U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                  FORM 10-KSB/A

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

                                 Amendment No. 1
                                              ---

                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF
                      THE SECURITIES EXCHANGE ACT OF 1934

                      FOR THE YEAR ENDED DECEMBER 31, 2003

                                    333-62690
                              (Commission File No.)

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

                        Commission File Number: 333-62690

                                 CYBERADS, INC.
        -----------------------------------------------------------------
        (Exact name of Small Business Issuer as specified in its Charter)

            Florida                                      65-1000634
-------------------------------             ------------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

            21073 Powerline Road, Suit 57, Boca Raton, Florida 33433
            --------------------------------------------------------
                    (Address of principal executive offices)
                              Phone #(561) 672 2193
                                     --------------
                           (Issuer's telephone number)


              (Former Name, former address and former fiscal year,
                         if changed since last Report.)

           Securities Registered Under Section 12 (b) of the Act: None

           Securities Registered Under Section 12 (g) of the Act: None

         Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 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|.

         Revenues for the year ended December 31, 2003: $4,197,128.

         The aggregate market value of voting stock held by non-affiliates of
CyberAds, Inc. ("CYAD") common stock, as of March 31, 2004 was approximately
$14,000,000 (based on the last sale price of such stock as reported by OTC
Bulletin Board). The number of shares outstanding of the registrant's common
stock, as of March 31, 2004 was 18,325,777.

         Documents incorporated by reference: Registration Statement on Form
SB-2, File No. 333-62690 and Registration Statement on Form SB-2, File No.
333-82104 information incorporated by reference into Part III of this Form
10-KSB.

         Transitional Small Business Disclosure Format (check one): Yes|_|No|X|
<PAGE>
                                TABLE OF CONTENTS

                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS...............................................3

ITEM 2.  DESCRIPTION OF PROPERTY...............................................4

ITEM 3.  LEGAL PROCEEDINGS.....................................................4

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

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS..............5

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS........5

ITEM 7.  FINANCIAL STATEMENTS..................................................9

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.........................9

ITEM 8A. CONTROLS AND PROCEDURES...............................................9

                                    PART III

ITEM 9.  DIRECTORS AND  EXECUTIVE OFFICERS OF THE REGISTRANT..................10

ITEM 10. EXECUTIVE COMPENSATION...............................................11

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS & MANAGEMENT.........12

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.......................13

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.....................................15

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES...............................15

SIGNATURES....................................................................16

INDEX TO EXHIBITS.............................................................16

                                    PART F/S

                          INDEX TO FINANCIAL STATEMENTS

Auditor's Report.............................................................F-1

Balance Sheets as of December 31, 2003 and  2002.............................F-2

Statement of Operations for the years ended December 31, 2003 and  2002......F-4

Statement of Changes in Stockholder's Equity for the years ended December 31,
2003 and 2002................................................................F-5

Statement of Cash Flows for the years ended December 31, 2003 and 2002.......F-7

Notes to Financial Statements................................................F-9

                                        2
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                                     PART I

FORWARD LOOKING INFORMATION

         This Form 10-KSB contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. For this
purpose, any statements contained in this Form 10-KSB that are not statements of
historical fact may be deemed to be forward-looking statements. Without limiting
the foregoing, words such as "may," "will," "expect," "believe," "anticipate,"
"estimate," or "continue" or comparable terminology are intended to identify
forward-looking statements. These statements by their nature involve substantial
risks and uncertainties and actual results may differ materially depending on a
variety of factors, many of which are not within CYAD's control. These factors
include, but are not limited to, economic conditions generally and in the
industries in which CYAD's future customers participate; competition within
CYAD's industry, including competition from much larger competitors;
technological advances which could render CYAD's products less competitive or
obsolete; failure by CYAD to successfully develop new products or to anticipate
current or prospective customers' product needs; price increases or supply
limitations for components purchased by CYAD for use in its products; and
delays, reductions, or cancellation of orders that may be placed with CYAD.
There can be no assurance that CYAD will be able to develop its products or
markets for its products in the future.

ITEM 1.           DESCRIPTION OF BUSINESS

OVERVIEW

         CyberAds, Inc., a Florida corporation ("CYAD" or the "Company"), was
organized on April 12, 2000, under the laws of the State of Florida. CYAD
initially compiled member lists through an Internet-based opt-in e-mail list
found on our website "www.sportsforcash.com." "Internet-based opt-in e-mail"
creates member lists by requiring website visitors to provide us with certain
personal information and consent to receiving e-mails from our company in order
to gain access to our website. Our goal was to sell the member lists to direct
marketers seeking to target promotional campaigns to large groups of people via
electronic mail. We initially had the concept of awarding prizes to attract
potential members to our website www.sportsforcash.com. However, we terminated
our prize program after determining that our business model was not profitable.
This segment of our operations has been recently discontinued.

         In December 2000 we began 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 "idscellular.com" website. A third party website will
receive a commission if a customer it refers to us purchases a cellular phone or
cellular services.

         All of our revenues are derived from our cellular phone marketing
services. Our business now focuses exclusively on marketing cell phone services
to potential consumers we are introduced to through our affiliate program and
other third party telemarketing services.



                                       3
<PAGE>
         In December 2003 we acquired a 22% interest in The Vineyards Country
Club ("The Vineyards"), a real estate development project located adjacent to
Palm Springs, California. The Vineyards is a luxury motor coach facility
including a recently completed clubhouse, swimming pool, tennis court, and
nine-hole regulation size golf course. Phase One at The Vineyards is
substantially complete and consists of 69 luxury coach sites. . Within 3 to 5
years we expect to add an additional 200+ sites, thus expanding The Vineyards to
well over 300 sites. The Vineyards project also includes 30 acres of commercial
property immediately adjacent to the development with plans for an extended-stay
hotel, retail, and an entertainment complex, all within walking distance to the
existing Trump Casino.

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 of no proposed regulations that may have an
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
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.

PERSONNEL

         As of the date of this report, CYAD has three full time employees as
well as a number of part time relationships with contractors for certain
services. None of CYAD's personnel are covered by collective bargaining
agreements.

ITEM 2.  PROPERTIES

         On April 6, 2002 we relocated all of our operations to a 2,000 square
foot facility located at 21073 Powerline Road, Suite 57, Boca Raton, Florida.
This property is leased from 6001, LLC. The term of the lease is through April
1, 2005. We pay approximately $4,200 per month for the lease.

ITEM 3.  LEGAL PROCEEDINGS

         The Company is not a party to any legal proceedings.


ITEM 4.  SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

         No matters were submitted to the vote of security holders.

                                       4
<PAGE>
                                     PART II

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

         The principal United States market for CYAD's common stock is the OTC
Bulletin Board. The following is the high and low closing sale prices for CYAD
common stock:

FISCAL 2003                                             HIGH           LOW
                                                      -------       -------
Fourth Quarter (through December 31, 2003).........   $  2.10       $  0.85
Third Quarter (through September 30, 2003).........   $  1.50       $  0.27
Second Quarter (through June 30, 2003).............   $  0.51       $  0.02
First Quarter (through March 31, 2003).............   $  0.13       $  0.04

FISCAL 2002
Fourth Quarter (through December 31, 2002).........   $  0.19       $  0.02
Third Quarter (through September 30, 2002).........   $  0.50       $  0.06
Second Quarter (through June 30, 2002).............   $  2.60       $  0.25
First Quarter (through March 31, 2002).............   $  3.60       $  1.00


         The above prices presented are bid prices that represent prices between
broker-dealers and do not include retail mark-ups and markdowns for any
commissions paid to the dealer. These prices may not reflect actual
transactions.

         There are 80 shareholders of record of the Company's Common Stock, not
including shareholders who hold common stock in street name. The holders of
common stock are entitled to one vote per share of common stock on all matters
to be vote on by the stockholders. There are no cumulative voting rights.
Subject to preferences that may be applicable to any outstanding preferred
stock, the holders of common stock are entitled to receive dividends, if any, as
may be declared by the board of directors out of funds legally available for
dividends. In the event of a liquidation, dissolution or winding up, the holders
of common stock are entitled to share ratably in the net assets remaining after
payment in full of all liabilities, subject to the prior rights of preferred
stock, if any, then outstanding. There are no redemption or sinking fund
provisions applicable to the common stock.

         DIVIDENDS

         The Company has never paid cash dividends on its common stock. The
declaration and payment of dividends is within the discretion of the Company's
board of directors and will depend, among other factors, on earnings and debt
service requirements as well as the operating and financial condition of the
Company. At the present time, the Company's anticipated working capital
requirements are such that it intends to follow a policy of retaining earnings
in order to finance the development of its business. Accordingly, the Company
does not expect to pay a cash dividend within the foreseeable future.

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

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
Inphonic 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 Inphonic is associated.

         The cellular providers have distinct standards and qualifications
regarding the credit history of individuals in which they will provide services.

                                       5
<PAGE>
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 300 affiliates.

         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.

         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.

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.

                                       6
<PAGE>
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
reduce staffing levels by 90% and reduce payroll by over 80%. 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. During the 4th quarter of
2003 Management determined the cost per application model it was paying to the
Affiliates was inconsistent with the sales results for shipped cell phones.
Management took steps to reduce the applications by reducing the application fee
it paid to Affiliates. Further, we required the applications to include credit
card information which reduced the applications submitted. Prior to this change
the company was experiencing a less than 2% conversion rate from Applications to
Sales. When the change was implemented the conversion rate increased to 5%.
Management believes the requirement of credit card information will have a
materially negative impact on the number of applications it receives from
Affiliates/Consumers going forward. Management is reviewing alternative
application acquisition models at this time and will continue with the current
requirements of credit card information for the foreseeable future.

In December 2003 we acquired a 22% interest in The Vineyards Country Club ("The
Vineyards"), a real estate development project located adjacent to Palm Springs,
California. Our investment in The Vineyards was acquired by our wholly owned
subsidiary, The Vineyards, LLC. The Vineyards is a luxury motor coach facility
including a recently completed clubhouse, swimming pool, tennis court, and
nine-hole regulation size golf course. Phase One at The Vineyards is
substantially complete and consists of 69 luxury coach sites. . Within 3 to 5
years we expect to add an additional 200+ sites, thus expanding The Vineyards to
well over 300 sites. The Vineyards project also includes 30 acres of commercial
property immediately adjacent to the development with plans for an extended-stay
hotel, retail, and an entertainment complex, all within walking distance to the
existing Trump Casino. The property value was determined by an "as is" appraisal
of the land plus the net cost of the improvements. No allowance was deemed
necessary because of the company's minority position in the project.

         During the fourth quarter the company's lender entered into an
agreement with the company to convert its secured position to an ownership of
836, 000 convertible preferred shares. The share will have no voting rights and
will, after the first anniversary of the closing have the right to convert at
any time into fully paid and nonassessable shares of Common Stock obtained by
dividing 115% of the liquidation value of the shares to be converted, by the
average bid and ask price of a share of Common Stock during the 30 day period
immediately prior to the conversion date.

         During the fourth quarter an unsecured creditor of the company agreed
to convert its $400,000 debt to 440000 common restricted shares.

PATENTS AND PROPRIETARY RIGHTS

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

RESULTS OF OPERATIONS

                                       7
<PAGE>
YEARS ENDED DECEMBER 31, 2003 AND 2002

         We reported revenues of $4,197,128 and $8,326,211 for the years ending
December 31, 2003 and 2002, respectively, losses of $457,835 and $15,873,201
during the years ended December 31, 2003 and 2002, respectively. The reduction
in revenue from 2002 to 2003 is attributed to the change in revenue associated
to the Inphonic agreement whereby CyberAds receives a net commission instead of
the revenue for each phone. The reduction in losses for 2003 was the direct
result of reduction in G & A expenses and Salaries attributed to the agreement
with Inphonic that allowed CyberAds to rely on the fulfillment processes at
Inphonic reducing the requirement of employee related expenses at CyberAds.

LIQUIDITY AND CAPITAL RESOURCES

         CYAD has not been profitable and has experienced negative cash flow
from operations due to its development stage, substantial on-going investment in
research and development efforts. Consequently, CYAD has been dependent on the
sales of equity to fund cash requirements.

         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
securities were issued under an exemption from registration pursuant to Section
4(2) of the Securities Act. The securities 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.

         During the three months ended March 31, 2002, we issued an aggregate of
124,000 shares of common stock for an aggregate amount of $90,400. These shares
were issued to two option holders pursuant to the exercise of options with
exercise prices ranging from $.60 to $1.00. 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. The option holders 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.

                                       8
<PAGE>
         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 there
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.

         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 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.

         On January 21, 2002, the Company intended to issue 625,000 shares of
series a convertible preferred stock to Lawrence Levinson as consideration for a
$625,000 promissory note made by Mr. Levinson in favor of our company. The
preferred shares were never issued.

ITEM 7.  FINANCIAL STATEMENTS

         The financial statements of CYAD are included (with an index listing
all such statements) in a separate financial section at the end of the Annual
Report on Form 10-KSB.

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

Weinberg & Company,  P.A., by letter dated August 13, 2003, was dismissed as the
independent  accountant for the Company. On August 13, 2003, the Company engaged
Timothy L. Steers, CPA as its new independent accountant.

In connection with the audits for the two most recent fiscal years and in
connection with Weinberg's review of the subsequent; interim period preceding
dismissal on August 13, 2003, there have been no disagreements between the
Company and Weinberg on any matter of accounting principals or practices,
financial statement disclosure, or auditing scope or procedure, which would have
caused Weinberg; to make a reference thereto in its report on the Company's
financial statements for those periods. During the two most recent fiscal years
and prior to August 13, 2003, the Company had no reportable events (as defined
in Item 304(a)(1)(v) of Regulation S-B).

ITEM 8A. CONTROLS AND PROCEDURES

         Within 90 days prior to the date of filing of this report, we carried
out an evaluation, under the supervision and with the participation of our
management, including the Chief Executive Officer (who also effectively serves
as the Chief Financial Officer), of the design and operation of our disclosure
controls and procedures. Based on this evaluation, our Chief Executive Officer
concluded that our disclosure controls and procedures are effective for
gathering, analyzing and disclosing the information we are required to disclose
in the reports we file under the Securities Exchange Act of 1934, within the
time periods specified in the SEC's rules and forms.

                                       9
<PAGE>
                                    PART III

ITEM 9.           DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         Directors hold office until the next succeeding annual meeting of
shareholders, and until there successors have been elected and qualified.

         The directors, executive officers, significant employees and
consultants of CYAD, their respective ages and positions with CYAD are as
follows:

NAME                 AGE    POSITION
----                 ---    --------

Lawrence Levinson    56     Chairman of the Board and Chief Executive Officer

         Director and Executive Officers

         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. From 1982 until
1986, Mr. Levinson was the owner/operator of two restaurants in the Chicago
area. From 1976 to 1982, Mr. Levinson owned and operated a temporary help
services company in Chicago with over 200 corporate clients.

         The Company's Bylaws currently authorize up to seven directors. Each
director is elected for one year at the annual meeting of stockholders and
serves until the next annual meeting or until a successor is duly elected and
qualified. Executive officers serve at the discretion of our board of directors.
There are no family relationships among any of the directors and executive
officers.

                  CODE OF ETHICS.

                  Effective February 24, 2004, the Board of Directors adopted a
Code of Ethics for Senior Financial Officers. The Code of Ethics was adopted
pursuant to the requirements of the Sarbanes-Oxley Act of 2002 and the rules and
regulations of the Securities and Exchange Commission thereunder. A copy of the
Code of Ethics will be made available upon request at no charge. Requests should
be directed in writing to the Company at Powerline Road, Suite 57, Boca Raton,
Florida 33433



                                       10
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

         The following table sets forth information relating to salary we paid
during the past fiscal year to our chief executive officer; and to each of our
executive officers that earned more than $100,000 during the fiscal year ended
December 31, 2003. 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, 2003.

Name                 Position        Salary          Stock Options
----                 --------        ------          -------------
Lawrence Levinson    CEO             $  43,000           None
Ronald Trautman      Asst to Pres    $ 174,993           None
Robert Kline         Pres            $  75,600           None
James Baumhart       COO             $  78,264           None

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.

         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:

                                       11
<PAGE>
         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. Effective December 31, 2003, Mr. Levinson, although a director, until
new directors are elected, no longer maintained any direct Management
responsibilities.

         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. Mr. Kline's
active participation ceased during the fourth quarter of 2004.

         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
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. Mr. Magno's active
participation ceased during the second quarter of 2004.

         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.


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
         RELATED STOCKHOLDER MATTERS.

         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., 21073 Powerline Road, Suite 57, Boca Raton, Florida
33433.

         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.

                                       12
<PAGE>
Name and Address of              Amount and Nature of           Percentage
Beneficial Owner                 Beneficial Ownership           of Class
----------------                 --------------------           --------
Lawrence Levinson                    6,357,000(1)(2)(3)            34.69%
3350 NW 2nd Avenue, Ste.A-44
Boca Raton Fl. 33431

Inphonic, Inc.                       1,250,000                       6.8%
1010 Wisconson Ave. #250
Washington, D.C. 20007

Four Star Financial Services         1,352,000(4)                    7.4%
1000 Marina Blvd. Ste. 600
Brisbane, CA 94005

Maxmin, Inc.                         1,183,333(4)                    6.5%
415 E. Hyman Ste 201
Aspen CO 81611

Jordan Levinson                      1,000,000                       5.5%
21257 Rock Ridge Drive
Boca Raton Fl.33428

Executive Officers and
Directors (as a group of 1)          6,357,000                     34.69%

(1) Includes options to purchase 75,000 shares of common stock exercisable at
$1.00 per share. (2) Includes 4,482,000 shares that are subject to a Stock
Purchase Agreement between the owner and Novanet Media Inc.
(3)   Includes 800,000 shares which have been  optioned to a private party.
(4) Includes 200,000 and 33,333 shares respectively which have been issued
pursuant to financing and consulting agreements to be exercised at $.50 per
share.

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.

         As of December 31, 2003, the amount due on various loans from
previously related parties approximately $800,000.This amount is secured by the
company's assignment of its agreement with its fulfillment provider.

                                       13
<PAGE>
         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. This option agreement was terminated without any
shares being exercised.

         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.

         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 were exercisable at
$1.00 per share for a term of six months. Mr. Foland exercised 625,000 of these
options and allowed 675,000 of the options to expire.

         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. These options subsequently expired without being
exercised.

         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. Mr Modansly resigned during the third quarter of 2003.
















                                       14
<PAGE>
ITEM 13. EXHIBITS, LISTS AND REPORTS ON FORM 8-K

(a)      Exhibits

Exhibit
Number    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)
31        Rule 15d-14(a) certification of Walter Tatum.
32        Section 1350 certification of Walter Tatum.




(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 period covered
by this report.

         August 21, 2003
           Item 4. Changes in Registrant's Certifying Accountant
           Item 7. Financial Statements, ProForma Financial Information and
                   Exhibits.

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES






                                       15
<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 22, 2004.

CYBERADS, INC.


By:/s/ WALTER TATUM
-------------------
Walter Tatum
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/ WALTER TATUM              President          4/22/04
--------------------
Walter Tatum


































                                       16
<PAGE>



                                 CYBERADS, INC.

                     Years ended December 31, 2003 and 2002


                                    CONTENTS
                                                                          Page
                                                                      ----------
Report of Independent Auditor's.......................................       F-1

Consolidated Financial Statements:
   Balance sheets..................................................... F-2 - F-3
   Statements of operations...........................................       F-4
   Statements of changes in stockholders' equity (deficit)............ F-5 - F-6
   Statements of cash flows........................................... F-7 - F-8
   Notes to consolidated financial statements.........................F-9 - F-22









































<PAGE>
                         REPORT OF INDEPENDENT AUDITORS'


To the Board of Directors
CyberAds, Inc.


We have audited the accompanying  consolidated balance sheets of CyberAds,  Inc.
as of December 31, 2003 and the related  consolidated  statements of operations,
changes  in  stockholders'  equity  (deficit)  and cash  flows for the year then
ended.  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 audit. The consolidated financial
statements  of CyberAds,  Inc. as of December  31,  2002,  were audited by other
auditors whose report dated May 13, 2003,  expressed an  unqualified  opinion of
those statements.

We conducted our audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain reasonable  assurance about whether the 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
audit provides 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. as of
December 31, 2003,  and the results of its operations and its cash flows for the
year then ended 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 2 to the
consolidated  financial  statements,  the  Company  had a loss  from  continuing
operations of $1,201,111 and a working capital  deficiency of $2,720,748.  These
matters raise  substantial  doubt about the  Company's  ability to continue as a
going concern. Management's plans in regards to these matters are also described
in Note 2. The consolidated  financial statements do not include any adjustments
that might result from the outcome of this uncertainty.


                                                     TIMOTHY L. STEERS, CPA, LLC


April 6, 2004
Portland, OR











                                       F-1
<PAGE>
                                 CYBERADS, INC.

                           Consolidated Balance Sheet
<TABLE>
<CAPTION>
                                                                                       December 31
                                                                         -------------------------------------
                                                                                2003               2002
                                                                         -----------------   -----------------
<S>                                                                       <C>                 <C>
                                       ASSETS
Current assets:
   Accounts receivable, less allowance for doubtful
     accounts of $486,000 in 2002                                         $        20,380     $     2,016,054
   Inventories                                                                          -             156,234
                                                                           --------------      --------------
       Total current assets                                                        20,380           2,172,288






Property and equipment, net                                                        14,171             210,659







Other assets:
   Hold-to-maturity investments                                                10,700,000                   -
   Deposits                                                                         8,585              77,251
   Intangible asset                                                                     -              75,000
   Other assets                                                                         -              24,785
                                                                           --------------      --------------
       Total other assets                                                      10,708,585             177,036






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

                                                                          $    10,743,136     $     2,559,983
                                                                           ==============      ==============
</TABLE>









                             Continued on next page.
                                       F-2
<PAGE>
                                 CYBERADS, INC.

                     Consolidated Balance Sheet (continued)


<TABLE>
<CAPTION>
                                                                                       December 31
                                                                         -------------------------------------
                                                                                2003               2002
                                                                         -----------------   -----------------

                   LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:

<S>                                                                       <C>                 <C>
   Cash overdraft                                                         $             -     $       112,649
   Outstanding checks in excess of cash in bank                                     1,207                   -
   Note payable                                                                   120,000                   -
   Accounts payable                                                               697,748           1,783,712
   Accounts payable - related parties                                                   -             831,625
   Accrued liabilities                                                            944,658           1,597,906
   Unearned revenue                                                               130,960                   -
   Factor payable, net                                                                  -             613,423
   Advances from related parties                                                  786,555           1,101,158
   Due to officers                                                                      -             146,250
   Loans payable - convertible debentures                                          60,000              60,000
                                                                           --------------      --------------
       Total current liabilities                                                2,741,128           6,246,723

Advances from stockholder                                                         157,634                   -


Commitments


Stockholders' equity (deficit):
   Preferred  stock,  $.001 par value,  authorized  5,000,000  shares,  of which
     1,000,000 has been designated as Series A Convertible, issued and
     outstanding 835,660 shares in 2003 (no shares in 2002)                           836                   -
   Common stock, $.001 par value, authorized 50,000,000 shares, issued and
     outstanding 18,325,777 shares in 2003 (14,774,777 shares in 2002)             18,326              14,775
   Common stock to be issued                                                   11,140,000                   -
   Additional paid-in capital                                                  15,399,238          13,818,415
   Accumulated deficit                                                        (18,714,026)        (17,512,915)
   Deferred financing costs                                                             -              (7,015)
                                                                           --------------      --------------
       Total stockholders' equity (deficit)                                     7,844,374          (3,686,740)
                                                                           --------------      --------------


                                                                          $    10,743,136     $     2,559,983
                                                                           ==============      ==============
</TABLE>



                             See accompanying notes.
                                       F-3
<PAGE>
                                 CYBERADS, INC.

                      Consolidated Statement of Operations

<TABLE>
<CAPTION>
                                                                                 Years ended December 31
                                                                                 2003              2002
                                                                           ---------------   -----------------
<S>                                                                        <C>                <C>
Net revenues                                                               $    4,197,128     $     8,326,211

Cost of revenues                                                                1,177,111           3,939,359
                                                                            -------------      --------------

Gross profit                                                                    3,020,017           4,386,852

Selling expenses                                                                1,845,967           2,506,943

General and administrative expenses                                             1,941,578          16,650,719
                                                                            -------------      --------------

Loss from continuing operations                                                  (767,528)        (14,770,810)

Other income (expenses):
   Gain on theft of assets                                                              -               1,203
   Gain on settlement with former employee                                              -               8,250
   Impairment of property and equipment                                          (265,961)            (77,627)
   Other income, net                                                               16,176                 636
   Interest expense and financing costs, net                                     (183,798)           (538,146)
   Loss on acquisition not consummated                                                  -            (300,000)
                                                                            -------------      --------------
     Total other expenses                                                        (433,583)           (905,684)
                                                                            -------------      --------------

Net loss from continuing operations                                            (1,201,111)        (15,676,494)

Loss from discontinued operations                                                       -            (196,707)
                                                                            -------------      --------------


Net loss                                                                   $   (1,201,111)    $   (15,873,201)
                                                                            =============      ==============




Basic and diluted loss per common share:
   Loss from continuing operations                                         $         (.07)    $         (1.10)
   Loss from discontinued operations                                                    -               (0.01)
                                                                            -------------      --------------

                                                                           $         (.07)    $         (1.11)
                                                                            =============      ==============
</TABLE>



                             See accompanying notes.
                                       F-4
<PAGE>
                                 CYBERADS, INC.

       Consolidated Statement of Changes in Stockholders' Equity (Deficit)
                     Years ended December 31, 2003 and 2002

<TABLE>
<CAPTION>

                          Convertible
                        preferred stock       Common stock         Common     Additional                  Deferred      Total
                       ----------------- -----------------------  stock to     paid-In     Accumulated   financing   stockholders'
                        Shares   Amount    Shares       Amount    be issued    capital       deficit       costs    equity (deficit)
                       -------- -------- ------------ ---------- ----------- ------------ ------------- ----------- ----------------
<S>                    <C>      <C>       <C>         <C>        <C>         <C>          <C>           <C>         <C>
Balance at
   December 31,
   2001                      -  $     -   13,384,777  $  13,385  $        -  $ 1,301,870  $ (1,639,714) $        -  $      (324,459)
Shares issued for
   cash, net of
   offering costs            -        -       40,000         40           -       39,960             -           -           40,000
Shares and
   options issued
   for services              -        -      315,000        315           -   12,091,620             -           -       12,091,935
Shares and options
   issued for accrued
   liabilities               -        -       50,000         50           -       50,950             -           -           51,000
Options exercised            -        -      585,000        585           -       14,415             -           -           15,000
Convertible
   debentures                -        -            -          -           -       20,000             -      (7,015)          12,985
Share Issued for
   acquisition not
   consummated               -        -      400,000        400           -      299,600             -           -          300,000
Net loss                     -        -            -          -           -            -   (15,873,201)          -      (15,873,201)
                       -------- -------- ------------ ---------- ----------- ------------ ------------- ----------- ----------------

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


















                           Continued on next page.
                                     F-5
<PAGE>
                                 CYBERADS, INC.

       Consolidated Statement of Changes in Stockholders' Equity (Deficit)
                     Years ended December 31, 2003 and 2002

<TABLE>
<CAPTION>
                          Convertible
                        preferred stock       Common stock         Common     Additional                  Deferred      Total
                       ----------------- -----------------------  stock to     paid-In     Accumulated   financing   stockholders'
                        Shares   Amount    Shares       Amount    be issued    capital       deficit       costs    equity (deficit)
                       -------- -------- ------------ ---------- ----------- ------------ ------------- ----------- ----------------
<S>                    <C>      <C>       <C>         <C>        <C>         <C>          <C>           <C>         <C>
Balance at
   December 31,
   2002                      -  $     -   14,774,777  $  14,775  $        -  $ 13,818,415 $(17,512,915) $   (7,015) $    (3,686,740)
Shares issued for
   debt                835,660      836            -          -           -       834,824            -           -          835,660
Amortization of
   deferred financing
   costs                     -        -            -          -           -            -             -       7,015            7,015
Shares issued or to
   be issued for debt        -        -    1,250,000      1,250      440,000       86,250            -           -          527,500
Shares issued in
   exchange for
   services                  -        -    2,275,000      2,275           -       606,475            -           -          608,750
Shares issued for
   interest on
   convertible
   debentures                -        -       26,000         26           -        53,274            -           -           53,300
Shares to be issued
   for hold-to-maturity
   investments               -        -            -          -   10,700,000           -             -           -       10,700,000
Net loss                     -        -            -          -           -            -    (1,201,111)          -       (1,201,111)
                       -------- -------- ------------ ---------- ----------- ------------ ------------- ----------- ----------------

Balance at
   December 31, 2003   835,660  $   836   18,325,777  $  18,326  $11,140,000 $ 15,399,238 $(18,714,026) $        -  $     7,844,374
                       ======== ======== ============ ========== =========== ============ ============= =========== ================
</TABLE>


















                             See accompanying notes.
                                       F-6
<PAGE>
                                 CYBERADS, INC.

                      Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>
                                                                                Years ended December 31
                                                                                2003               2002
                                                                           ---------------   -----------------
<S>                                                                        <C>                <C>
Cash flows from operating activities:
   Net loss                                                                $   (1,201,111)    $   (15,873,201)
    Adjustments to reconcile net loss to net cash provided by operating
     activities:
       Provision for doubtful accounts                                            382,217             223,310
       Impairment of long-lived assets                                            265,961              77,627
       Impairment of inventories                                                  120,879                   -
       Depreciation                                                                19,494              39,805
       Amortization of deferred financing costs                                     7,015                   -
       Common stock issued for services                                           608,750          12,091,935
       Common stock issued for interest                                            53,300                   -
       Loss on acquisition not consummated                                              -             300,000
       Beneficial conversion of convertible debentures                                  -              12,985
       Gain on settlement with former employee                                          -              (8,250)
       Gain on theft of assets                                                          -              (1,203)
       Changes in assets and liabilities:
         Accounts receivable                                                      671,163             737,857
         Inventories                                                               35,355             227,438
         Deposits                                                                  68,666            (61,338)
         Other assets                                                              24,785            (24,785)
         Outstanding checks in excess of cash in bank                               1,207                   -
         Accounts payable                                                      (1,390,089)          1,855,061
         Accrued liabilities                                                      289,046             481,477
         Unearned revenue                                                         130,960                   -
                                                                            -------------      --------------
                                                                                   87,598              78,718
Cash flows from investing activities:
   Purchase of intangible asset                                                         -             (75,000)
   Cash received for stolen equipment                                                   -              22,245
   Purchases of property and equipment                                            (13,967)           (307,170)
                                                                            -------------      --------------
                                                                                  (13,967)           (359,925)
Cash flows from financing activities:
   Cash overdraft                                                                (112,649)            112,649
   Net proceeds from factored accounts receivable                                 342,237              66,382
   Advances from related parties                                                        -             884,896
   Repayments to related parties                                                 (314,603)           (814,938)
   Proceeds from officers                                                               -               2,250
   Repayments to officers                                                        (146,250)                  -
   Repayments to third parties                                                          -            (125,000)
   Proceeds from convertible debentures                                                 -              60,000
   Net advances from stockholder                                                  157,634                   -
   Proceeds from sale of common stock                                                   -              55,000
                                                                            -------------      --------------
                                                                                  (73,631)            241,239
                                                                            -------------      --------------

Net decrease in cash                                                       $            -     $       (39,968)
                                                                            =============      ==============
</TABLE>
                             Continued on next page.
                                       F-7
<PAGE>
                                 CYBERADS, INC.

                Consolidated Statement of Cash Flows (continued)

<TABLE>
<CAPTION>
<S>                                                                        <C>                <C>
Cash at beginning of year                                                  $            -     $             -

Net decrease in cash                                                                    -             (39,968)
                                                                            -------------      --------------


Cash at end of year                                                        $            -     $             -
                                                                            =============      ==============












Supplemental disclosure of cash flow information -
   cash paid during the year for interest and financing costs              $      206,697     $       479,689
                                                                            =============      ==============





Supplemental disclosure of non-cash investing and financing activities:
   Common stock to be issued in exchange for hold-to-maturity investments  $   10,700,000     $             -
                                                                            =============      ==============

   Factor payable renegotiated into notes payable                          $      120,000     $             -
                                                                            =============      ==============

   Preferred stock issued in exchange for factor payable                   $      835,660     $             -
                                                                            =============      ==============

   Common stock issued or to be issued in exchange for debt                $      527,500     $             -
                                                                            =============      ==============

   Common  stock and common  stock  options  issued in
     exchange for accrued liabilities                                      $            -     $        51,000
                                                                            =============      ==============
</TABLE>





                             See accompanying notes.
                                       F-8
<PAGE>
                                 CYBERADS, INC.

                   Notes to Consolidated Financial Statements
                                December 31, 2003

1.       Business and summary of significant accounting policies
         -------------------------------------------------------

         Business:  CyberAds, Inc. ("CyberAds") was incorporated in the state of
         Florida on April 12, 2000. The Company earns  commissions  from selling
         approved  contracts  to  subscribers  for cellular  telephone  service.
         Commissions  are received  either from master dealers or cellular phone
         service  providers,  not  the  subscriber.  Applications  for  cellular
         telephone  services are obtained  from  advertising  banners  placed at
         various websites. The Company does business with cellular phone service
         providers as well as master dealers that have  contracted  with various
         other carriers and with several website hosts, who receive a commission
         for each completed contract for cellular phone service.

         In December 2000, the Company acquired IDS Cellular,  Inc. ("IDS") in a
         business  combination  accounted for as entities  under common  control
         because  both  entities  had  common  ownership  interests.  All of the
         operations or IDS was moved to CyberAds and IDS is currently dormant.

         In  January   2002,   the  Company   acquired  80%  or  Cyad   Cellular
         Distributors,   Inc.  ("Cyad")  a  newly  formed  entity.   Cyad  began
         developing the business of wholesaling cellular phones. In August 2002,
         Cyad's operations were discontinued.

         Principles of consolidation:  The accompanying  consolidated  financial
         statements  for 2003  include the  accounts of CyberAds  and its wholly
         owned   subsidiary  IDS.  The   accompanying   consolidated   financial
         statements for 2002 include the accounts of CyberAds,  its wholly owned
         subsidiary  IDS, and its 80% owned  subsidiary  Cyad.  All  significant
         intercompany   transactions   and  balances  have  been  eliminated  in
         consolidation.

         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.

         Inventories:  Inventories  consist primarily of cellular telephones and
         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.

         In March 2003,  cellular  phone  service  providers,  or a  fulfillment
         company,  began shipping cellular  telephones directly to the Company's
         subscribers.  As a result, the Company recognized an impairment loss of
         approximately  $120,900 during 2003 for  inventories  deemed to have no
         value (no impairment loss was recognized during 2002).






                                       F-9
<PAGE>
                                 CYBERADS, INC.

                   Notes to Consolidated Financial Statements
                                December 31, 2003

1.       Business and summary of significant accounting policies (continued)
         -------------------------------------------------------------------

         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.  Leasehold
         improvements  are amortized over the lesser of the original term of the
         related lease or their estimated useful life.

         Investments:  Investments  are  accounted  for under the  provisions of
         Statement  of  Financial   Accounting   Standards   ("SFAS")  No.  115,
         "Accounting  for Certain  Investments  in Debt and Equity  Securities".
         SFAS 115 requires  that all  applicable  investments  be  classified as
         trading securities,  available-for-sale securities, or hold-to-maturity
         securities. The statement further requires that: (1) trading securities
         be reported  at fair  market  value,  with  unrealized  gains or losses
         recognized as a component of operating results, (2)  available-for-sale
         securities be reported at fair market value,  with unrealized gains and
         losses  excluded from earnings but reported in a separate  component of
         shareholders'  equity (net of the effects of income  taxes)  until they
         are disposed of or sold; at the time of disposal or sale,  any gains or
         losses,   calculated  by  the  specific   identification   method,  are
         recognized   as   a   component   of   operating   results,   and   (3)
         hold-to-maturity securities be reported at amortized cost.

         The  Company's  hold-to-maturity  investments  as of December  31, 2003
         consisted  of a 22% interest in a limited  liability  company that owns
         real estate.

         Fair value of  financial  instruments:  The Company  discloses  certain
         information  about the fair value of financial  instruments as required
         by SFAS 107,  "Disclosure  About 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.

         Impairment of long-lived  assets: The Company assess the recoverability
         of long-lived assets under SFAS 144,  "Accounting for the Impairment or
         Disposal of Long-Lived Assets" by determining  whether the depreciation
         and  amortization of the asset's balance over its remaining life can be
         recovered through projected  undiscounted future cash flows. The amount
         of  impairment,  if any, is measured based on fair value and charged to
         operations  in the  period in which the  impairment  is  determined  by
         management.  Long-lived  assets to be disposed  of are  reported at the
         lower of carrying amount or fair value less cost to sell.

         The  Company  recorded an  impairment  loss of  approximately  $266,000
         during  2003  ($77,600  during  2002) for assets  that became idle as a
         result of staff reductions.

         Revenue recognition:  The Company records revenue on a "net" basis when
         contracts are submitted to master dealers.  The phones are shipped from
         the dealers to the subscriber and the Company does not bear the risk of
         loss on the cellular
                                      F-10
<PAGE>
                                 CYBERADS, INC.

                   Notes to Consolidated Financial Statements
                                December 31, 2003

1.       Business and summary of significant accounting policies (continued)
         -------------------------------------------------------------------

         Revenue recognition (continued):  phone. Revenue is recognized when the
         master dealer ships the phones to the subscriber.

         The  Company  records  revenue on a "gross"  basis when  contracts  are
         submitted directly to cellular phone service providers.  The phones are
         shipped from the Company to the  subscriber  and the Company  bears the
         risk of loss on the cellular phone.  Under the gross method  commission
         and related  cost of goods sold for the  cellular  phone is  recognized
         when the Company ships the phones.

         Advertising  costs:  The Company  expenses the cost of  advertising  as
         incurred as selling expenses.  Advertising  expenses were approximately
         $9,500 for 2003 ($313,700 for 2002).

         Stock  options  and  warrants:  The  Company  accounts  for stock based
         compensation  to employees  under SFAS No. 123,  "Accounting  for Stock
         Based  Compensation".  SFAS 123  defines a fair value  based  method of
         accounting for stock based  compensation.  However,  SFAS 123 allows an
         entity to continue to measure  compensation  cost  related to stock and
         stock  options  issued  to  employees  using  the  intrinsic  method of
         accounting  prescribed by Accounting  Principles  Board Opinion ("APB")
         No. 25,  "Accounting for Stock Issued to Employees".  Entities electing
         to  remain  with the  accounting  method  of APB 25 must make pro forma
         disclosures of net income and earnings per share,  as if the fair value
         method of accounting defined in SFAS 123 had been applied.  The Company
         has elected to account for its stock based  compensation  to  employees
         under APB 25.

         During  2003,  the Company  adopted  SFAS 148 that  amended SFAS 123 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  amended  the  disclosure
         provisions of SFAS 123 requiring prominent disclosure about the effects
         on reported net income of an entity's  accounting policy decisions with
         respect to stock-based employee compensation. SFAS 148 also amended APB
         28, "Interim  Financial  Reporting",  to require disclosure about those
         effects in interim financial information.  The adoption of SFAS 148 had
         no effect on the Company's financial position or results of operations.

         The  Company   accounts  for  stock  options  and  warrants  issued  to
         non-employees for services under the fair value method of SFAS 118.

         Website development costs: The Company accounts for website development
         costs  under  Emerging  Issues  Task  Force  ("EITF")  Issue No.  00-2,
         "Accounting for Web Site  Development  Costs".  Under EITF 00-2,  costs
         that involve  design of the web page that do not change the content are
         capitalized and amortized over there



                                      F-11
<PAGE>
                                 CYBERADS, INC.

                   Notes to Consolidated Financial Statements
                                December 31, 2003

1.       Business and summary of significant accounting policies (continued)
         -------------------------------------------------------------------

         Website  development  costs  (continued):  estimated useful life. Costs
         incurred  in  operating  a web site  that has no  future  benefits  are
         expensed in the current period. The Company accounts for costs incurred
         in operating  their website  under the American  Institute of Certified
         Public  Accountants  Statement of Position  ("SOP") No. 98-1. Under SOP
         98-1,  costs that have a future benefit are  capitalized  and amortized
         over the  estimated  future  periods  that are expected to benefit from
         website changes.

         Income taxes: The Company files a consolidated tax return that includes
         CyberAds and IDS. The  consolidated tax liability,  determined  without
         taking  credits  into  account,  is allocated  based on each  company's
         contribution to consolidated  taxable income. Tax credits are allocated
         on a pro  rata  basis  equal  to  each  company's  contribution  to the
         consolidated tax credits determined to be available each year.

         Income taxes are determined using the liability method whereby deferred
         tax  assets  and  liabilities  are  recognized  for  the  expected  tax
         consequences  of  temporary  differences  between  the  tax  bases  and
         reported  amounts of assets and  liabilities.  Deferred  tax assets and
         liabilities  are computed  using enacted tax rates expected to apply to
         taxable income in the years in which temporary differences are expected
         to be  recovered  or  settled.  The effect on  deferred  tax assets and
         liabilities  from a change in tax rates is  recognized in income in the
         period  that  includes  the  enactment  date.  The  Company  provides a
         valuation  allowance  for certain  deferred  tax assets,  if it is more
         likely  than not that the Company  will not realize tax assets  through
         future operations.

         Reporting consolidated comprehensive income (loss): The Company reports
         and  displays   consolidated   comprehensive   income  (loss)  and  its
         components as separate amounts in the consolidated financial statements
         with the same  prominence as other financial  statements.  Consolidated
         comprehensive  income (loss)  includes all changes in equity during the
         year that  results  from  recognized  transactions  and other  economic
         events other than transactions with owners. There were no components of
         consolidated  comprehensive  income  to  report  for  the  years  ended
         December 31, 2003 and 2002.

         Segment Reporting:  The Company and its subsidiary reports  information
         about  operating  segments and related  disclosures  about products and
         services,   geographic  areas  and  major  customers  under  SFAS  131,
         "Disclosures about Segments of an Enterprise and Related  Information".
         Operating segments are defined as components of an enterprise for which
         separate financial information is available that is evaluated regularly
         by  management  in deciding how to allocate  resources and in assessing
         performance.  The Company views its operations and manages its business
         in principally one segment, obtaining cellular phone applications.



                                      F-12
<PAGE>
                                 CYBERADS, INC.

                   Notes to Consolidated Financial Statements
                                December 31, 2003

1.       Business and summary of significant accounting policies (continued)
         -------------------------------------------------------------------

         Net loss per common  share:  Net loss per common  share is  computed by
         dividing  net loss by the  weighted  average  number of  common  shares
         outstanding  during the period as  defined by SFAS 128,  "Earnings  Per
         Share".  The weighted average number of common stock shares outstanding
         was 16,074,986 for 2003 (14,333,944 for 2002).  Convertible debentures,
         convertible  preferred stock, common stock options, and common stock to
         be  issued  are  considered  common  stock  equivalents.  Common  stock
         equivalents  have not been included in the  computation of diluted loss
         per  share  as the  effect  on net  loss  per  common  share  would  be
         anti-dilutive.

         Use of  Estimates:  The process of preparing  financial  statements  in
         conformity with accounting  principles generally accepted in the United
         States  of  America  requires  the  use of  estimates  and  assumptions
         regarding certain types of assets, liabilities,  revenues and expenses.
         Accordingly,  upon settlement, actual results may differ from estimated
         amounts.

         Reclassifications:  Certain 2002 balances have been reclassified in the
         accompanying  consolidated  financial statements to conform to the 2003
         presentation.

2.       Going concern
         -------------

         The Company has experienced  recurring losses from operations and as of
         December  31, 2003 had a working  capital  deficit of  $2,720,748.  The
         Company was also in default with respect to certain debt agreements and
         has unpaid payroll related taxes due to the Internal Revenue Service as
         of December 31, 2003.

         Effective  September  9, 2003, a major  shareholder  and officer of the
         Company  sold a  substantial  portion of his  shares to Novanet  Media,
         Inc.,  a  California  corporation,  under  a Stock  Purchase  Agreement
         ("Novanet  Agreement").  Under the terms of the Novanet Agreement,  all
         then-existing  officers of the Company  resigned and were replaced with
         new management. Under new management,  approximately $1,483,200 of debt
         has been  renegotiated into notes payable or converted to capital stock
         of  the  Company.  New  management  has  also  eliminated  unprofitable
         products and reduced overhead.

         New  management of the Company plans to continue to  restructure  debt,
         seek  profitable   products,   reduce  operating  expenses,   and  seek
         additional   capital  and  debt  financing  until  operations   achieve
         profitability.  Management of the Company  believes the above  actions,
         along with other plans,  will allow them to continue  operations  until
         the  Company  can  recover  assets  and  satisfy  debt  through  normal
         operations.  Until then,  the Company is dependent  upon its ability to
         restructure operations and obtain additional financing.


                                      F-13
<PAGE>
                                 CYBERADS, INC.

                   Notes to Consolidated Financial Statements
                                December 31, 2003

2.       Going concern (continued)
         -------------------------

         The  consolidated  financial  statements  do  not  reflect  adjustments
         relating to the recorded asset  amounts,  or the amounts of liabilities
         that would be  necessary  should the Company not be able to continue in
         existence.

3.       Property and equipment
         ----------------------

         Property and equipment consisted of the following at December 31:

                                                      2003          2002
                                                  -----------  -------------
           Furniture and fixtures                 $    2,598    $    51,318
           Machinery and equipment                         -         72,227
           Leasehold improvements                     20,085          8,076
           Computer equipment                         19,551         53,951
            Property and equipment - idle                  -         58,931
                                                   ---------     ----------
                                                      42,234        244,503
            Less accumulated depreciation            (28,063)       (33,844)
                                                   ---------     ----------

                                                  $   14,171    $   210,659
                                                   =========     ==========

4.       Note payable
         ------------

         Effective  November 12, 2003,  the Company  entered into a Debt Paydown
         and Equity  Conversion  Agreement  ("Debt Paydown  Agreement")  for the
         purpose of renegotiating  their factor payable.  Under the Debt Paydown
         Agreement, the Company paid an aggregate of $45,000 to reduce the debt;
         converted  $835,660 of debt into 835,660 shares of the Company's Series
         A  preferred  stock;  and  converted  $120,000  of  the  debt  into  an
         installment note.

         The note bears  interest at the rate of 10% per annum and is payable in
         installments  of $5,000 on January 15, 2004 and February 15, 2004, plus
         interest.  Final payment is due March 15, 2004, plus interest. The note
         is secured by all of the Company's  accounts  receivable,  inventories,
         and computer  hardware and  software  and is  guaranteed  by two former
         officers of the  Company.  The  Company is  currently  in default  with
         respect to the agreement.

5.       Accrued expenses
         ----------------

         Accrued expenses consisted of the following at December 31:

                                                         2003            2002
                                                       ----------   ------------
           Payroll and payroll related liabilities    $   548,195  $     579,535
           Interest                                             -         76,077
           Commission charge-backs                        361,463        942,294
            Professional fees                              35,000              -
                                                       ----------   ------------

                                                      $   944,658  $   1,597,906
                                                       ==========   ============
                                      F-14
<PAGE>
                                 CYBERADS, INC.

                   Notes to Consolidated Financial Statements
                                December 31, 2003

5.       Accrued expenses (continued)
         ----------------------------

         The Company is non-compliant  with respect to certain federal and state
         payroll related taxes.  Included in accrued payroll and payroll related
         liabilities is approximately $540,800 of unpaid payroll taxes.

6.       Advances from related parties
         -----------------------------

         Advances  from related  parties  consisted of the following at December
         31:
<TABLE>
<CAPTION>
                                                                                      2003            2002
                                                                                  ------------  --------------
<S>                                                                                <C>          <C>
            Advance due to a corporation owned by a former officer
              of the Company, bearing interest at 10% per annum,
              due on demand and unsecured.                                         $    54,000  $     360,549
            Advance due to a former officer of the Company, bearing
              interest at 10% per annum, due on demand and
              unsecured.                                                               732,555        734,322
            Advance due to a former officer of the Company.                                  -          6,287
                                                                                    ----------   ------------

                                                                                   $   786,555  $   1,101,158
                                                                                    ==========   ============
</TABLE>

         In January 2002,  the Company  issued  options to the former officer of
         the Company in consideration  for unpaid interest.  Accordingly,  under
         APB 25,  no  expense  was  recognized.  Interest  expense  on the above
         advances was  approximately  $59,500 for 2002,  of which  approximately
         $26,600 was recorded as leased car payments under an  arrangement  with
         the former officer to pay those payments in lieu of interest.

7.       Loans payable - convertible debentures
         --------------------------------------

         Loans payable - convertible debentures consists of unsecured loans from
         two individuals  whereby the principal of the note is convertible  into
         the  Company's  common  stock at the option of the holder.  Interest on
         borrowings is payable quarterly at a rate of 20% per annum.

         The notes were  originally  convertible  on or after May 13,  2003 at a
         conversion rate of 75% of the closing bid price of the Company's common
         stock one trading day prior to conversion.  The  beneficial  conversion
         feature of the convertible debentures was valued at $20,000 on the date
         of issuance and was  amortized  over the original  one-year life of the
         debentures.

         The due date of the convertible debentures was extended to February 13,
         2004. In consideration  for the extension,  the repayment of one of the
         notes was increased by $5,000 representing  additional interest and the
         Company  issued the holders an aggregate of 26,000 shares of its common
         stock for unpaid interest.

                                      F-15
<PAGE>
                                 CYBERADS, INC.

                   Notes to Consolidated Financial Statements
                                December 31, 2003

7.       Loans payable - convertible debentures (continued)
         --------------------------------------------------

         The notes were due in  installments  of $15,000 on November  13,  2003,
         $13,750 on December 13, 2003 and January 13, 2004,  with final  payment
         due February 13, 2004. The Company is currently in default with respect
         to the agreement.

         Interest  expense  was  $3,300  for the year ended  December  31,  2003
         ($12,985  for 2002 and $7,015  was  reflected  as a  deferred  interest
         expense component of equity).

8.       Advances from stockholder
         -------------------------

         Notes payable to  stockholder  consists of advances from Novanet Media,
         Inc.  for  working  capital  purposes.   The  advances  are  unsecured,
         non-interest  bearing and due on demand;  however,  Novanet Media, Inc.
         has agreed not to demand  repayment of the advances before May 2005 and
         unless cash is available from a merger,  capital stock exchange,  asset
         acquisition, or other business combination, or from operations.

9.       Commitments
         -----------

         The Company leases its office  facilities under a non-cancelable  lease
         agreement  that  expires  in  March  2005.  Management  of the  Company
         renegotiated the lease and moved to small facilities where the payments
         are $4,200 per month.

         Future minimum lease payments under the non-cancelable  operating lease
         are as follows:

            Years ending December 31:
            -------------------------
                     2004                                $   50,400
                     2005                                    12,600
                                                          ---------

                                                         $   63,000
                                                          =========

         Rent expense was approximately $181,000 for the year ended December 31,
2003 ($234,000 for 2002).

10.      Capital stock transactions
         --------------------------

         In October 2003 and in connection with the Debt Paydown Agreement,  the
         Company designated  1,000,000 shares of its preferred stock as Series A
         Convertible  Preferred Stock. The Series A Convertible  Preferred Stock
         is non-voting  and dividends  accrue at a rate of 10% per annum payable
         quarterly.  Unpaid  accrued  dividends  are  cumulative.  The  Series A
         Convertible  Preferred  Stock is  convertible  all or in part  into the
         number of shares of the  Company's  common  stock  equal to 115% of the
         value of the preferred stock plus any cumulative dividends.

                                      F-16
<PAGE>
                                 CYBERADS, INC.

                   Notes to Consolidated Financial Statements
                                December 31, 2003

10.      Capital stock transactions (continued)
         --------------------------------------

         On March 7, 2003,  the Company  issued  1,250,000  shares of its common
         stock in  exchange  for debt of  $87,500  owed to the  provider  of its
         cellular phone service.

         On April 4, 2003,  the Company issued 25,000 shares of its common stock
         upon signing an investment banking agreement for services. The weighted
         average issuance price of the shares was $.05 per share.  Management of
         the Company  estimated the value the shares issued based on the closing
         bid price of the  Company's  common stock at the date of issuance,  the
         historical  trend of the  trading  prices for its common  stock and the
         volume  of  shares  traded.  The  Company  recorded  professional  fees
         aggregating $1,250 during 2003 as a result of the issuance.

         On  September  30, 2003,  the Company  issued  1,000,000  shares of its
         common stock to a major  shareholder of Novanet Media, Inc. in exchange
         for management  services.  The weighted  average  issuance price of the
         shares was $.30 per share.  Management  of the  Company  estimated  the
         value the shares issued based on the closing bid price of the Company's
         common  stock  at the date of  issuance,  the  historical  trend of the
         trading  prices for its common  stock and the volume of shares  traded.
         The Company recorded professional fees aggregating $300,000 during 2003
         as a result of the issuance.

         On December 31, 2003,  the Company  issued 250,000 shares of its common
         stock to an investment-banking  firm for services. The weighted average
         issuance  price of the shares was $1.15 per  share.  Management  of the
         Company  estimated the value the shares issued based on the closing bid
         price  of the  Company's  common  stock at the  date of  issuance,  the
         historical  trend of the  trading  prices for its common  stock and the
         volume  of  shares  traded.  The  Company  recorded  professional  fees
         aggregating $287,500 for 2003 as a result of the issuance.

         In December  2003,  the Company  agreed to issue 440,000  shares of its
         common stock in exchange for debt of $440,000.

         In December 2003, the Company agreed it issued  8,000,000 shares of its
         common  stock in exchange  for a 22%  interest  in a limited  liability
         company that owns real estate.  The weighted  average issuance price of
         the shares was $1.34 per share. Management of the Company estimated the
         value the shares issued based on the closing bid price of the Company's
         common  stock  at the date of  issuance,  the  historical  trend of the
         trading  prices for its common  stock and the volume of shares  traded.
         The Company recorded  $10,700,000 of hold-to-maturity  investments as a
         result of the agreement.

         During  2002,  the  Company  issued  84,000  shares of common  stock in
         exchange for consulting  services.  The weighted average issuance price
         of the shares was $.60



                                      F-17
<PAGE>
                                 CYBERADS, INC.

                   Notes to Consolidated Financial Statements
                                December 31, 2003

10.      Capital stock transactions (continued)
         --------------------------------------

         per share.  Management  of the Company  estimated  the value the shares
         issued based on the closing bid price of the Company's  common stock at
         the date of issuance,  the  historical  trend of the trading prices for
         its common stock and the volume of shares traded.  The Company recorded
         professional  fees  aggregating  $50,400  for 2002 as a  result  of the
         issuance.

         During 2002,  the Company  issued 15,000 shares of its common stock and
         options to purchase  50,000 shares of common stock,  having an exercise
         price of $1.25 per share, in exchange for advisory,  investor relations
         and public relations  services.  The weighted average issuance price of
         the shares was $.25 per share.  Management of the Company estimated the
         value the shares issued based on the closing bid price of the Company's
         common  stock  at the date of  issuance,  the  historical  trend of the
         trading  prices for its common  stock and the volume of shares  traded.
         The Company recorded  professional fees aggregating $23,535 for 2002 as
         a result of the issuance.

         During 2002,  the Company  issued 50,000 shares of its common stock and
         options to purchase  50,000 shares of common stock,  having an exercise
         price of $1.00 per share for an aggregate  value of $51,000 in exchange
         for debt owed for legal services.

         During 2002,  the Company  issued an aggregate of 400,000 shares of its
         common stock in connection  with an acquisition  later rescinded by the
         Company. The weighted average issuance price of the shares was $.75 per
         share.  Management of the Company estimated the value the shares issued
         based on the closing  bid price of the  Company's  common  stock at the
         date of issuance,  the  historical  trend of the trading prices for its
         common stock and the volume of shares  traded.  The Company  recorded a
         loss of $300,000 for 2002 for the issuances.

         During 2002, the Company granted options to  non-employees  to purchase
         3,450,000  shares of its common  stock at  exercise  prices of $.25 and
         $1.00. The Company recorded  professional fees aggregating $295,000 for
         2002 as a result of these share  grants.  The fair value of the options
         granted  was  estimated  on the date of grant  using the  Black-Scholes
         option-pricing model with the following  assumptions for the year ended
         December 31, 2002:

              Expected life of the option                    1 year to 4 years
              Risk-free interest rate                           1.54% to 4.57%
              Expected volatility                                   0% to 285%
              Expected dividend yield                                       0%







                                      F-18
<PAGE>
                                 CYBERADS, INC.

                   Notes to Consolidated Financial Statements
                                December 31, 2003

11.      Stock based compensation
         ------------------------

         During 2003, the Company issued 1,000,000 shares of its common stock to
         a former officer as  compensation  for services  through  September 14,
         2003.  The weighted  average  issuance price of the shares was $.02 per
         share.  Compensation  expense of $20,000 was  recorded for 2003 for the
         intrinsic value of the services rendered.

         During 2002,  the Company  issued an aggregate of 16,000  shares of its
         common  stock to an employee  and a member of the Board of Directors as
         compensation for services. Compensation expense of $23,000 was recorded
         for 2002 for the intrinsic value of the services rendered.

         During 2002, the Company granted  options to purchase  6,350,000 of its
         common stock to certain  employees.  The Company applies APB 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 148, the Company's net loss would
         have  changed to the  following  pro-forma  amount for the years  ended
         December 31:

<TABLE>
<CAPTION>
                                                                                 2003              2002
                                                                           ---------------   -----------------
<S>                                                                        <C>                <C>
              Net loss as reported                                         $   (1,201,111)    $   (15,873,201)
              Pro-forma effect                                                   (280,000)           (872,000)
                                                                            -------------      --------------

              Pro-forma net loss                                           $   (1,481,111)    $   (16,745,201)
                                                                            =============      ==============

              Basic and diluted net loss per share as reported             $         (.07)    $         (1.11)
              Pro-forma effect                                                       (.02)               (.06)
                                                                            -------------      --------------

              Pro-forma basic and diluted net loss per share               $         (.09)    $         (1.17)
                                                                            =============      ==============
</TABLE>









                                      F-19
<PAGE>
                                 CYBERADS, INC.

                   Notes to Consolidated Financial Statements
                                December 31, 2003

12.      Stock options
         -------------

         The Company's  stock option  activity for options  granted to employees
         and non-employees is summarized as follows for the years ended December
         31:

<TABLE>
<CAPTION>
                                                                      Weighted                       Weighted
                                                                       average                        average
                                                                      exercise        Shares         exercise
                                                        Shares          price       exercisable        price
                                                   ---------------   -----------  ---------------  -----------
<S>                                                     <C>            <C>             <C>             <C>
           Outstanding at
              January 1, 2002                           1,300,000      $  .70          1,300,000       $ .70
                                                                                  ===============  ===========
           Granted                                      9,800,000        1.03
           Expired                                     (2,325,000)       1.87
           Exercised                                     (625,000)       1.00
                                                   ---------------
           Outstanding at
              December 31, 2002                         8,150,000         .82          8,150,000       $ .82
                                                                                  ===============  ===========
           Cancelled                                   (5,000,000)          -
            Expired                                      (225,000)        .70
                                                   ---------------
           Outstanding at
              December 31, 2003                         2,925,000      $  .48          2,925,000       $ .48
                                                   ===============   ===========  ===============  ===========
</TABLE>

         The Company's stock option  outstanding and exercisable at December 31,
2003 is summarized as follows:

<TABLE>
<CAPTION>
                            Options outstanding                                 Options exercisable
          -----------------------------------------------------------  -----------------------------------
                                              Weighted average
                                        -----------------------------                        Weighted
               Range                       remaining      exercise                            average
             of prices      Shares           life           price           Shares        exercise price
          --------------  -----------   --------------  -------------  ---------------   -----------------
<S>         <C>            <C>              <C>             <C>            <C>                 <C>
            $.04 - $.99    1,625,000        1 year          $.23           1,625,000           $.23
           ============                     =======         ====                               ====
           $.99 - $1.25    1,300,000        2 years         $.91           1,300,000           $.91
           ============    ---------        =======         ====           ---------           ====
           $.04 - $1.25    2,925,000        2 years         $.48           2,925,000           $.48
           ============    =========        =======         ====           =========           ====
</TABLE>

13.      Income taxes
         ------------

         Deferred income taxes consisted of the following at December 31:
<TABLE>
<CAPTION>
                                                                                   2003              2002
                                                                             ----------------  ---------------
<S>                                                                          <C>               <C>
           Deferred tax asset - net operating loss carryovers                $     6,362,600   $    5,954,400
           Valuation allowance for deferred tax asset                             (6,362,600)      (5,954,400)
                                                                              --------------    -------------

                Net deferred income taxes                                    $             -   $            -
                                                                              ==============    =============
</TABLE>
                                      F-20
<PAGE>
                                 CYBERADS, INC.

                   Notes to Consolidated Financial Statements
                                December 31, 2003

13.      Income taxes
         ------------

         As a  result  of  the  Company's  continued  losses  and  uncertainties
         surrounding  the  utilization  of the net  operating  loss  carryovers,
         management has determined  that the  realization of deferred tax assets
         is  uncertain.  Accordingly,  a  valuation  allowance  equal to the net
         deferred tax asset amount has been recorded as of December 31, 2003 and
         2002.

         Reconciliation  of income taxes computed at the Federal  statutory rate
         of 34% to the  provision  for income  taxes is as follows for the years
         ended December 31:

<TABLE>
<CAPTION>
                                                                2003              2002
                                                             -------------  ---------------
<S>                                                          <C>            <C>
           Tax at statutory rates                            $   (408,378)  $   (5,396,888)
           Differences resulting from:
              Non-deductible and other items                          178              (12)
              Change in deferred tax valuation allowance          408,200        5,396,900
                                                             -------------  ---------------

                Provision for income taxes                   $          -   $            -
                                                             =============  ===============
</TABLE>

         At December 31, 2003, the Company had net operating loss  carryovers of
         approximately  $18,713,500  available to offset future Federal  taxable
         income,  if any,  expiring  through 2023.  The  utilization  of the net
         operating loss carryovers could be limited due to restrictions  imposed
         under  Federal tax laws upon a change in  ownership.  The amount of the
         limitation, if any, has not been determined at this time.

14.      Concentrations of credit risk
         -----------------------------

         The Company sold  approximately  80% of its products to five  customers
         for  2002.  As  December  31,  2002,  accounts  receivable  from  those
         customers aggregated approximately $2,326,400.

15.      Settlements
         -----------

         The Company  entered into a consulting  agreement in September 2002 for
         advisory,   investor  relations  and  public  relations  services.  The
         consulting  firm and the Company have taken the position that the other
         is in default of the  agreement.  The Company and the  consulting  firm
         reached a  settlement  in April 2004  whereby  the  Company  will issue
         100,000 shares of its common stock granted to the consulting firm under
         the original  consulting  agreement;  however,  the consulting  firm is
         restricted from reselling the shares. Under the terms of the settlement
         agreement  the  consulting  firm may resell no more than 3,000 share of
         the  Company's  common  stock per week and no more than an aggregate of
         50,000  shares  over  a  period  of  120  days  from  the  date  of the
         settlement.  They are further  restricted  from reselling the Company's
         common stock until September 13, 2004 at which time they may

                                      F-21
<PAGE>
                                 CYBERADS, INC.

                   Notes to Consolidated Financial Statements
                                December 31, 2003

15.      Settlements (continued)
         -----------------------

         resell no more than 3,000 shares of the Company's common stock per week
         and no more than an  aggregate  of 50,000  shares  over a period of 120
         days.  The  settlement  had no  effect  on the  accompanying  financial
         statements as the stock options  granted under the original  consulting
         agreement where previously reflected.

         In April 2004,  the Company agreed to indemnify a former officer of the
         Company  for any  loss he  sustained  in a  settlement  reached  with a
         cellular phone service provider  against IDS and him personally.  Under
         the  indemnification,  the Company is  obligated to pay an aggregate of
         $72,261 in  installments of $5,000 each on or before August 1, 2004 and
         September   1,  2004  with  the  balance  due  October  1,  2004.   The
         indemnification had no effect on the accompanying  financial statements
         as  the  amount  owed  to  the  cellular  phone  service  provider  was
         previously recorded as accounts payable in the records of IDS.

         In April 2004, the Company  reached a settlement  with a cellular phone
         service  provider  whereby the Company has agreed to issue the provider
         250,000 shares of common stock previously granted. However, the Company
         and the  cellular  phone  service  provider are  currently  negotiating
         mutually acceptable share resale terms. The settlement had no effect on
         the accompanying  financial  statements as the stock options granted to
         the cellular phone service provider where previously reflected.




























                                      F-22