UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

[X] Annual report under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2003

[ ] Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934 (No fee required) for the transition period from to

Commission file number: 0-27919

XRAYMEDIA Inc.

fka XRAYMEDIA.COM Inc.

(Name of Small Business Issuer in Its Charter)

        Minnesota                                                                            410951123

(State or Other Jurisdiction of                                                  (  I.R.S. Employer

Incorporation or Organization)                                               Identification No.)

555 Hastings Street, Ste.# 1560, Vancouver, B.C., Canada V6B 4N6

(Address of Principal Executive Offices) (Zip Code)

(Issuer's Telephone Number, Including Area Code)

Securities registered under Section 12(b) of the Exchange Act:

Title of Each Class                                                        Name of each Exchange on Which Registered

Common Stock ($0.001 Par Value)                                             None

Preferred Stock ($0.001 Par Value)

Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X]      No [  ]

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B not contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB [X].

The issuer's total revenues for the year ended December 31, 2003, were $303.

On March 2, 2004, the number of shares outstanding of the registrant's Common Stock, $0.001 par value (the only class of voting stock), was 110,548,833. The market value of stock held by non-affiliates as of March 02, 2004 was $7,081,660. On March 02, 2004, the number of shares outstanding of the registrants Preferred Stock, $0.001 par value (non-voting), was 1,000,000. The Company’s President, Raymond Dabney, holds 100% of these shares.

FORWARD-LOOKING STATEMENTS. THIS REGISTRATION STATEMENT INCLUDES "FORWARD-LOOKING STATEMENTS." FORWARD-LOOKING STATEMENTS CONTAINED IN THIS REGISTRATION STATEMENT ARE BASED ON MANAGEMENT'S BELIEFS AND ASSUMPTIONS AND ON INFORMATION CURRENTLY AVAILABLE TO MANAGEMENT. FORWARD-LOOKING STATEMENTS INCLUDE STATEMENTS IN WHICH WORDS SUCH AS "EXPECT, " "ANTICIPATE," "INTEND," "PLAN," "BELIEVE," "ESTIMATE," "CONSIDER," OR SIMILAR EXPRESSIONS ARE USED.

YOU SHOULD NOT CONSTRUE ANY FORWARD-LOOKING STATEMENT AS A GUARANTEE OF FUTURE PERFORMANCE. THESE STATEMENTS INHERENTLY INVOLVE RISKS, UNCERTAINTIES AND ASSUMPTIONS. THE FUTURE RESULTS AND STOCKHOLDER VALUES MAY DIFFER FROM THOSE EXPRESSED IN THESE FORWARD-LOOKING STATEMENTS, AND THOSE VARIATIONS MAY BE MATERIAL AND ADVERSE. MANY FACTORS THAT WILL AFFECT THESE RESULTS AND VALUES ARE BEYOND OUR ABILITY TO CONTROL OR PREDICT.

A. Corporate Organization

As used herein the terms "Xray" and "XRAYMEDIA " refers to XRAYMEDIA, Inc., a Minnesota corporation, its subsidiaries and predecessors, unless the context indicates otherwise.

On November 15, 2003 the name was changed from XRAYMEDIA.COM Inc., to XRAYMEDIA, Inc., to better reflect the company as a traditional advertising agency rather then continuing to use the negative connotation of .com being attached to the corporate name.

On June 28, 2000 the name was changed from e-bidd.com, inc., to XRAYMEDIA.com inc. to avoid a potential conflict with another totally separate and unrelated company by a similar name, www.Ebid.com,that also operated as an Internet auction site.

XRAYMEDIA has had several previous names in the past including: Image Photo Systems, Inc., AJA Merchant Banking Corporation, Cyberguides International, Inc., Digital Reporting, Inc., and Port Industries, Inc.

Although XRAYMEDIA was initially formed to conduct any lawful activity, XRAYMEDIA is a Media Solutions Company offering a variety of integrated products and services through its website, including media buying and selling, live media negotiating technology, web, logo and print ad design services, public relations and investor relations services, as well additional media technology to be announced as implemented. Through affiliations with Media Industry leaders is positioned to capitalize on the migration of advertising sales and real-time Internet negotiating technology as well as other related media based activity, to the internet through Business to Business Media solutions.

XRAYMEDIA was originally incorporated in Minnesota on November 27, 1968, as Port Industries, Inc., and operated as a real estate development company. Port Industries, Inc. commenced bankruptcy proceedings under Chapter XI in May, 1974 and emerged from bankruptcy in April, 1976. As a result of the bankruptcy, all assets were distributed and the debtor's rights were formally discharged. Port Industries, Inc. remained inactive from 1976 until 1994.

On March 1, 1994, Port Industries, Inc. entered into an agreement of merger with Digital Reporting, Inc., a Delaware corporation, engaged in the business of corporate acquisitions. Upon the effective date of the merger Port Industries, Inc., issued 720 shares (1,800 shares prior to stock splits) of its common stock in exchange for all of the outstanding shares of Digital Reporting, Inc., whose operations were nominal since its inception, and became the sole surviving corporation under its post-merger name, Digital Reporting, Inc.

In September 1997, Digital Reporting, Inc. acquired all of the outstanding common shares Cyberguides International, Inc., a Delaware corporation, in exchange for 3,500 restricted shares of Digital Reporting, Inc.'s common stock. Accordingly, Digital Reporting, Inc. changed its name to Cyberguides International, Inc. and operated a web page on the Internet that contained a database of general information about public companies. Cyberguides International, Inc. then merged with Corp Reports.com whose principal business activity was similar to that of Cyberguides International, Inc., the operation of a web page in the early days of the Internet that contained a database of public companies annual reports.

In February, 1998 A.J. Alda & Associates acquired a majority interest in Cyberguides International, Inc. by purchasing approximately 1,140 restricted common shares of its stock. Mr. A.J. Alda was then appointed director, president, and chief executive officer of Cyberguides International, Inc. which changed its name to AJA Merchant Banking Corporation and operated as a public merchant banking corporation. AJA Merchant Banking Corporation, also in the business of corporate acquisitions, entered into preliminary negotiations with a

printed circuit board manufacturer in the Minneapolis - St. Paul, Minnesota area to build a prototype circuit board but failed to reach the development or production stage.

On December 4, 1998, AJA Merchant Banking Corporation changed its name to Image Photo Systems, Inc. and began developing 3D picture viewers for children. Image

Photo Systems, Inc. developed a prototype 3D picture viewer, but failed to reach he manufacturing, production, or sales stage. In 1999, the officers and directors associated with the acquisition of Image Photo Systems, Inc. resigned.

In July, 1999 Image Photo Systems, Inc., under new management, entered into an Agreement with Laurier Limited, whereby it acquired its current operations as an Internet auction site and licensor of Auction and Ad Serving Software and Laurier Limited received 10,000,000 restricted shares of Image Photo Systems, Inc. stock. In September 1999, Image Photo Systems, Inc. changed its name to e-bidd.com, Inc. Subsequently, the Laurier transaction was reversed. (See below).

On June 28, 2000 the name was changed from e-bidd.com, inc., to XRAYMEDIA.com inc. to avoid a potential conflict with another totally separate and unrelated company by a similar name, www.Ebid.com, that also operated as an Internet auction site.

As of September 30, 2000, the Company had not received the software license from Laurier Limited for which 10,000,000 shares of common stock had been issued. Because of this default, the company has reversed the asset and related stockholders' equity amounts originally recorded in this transaction retroactively to Dec. 31, 1999.

The company had been in development of its own Media Auction software with separate modules being acquired from other sources. On December 18, 2000, in a 2nd Level Public Access program XRAYMEDIA had opened its media auction site for qualified media buyers and sellers to test. During that time, protocols for credit approval and confirmation of inventory had been applied and checked repeatedly for robustness. XRAYMEDIA intended to officially launch that media auction software before the year-end of 2001.

On May 29th 2001 The Company announced that it has acquired from a European Company called TS4U LTD a breakthrough, dynamically interactive streaming-auction / inventory implementing software system. The transaction allows for XRAYMEDIA to retain ownership of the revised software "XRMD System" with all the necessary Advertising/Media Industry categories and database structures required for the launch of its Media Auction. Under the terms of the Agreement XRAYMEDIA is not to sell, license or distribute the software to any third parties for business use at anytime. The deal also calls for the TS4U LTD not to compete in the Advertising/Media Industry worldwide. XRAYMEDIA Can only use the technology for the Advertising/Media Industry worldwide. The company then proceeded to make the necessary changes to the software to launch a full real-time advertising/media inventory negotiating system for the media industry.

From August 21st 2001 through to today the company has successfully launched three upgraded versions of the Live Media Marketplace, the current release is version 3.0.

XRAYMEDIA has recently announced that it will be releasing the newest version along  with a revised Corporate website, both expected to be released early in 2004.

On March 18, 2003 the company released the new LMM v3.0 uniting live media negotiating with trade/barter modules giving all registered buyers and sellers flexibility and negotiating power, enabling the general public to choose the way they wish to purchase advertising in a powerful and cost effective manner. All media trading activity takes place on each users private "Media Trading Floor" screen. Users can enter new media buy and sell orders, negotiate in real-time choosing currencies from around the world or use the new trade/barter modules to instantly change cash/trade values and percentage blends. The live updating technology automatically creates "Media Matches" with "Media Orders" appearing

on the personal "Media Trading Floor". These matches are "Media Orders" placed by other users that match the users' Media Buy and/or Sell Order criterion. Once these matches are generated, all users can review the details and begin to negotiate in real-time. At any point both negotiating parties agree upon a price and close the deal online, simultaneously deleting the sold media orders from all other users screen.

XRAYMEDIA is a traditional advertising agency that has leading edge live media trading technology. "The Live Media Marketplace v3.0" is available for Private-labeled in-house use and live general public negotiations. All buyers and sellers of media can negotiate in real-time, choosing currencies from around the world or use the new trade/barter modules to instantly change cash/trade values and percentage blends, over the Internet in a secure and simple manner. The system provides private, one-on-one, and one-to-many negotiations while dynamically loading and matching inventory changes and instantly updating new opportunities. Maximizing its registered users' reach to find the optimum market price for any given media  inventory without compromising the seller's proprietary pricing information or identity if they so choose. Sign in at www.xraymedia.com; there are no sign up fees or monthly charges for buyers or sellers. Place your orders and start negotiating live, in a private secured 128-bit encrypted media trading floor.

From the first day of the revised Live Media Marketplace v3.0 launch with the new corporate trade modules XRAYMEDIA has amassed a substantial amount of corporate trade transactions through its corporate trade partners and affiliates. Trade volumes reached a peak of approximately $55,000,000.00 in corporate trade transactions from its partners in the Live Media Marketplace v3.0. As one of the partners by contract, XRAYMEDIA received goods in consideration for use of their marketplace which will be liquidated and realized as soon as practicable.

 

Based on Accounting Principles Generally Accepted in the United States the “Corporate Trade Transactions Fees” to date will not be reflected in the financial statements until the company has liquidated the goods. The Company is in the process of selling all the goods for cash to an unrelated party.

From January 2003 until now the company has begun test marketing several economies of scale for actual market penetration viability studies for the complete XRAYMEDIA business model. Certain economies have been addressed, including the corporate trade modules, the "XR2 System", which is focused on creating jobs & Agency Branches offering licensed Independent Media Managers and Independent Media Traders full time or part-time employment opportunities in the media industry. Its penetration into the infomercial sector of the media industry has proven valuable for future clients looking to purchase advertising for their  infomercial products. This media sector actual market test is being done through three specific joint venture partnership agreements with companies that have identified infomercial products.

The largest test-marketing program will be for the newest version of the Live Media Marketplace, alongside the launch of a new XRAYMEDIA corporate website in 2004.

This test-marketing program will commence once both sites have been launched and  will be the focus for the remainder of the year. This will be a multi-market penetration test and is going to target all small to medium sized businesses looking to purchase advertising opportunities for their products and services strictly on a cash basis.

The test marketing study will be conducted using several coinciding market penetration models for achieving a maximum number of registered cash buyers in the system. This test will be conducted for cash buyers only, allowing XRAYMEDIA to monitor the compounded strength of several individual cash buyers harnessed through a single point of purchase.

XRAYMEDIA has received several joint venture opportunities, but it will primarily  focus on the release of the new corporate website, the launch of the newest version of the Live Media Marketplace along with the marketing program for the remainder of the year.

John Hagel of McKinsey coined the term “infomediaries” to describe intermediaries who sell information about a market, creating a platform on which buyers and sellers can do business. Many Internet researchers now believe that perhaps the most profitable pure Internet companies, as well as the most influential, will be business-to-business infomediaries, who will have the ability to re-organize entire industries. Red Herring, an Internet aficionado magazine, recently called the emergence of "Internet Infomediaries" the next bastion of economic activity to profoundly impact the Internet. Infomediaries represent a new category of entrepreneurs. Through the development of its Media SuperPortal – and more specifically, its Live Media Trading Technology - XRAYMEDIA has membership in this rare category.

XRAYMEDIA’s objective is to become a premiere media company. Research indicates that the media industry is ripe for a business-to-business eCommerce service for buying and selling premium advertising space (Television, Radio, Print, Out-of-Home, Specialty, and Online). The traditional process of buying media is usually cumbersome and time-consuming for buyers, and can serve to effectively shrink sellers’ consumer base.

There is no question that media remains big business: Total media industry spending grew 8.1% to $524.7 billion in 1999 and was on-target for 2.5% growth in 2000 and giant leap of 5.8% in 2001. Of course, no one could have predicted the deeper and wider slump in the economy and the debilitating terrorist attacks of September 11, 2001. In actual fact, total U.S. ad spending was down approximately 5.7 percent in 2001, due largely to the weak economy, corporate budget cuts and dot.com meltdowns. By 2000, the dot.com industry became nearly as large an advertising category as passenger cars, accounting for almost 10 percent of advertising in 2000 and over $5.5 billion in spending. Coen predicts that after the shakeout in 2000 and 2001, dot.coms won’t reemerge as a significant force for several more years. The advertising industry has since begun a steady rebound, and despite the economic setbacks in 2001, industry expenditures grew at an overall compound annual rate of 4.3 percent from 1997-2002.

As part of the fifth-fastest growing sector in the US economy, industry experts anticipate a 6.3 percent compound annual growth rate in media spending, over the next five years with an upsurge in 2006 and 2007. PricewaterhouseCoopers forecasts that global entertainment and media spending will reach a record $1.4 Trillion by 2007, with advertising capturing $375 billion of that market.

In the long-term, the media industry will be driven in large part by an accelerated rise in consumer spending on media. Consumer spending on cable and satellite television, filmed entertainment, and video games was strong for the second year in a row in 2003. Industry authorities believe that this foreshadows a gradual overall media recovery that will continue into the future.

Consumers spent an average of 3,599 hours using media in 2002; this represents an increase of 1.8 percent over 2001. Veronis Suhler and Stevenson forecast that the average time consumers spend with media will swell to 3, 874 hours, a compound annual growth rate of 1.5 percent. Consumers appeared to favor both satellite and cable television as their media of choice in 2002, with total television viewing accounting for 47.3 percent of the average consumers time spent with media. Consumer spending on online content also rose by a dramatic 95% in 2002, totaling $1.3 billion, the majority of these revenues can be attributed to annual subscriptions, accounting for 41 percent of online sales.

These developments are not restricted to North America alone. A report released by eMarketer.com has stated that Western Europe’s B2B ecommerce accounted for $334.14 billion in 2003, an increase of $201.4 billion from the previous year. Western European B2C ecommerce revenues also grew by $44.76 billion in the same time period. This trend is having an impact on the global marketplace. E-Marketer further reports that B2B ecommerce revenues in the United States will surpass the $700 billion mark at the end of 2003. By the end of 2004, US ecommerce revenues are expected to reach $1.01 trillion. Further, the decision about whether or not to engage a business plan that includes the European marketplace will have a distinct impact on the financial situation of online businesses as Europe continues to establish its online presence.

Currently, there is a scattered presence of online auction sites. Sites such as eBay.com have made the online auction famous. In terms of business-to-business eCommerce services for buying and selling premium-advertising space, major competitors have included Onemediaplace, Reuters, Marketron. These companies generated substantial traffic and have reported several millions in revenue with their media auctions and Internet media buying services, signaling the desire among media professionals for a coherent and convenient way to conduct business.

Over the past few years these companies have merged with larger media businesses or created alliances with several other media firms to hasten the capture of this lucrative market, such as www.invisioninc.com, www.ad2media.com, www.twoplus.com,

www.marketron.com, www.mediatrader.co.uk, www.emediatrade.net, www.matchcraft.com and DDS Donavan Data Systems has http://www.dds.co.uk/home/e-Trading_home it seems

as though none of which currently operate a live media marketplace, similar to that of XRAYMEDIA.

XRAYMEDIA breaks new ground, as the Company remains the only business to host a Live Media Marketplace with live media negotiating technology. XRAYMEDIA is positioned to surpass any potential competition by offering the services of a traditional advertising agency, and by supplementing these services with an all-encompassing media package - the XRAYMEDIA Media SuperPortal.

XRAYMEDIA is positioned to become a media industry leader, providing cutting edge live negotiating technology to the media industry through its premiere business-to-business web site.

The company believes that:

Currently, significant untapped opportunities exist in this area of eCommerce;

An Internet Media SuperPortal has the ability to replace outdated and inefficient methods of selling and purchasing advertising space;

An Internet Media SuperPortal can replace outdated and inefficient methods of accessing an Advertising Agency, a Media Buying Firm, a Public Relations department, a Marketing firm, and Design Services;

There are numerous untapped opportunities for a synergetic relationship between online negotiating for advertising and conventional advertising purchasing methods;

There are opportunities to garner income from cooperative relationships between subscribing media outlets, agencies, agencies offering services through the XRAYMEDIA Media SuperPortal, and XRAYMEDIA itself.

XRAYMEDIA has assembled the partners and technology to enable it to expand on its vision: XRAYMEDIA's mission is to provide a Media SuperPortal site to the general business community and media professionals. This will make all media markets more accessible and user-friendly to national and local advertisers alike, by streamlining and centralizing the process of buying media. Sellers can avail themselves of a broader, more global marketplace.

We have a common goal of bringing new efficiencies to the marketplace. By doing so, we can increase agency billings and profitability, create better results for advertisers, and generate additional revenue for all media.

The Internet is changing historically staid industries by enabling them to operate with unprecedented efficiency. Previously fragmented enterprises - from paper to chemicals - are establishing centralized marketplaces online. As the technology underlying eCommerce solutions improves, the level of trust in the security of online commerce systems increases. The impact of this trend cannot be overstated: both individuals and businesses are beginning to exploit the convenience and immediacy of online eCommerce options. Just as commerce is central to real-world business practices, eCommerce is the core of Internet purchasing. Online marketplaces provide business solutions: they are instant and global forums for trade. The online auction is an increasingly popular venue for both businesses and individuals.

The immense size of the advertising industry is no secret. Advertising as a whole – and more specifically online advertising – is a particularly lucrative business. Even within the subgroup of business-to-business sites, the potential for growth is indefinite. Analysts estimate that based on its current growth rate, the business-to-business market will grow to $3 billion by 2005, representing 18% of online advertising spending on mainstream online media.

The closest comparison is that of an Internet auction - defined as an exchange of products or inventory through online communication channels and computer applications for a specific community of practice – represent a particularly timely and exciting growth opportunity. According to Jupiter Communications, online business-to-consumer auctions moved $3.2 billion worth of merchandise annually as of 2002; this figure can be added to further sales conducted person-to-person. A survey conducted by PricewaterhouseCoopers found that online advertising revenues surpassed the $1.0 billion mark for the first time in the third quarter of 1999, and a recent survey on online spending indicates that online auctions accounted for $644 million in the first quarter of 2000 (Harris Interactive) and has grown substantially since.

THE MARKET

Industry information indicates a rare opportunity in the combination of online resources and media requirements. Total industry spending jumped 8.1% to $524.7 billion in 1999 and, in fact, grew steadily from 1997 – 2002 (despite the economic slow down of 2001) with an overall compound annual growth rate (CAGR) of 4.3 percent. Experts forecast a 6.3 percent CAGR over the 2002-2007 period, with industry expenditures reaching over $850 billion by 2007. In addition, as models for purchasing conventional, offline advertising migrate to the web, there are similar significant opportunities to tap into that area of growth.

XRAYMEDIA’s Media SuperPortal also represents a significant opportunity for cross selling. By offering a comprehensive collection of services that encapsulates the full set of on- and off-line media needs, the Media SuperPortal is positioned to exploit the industry requirement for a knowledgeable mixed medium approach.

Below are some very favorable remarks by reputable and reliable media and research firms, concerning the demand, and potential, for online Internet exchange companies, as well as the media and entertainment industry as a whole.

Information Technology Association of America, June 11, 2003 “The resiliency of the entertainment and media sector is evidenced by global advertising’s rebound from recent weakness, boosted by solid category increases in television, radio, and out-of-home advertising. Also contributing to the turnaround will be: a resurgance of Internet advertising as new metrics offer reach and frequency figures that empower media buyers to increase spending”

PricewaterhouseCoopers, June 2003 "The U.S, entertainment and media marketplace is poised for stronger growth. We expect rebounds from television network and radio advertising, coupled with especially strong DVD, video game, and Internet advertising and access spending to lead the way.”

Global Information Inc., January 2001. “Digital marketplaces offer an efficient new way for matching buyers and suppliers. In particular, the reduced costs of searching for potential business partners will create more efficient markets.”

Consumer internet usage has grown faster than any other forms of media over the past five years, with an astonishing compound annual growth rate of 43.1 percent over the 1997-2002 period. Online activities increased faster than any other media sector in 2002, growing by 13 percent to 154 hours per person. PricewaterhouseCoopers forecasts unprecedented expansion in the broadband universe, with the CAGR nearing 30 percent, and with penetration more than tripling as we approach 2007. These authorities go on to predict that over 153 million households will be broadband-enabled by 2007. XRAYMEDIA is prepared to accept the challenges of servicing a global community.

Veronis Suhler and Stevenson, predict that consumer-supported media will account for 44.6 percent of the total time spent with media, and ad-supported media will represent 55.4 percent of the total by 2007.

XRAYMEDIA aims to transform the advertising industry through its Live Media Trading Center. As the only first, second, and third party aggregator of general media services, XRAYMEDIA will bring the power of the Internet to the advertising industry as a whole, enabling large and small companies, advertising agencies, and general media buyers to engage in the total media process online. While there is an uneven presence of Internet auction sites, there is a startling lag in the development of media marketplaces offering a business-to-business eCommerce service for buying and selling premium ad space. XRAYMEDIA as a traditional ad agency that has successfully launched its revolutionary live media trading technology dubbed "The Live Media Marketplace" which offers all buyers and sellers of media and advertising space the opportunity to negotiate and secure the optimum market price for any given inventory. The system provides private, one-on-one and one-to-many negotiations while dynamically loading and matching inventory changes and instantly updating new opportunities, all without compromising the seller's proprietary pricing information or identity if they so choose. All media trading activity takes place in real-time on the user's own private 'Media Trading Floor,' comprised of the user's own private media orders, media matches, viewing options, information sources and private exchange. It provides the most powerful and cost effective means for offering, tracking and negotiating media inventory for sale.

XRAYMEDIA is in good company – and is positioned to surpass the competition. The energetic reaction to these services by businesses indicates an unsatisfied industry requirement. Other sites have tried to break into the marketplace, and have not been able to sustain themselves; these sites have not encompassed a complete circle of services. XRAYMEDIA is breaking an out-dated standard by realizing the potential of the Internet: the Internet makes an instantaneous, global, and full-service site not only possible, but also inevitable.

THE XRAYMEDIA MEDIA SUPERPORTAL

Our first milestone – completed in its test phase on October 24, 2000 - was to create a live media marketplace: XRAYMEDIA’s Media SuperPortal. The SuperPortal is divided into three distinct sub portals (Corporate Culture, Media Services, and Community Resources). Each sub portal is designed to deliver a specific objective in making the practice of buying and selling media a convenient and cohesive process. As we grow, both as a site and as a company, we will expand to include a full set of services and tools for the media professional.

The XRAYMEDIA SuperPortal branches out into three sub portals:

The Corporate Culture sub portal is designed to act as a resource for visitors to learn more about the media industry, and about XRAYMEDIA. Corporate Culture presents clients with an Executive Summary of XRAYMEDIA, company Press Releases, Industry intelligence, Investor information, a call for Business Partners, and - on our Careers page - employment information.

Our Media Services sub portal features XRAYMEDIA’s central marketplace and service-oriented functions: Advertising Agency, Public Relations, Live Media Negotiating, Traditional Services, and Online Ventures.

XRAYMEDIA’s Advertising Agency page gives clients access to a full range of services, including Placement, Design, and Strategic marketing. At the bottom of each page is a link to a Request For Proposal (RFP), and to contact us.

XRAYMEDIA offers a wide range of Public Relations services. Our Planned PR, Consulting, Media Relations, and Design Services cover all the bases for putting together an effective public relations campaign. Clients are invited to submit an RFP, or to contact XRAYMEDIA directly to take advantage of these services.

A major component of this site is the Live Media Negotiating Technology, “The Live Media Marketplace” located in our Media Services sub portal. The technology is designed to make Television, Radio, Print, Out-of-Home, Specialty, and Online media more accessible and user-friendly for local, national, and multi-market advertisers. Sellers use the service to list their available media products in an private one-on-one or one-to-many negotiating format. Once a negotiation has commenced, buyers from around the world can visit and negotiate their best price on desired items. Each sale is confirmed through the technology is notified by email. Next, the buyer pays for their purchase, and provides the seller with the necessary advertising documents to be displayed or aired. XRAYMEDIA provides secure payment technology and a verified credit line, so the buyers’ credit is verified prior to bidding. As well, both buyers and sellers are bound by a contract to honor their online listing and bidding activities. The Live Media Negotiating Technology provides a quick and convenient place for media buyers and sellers, expanding the market from local or national to global.

The Traditional Services page of the Media Services sub portal contains links to our Rate Card, Request For Proposal (RFP), and the traditional methods of carrying out Advertising Agency and Public Relations services. The XRAYMEDIA Rate Card contains a database of Television, Radio, Print, Out-of-Home, Specialty, and Online media for sale. Our Request For Proposal page offers visitors a confidential electronic RFP.

In the Online Ventures section of the Media Services sub portal, visitors will find Wireless, Banner Network, eMarketing, and Branding Strategies. There are also links to the Design Services section. Here, clients can submit an RFP for any services they wish to use.

The third sub portal on XRAYMEDIA’s Media SuperPortal is called Community Resources. This area has been designed to help facilitate quick and easy solutions for media professionals faced with the challenges of an ever-changing industry. Think of our Resource Center as your research department. Here, subscribers have instant access to our Library, featuring useful articles on media-related topics ranging from marketing tips to writing effectively. For further reference, XRAYMEDIA has assembled a Glossary of media-related terms and definitions. Subscribers can keep on top of timely issues by tracking industry changes on our web page, and by subscribing to our weekly newsletter. In the coming months, XRAYMEDIA will be adding further features to this sub portal, including members Chat, Video Teleconferencing services, Virtual Office tools, and free web-based Email.

The XRAYMEDIA Media SuperPortal will use the most current technology and servers for posting real time information on availability and pricing. The site will not only post standard Rate Card information, it will also serve as an interface for checking inventory availability and pricing. The real-time media trading is one step ahead of an interactive web version of a media buying service: An entire range of advertising buyers and sellers will meet at the XRAYMEDIA site to make their purchases and sales. Using the XRAYMEDIA Live Negotiating Technology, media professionals and general business owners can accomplish in minutes what used to take hours. The other services available on the Media SuperPortal – Advertising Agency, Public Relations, Traditional Services including Design, and Online Ventures including eMarketing - ensure that there is an alternative to traditional ways of meeting industry needs. For example, the availability of Design and Public Relations services on the SuperPortal gives media professionals a choice between virtual and real-world options. Clients can choose to use the Media SuperPortal as a one-stop resource for all their media needs.

THE XRAYMEDIA OPPORTUNITY

XRAYMEDIA streamlines the existing process of buying and selling media, and allows media professionals to use a new method for transactions, such as Live Media Negotiations. This means that buyers and sellers are eager to use our services, and that the company is more likely to secure a significant long-term revenue stream.

XRAYMEDIA will be the first and only Internet site that integrates Live Negotiating Technology with a network of best-of-breed media products and services tailored to the needs of all advertisers around the world in a single facility. The Media SuperPortal supplies buyers and sellers with a more proficient and cost effective way to buy and sell media. Our Live Media Negotiating technology service provides an efficient means of executing media schedules for advertising agencies and direct advertisers. To this essential function for media professionals and the general business community XRAYMEDIA adds a vast array of other tools and services. The Media SuperPortal is a full-service, convenient, and efficient resource for the general business community and media professionals alike.

CURRENT MEDIA BUYING PRACTICES

The traditional means of buying media space is a slow, painstaking process that often involves a cumbersome combination of printing typed documents, faxing to individual media, and phone follow-up calls with each media. In addition, because there are more than 7,000 radio and TV media - and these media continually change call letters, addresses, media formats, and network affiliations - keeping track of information is a perpetual and arduous task. General media buying is a labor-intensive process of checking on availability and pricing, scheduling, making reservations, and getting confirmations. In the case of a multi-outlet campaign, this process has to be done repeatedly. Even if some or all of the buying is done through a media service, it still requires the time-consuming process of calling a representative and waiting for a confirmation on pricing and availability. Further, booking advertising space or time will generally take several phone calls and multiple faxes.

Despite the convenience of using an online connection to undertake these business transactions, media buying services have not yet migrated to an eCommerce mode. Even when a media-buying service has a web site, it is not interactive, and it still relies heavily on non-electronic, non real-time ways to transmit information on availability and pricing. This simultaneously presents a challenge and an opportunity. Making the media-buying process more efficient represents a vast market opportunity to restructure and update communications between buyers and sellers.

Media-buying representatives and proprietary software have attempted to unify buyers and sellers and to expedite transactions, but none have leveraged the Internet's ease, clarity, worldwide reach, constant availability, and ability to establish market value. Purchasing premium and general advertising space in North America in all media remains a complex and time-intensive process replete with hidden and potentially unnecessary costs.

Media-buyers and executives alike are eager to migrate to web technology, but the threshold for entry is high. It involves creating direct relationships with media across the board, the possible merger or acquisition of a non web-based media-buying service, and a technology engine advanced enough to drive a real-time, continuously updating media database. Until now, there has been no such provider. XRAYMEDIA will meet these specifications.

ADVANTAGE FOR MEDIA BUYERS

With XRAYMEDIA, media-buyers communicate with media-sellers via the Internet. Orders, avail requests, and traffic instructions go directly to the sellers, saving time and energy. Using our SuperPortal, a media-buyer can accomplish in an instant what used to take hours, and can dramatically increase both their exposure and advertising revenues. XRAYMEDIA is available to media buyers at no cost.

Through our Live Media Negotiating Technology, buyers will be able to purchase premium Television, Radio, Print, Out-of-Home, Specialty, and Online advertising in an instant. XRAYMEDIA is focused on providing first choice advertising time to media-buyers nationwide as well as remnant high discount advertising opportunities allowing both buyer and seller to negotiate the price in real-time over Internet. By improving on an existing method rather than imposing a new advertising buying practice on the industry, we will deliver the fastest, most cost-effective media-buying process available.

 

XRAYMEDIA will benefit media buyers by streamlining the advertising buying process and facilitating the negotiation procedures. This keeps advertising rates reasonable. We eliminate the need for middle-tier companies that profit from mediating between buyer and seller. XRAYMEDIA strongly believes, however, that the huge market for broadcast advertising leaves ample room for our firm and rep firms to coexist.

 

In the XRAYMEDIA Media SuperPortal, advertising availability will be checked and confirmed, and space will be purchased and paid for up front. Up front payment reflects the entire XRAYMEDIA business model, by collecting fees and creating cash flow at the earliest point possible in the transaction cycle.

XRAYMEDIA avoids the constraints of geographic location of sales offices. As we are online, advertising agencies and direct advertisers can utilize our service worldwide. In addition to the convenience, Television, Radio, Print, Out-of-Home, Specialty, and Online media will pay a lower sales commission when accepting orders from agencies and direct advertisers using the XRAYMEDIA Live Negotiating technology. The Live Negotiating technology facilitates a private negotiating platform, which not only provides advertisers with better rates, but also provides the ability to negotiate in real-time with a wider audience reach simultaneously for their campaigns.

THE PROCESS

A standard web browser is all that is needed to access and use XRAYMEDIA’s Media SuperPortal. Media buyers can communicate with media sellers and XRAYMEDIA using the Internet without changing their traditional process. XRAYMEDIA facilitates these transactions by acting as an infomediary. Through the Media SuperPortal, media professionals can easily get the help that they need to successfully do their business.

The Media Services sub portal is home to the interactive, client-centered services and features of the SuperPortal. Here, visitors will find the Advertising Agency, Public Relations, Live Media Negotiations, Traditional Services, and Online Ventures.

The online Advertising Agency features all the services necessary to launch any campaign. These include Placement, Design, and Strategic marketing. XRAYMEDIA’s Public Relations page is the gateway to a full range of public relations services, including PR planning, Consulting, Media relations, and Design. Each of these sections features a direct link to an RFP (Request For Proposal), for quick and intuitive navigation. The Live Media Negotiating Technology will act as a cohesive and instant global market in which buyers and sellers can do business. XRAYMEDIA’s user-friendly interface, secure system, and facilitation all work to make the Media SuperPortal a powerful tool for all businesses looking to advertise their products and services. Within Traditional Services, users will find the pages for XRAYMEDIA’s Rate Card and Request For Proposal (RFP). XRAYMEDIA’s Rate Card is a comprehensive database of all media for sale, including Television, Radio, Print, Out-of-Home, Specialty, and Online. As well, mechanical data information will provide the client with a general understanding of the buying process, statistics, and reports. Included will be information regarding pricing structure, deadlines, and the overall workings of traditional media services. The Online Ventures section features information about Wireless, Banner Networks, eMarketing, and Branding Strategies. Media professionals can use our direct links to an RFP from any of these pages.

Alternately, XRAYMEDIA’s clients can visit the Request For Proposal page to submit a confidential request to XRAYMEDIA. Using our RFP, buyers can send multi-market avail requests with separate buy parameters, all with a single click. Once media schedules are configured, buyers using advanced software systems like SmartPlus, Strata, or COREMedia can utilize XRAYMEDIA's Electronic Data Interchange (EDI) technology to upload media order data to the SuperPortal for immediate distribution. XRAYMEDIA also provides free order builder software with built-in EDI functionality for buyers who do not currently license media software. Our free Order Builder program generates media schedules based on the client, product, campaign, flight dates, and demographic information. Multi-market, multi-media orders include flexible spot distribution, Cost-per-Point (CPP), and total spot and cost calculations. Once created, orders are uploaded through XRAYMEDIA and sent directly to the selected media. Sending orders from a buyer's media software to our upload file is as easy as printing them. XRAYMEDIA's advanced Internet-to-fax technology provides immediate and reliable fax delivery of media schedules. We ensure prompt, accurate delivery with detailed information about all transactions. XRAYMEDIA automatically notifies media buyers via email once all media confirmations have been received. This technology fuses a media buyer's sophisticated buying software with our advanced communication system.

Members enter the XRAYMEDIA Live Media Marketplace through a password-protected interface, which is uniquely tailored to the needs of each media buyer. Our advanced system can perform high-volume, reliable, real-time transaction processing and can provide timely, accurate, and free communication delivery. All communications and transactions are digitally archived. Once media schedules are configured, buyers can also use XRAYMEDIA to send orders to media. Our technology will integrate with the leading industry media buying and planning software, used by 1,200 advertising agencies nationwide. Unlike other communications systems, buyers do not need to load proprietary software onto their computers.

XRAYMEDIA will have the opportunity to attract the widest range of members based on offering services that encompass the entire media industry. This membership will include large and small advertising agencies, media-buyers and -sellers, and direct advertisers.

Access to XRAYMEDIA's system is granted only to account holders whose identity is verified through their username and password on each login. Each application for an account is reviewed by XRAYMEDIA to ensure that only qualified applicants are granted an account.

XRAYMEDIA employs an advanced firewall to prevent unauthorized access and all EDI transactions are processed on secure servers to ensure confidential information is protected. All information is 128-bit encrypted and verified by Certificates of Authenticity.

XRAYMEDIA intends to successfully establish the Media SuperPortal as the premiere site for the general business community and media professionals. We will provide fast, efficient, and reliable information, and essential resources in a user-friendly format. Our database will capture details resulting in corporate and customer profiling, which will allow buyers, sellers, and advertisers to develop their businesses in direct response to their market.

XRAYMEDIA’s graphical interface will simplify user operations and provide required services through the Media SuperPortal by:

Enabling merchants to accept online information, securely;

Keeping implementation costs low;

Providing transaction data to the client for clearing on XRAYMEDIA’s system;

Bringing third party reporting and billing to both buyers and sellers.

The opportunity to create lateral synergies with corporations and organizations will provide income streams through sponsorships, banner advertisements, and eCommerce opportunities.

XRAYMEDIA will aggressively seek strategic partnerships, and facilitate advertising opportunities with corporations, online search portals, and organizations with revenue-enhancing prospects.

Banner ads, polling initiatives, sponsorship opportunities, and lateral promotion campaigns will produce multiple revenue streams while extracting economic value from services rendered.

XRAYMEDIA will implement business-to-business eCommerce systems such as our Live Media Negotiating Technology. The availability of other services - our Advertising Agency, Public Relations department, Traditional Services including Rate Card and Request For Proposal (RFP), Design Services, and Online Ventures including eMarketing – makes XRAYMEDIA’s Media SuperPortal a full-service online media mall. The development of other resources like free web-based email and an online chat forum will enhance the attractiveness of the site because of its convenience for a variety of functions.

G. Regulatory Overview (New and Existing Regulation of the Internet)

XRAYMEDIA is subject to the same federal, state and local laws as other companies conducting business on the Internet. Today there are relatively few laws specifically directed towards online services. However, due to the increasing popularity and use of the Internet and online services, it is possible that laws and regulations will be adopted with respect to the Internet or online services. These laws and regulations could cover issues such as online contracts, user privacy, freedom of expression, pricing, fraud, content and quality of products and services, taxation, advertising, intellectual property rights and information security. Applicability to the Internet of existing laws governing issues such as property ownership, copyrights and other intellectual property issues, taxation, libel, obscenity

and personal privacy is uncertain.

In addition, numerous states, including the State of New York, in which XRAYMEDIA's alternate place of business is located, have regulations regarding the manner in which "auctions" may be conducted and the liability of "auctioneers" in conducting such auctions. No legal determination has been made with respect to the applicability of the State of New York's regulations to XRAYMEDIA's business to date and little precedent exists in this area. One or more states may attempt to impose these regulations upon XRAYMEDIA in the

future, which could harm XRAYMEDIA's business. Several states have proposed

legislation that would limit the uses of personal user information gathered online or require online services to establish privacy policies.

Changes to existing laws or the passage of new laws intended to address these issues could directly affect the way XRAYMEDIA does business or could create uncertainty in the marketplace. This could reduce demand for the services of XRAYMEDIA or increase the cost of doing business as a result of litigation costs or increased service delivery costs, or could otherwise harm XRAYMEDIA's business. In addition, because XRAYMEDIA's services are accessible worldwide, and XRAYMEDIA facilitates sales of goods to users worldwide, foreign jurisdictions may claim that XRAYMEDIA is required to comply with their laws. In some jurisdictions, XRAYMEDIA will be required to collect value-added taxes on its fees.

XRAYMEDIA's annual report will contain audited financial statements. XRAYMEDIA

is not required to deliver an annual report to security holders and will not voluntarily deliver a copy of the annual report to the security holders. XRAYMEDIA intends to, continue filing all of its required information with the Securities and Exchange Commission ("SEC").

The public may read and copy any materials that are filed by XRAYMEDIA with the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The Public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The statements and forms filed by XRAYMEDIA with the SEC have also been filed electronically and are available for viewing or copy on the SEC maintained Internet site that contains reports, proxy and information statements, and

other information regarding issuers that file electronically with the SEC. The Internet address for this site can be found at http://www.sec.gov. Additional information can be found concerning XRAYMEDIA on the Internet at http://www.XRAYMEDIA.com.

XRAYMEDIA has amalgamated its operations offices to one composite location; 555 West Hastings Street, Suite 1560, Vancouver B.C. V6B 4N6, housing the corporate operations and the servers.

 

The facilities contains approximately 3,000 square feet of office space on a month-to-month basis for $6,700 dollars per month. XRAYMEDIA believes that this facility is generally suitable and adequate to accommodate its current operations and that such facility is adequately insured.

XRAYMEDIA is currently not a party to any pending legal proceedings.

On May 31, 2000 XRAYMEDIA filed for a Special Meeting of Shareholders of e-bidd.com, Inc., was held to consider and vote upon a proposal to change the

name of the Corporation from e-bidd.com, Inc. to XRAYMEDIA.com, Inc. and to transact such business as properly come before the meeting.

On November 5, 2003 XRAYMEDIA filed for a Special Meeting of Shareholders of XRAYMEDIA.COM Inc., was held to consider and vote upon a proposal to change the name of the Corporation from XRAYMEDIA.COM Inc. to XRAYMEDIA Inc., to change the authorized common share capital to 250,000,000, create 1,000,000 new class of preferred shares with a 1:100 conversion into common shares and to transact such business as properly come before the meeting. Subsequently, all of which was passed at the meeting. The SEC subsequently issued a new CUSIP and trading symbol- XRYM.

XRAYMEDIA's common stock is currently traded as a fully reporting issuer on the NASD Over The Counter Bulletin Board under the symbol "XRYM" through a Form 10-SB approved by the SEC.

The table below sets forth the high and low sales prices for XRAYMEDIA's Common Stock for each quarter of 2000, 2001, 2002 & 2003. The quotations below reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions:

 

 

 

 

 

 

 

 

As of March 02, 2004, there were approximately 455 shareholders of record holding a total of 110,548,833 shares of Common Stock. The holders of the Common Stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders. Holders of the Common Stock have no preemptive rights and no right to convert their Common Stock into any other securities. There are no redemption or sinking fund provisions applicable to the Common Stock. The Preferred stock of 1,000,000 shares can be converted to Common stock on a 100 Common for 1 Preferred share but have no voting rights directly.

 

There are no redemption or sinking fund provisions applicable to the Preferred stock.

XRAYMEDIA has not declared any cash dividends since inception and does not anticipate paying any dividends in the foreseeable future.

The payment of dividends is within the discretion of the Board of Directors and will depend on XRAYMEDIA's earnings, capital requirements, financial condition, and other relevant factors. There are no restrictions that currently limit XRAYMEDIA's ability to pay dividends on its Common Stock or Preferred Stock other than those generally imposed by applicable state law.

A. Results of Operations

The numbers used in this analysis are those contained in the comparative financial statements that follow. These reflect the changes of previous periods to reflect the current method of presentation.

XRAYMEDIA has generated minimal net revenues from 2003 and 2002 operations; $0.00. from 2001 operations, the periods covered by This Form 10-KSB.

Net losses for the year ended December 31, 2003, increased to $2,012,733 from $1,679,917. in 2002, (an increase of 20 %). The year 2002 was itself, an increase from $1,517,200. for the year ended December 31, 2001,( an increase of 11%).

The increase in losses was attributable to a combination of several items, they  are - increase in professional fees, marketing, media advertising, and investor relations.

The increases were partially offset by a decrease in compensation expense.

XRAYMEDIA expects to continue to incur losses at least through fiscal year 2004 and there can be no assurance that XRAYMEDIA will achieve or maintain profitability from revenues that may be generated or that growth can be sustained in the future.

Selling, general and administrative expenses for the year ended December 31, 2003, increased to $1,787,390 from $1,420,350 for the year ended December 31, 2002, (an increase of 26%) and from $1,422,818 for the year ended December 31, 2001 (an increase of <1%). The increase in selling, general and administrative expenses were the result of the various measures implemented by Company management to move the company into new areas. Depreciation and amortization expenses for the years ended December 31, 2003, December 31, 2002 and

December 31, 2001 were $66,951, $66,333, and $57,427 respectively.

Research and Development expenses were $219,479 in 2003, $220,668 in 2002, and $135,080 in 2001. The company continued to spend as heavily in 2003 as it had in 2002, in order to further develop its Media Service Portal of the Live Media Marketplace.

The increase in negative cash flows for the year ended December 31, 2003 are primarily attributable to an increase in media advertising, travel, marketing, professional fees, supplies and investor relations. The Company was able to reduce compensation expense and hold research and development and depreciation constant while other expenses fluctuated slightly. For the year ended December 31, 2002, a decrease in negative cash flows was primarily attributable to a decrease in share costs re Sec.144 control position, coupled with increased borrowings.

Cash flows generated by operations were a negative $1,178,914 for the year ended December 31, 2003, a negative $32,069 for the year ended December 31,2002,and a negative $186,634 for the year ended December 31, 2001.

Cash flows generated by investing activities were a negative $13,951 for the year ended December 31, 2003, $0 for the year ended December 31,2002,and a negative $29,953 for the year ended December 31, 2001. The increase is attributable to the purchase of fixed assets.

Cash flows generated from financing activities was $1,212,051 for the year ended December 31, 2003,and $30,000 for the year ended December 31,2002, and $177,000 for 2001. XRAYMEDIA's financing activities, in 2003 primarily consisted of the sale of XRAYMEDIA's common stock pursuant to private placements.

XRAYMEDIA has funded its cash needs over the periods covered by this Form 10-KSB through the issuance of its common stock for cash, settlement of debt, and outside advances. XRAYMEDIA intends to cover its cash needs over the next twelve months in part through outside advances, but also through the sale of additional shares of its common stock pursuant to a registration statement or an appropriate exemption from registration. However, there is no guarantee that XRAYMEDIA will continue to be able to raise additional funds from the sale of its securities.

On January 18, 2000, XRAYMEDIA negotiated a private placement with two separate investment groups in the amounts of $500,000.00 and $360,000.00 for netted proceeds of $810,000.00 to be used as general working capital. These total gross proceeds bought 4,200,000 units at a price of $.20 per unit. Each unit consisted of one share ("Share") of common stock of XRAYMEDIA and one warrant to purchase an additional share of common stock at a price of $.30 for a period of one year from the date of issuance ("First Hold Period") and at a price of $.50 for a period of one year from the end of the First Hold Period ("Second Hold Period"). A portion of the shares were offered to 22 non-US residents outside the United States in reliance upon Regulation S promulgated under the Securities Act of 1933 and the remainder of the shares offered to 4 investors in the United States in reliance upon Regulation D.

XRAYMEDIA made no significant net capital expenditures on property or equipment  during the years ended December 31, 2003 and 2002. The major planned capital expenditure is further website development. XRAYMEDIA has budgeted $100,000.00 to purchase the additional equipment or programs needed for this development and XRAYMEDIA intends to contract sometime in the near future to complete this work. XRAYMEDIA also plans to raise operating funds by a mixture of debt and stock to provide monies needed for their new projects.

Two years ago, XRAYMEDIA's website had passed its initial test stage on its way to becoming operational to handle the 'real-time' interactive business now expected. The newest developments have resulted in numerous new modifications and will need other changes as we explore the different pathways.

XRAYMEDIA's estimated cash requirements are approximately $1,500,000 annually. The majority of our cash requirements will be used for personnel costs, professional fees, advertising, and further website development. These should be offset to some extent from revenue cash flow. The company will continue its earlier practice of settling some debt for shares.

XRAYMEDIA has net operating loss carry forwards of approximately $8,700,000.00 which will expire from 2013 to 2023. All available losses may not be utilized unless matching profits are earned.

XRAYMEDIA believes that inflation has had a negligible effect on operations over the past three years. XRAYMEDIA believes that it can offset inflationary increases in the cost of materials and labor by increasing sales and improving operating efficiencies.

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. In consultation with our Board of Directors, we have identified accounting policies that we believe are key to an understanding of our financial statements. These are important accounting policies that require management’s most difficult, subjective judgments.

Revenue is recognized when the earning process is complete and the risk and rewards of ownership have transferred to the customer, which is generally considered to have occurred upon the delivery of the media to our customer. The Company recognizes revenue in accordance with SEC Staff Accounting Bulletin 101

Transactions that involve the exchange of goods or services for other goods or services are accounted for in accordance with APB 29 and the interpretations contained in EITF 93-11 and EITF 99-17. Accordingly, the Company generally records exchanges at the carrying value of the goods or services exchanged, which is typically zero, as the fair values of the goods or services exchanged lack readily determinable fair values within reasonable limits as the Company has no history of receiving cash in similar transactions, and therefore the earnings process has not been completed. The transactions involve barter as described further in Note K.

The second critical accounting policy relates to research and development expenses. We expense all research and development expenses as incurred. Costs incurred to establish the technological feasibility of our web site is expensed as incurred and included in Research and Development expenses. There are no production costs to capitalize as defined in Statement on Financial Accounting Standards No. 86.

 

XRAYMEDIA has suffered recurring losses from operations that raises substantial doubt about its ability to continue as a going concern. Management plans in regards to theses matters is to grow through business combinations rather then to seek immediate, short-term

earnings. However, in order to support existing operations and to fund proposed acquisitions, additional bank, private and/or equity financing must be obtained. Additionally, XRAYMEDIA plans to increase its sales through its website, www.xraymedia.com.

Additionally, due to the website launch delays and unexpected expenditures on internal development of replacement auction software it was necessary for management to arrange advances to XRAYMEDIA.

 

 

 

 

 INDEPENDENT AUDITORS' REPORT

Board of Directors                             

(A Company in the Development Stage)

Vancouver, B.C., Canada

We have audited the accompanying balance sheets of Xraymedia, Inc. (A Company in the Development Stage) (Company), as of December 31, 2003 and 2002 and the related statements of operations and accumulated deficit, and of cash flows for the years ended December 31, 2003, 2002, 2001, and for the period March 31, 1994 (inception of development stage)to December 31, 2003. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Xraymedia, Inc. (A Company in the Development Stage) as of December 31, 2003 and 2002, and the results of its operations and cash flows for the years ended December 31, 2003, 2002, 2001, and the period March 1, 1994 (Date of Inception of Development Stage) to December 31, 2003, in conformity with accounting principles generally accepted in the United States of America.

 

Board of Directors                             

 

 

(FORMERLY XRAYMEDIA.COM, INC.)

(A COMPANY IN THE DEVELOPMENT STAGE)

DECEMBER 31, 2003 AND 2002

 

(A COMPANY IN THE DEVELOPMENT STAGE)

 STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT

YEAR ENDED DECEMBER 31, 2003, 2002 AND 2001

THE PERIOD MARCH 1, 1994 (INCEPTION OF THE DEVELOPMENT STAGE) TO DECEMBER 31, 2003

 

 

 

(A COMPANY IN THE DEVELOPMENT STAGE)

 STATEMENTS OF STOCKHOLDERS' EQUITY

THE PERIOD MARCH 1, 1994 (INCEPTION OF THE DEVELOPMENT STAGE) TO DECEMBER 31, 2003

                            

 

(A COMPANY IN THE DEVELOPMENT STAGE)

STATEMENTS OF STOCKHOLDERS' EQUITY (continued)

THE PERIOD MARCH 1, 1994 (INCEPTION OF THE DEVELOPMENT STAGE) TO DECEMBER 31, 2003

 

(A COMPANY IN THE DEVELOPMENT STAGE)

YEARS ENDED DECEMBER 31, 2003, 2002, AND 2001

NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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In November 2003, the Company changed its name to XRAYMEDIA, INC. (XRYM) from XRAYMEDIA.COM.

The Company is incorporated in the United States in the state of Minnesota and operates in Vancouver, British Columbia and New York. The Company’s principal business is a general media Internet supersite portal currently under development. The website XRAYMEDIA.com, when completed, will be comprised of a main general media supersite portal that will branch out into three media specific business portals: Buy & Sell Services; Public Relations Services; and Advertising Agency Services (Live Media Marketplace).  The Company intends to sell conventional media advertising space, online advertising, and advertising and public relations services via its internet site. Because the Company is in the development stage, the accompanying financial statements should not be regarded as typical for normal operating periods.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Basic earnings <loss> per share have been calculated in conformity with Financial Accounting Standards Board Statement No. 128 “Earnings per Share”. The Company has a simple capital structure with no significant potential common shares. Basic earnings <loss> per share is calculated weighted on the average number of common shares outstanding each year.

Office furniture and equipment purchases are capitalized and the cost depreciated over the estimated useful lives of the related assets, generally five to seven years under the straight-line method. Office furniture and equipment abandoned is written off at the time of the abandonment.

The issuance of common stock for other than cash is recorded by the Company at managements estimate of the fair value of the assets acquired or services rendered.

No income taxes were paid or are payable for the years ended December 31, 2003 and 2002.

The financial statements are stated in U.S. dollars, which is the functional currency of the Company.

The Company maintains their financial records in U.S. dollars. If transactions had been recorded in foreign currency (Canadian dollars) and then translated into U.S. dollars using a weighted-average translation rate the difference between that amount and the activities expressed in U.S. dollars is immaterial.

All research and development expenses are expensed as incurred. Costs incurred to establish the technological feasibility of the web site is expensed as incurred and included in Research and Development expenses. There are no production costs to capitalize as defined in Statement on Financial Accounting Standards NO.86.

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