholas E.
Brooks (24.5%). Mr. Krause owns a minority interest in our company. Mr. Levinson
is our CEO and principal shareholder. Mr. Brooks is a former officer of our
company. From inception through December 31, 2000, more than 50% of our revenues
were derived from our agreement with American Cellular.

         On January 6, 2002 we issued options to purchase 1,300,000 shares of
our common stock to Gene Foland as consideration for advertising and marketing
consulting services provided by Mr. Foland. The options are exercisable at $1.00
per share for a term of six months. Based upon the current number of outstanding
shares of our common stock, upon exercise of these options, Mr. Foland would be
a beneficial owner of more than 5% of our outstanding common stock.

         On January 6, 2002 we issued options to purchase 1,300,000 shares of
our common stock to James Ricketts as consideration for Latin American sales
development consulting services provided by Mr. Ricketts. The options are
exercisable at either $1.00 or $2.00 for a term of six months. Based upon the
current number of outstanding shares of our common stock upon exercise of these
options, Mr. Ricketts would be a beneficial owner of more than 5% of our
outstanding common stock.
                                       21
<PAGE>
         On January 8, 2002 we appointed Robert Modansky to serve on our board
of directors. Mr. Modansky's accounting firm has provided accounting services to
our company and has accrued approximately $16,000 in fees for services performed
during fiscal year 2001.

Item 13. Exhibits, Lists and Reports on Form 8-K

(a)      Exhibits

Exhibit No.     Description of Document
-----------     -----------------------

2.2         Stock Purchase Agreement with IDS Cellular and its shareholders(1)
3.1(a)      Articles of Incorporation(1)
3.1(b)      Articles of Amendment(1)
3.1(c)      Designation of Series A Convertible Preferred Stock(2)
3.2         Bylaws(1)
4.0         Form of Stock Certificate(1)
4.1         Loan Agreement with Four Star Financial Services, LLC(1)
4.2         Loan Agreement with Levinson(1)
10.1        Employment/Consulting Agreement with Levinson(1)
10.2        Agreements with American Cellular, Inc. and GT Global
            Communications, Inc.(1)
10.3        Agreement with Triton PCS(1)
10.4        Agreement with Regal Marketing International(1)
10.6        Agreement with Beck Management, Inc.(1)
10.7        Consulting Agreement with Gene Foland(2)
10.8        Consulting Agreement with James L. Ricketts(2)
10.9        Consulting Agreement with James L. Copley(2)
10.10       Sales Agency Agreement with MCI WorldCom Wireless(2)
21.0        Subsidiaries of Registrant(1)

         (1) Previously filed in Registration Statement on Form SB-2, File No.
333-62690

         (2) Previously filed in Registration Statement on Form SB-2, File No.
333-82104

(b)      Reports on Form 8-K:

         The following reports on Form 8-K were filed during the last quarter of
the period covered by this report and the period subsequent to the period
covered by this report:

         On January 29, 2002, we filed a current report on Form 8-K disclosing
that on January 22, 2002 we issued 625,000 shares of series A preferred stock to
Lawrence Levinson, our CEO, in consideration for advances in the aggregate of
approximately $350,000 that Mr. Levinson and his affiliates have made to our
company and a personal guarantee that Mr. Levinson has made on behalf of our
company.

         On February 6, 2002, we filed an amended current report on Form 8-K/A
to disclose the designation, rights and preferences of the series A preferred
stock that we issued to Lawrence Levinson on January 22, 2002. Each share of
series A preferred stock is convertible into one share of our common stock at
the option of the holder. In addition, the series A preferred shares have super
voting rights.

                                       22
<PAGE>
                                   SIGNATURES

         In accordance with Section 13 or 15(d) of the Securities Exchange Act,
the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized, in Boca Raton, Florida on April 15, 2002.

                                           CYBERADS, INC.


                                           By: /s/ Lawrence Levinson
                                              ----------------------
                                              Lawrence Levinson
                                              Chairman, Chief Executive Officer



         In accordance with the requirements of the Securities Act of 1934, this
report has been signed by the following persons in the capacities and on the
dates indicated.

       SIGNATURE                     TITLE                      DATE
       ---------                     -----                      ----

/S/Lawrence Levinson                 D, CB                     5/15/03
--------------------
Lawrence Levinson

/s/Robert Kline                      P/T/D                     5/15/03
---------------
Robert B. Kline

/s/Robert Modansky                   D                         5/15/03
------------------
Robert Modansky

/s/Michael Zimmerman                 D                         5/15/03
--------------------
Michael Zimmerman








                                       23

<PAGE>
                                 Certifications

I, Larry Levinson, certify that:

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

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

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

4.       I am responsible for establishing and maintaining disclosure controls
         and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for
         the registrant and have:

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

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

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

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

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

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

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

Date: May 15, 2003

/s/Larry Levinson
-----------------
President, Chief Executive Officer,
Chief Financial Officer, and
Principal Accounting Officer

                                       24
<PAGE>
                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

         In connection with the Annual Report of Cyberads, Inc. #2 ("the
Company")on Form 10-KSB for the period ended #3 as filed with the Securities and
Exchange Commission on the date hereof ("the Report"), I, Larry Levinson, Chief
Financial Officer, Principal Accounting Officer, Chief Executive Officer and
President, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

         1.    The Report fully complies with the requirements of Section 13(a)
               or 15(d) of the Securities Exchange Act of 1934; and

         2.    The information contained in the Report fairly presents, in all
               material respects, the financial condition and result of
               operations of the Company.

Dated: May 15, 2003


/s/Larry Levinson
-----------------
Chief Executive Officer





























                                       25







<PAGE>
                         CYBERADS, INC. AND SUBSIDIARIES



                                    CONTENTS
                                    --------


PAGE            F-1         INDEPENDENT AUDITORS' REPORT

PAGE            F-2         CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2002

PAGE            F-3         CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE
                            YEARS ENDED DECEMBER 31, 2002 AND 2001

PAGE            F-4         CONSOLIDATED STATEMENT OF CHANGES IN
                            STOCKHOLDERS' DEFICIENCY FOR THE YEARS ENDED
                            DECEMBER 31, 2002 AND 2001

PAGE          F-5 - F-6     CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE
                            YEARS ENDED DECEMBER 31, 2002 AND 2001

PAGES         F-7 - F-25    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF
                            DECEMBER 31, 2002




<PAGE>
                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------

To the Board of Directors of:
  CyberAds, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheet of CyberAds, Inc.
and Subsidiaries as of December 31, 2002 and the related consolidated statements
of operations, changes in stockholders' deficiency and cash flows for the years
ended December 31, 2002 and 2001. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly in all material respects, the financial position of CyberAds, Inc. and
Subsidiaries as of December 31, 2002, and the results of their operations and
their cash flows for the years ended December 31, 2002 and 2001 in conformity
with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 17 to
the consolidated financial statements, the Company had a $15,873,201 loss from
operations, a working capital deficiency of $4,074,435 and a stockholders'
deficiency of $3,686,740. These matters raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in regards
to these matters is also described in Note 17. The consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.



WEINBERG & COMPANY, P.A.


Boca Raton, Florida
May 13, 2003

                                      F-1
<PAGE>
                         CYBERADS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                             AS OF DECEMBER 31, 2002
                             -----------------------
<TABLE>
<CAPTION>
                                     ASSETS
                                     ------
<S>                                                                                     <C>
CURRENT ASSETS
 Accounts receivable, net                                                               $        1,073,760
 Inventory                                                                                         156,234
                                                                                        ------------------
       Total Current Assets                                                                      1,229,994
                                                                                        ------------------

PROPERTY AND EQUIPMENT - NET                                                                       210,659
                                                                                        ------------------
OTHER ASSETS
 Deposits                                                                                           77,251
 Intangible asset                                                                                   75,000
 Other assets                                                                                       24,785
                                                                                        ------------------
       Total Other Assets                                                                          177,036
                                                                                        ------------------

TOTAL ASSETS                                                                            $        1,617,689
------------                                                                            ==================

                    LIABILITIES AND STOCKHOLDERS' DEFICIENCY
                    ----------------------------------------

CURRENT LIABILITIES
 Cash overdraft                                                                         $          112,649
 Accounts payable                                                                                1,783,712
 Accounts payable - related parties                                                                831,625
 Accrued expenses                                                                                  655,612
 Factor payable, net                                                                               613,423
 Advances from related parties                                                                   1,101,158
 Due to officers                                                                                   146,250
 Loan payable - convertible debentures                                                              60,000
                                                                                        ------------------
       Total Current Liabilities                                                                 5,304,429
                                                                                        ------------------
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIENCY
 Convertible preferred stock, $.001 par value, 5,000,000 shares
  authorized, none issued and outstanding                                                               --
 Common stock, $.001 par value, 50,000,000 shares authorized,
  14,774,777 shares issued and outstanding                                                          14,775
 Additional paid-in capital                                                                     13,818,415
 Accumulated deficit                                                                           (17,512,915)
                                                                                        ------------------
                                                                                                (3,679,725)
 Deferred financing costs                                                                           (7,015)
                                                                                        ------------------
      Total Stockholders' Deficiency                                                            (3,686,740)
                                                                                        ------------------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY                                          $        1,617,689
----------------------------------------------                                          ==================
</TABLE>



          See accompanying notes to consolidated financial statements.
                                       F-2


<PAGE>
                         CYBERADS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
                 ----------------------------------------------

<TABLE>
<CAPTION>

                                                                                   For the Year Ended       For the Year Ended
                                                                                   December 31, 2002         December 31, 2001
                                                                                   ------------------       --------------------
<S>                                                                                <C>                      <C>
NET REVENUES                                                                       $       8,326,211        $          4,968,550

COST OF REVENUES                                                                           3,939,359                   1,147,668
                                                                                   -----------------        --------------------

GROSS PROFIT                                                                               4,386,852                   3,820,882
                                                                                   -----------------        --------------------

OPERATING EXPENSES
 Selling                                                                                   2,506,943                   1,692,847
 Payroll expenses                                                                          2,438,586                   1,048,086
 General and administrative                                                               14,212,133                   1,732,327
                                                                                   -----------------        --------------------
     Total Operating Expenses                                                             19,157,662                   4,473,260
                                                                                   -----------------        --------------------

LOSS FROM CONTINUING OPERATIONS BEFORE OTHER EXPENSE                                     (14,770,810)                   (652,378)
                                                                                   -----------------        --------------------

OTHER EXPENSE
 Gain on theft of assets                                                                       1,203                          --
 Gain on settlement with former employee                                                       8,250                          --
 Impairment of property and equipment                                                        (77,627)                         --
 Other income                                                                                    636                          --
 Interest expense and financing costs                                                       (538,146)                   (262,728)
 Loss on acquisition not consummated                                                        (300,000)                         --
                                                                                   -----------------        --------------------
     Total Other Expense                                                                    (905,684)                   (262,728)
                                                                                   -----------------        --------------------

LOSS FROM CONTINUING OPERATIONS                                                          (15,676,494)                   (915,106)

LOSS FROM DISCONTINUED OPERATIONS                                                           (196,707)                   (111,553)
                                                                                   -----------------        --------------------

NET LOSS                                                                           $     (15,873,201)       $         (1,026,659)
--------                                                                           =================        ====================

BASIC AND DILUTED LOSS PER COMMON SHARE
 Loss from continuing operations                                                   $           (1.10)       $              (0.07)
 Loss from discontinued operations                                                             (0.01)                      (0.01)
                                                                                   -----------------        --------------------
                                                                                   $           (1.11)       $              (0.08)
                                                                                   =================        ====================

Weighted average number of common shares outstanding - basic and diluted                  14,333,944                  13,314,033
                                                                                   =================        ====================
</TABLE>



          See accompanying notes to consolidated financial statements.
                                       F-3
<PAGE>
                         CYBERADS, INC. AND SUBSIDIARIES
          CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIENCY
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
                 ----------------------------------------------
<TABLE>
<CAPTION>


                                                                                                          Deferred
                                                                                                         Consulting
                                                                                                           Fees &
                                                               Additional                                 Deferred
                                           Common Stock          Paid-In     Accumulated  Subscriptions   Financing
                                      Shares       Amount        Capital       Deficit     Receivable       Costs       Total
                                   ----------   ------------  ------------  ------------- ------------- ----------- ------------
<S>                                <C>          <C>           <C>           <C>           <C>           <C>         <C>
Balance, December 31, 2000         13,235,000   $     13,235  $    671,020  $   (613,055) $     (5,025) $ (150,000) $    (83,825)

Issuance of common stock for cash,
  net of offering costs                59,777             60        53,740            --            --          --        53,800

Issuance of common stock
  for services                         90,000             90        89,910            --            --          --        90,000

Recognition of deferred
  consulting fees                          --             --            --            --            --     150,000       150,000

Settlement of subscription
  for services                             --             --            --            --         5,025          --         5,025

In-kind contribution of services           --             --         6,200            --            --          --         6,200

Issuance of options related
  to a loan                                --             --       153,000            --            --          --       153,000

Options issued for services                --             --       249,000            --            --          --       249,000

Issuance of options related to
  advances made to the Company             --             --        79,000            --            --          --        79,000

Net loss, 2001                             --             --            --    (1,026,659)           --          --    (1,026,659)
                                  -----------   ------------  ------------  ------------  ------------  ----------  ------------

Balance, December 31, 2001         13,384,777         13,385     1,301,870    (1,639,714)           --          --      (324,459)

Issuance of common stock for
  cash, net of offering costs          40,000             40        39,960            --            --          --        40,000

Issuance of common stock and
  options for services                315,000            315    12,091,620            --            --          --    12,091,935

Issuance of common stock and
  options for 2001 accrued
  legal services                       50,000             50        50,950            --            --          --        51,000

Options exercised                     585,000            585        14,415            --            --          --        15,000

Convertible debentures                     --             --        20,000            --            --      (7,015)       12,985

Issuance of stock on acquisition
  not consummated                     400,000            400       299,600            --            --          --       300,000

Net loss, 2002                             --             --            --   (15,873,201)           --          --   (15,873,201)
                                  -----------   ------------  ------------  ------------  ------------  ----------  ------------

BALANCE, DECEMBER 31, 2002         14,774,777   $     14,775  $ 13,818,415  $(17,512,915) $         --  $   (7,015) $ (3,686,740)
--------------------------        ===========   ============  ============  ============  ============  ==========  ============
</TABLE>

          See accompanying notes to consolidated financial statements.
                                       F-4


<PAGE>
                         CYBERADS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
                 ----------------------------------------------
<TABLE>
<CAPTION>
                                                                              For the Year Ended    For the Year Ended
                                                                               December 31, 2002     December 31, 2001
                                                                              ------------------    ------------------
<S>                                                                              <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net loss                                                                        $(15,873,201)         $ (1,026,659)
 Adjustments to reconcile net loss to net cash
   provided by (used in) operating activities:
 Provision for doubtful accounts                                                      223,310               517,393
 Loss on acquisition not consummated                                                  300,000                    --
 Impairment of fixed assets                                                            77,627                    --
 Beneficial conversion of convertible debentures                                       12,985                    --
 Depreciation                                                                          39,805                 5,558
 Gain on settlement with former employee                                               (8,250)                   --
 Stock and options issued for services                                             12,091,935               494,025
 Gain on theft of assets                                                               (1,203)                   --
 In-kind contribution of services                                                          --                 6,200
 Options issued as part of a loan                                                          --               153,000
 Options issued related to advances made to the Company                                    --                79,000
 (Increase) decrease in:
  Accounts receivable                                                                 737,857            (2,504,812)
  Other assets                                                                        (24,785)                   --
  Prepaid expenses                                                                         --                (5,913)
  Inventory                                                                           227,438              (383,672)
  Deposits                                                                            (61,338)                   --
 Increase (decrease) in:
  Accounts payable                                                                  1,855,061               792,592
  Accrued expenses                                                                    481,477               135,135
  Due to officers                                                                          --                81,750
                                                                                 ------------          ------------
       Net Cash Provided by (Used in) Operating Activities                             78,718            (1,656,403)
                                                                                 ------------          ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchase of intangible asset                                                         (75,000)                   --
 Cash received for stolen equipment                                                    22,245                    --
 Purchases of property and equipment                                                 (307,170)              (42,503)
                                                                                 ------------          ------------
       Net Cash Used In Investing Activities                                         (359,925)              (42,503)
                                                                                 ------------          ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from issuance of common stock                                                55,000                53,800
 Cash overdraft                                                                       112,649                    --
 Proceeds from convertible debentures                                                  60,000                    --
 Proceeds from officers                                                                 2,250                    --
 Advances from third parties                                                               --               325,000
 Repayments to third parties                                                         (125,000)             (200,000)
 Advances from related parties                                                        884,896             1,221,800
 Repayments to related parties                                                       (814,938)             (258,129)
 Proceeds from factored accounts receivable, net                                       66,382               547,041
                                                                                 ------------          ------------
       Net Cash Provided By Financing Activities                                      241,239             1,689,512
                                                                                 ------------          ------------

NET INCREASE (DECREASE) IN CASH                                                       (39,968)               (9,394)

CASH, BEGINNING OF PERIOD                                                              39,968                49,362
                                                                                 ------------          ------------
CASH, END OF PERIOD                                                              $         --          $     39,968
-------------------                                                              ============          ============
Interest paid during the year                                                    $    479,689          $     30,728
                                                                                 ============          ============
Taxes paid during the year                                                       $         --          $         --
                                                                                 ============          ============
</TABLE>
          See accompanying notes to consolidated financial statements.
                                       F-5

<PAGE>
                         CYBERADS, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
                 ----------------------------------------------






SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
-----------------------------------------------------------------------

In January 2002, the Company issued 50,000 shares of common stock and 50,000
stock options for an aggregate value of $51,000, as payment for legal services
previously rendered and accrued.

During the year ended December 31, 2002, a theft occurred resulting in a $56,353
reduction in inventory and a $21,042 reduction in fixed assets. The Company
received insurance proceeds of $78,598 and accordingly, recorded a gain of
$1,203 from theft loss recovery.








































          See accompanying notes to consolidated financial statements.
                                       F-6
<PAGE>
                         CYBERADS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF DECEMBER 31, 2002

NOTE 1   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION
------   -----------------------------------------------------------

         (A) Nature of Operations
         ------------------------

         CyberAds, Inc. was incorporated in the state of Florida on April 12,
         2000 and originally intended to offer internet-based opt-in email list
         aggregation and database services to customers that wished to direct
         mail promotional campaigns to consumers who had given their permission
         to receive email messages in various categories. NetAds of South
         Florida, Inc., a wholly owned subsidiary of the CyberAds, was
         incorporated in the state of Florida on April 12, 2000 and operated the
         associated website. NetAds obtained consumers permission to receive
         opt-in email by giving away cash and non-cash prizes to those people
         registered at their website. As of December 31, 2000, NetAds suspended
         awarding cash prizes. During 2001, this business segment was
         discontinued (See Note 14).

         Effective December 31, 2000, the Company acquired IDS Cellular, Inc.
         ("IDS") by issuing 7,500,000 shares of its common stock for all of the
         outstanding common stock of IDS whereby IDS became a wholly owned
         subsidiary. The acquisition was accounted for as a business combination
         of entities under common control because both entities had common
         ownership interests. IDS was incorporated in the state of Florida on
         December 11, 2000 and receives revenue by obtaining cellular phone
         applications from advertising banners placed at various websites and
         submitting approved applications to cellular phone service providers
         (carriers) as well as to master dealers that have contracted with
         various other carriers. IDS does business with several website hosts,
         who receive a commission for each completed contract for cellular phone
         service. All operations of IDS have been moved to CyberAds, Inc. (See
         Note 14).

         In January 2002, Cyad Cellular Distributors, Inc. ("Cyad") was formed
         and CyberAds, Inc. received 80% of the shares issued at Cyad's
         inception. Cyad began developing the business of wholesaling cellular
         phones. In August 2002, Cyad's operations were discontinued (See Note
         14).

         Effective June 1, 2002, CyberAds entered into an agreement to acquire
         all of the outstanding shares of GT Global Communications, Inc. ("GT")
         in exchange for cash of $75,000, and 400,000 shares of the CyberAds'
         common stock having an aggregate fair market value of $300,000 for a
         total purchase price of $375,000. Due to the fact that the records for
         GT were not auditable, the Company rescinded its agreement to acquire
         GT. As part of the rescission, the former owners of GT received their
         stock back and retained all consideration received from CyberAds.
         CyberAds was able to retain the trade name "Wireless Choices", which
         appears on the accompanying balance sheet as an intangible asset.
         Accordingly, CyberAds recognized a $300,000 loss on the rescinded
         acquisition.

                                      F-7
<PAGE>
                         CYBERADS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF DECEMBER 31, 2002

         In March 2003, the Company changed its business model whereby it will
         no longer maintain an inventory. For the cellular phone subscriptions
         obtained in the future, the phones shall be shipped by carrier or a
         fulfillment company. As a result, the Company will not be responsible
         for delivering cellular phones to subscribers and revenue shall be
         recognized on a net basis.

         (B) Principles of Consolidation
         -------------------------------

         The accompanying consolidated financial statements include the accounts
         of CyberAds, Inc., and its wholly owned subsidiaries (NetAds of South
         Florida, Inc., IDS Cellular, Inc. and Cyad Cellular Distributors,
         Inc.), collectively, (the "Company"). All significant intercompany
         transactions and balances have been eliminated in consolidation.

         (C) Use of Estimates
         --------------------

         In preparing financial statements in conformity with accounting
         principles generally accepted in the United States of America,
         management is required to make estimates and assumptions that affect
         the reported amounts of assets and liabilities and the disclosure of
         contingent assets and liabilities at the date of the financial
         statement and revenues and expenses during the reported period. Actual
         results could differ from those estimates.

         (D) Cash and Cash Equivalents
         -----------------------------

         For purposes of the cash flow statement, the Company considers all
         highly liquid investments with original maturities of three months or
         less at the time of purchase to be cash equivalents.

         (E) Reclassifications
         ---------------------

         Certain 2001 balances have been reclassified to conform to the 2002
         presentation.

         (F) Property and Equipment
         --------------------------

         Property and equipment are stated at cost less accumulated
         depreciation. Depreciation is provided for over the estimated useful
         life of the assets of five to seven years. Repairs and maintenance that
         do not extend the useful life of the asset are charged to expenses in
         the period they occur. Leasehold improvements are amortized over the
         shorter of the term of the related lease or their useful life. An
         impairment loss of $77,627 was recorded during 2002 for assets that are
         idle as a result of staff reductions.

                                      F-8
<PAGE>
                         CYBERADS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF DECEMBER 31, 2002

         (G) Inventories
         ---------------

         Inventories are valued at the lower of cost or market. Cost is
         determined using the first-in, first-out (FIFO) method. Provision for
         potentially obsolete or slow moving inventory is made based on
         management's analysis of inventory levels and future sales forecasts.
         No impairment loss was recognized during 2002 and 2001.

         (H) Income Taxes
         ----------------

         The Company accounts for income taxes under the Statement of Financial
         Accounting Standards No. 109 "Accounting for Income Taxes" ('SFAS
         109"). Under Statement 109, deferred tax assets and liabilities are
         recognized for the future tax consequences attributable to differences
         between the financial statement carrying amounts of existing assets and
         liabilities and their respective tax bases. Deferred tax assets and
         liabilities are measured using enacted tax rates expected to apply to
         taxable income in the years in which those temporary differences are
         expected to be recovered or settled. Under Statement 109, the effect on
         deferred tax assets and liabilities of a change in tax rates is
         recognized in income in the period that includes the enactment date.

         (I) Stock Options and Warrants
         ------------------------------

         In accordance with Statement of Financial Accounting Standards No. 123,
         ("SFAS 123") the Company has elected to account for Stock Options and
         Warrants issued to employees under Accounting Principles Board Opinion
         No. 25 ("APB Opinion No. 25") and related interpretations. The Company
         accounts for stock options and warrants issued to non-employees for
         services under the fair value method of SFAS 123.

         (J) Loss Per Share
         ------------------

         Basic and diluted net loss per common share for all periods presented
         is computed based on the weighted average common shares outstanding as
         defined by Statement of Financial Accounting Standards, No. 128,
         "Earnings Per Share". Common stock equivalents have not been included
         in the computation of diluted loss per share since the effect would be
         anti-dilutive.

         (K) Advertising Expense
         -----------------------

         Costs incurred for producing and communicating advertising of the
         Company are charged to operations as incurred. Advertising expense,
         including promotional expenses, for the years ended December 31, 2002
         and 2001 was $313,704 and $81,814, respectively.

                                      F-9
<PAGE>
                         CYBERADS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF DECEMBER 31, 2002

         (L) Website Development Expenses
         --------------------------------

         The Company follows the Emerging Issues Task Force Issue 00-2
         "Accounting for Web Site Development Costs" in accounting for its
         website development expenses. Accordingly, costs that involve design of
         the web page and do not change the content are capitalized and
         amortized over their estimated useful life. Costs incurred in operating
         a web site that have no future benefits are expensed in the current
         period. Costs incurred in operating the website which have a future
         benefit are capitalized in accordance with the AICPA's Statement of
         Position 98-1 and amortized over the respective future periods which
         are expected to benefit from the changes.

         (M) Revenue Recognition
         -----------------------

         The Company actively seeks applications for cellular phone contracts,
         for which commissions are received either directly or indirectly from
         wireless providers. The Company recognizes revenue on both a net and
         gross basis as explained below. During 2002 and 2001, the Company
         submitted applications for approval to contracted master dealers. The
         agreements with the master dealers call for commissions to be paid once
         the consumer has received the phone. Under these circumstances, the
         Company does not bear the risk of loss on the cellular phone and
         recognizes only a net commission at the time the phone is delivered to
         the consumer.

         In the fourth quarter of 2001, the Company began submitting contracts
         directly to several major wireless providers. The Company maintains an
         inventory and ships phones directly to customers. Under these
         circumstances, the Company bears the risk of loss on the cellular
         phones and recognizes a gross commission and related cost of goods sold
         for the cellular phone at the time the phone is shipped. The Company's
         gross margin will vary depending on the percentage of revenue received
         directly from wireless providers or from master dealers.

         (N) Fair Value of Financial Instruments
         ---------------------------------------

         Statement of Financial Accounting Standards No. 107, "Disclosure About
         Fair Value of Financial Instruments," requires certain disclosures
         regarding the fair value of financial instruments. Accounts receivable,
         accounts payable, accrued expenses, factor payable and loans and
         advances payable to related and non-related parties are reflected in
         the financial statements at fair value because of the short-term
         maturity of the instruments.

                                      F-10
<PAGE>
                         CYBERADS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF DECEMBER 31, 2002

         (O) Impairment of Long-Lived Assets
         -----------------------------------

         The Company reviews long-lived assets for impairment under Statement of
         Financial Accounting Standards No. 144, "Accounting for the Impairment
         or Disposal of Long-Lived Assets." Long-lived assets to be held and
         used are reviewed for impairment whenever events or changes in
         circumstances indicate that the carrying amount of an asset may not be
         recoverable. The carrying amount of a long-lived asset is not
         recoverable if it exceeds the sum of the undiscounted cash flows
         expected to result from the use and eventual disposition of the asset.
         Long-lived assets to be disposed of are reported at the lower of
         carrying amount or fair value less cost to sell. An additional
         impairment loss of approximately $43,000 will be recognized in the
         quarter ended March 31, 2003 for additional assets that became idle as
         a result of further staff reductions.

         (P) New Accounting Pronouncements
         ---------------------------------

         SFAS No. 148 amends FASB Statement No. 123, Accounting for Stock Based
         Compensation to provide alternative methods of transition for an entity
         that voluntarily changes to the fair value based method of accounting
         for stock-based employee compensation. It also amends the disclosure
         provisions of that Statement to require prominent disclosure about the
         effects on reported net income of an entity's accounting policy
         decisions with respect to stock-based employee compensation. Finally,
         this Statement amends APB Opinion No. 28, Interim Financial Reporting,
         to require disclosure about those effects in interim financial
         information.

         The adoption of this pronouncement will not a material effect on the
         Company's financial position or results of operations.

NOTE 2   ACCOUNTS RECEIVABLE
------   -------------------

         Accounts receivable at December 31, 2002 consisted of the following:

         Accounts receivable                                 $       2,502,054
         Less allowance for doubtful accounts                         (486,000)
         Less reserve for chargebacks                                 (942,294)
                                                             -----------------
                                                             $       1,073,760
                                                             =================

         Bad debts for the years ended December 31, 2002 and 2001 were $223,310
         and $399,869, respectively.

                                      F-11
<PAGE>
                         CYBERADS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF DECEMBER 31, 2002

NOTE 3   PROPERTY AND EQUIPMENT
------   ----------------------

         Property and equipment at December 31, 2002 consisted of the following:

         Furniture and fixtures                               $          51,318
         Machinery and equipment                                         72,227
         Leasehold improvements                                           8,076
         Computer equipment                                              53,951
         Property and equipment - idle                                   58,931
         Less accumulated depreciation                                  (33,844)
                                                              -----------------
                                                              $         210,659
                                                              =================

         Depreciation expense for the years ended December 31, 2002 and 2001 was
         $39,805 and $5,558, respectively. See Note 1(O) for impairment of idle
         long-lived assets.

NOTE 4   ACCRUED EXPENSES
------   ----------------

         The following schedule reflects accrued expenses at December 31, 2002:

         Accrued payroll and payroll taxes                     $        565,735
         Accrued vacation                                                13,800
         Accrued interest                                                76,077
                                                               ----------------
                                                               $        655,612
                                                               ================

NOTE 5   FACTOR PAYABLE
------   --------------

         On October 17, 2001, the Company entered into a one-year accounts
         receivable factoring agreement with a factor. This agreement was
         replaced with a nine-month agreement dated January 12, 2002 with
         another factor. The new agreement renews automatically for successive
         one-year periods unless terminated. Under the new agreement, the factor
         advances 50% of the gross accounts receivable from certain customers
         (at the factor's discretion) of the Company. The value of the accounts
         receivable upon which the factor advances funds is based on the lowest
         plan commission the Company is entitled to receive from the carrier
         (even though actual commissions are higher). The Company is charged an
         initial fee of 0.75% plus a variable percentage fee ranging from 1% to
         6% based upon the length of the collection period. All of the Company's
         accounts receivable, inventories and computer hardware and software are
         pledged as collateral under this agreement. In addition, both the Chief
         Executive Officer and the President have personally guaranteed the
         funds due to the factor. Under the terms of the agreement, the Company
         must pay a discount fee on a minimum of $50,000 of advances per month.
         As of December 31, 2002, the net amount owed to the factor was $613,423

                                      F-12
<PAGE>
                         CYBERADS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF DECEMBER 31, 2002

         on factored gross accounts receivable of $1,151,025. During 2002, the
         Company incurred $313,626 in factoring expense. The Company is
         currently in default with respect to the factoring agreement and is in
         the process of negotiating a settlement.

NOTE 6   ADVANCES FROM RELATED PARTIES
------   -----------------------------

         The following schedule reflects advances due to related parties at
         December 31, 2002:
<TABLE>
<CAPTION>
<S>                                                                                     <C>
         Advance due to a corporation owned by the Chief Executive Officer of the
          Company, bearing 10% interest, due on demand and unsecured                    $         360,549

         Advance due to the President of the Company, non-interest bearing, due on
          demand and unsecured                                                                      6,287

         Advance due to the Chief Executive Officer of the Company, bearing 10%
          interest, due on demand and unsecured                                                   734,322
                                                                                        -----------------
                                                                                        $       1,101,158
                                                                                        =================
</TABLE>
         In consideration of interest, the Company issued options to the Chief
         Executive Officer in January 2002. Accordingly, under APB 25, no
         expense was recognized. In addition, in January 2001, the Company
         entered into an agreement with the Chief Executive Officer whereby the
         Company agreed to pay leased car payments on behalf of the Chief
         Executive Officer in lieu of paying interest to the Chief Executive
         Officer. During 2002, interest on the above advances was $59,489, of
         which $26,646 was for leased car payments and the balance is included
         in accrued interest payable.

NOTE 7   DUE TO OFFICERS
------   ---------------

         Due to officers consists of amounts due to two officers in the
         aggregate amount of $146,250 and are for consulting services previously
         rendered to the Company. During 2002, the Company entered into an
         agreement whereby an officer relinquished his receivable due from the
         Company in return for a consulting contract to perform future services.
         Accordingly, the Company recorded a gain of $8,250 during 2002.

NOTE 8   CONVERTIBLE DEBENTURES
------   ----------------------

         On May 9, 2002, the Company entered into two investment agreements
         whereby the Company issued mandatorily convertible debentures
         aggregating $60,000 is shown as convertible debentures on the
         accompanying December 31, 2002 balance sheet. The agreements provide
         for a 20% annual interest rate payable in quarterly installments. On

                                      F-13
<PAGE>
                         CYBERADS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF DECEMBER 31, 2002

         the one-year anniversary date of the agreements, the investment
         principal will convert to free trading common stock with a 25% discount
         to the market based on the closing price one trading day prior to the
         anniversary of the agreement. The beneficial conversion feature of the
         convertible debentures was valued at $20,000 on the date of issuance
         and is being amortized over the one-year life of the debenture.
         Interest expense of $12,985 was recognized during 2002 and $7,015 is
         reflected as a deferred interest expense component of equity. On May 9,
         2003, the due date of the convertible debentures was extended to
         September 9, 2003 bearing 10% interest. During the time extension, the
         notes are not convertible, but the conversion element will be
         reinstated if the debentures are not repaid by October 13, 2003.

         On December 24, 2002, the Company entered into a six-month agreement
         with an investment-banking firm to raise approximately $3,000,000 in a
         revolving line of credit and approximately $3,000,000 in equity
         capital, which would allow the Company to make significant acquisitions
         and deploy a marketing roll-out strategy. The funding will take the
         form of a $300,000 angel funding (i.e. private placement of common
         stock), in front of the approximately $6,000,000 funding previously
         described. The Company agrees to pay the firm a fee equal to 4.5% of
         the equity capital raised up to $1,000,000 and 3% of the capital raised
         above $1,000,000. The Company also agrees to pay a fee of 2.5% of the
         loan proceeds raised up to $1,000,000 and 1% thereafter. As additional
         consideration, upon completion of the funding, the Company will issue
         shares of common stock equal to 5% of the equity ownership that the
         preferred stockholders would have upon conversion established at the
         time of their investment. If the Company acquires a company, which was
         directly or indirectly introduced by the investment-banking firm, then
         the Company agrees to pay a fee of $60,000 per acquisition. Pursuant to
         the agreement, the Company agreed to issue 25,000 common shares to the
         investment-banking firm at the time of signing. The shares were issued
         in April 2003.

NOTE 9   COMMITMENTS AND CONTINGENCIES
------   -----------------------------

         (A) Operating Leases
         --------------------

         The Company occupied four different locations during 2001. The Company
         initially occupied 1,300 square feet of office space from a company
         that is owned by the Chief Executive Officer for its executive
         headquarters at no cost to the Company (See Note 10(E)). Accordingly,
         during 2001, the Company accrued $1,550 per month for this space or a
         total of $6,200, which is included in additional paid-in capital (See
         Note 10(E)). Commencing May 1, 2001, the Company began making actual
         rent payments for this space on a month-to-month basis of $1,989.
         During April 2001, the Company began subleasing additional space at a
         separate location at a rate of $1,500 per month from the aforementioned
         affiliated company.

                                      F-14
<PAGE>
                         CYBERADS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF DECEMBER 31, 2002

         During September 2001, the Company entered into a three-year lease for
         3,570 square feet having a monthly rental of $5,653. Within the same
         building, the Company entered into a one-year lease agreement for an
         additional 869 square feet with a monthly rental of $1,590.
         The above leases were terminated in March and May of 2002 upon the
         Company moving into its new facilities. On April 1, 2002, the Company
         entered into a three-year lease agreement for new office space to
         consolidate all of its operating facilities. Monthly rental under this
         agreement was $16,667, $18,333 and $20,000 during the first, second,
         and third year, respectively. Effective April 1, 2003, the lease
         agreement was amended whereby the Company reduced its office space to
         one-half of the original space with a corresponding reduction in the
         monthly rent.

         Future minimum lease payments under the operating lease at December 31,
         2002 consists of the following:

                                          Year
                                          ----

                                          2003              $          173,575
                                          2004                         151,933
                                          2005                         184,617
                                          2006                          31,800
                                                            ------------------
                                                            $          541,925
                                                            ==================

         Rent expense for the year ended December 31, 2002 and 2001 totaled
         $233,988 and $67,842, respectively.

         (B) Consulting Agreements
         -------------------------

         On January 6, 2002, the Company entered into an agreement with a
         consultant under which the consultant would provide the Company with
         business consulting services. The consultant received options to
         purchase 1,300,000 shares of common stock exercisable at $1.00 per
         share in exchange for these services. The options were exercisable for
         a six-month period commencing on the date of the agreement. A total of
         40,000 options were exercised within the six-month period and the
         remaining options have expired.

         On January 6, 2002, the Company entered into a product and sales
         development agreement with a consultant under which the consultant
         received options to purchase 200,000 shares of common stock exercisable
         at $1.00 per share and options to purchase 1,100,000 shares of common
         stock exercisable at $2.00 per share in exchange for these services.
         The options were exercisable for a six-month period commencing on the
         date of the agreement. No options were exercised during the six-month
         period.
                                      F-15
<PAGE>
                         CYBERADS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF DECEMBER 31, 2002

         On January 6, 2002, the Company entered into a product and sales
         development agreement with a consultant under which the consultant
         received options to purchase 300,000 shares of common stock exercisable
         at $2.00 per share in exchange for these services. The options were
         exercisable for a six-month period commencing on the date of the
         agreement. No options were exercised during the six-month period.

         On September 9, 2001, the Company entered into a one-year agreement
         with a consultant to assist with matters relating to the management and
         organization of the Company. The agreement calls for 90,000 shares of
         common stock as compensation (See Note 10(D)).

         On November 29, 2001, the Company entered into an agreement with a
         consultant to assist the Company to acquire direct cellular contracts
         with additional carriers. The Company issued options to purchase up to
         700,000 shares of common stock at an exercise price of $0.60 and $0.80
         (See Note 11(A)).

         On June 2, 2000, the Company entered into a one-year agreement with a
         consultant to provide strategic planning services (See Note 10(D)). The
         agreement called for the consultant to receive 300,000 shares of fully
         vested and non-forfeitable common stock as well as annual compensation
         of $24,000. The agreement was terminated early due to non-performance
         after $10,000 of compensation was paid and no balance is due as of
         December 31, 2001. The 300,000 shares were issued in 2000 and valued
         for financial accounting purposes at $300,000, the fair market value of
         the common stock on the grant date based on concurrent cash offerings.
         Consulting expense of $150,000 was recognized during each of the
         periods ended December 31, 2001 and 2000.

         On September 1, 2000, the Company entered into five one-year agreements
         with employee/consultants to perform the marketing, website
         development, and management of the Company. Four of these consultants
         are officers of the Company and include all three members of the Board
         of Directors. The agreements called for an aggregate of $282,000 to be
         paid annually. In addition, each consultant received an option to
         purchase 50,000 shares for an aggregate of 250,000 options of the
         Company's stock at $1.00. The options were originally due to expire
         September 1, 2001, but have been extended an additional four years (See
         Note 11(A)). At the expiration of the consulting agreements, these
         individuals became employees of the Company.

         Effective November 1, 2000, the Company entered into a one-year
         agreement with an individual who is an officer of the Company. The
         agreement called for the individual to perform duties relating to the
         management and organization of the Company. The agreement called for
         $42,000 to be paid annually. In addition, the officer received an
         option to purchase 50,000 shares of the Company's stock at $1.00. The
         options were originally to expire November 1, 2001, but have been
         extended an additional four years (See Note 11(A)).

                                      F-16

<PAGE>
                         CYBERADS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF DECEMBER 31, 2002

         (C) Employment Agreements
         -------------------------

         On February 20, 2002, the Company provided an offer letter to a Chief
         Technology Officer ("CTO"). The letter outlined the terms of an
         employment agreement that would be signed after a stated acceptance
         period. Effective September 30, 2002, the CTO, on behalf of his
         consulting firm, executed an agreement with the Company which provides
         for a total annual fee of $172,000 and stock options which are pending
         approval by the Board of Directors. In addition, the CTO and one of his
         employees each receive a $10,000 annual salary and insurance benefits
         from the Company.

         On April 8, 2002, the Company entered into a one-year employment
         agreement with a Chief Operating Officer ("COO"), employment commencing
         April 22, 2002. Compensation and benefits will include annual base pay
         of $120,000, an annual bonus, a leased vehicle and insurance on that
         vehicle and 150,000 stock options at an exercise price of $1.15 which
         will vest on January 1, 2003 provided that the COO is still in the
         employ of the Company.

         On May 1, 2002, the Company entered into an employment agreement with a
         Vice President of Finance, employment commencing June 24, 2002.
         Compensation and benefits for the position would include an initial
         annual base salary of $90,000, increasing to a minimum of $102,000
         after 3 months, and 50,000 stock options with an exercise price of
         $1.00, vesting after one year.

         No cost has been recorded for the stock options issued to employees
         under the above agreements because the Company accounts for stock
         options and warrants issued to employees under APB Opinion No. 25.

         (D) Other Contingencies
         -----------------------

         The Company is non-compliant with respect to payment of employee and
         employer payroll-related taxes. The liability is approximately $520,000
         as of December 31, 2002, including the estimated impact of penalties
         and interest. The Company recently initiated communications with the
         IRS to pursue a satisfactory settlement arrangement.

         On or about February 20, 2002, an unrelated limited liability company
         filed an action against the Company for trade name infringement to
         prevent IDS from using its name. On June 18, 2002, both parties to the
         lawsuit agreed that the IDS name would be phased out over a six-month
         period. Each party also agreed to bear their own costs and expenses.
         The action was cancelled with the approval of the Court.

                                      F-17
<PAGE>
                         CYBERADS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF DECEMBER 31, 2002

NOTE 10  STOCKHOLDERS' DEFICIENCY
-------  ------------------------

         (A) Authorized Stock
         --------------------

         On March 13, 2001, the Company increased its authorized shares of
         common stock to 50,000,000 and authorized 5,000,000 shares of preferred
         stock at $.001 par value.

         (B) Convertible Preferred Stock
         -------------------------------

         On January 22, 2002, the Company designated 625,000 shares of preferred
         stock as Series A with a stated value of $1.00 per share. The Company
         issued the 625,000 Series A preferred shares to the Company's Chief
         Executive Officer in return for a note receivable in the amount of
         $625,000 bearing 4% interest due on or before January 21, 2012. The
         preferred stock has preferential liquidation rights, is entitled to
         eight votes per preferred share, is redeemable at the stated value per
         share, and is convertible into common stock at a rate of four shares of
         common stock for each preferred share. As of December 31, 2002, the
         preferred stock as well as the note receivable have been rescinded.

         (C) Stock Issued for Cash
         -------------------------

         During the year ended December 31, 2002, 40,000 options were exercised
         at $1.00 per share for cash proceeds of $40,000.

         During the year ended December 31, 2002, 585,000 options were for cash
         proceeds of $15,000 and a subscription receivable of $570,000 for an
         aggregate amount of $585,000. The subscription receivable was written
         off during the year.

         During 2001, the Company issued 59,777 shares of common stock for an
         aggregate of $53,800 (net of offering costs of $5,977), or an average
         of $1.00 per share before offering costs.

         (D) Stock Issued for Services
         -----------------------------

         During the year ended December 31, 2002, the Company issued 84,000
         shares of common stock having a fair market value of $50,400 for
         services rendered by a consultant.

         During the year ended December 31, 2002, the Company issued 50,000
         shares of common stock and 50,000 stock options, having an exercise
         price of $1.00 per share for an aggregate value of $51,000 as payment
         for legal services rendered during 2001.

                                      F-18
<PAGE>
                         CYBERADS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF DECEMBER 31, 2002

         During the year ended December 31, 2002, the Company issued an
         aggregate of 16,000 shares of common stock to an employee and a member
         of the Board of Directors as compensation for services. Accordingly, an
         expense of $23,000 was recognized during the year ended December 31,
         2002 and the corresponding additional paid-in capital and common stock
         are reflected as components of equity.

         On April 29, 2002, the Company entered into a twelve-month service
         agreement with a consulting firm to provide advisory, investor
         relations and public relations services. The agreement was terminated
         effective July 1, 2002. The firm received 15,000 common shares and is
         entitled to receive 50,000 options for the purchase of additional
         common shares. Accordingly, consulting expense of $23,535 is reflected
         for the year ended December 31, 2002.

         During 2002, in connection with the purchase of the common stock of GT
         Global Communications, Inc., the Company issued 200,000 shares of
         common stock having an aggregate fair market value of $300,000 to each
         of the two owners of GT Global for an aggregate of 400,000 shares of
         common stock. The acquisition was rescinded and the Company recognized
         a $300,000 loss on the acquisition not consummated (See Note 1).

         On November 29, 2001, the Company entered into an agreement with a
         consultant whereby the Company agreed to issue 200,000 shares of common
         stock and 700,000 stock options having exercise prices of $0.60 and
         $0.80 in return for current and future marketing, consulting and
         strategic planning advisory services. The 200,000 shares were valued at
         $200,000, the fair market value of the common stock on the grant date
         based on concurrent cash offerings. Accordingly, consulting expense of
         $200,000 was recognized during 2002. The 700,000 options vested
         immediately and a corresponding expense of $249,000 was recognized in
         2001.

         On September 9, 2001, the Company entered into a one-year agreement
         with a consultant under which the consultant will provide management
         and organizational services. The consultant received a total of 90,000
         shares of common stock in exchange for these services (See Note 9(B)).
         During 2001, consulting expense of $90,000 was recognized accordingly.

         In April 2000, the Company issued 5,025,000 shares of common stock to
         its founders for $5,025. A subscription receivable for $5,025 was
         recorded at December 31, 2000. During 2001, the subscription receivable
         of $5,025 was satisfied by services rendered.

                                      F-19
<PAGE>
                         CYBERADS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF DECEMBER 31, 2002

         In June 2000, the Company issued 300,000 shares of common stock, valued
         at the fair market value on the grant date based on the concurrent cash
         offering price, for consulting fees due to the Company's financial
         advisor of $300,000 (See Note 9(B)). During 2001 and 2000, $150,000 and
         $150,000 respectively, was recognized as consulting expense.

         (E) In-Kind Contribution
         ------------------------

         From inception through April 2001, a company owned by the Chief
         Executive Officer provided office space and utilities to the Company.
         The Company was not required to pay for its use of the facilities.
         Accordingly, the Company recognized $6,200 of expense during 2001 for
         these contributed items with an offsetting increase in additional
         paid-in capital. Management estimated the value of the contributed
         items. The Company assumed the lease for the remainder of 2001 (See
         Note 9(A)).

NOTE 11  STOCK OPTIONS AND WARRANTS
-------  --------------------------

         (A) Common Stock Options
         ------------------------

         On November 1, 2001, the Company adopted the 2001 Stock Option Plan,
         (the "Plan") which authorized the issuance of up to 500,000 shares of
         common stock to employees, consultants, representatives, officers and
         directors of the Company. As of December 31, 2002, no shares have been
         issued under the Plan.

         During 2002 and 2001, the Company granted 6,350,000 and 300,000 stock
         options, to certain employees. The Company applies APB Opinion No. 25
         and related interpretations in accounting for stock options issued to
         employees. Accordingly, compensation cost has been recognized for
         options issued to employees only for the intrinsic value of those
         options in the amount of $11,500,000 for 2002. Had compensation cost
         been determined based on the fair market value at the grant date,
         consistent with SFAS 123, the Company's net loss for the year ended
         December 31, 2002 and 2001 would have changed to the pro-forma amount
         indicated below.

         In September 2001, the Company extended by four years the expiration
         date of options issued to employees in 2000 (See Note 9(B)). The
         options were re-priced and under APB 25, no expense was recognized.
<TABLE>
<CAPTION>
                                                                      2002                   2001
                                                                ------------------     -----------------
<S>                                                             <C>                    <C>
         Net Loss                           As Reported         $    (15,873,201)      $    (1,026,659)
                                            Pro Forma                (16,745,201)           (1,050,659)
         Basic and Diluted Net
          Loss Per Share                    As Reported                    (1.11)                (0.08)
                                            Pro Forma                      (1.17)                (0.08)
</TABLE>

                                      F-20
<PAGE>
                         CYBERADS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF DECEMBER 31, 2002

         During 2002, the Company issued options to consultants to purchase
         3,450,000 shares of commons tock at exercise prices of $0.25 and $1.00.
         Accordingly, $295,000 of expense was recognized as consulting expense
         and was included in general and administrative expenses during 2002.

         In June 2001, as part of a financing arrangement, the Company issued
         options to a financial institution to purchase 300,000 shares of common
         stock at an exercise price of $0.50. Accordingly, $153,000 of expense
         was recognized as interest expense during 2001.

         In November 2001, the Company issued options to non-employees to
         purchase 700,000 shares of common stock at exercise prices of $0.60 and
         $0.80. Accordingly, $249,000 of expense was recognized as consulting
         expense and was included in general and administrative expenses during
         2001.

         The effect of applying Statement No. 123 is not likely to be
         representative of the effects on reported net loss for future years due
         to, among other things, the effects of vesting.

         The fair value of each option grant is estimated on the date of grant
         using the Black-Scholes option pricing model in accordance with SFAS
         123 with the following weighted average assumptions used for grants in
         2002 and 2001, respectively: dividend yield of zero for all years;
         expected volatility of 0% to 285%; and 0.1%; risk-free interest rates
         of 1.54% to 4.57% and 6.125%; expected lives of one to four years.

         A summary of the Company's stock options as of December 31, 2002 and
         2001, and the changes during the years then ended is presented below:
<TABLE>
<CAPTION>
                                                                    2002                              2001
                                                         ----------------------------      --------------------------
                                                                             Weighted                       Weighted
                                                                             Average                         Average
                                                                             Exercise                       Exercise
         Fixed Options                                       Shares            Price         Shares           Price
         -------------                                   -------------       --------      ----------      ----------
<S>                                                          <C>                  <C>         <C>          <C>
         Outstanding at beginning of year                    1,300,000            .70         300,000      $     1.00
         Granted (includes re-priced options in 2001)        9,800,000           1.03       1,000,000            0.61
         Forfeited                                                  --             --              --              --
         Expired                                             2,325,000           1.87              --              --
         Exercised                                             625,000           1.00              --              --
                                                         -------------       --------      ----------      ----------
         Outstanding at end of year                          8,150,000            .82       1,300,000      $     0.70
                                                         =============       ========      ==========      ==========

         Options exercisable at year end                     8,150,000                      1,300,000
                                                         =============                     ==========
         Weighted average fair value of options
          granted to employees during the year           $        1.95                     $     0.08
                                                         =============                     ==========
</TABLE>
                                      F-21

<PAGE>
                         CYBERADS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF DECEMBER 31, 2002
<TABLE>
<CAPTION>

                                    Options Outstanding                                      Options Exercisable
           ----------------------------------------------------------------------    --------------------------------
                                                      Weighted
                                   Number             Average         Weighted            Number          Weighted
                               Outstanding at        Remaining         Average        Exercisable at       Average
               Range of         December 31,        Contractual       Exercise         December 31,       Exercise
            Exercise Price          2002                Life            Price              2002             Price
           ----------------    ----------------     -------------   -------------    ----------------   -------------
<S>        <C>         <C>            <C>                    <C>    <C>                     <C>         <C>
           $    0.00 - 0.99           2,325,000              2.04   $        0.35           2,325,000   $        0.35
           $    1.00 - 1.99           5,825,000              3.84            1.00           5,825,000            1.00
           ----------------    ----------------     -------------   -------------    ----------------   -------------
           $    0.00 - 1.99           8,150,000              3.33   $        0.82           8,150,000   $        0.82
           ================    ================     =============   =============    ================   =============
</TABLE>
         (B) Common Stock Warrants
         -------------------------

         In June 2000, the Company issued to an officer of the Company a
         five-year warrant to purchase up to 50,000 common shares at an exercise
         price of $1.00 per share as consideration for assistance with the sale
         of the Company's stock. The Company accounts for the warrants under APB
         25. Accordingly, no direct offering costs or compensation expenses were
         recognized.

NOTE 12  INCOME TAXES
-------  ------------

         Income tax expense (benefit) for the period ended December 31, 2002 and
         2001 is summarized as follows:
<TABLE>
<CAPTION>
                                                                                      2002                 2001
                                                                               -----------------     ----------------
<S>                                                                            <C>                   <C>
         Current:
           Federal                                                             $              --     $             --
           State                                                                              --                   --
                                                                               -----------------     ----------------
         Income tax expense (benefit)                                          $              --     $             --
                                                                               =================     ================
</TABLE>
         The Company's tax expense differs from the "expected" tax expense for
         the period ended December 31, 2002 and 2001 as follows:
<TABLE>
<CAPTION>
                                                                                      2002                 2001
                                                                               -----------------     ----------------
<S>                                                                            <C>                   <C>
         U.S. Income tax provision (benefit)                                   $      (5,396,900)    $       (349,100)
         Effect of unused net operating loss carryforward                              5,396,900              349,100
                                                                               -----------------     ----------------
                                                                               $              --     $             --
                                                                               =================     ================
</TABLE>
                                      F-22
<PAGE>
                         CYBERADS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF DECEMBER 31, 2002

         The tax effects of temporary differences that give rise to significant
         portions of deferred tax assets and liabilities at December 31, 2002
         and 2001 are as follows:
<TABLE>
<CAPTION>
                                                                                       2002                2001
                                                                               -----------------     ----------------
<S>                                                                            <C>                   <C>
         Deferred tax assets:
           Net operating loss carryforward                                     $       5,954,400     $        557,500
                                                                               -----------------     ----------------
              Total gross deferred tax assets                                          5,954,400              557,500
           Less valuation allowance                                                   (5,954,400)            (557,500)
                                                                               -----------------     ----------------
                                                                               $              --     $             --
                                                                               =================     ================
</TABLE>
         At December 31, 2002, the Company had net operating loss carryforwards
         of $17,512,915, for U.S. Federal Income Tax purposes available to
         offset future taxable income expiring on various dates through 2022.

         The net change in the valuation allowance during the period ended
         December 31, 2002 was an increase of $5,396,900.

NOTE 13  RELATED PARTIES
-------  ---------------

         During 2001, the Company had consulting agreements with each of the
         Company's five officers, which included the three members of the Board
         of Directors. The agreements expired during 2001 at which time the
         consultants became employees of the Company.

         During 2001, the Company settled a receivable of approximately $300,000
         with a corporation that was 49% owned by two individuals who were
         director/officers of the Company for approximately $50,000.
         Subsequently, the Company issued to the majority stockholder of this
         corporation stock options to purchase up to 700,000 shares of common
         stock (See Note 10(D)).

NOTE 14  SEGMENT INFORMATION AND DISCONTINUED OPERATIONS
-------  -----------------------------------------------

         During a portion of 2001, the Company operated in two business
         segments, Internet Database Services and Cellular Phone Contracts.
         During the fourth quarter of 2001, the Company decided to dispose of
         the Internet Database Services segment. The Company has ceased to
         support this operational segment. As of December 31, 2001, the assets
         of this segment have been transferred to the Cellular Phone Contracts
         segment.

                                      F-23
<PAGE>
                         CYBERADS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF DECEMBER 31, 2002

         In January 2002, Cyad was formed and the Company received 80% of the
         shares issued at Cyad's inception. The Company began developing the
         business of wholesaling cellular phones. In August 2002, the Company
         chose to discontinue Cyad's operations. As of December 31, 2002, there
         were no assets or liabilities related to Cyad.

         Since the Company's only remaining segment is the Cellular Phone
         Contracts segment, segment information is not presented and the income
         statement has been updated to reflect the discontinued operations.

NOTE 15  CONCENTRATIONS OF CREDIT RISK
-------  -----------------------------

         The Company relied on five and four customers for approximately 80% and
         78% of sales for the years ended December 31, 2002 and 2001,
         respectively. At December 31, 2002 and 2001 accounts receivable from
         those customers totaled $2,326,400 and $2,013,400, respectively.

NOTE 16  SIGNIFICANT FOURTH QUARTER ADJUSTMENTS
-------  --------------------------------------

         In the fourth quarter of 2002, the Company recorded significant
         adjustments that increased the net loss by approximately $1,308,000.
         These adjustments included $581,000 related to an increase in the
         allowance for sales returns (chargebacks), $40,000 related to allowance
         for doubtful accounts, $145,000 related to an increase in interest
         expense and financing costs for loans from an officer and related
         party, $78,000 for fixed asset impairment, $43,000 for accrual of
         additional legal fees, $121,000 for accrual of additional advertising
         costs and $300,000 for loss on an acquisition not consummated.

         In the fourth quarter of 2002, the Company recorded significant
         adjustments that increased the net loss by approximately $124,000.
         These adjustments included $450,000 related to an increase in the
         allowance for sales returns (chargebacks), $405,000 related to the
         accrual of additional sales, and $79,000 related to an increase in
         interest expense for options issued related to advances made to the
         Company.

NOTE 17  GOING CONCERN
-------  -------------

         As reflected in the accompanying financial statements, the Company's
         current year loss, working capital deficiency, and stockholders'
         deficiency of $15,873,201, $4,074,435, and $3,686,740, respectively,
         raise substantial doubt about its ability to continue as a going
         concern. The financial statements do not include any adjustments that
         might be necessary if the Company is unable to continue as a going
         concern.

         The Company plans to raise additional funds through loans from third
         parties and the sale of common stock for cash. The Company is of the
         opinion that the cash generated from their resources will be sufficient
         to provide adequate liquidity and capital resources.

         The ability of the Company to continue as a going concern is dependent
         on the Company's ability to raise additional capital and implement its
         business plan. Management believes that when it accomplishes the steps
         outlined above that the Company would have sufficient liquidity to

                                      F-24
<PAGE>
                         CYBERADS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF DECEMBER 31, 2002

         remain viable for at least twelve months following the date of these
         financial statements.

NOTE 18  SUBSEQUENT EVENTS
-------  -----------------

         On February 7, 2003, the Company entered into a one-year agreement to
         make a health card available to its customers, whereby its customers
         are entitled to receive savings on purchases of goods and services from
         program participants. The Company receives a commission on each card
         activated and the other party handles fulfillment, activation and
         customer service. The agreement will automatically renew for terms of
         one-year each unless mutually terminated.

         On February 10, 2003, the Company entered into a one-year agreement to
         make prepaid bank cards available to its customers, whereby its
         customers "load" their account with funds which they can the use via
         the bank card. The Company receives a commission on each card activated
         and the second party to the agreement handles card fulfillment,
         activation and customer service. The agreement will automatically renew
         for successive one-year terms.

         On March 10, 2003, the Company entered into a marketing and
         distribution agreement whereby CyberAds will provide customer names and
         contact information (that it obtains through its marketing efforts) to
         the other party who will provide fulfillment, activation and customer
         service for cellular phone service and other communications products
         and services. The Company is paid a commission for each activation and
         can be charged back for activations that are prematurely terminated by
         the customer. The Company received a $350,000 advance on commissions
         earned. The agreement provides for repayment of these per-paid
         commissions via commissions earned on specific types of sales. The
         Company has placed 1,250,000 restricted shares of its common stock in
         escrow as collateral in the event that the agreement is terminated for
         any reason prior to the time that the pre-paid commissions have been
         repaid. As further consideration for CyberAds performance of this
         agreement, a warrant will be issued to CyberAds for the purchase of
         62,500 shares of common stock of the other party.

         On March 14, 2003, the Company entered into a settlement agreement with
         a company owned by the former Chief Technology Officer. The other party
         is entitled to market the CyberAds customer list and CyberAds agrees to
         compensate the other party 50% of the revenue generated from the list
         for revenue it claims it lost as a result of the marketing and
         distribution agreement referred to above. The compensation is limited
         to $15,000. As part of the settlement, the Company also provided the
         other party with used office furniture and equipment with an estimated
         market value of $3,680. On April 8, 2003, the Company renegotiated the
         lease for the building occupied by the corporate headquarters. The
         Company relinquished one of the two bays that it was occupying and
         reduced the leased space to approximately one-half of what was
         previously occupied. Rent expense was reduced accordingly. It was also
         agreed that the landlord would apply $35,000 of the $65,000 security
         deposit towards rent that was previously deferred. The lease amendment
         extends the lease term through February 28, 2006.

         As of May 8, 2003, the Company's subsidiary, IDS, is being sued by a
         vendor for non-payment of goods delivered to IDS in 2003. The Company's
         attorney believes the likelihood of loss is probable, therefore the
         Company has appropriately accrued $80,895 for the loss in 2003.

                                      F-25