Third Millennium Industries Inc – ‘8-K’ for 8/22/03

On:  Wednesday, 9/3/03, at 8:21pm ET   ·   As of:  9/4/03   ·   For:  8/22/03   ·   Accession #:  1038838-3-535   ·   File #:  0-49722

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Current Report   —   Form 8-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K         Form 8-K Dated August 22, 2003                        55    203K 
 2: EX-2.1      Agreement and Plan of Reorganization                  33    123K 

8-K   —   Form 8-K Dated August 22, 2003
Document Table of Contents

8-K
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 U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

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

 Date of Report (date of earliest event reported): August 22, 2003

X-NET SERVICES CORP.
--------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)

          Nevada                      000-49722                 87-0671807
-----------------------------         -------------             ----------------
(State or Other Jurisdiction           (Commission               (IRS Employer  
  of Incorporation) No.)              File Number)              Identification

4933 East Highway 60                            
     Rogersville, MO                             65742
--------------------------------                 -----------
(Address of Principal Executive                   (Zip Code)
Offices)                            

(417) 890-6556
 -----------------------------------------------------
(Registrant's telephone number, including area code)

13537 Jackson Street, Thornton, CO 80241
------------------------------------------------------------
 (Former Name or Former Address, if Changed Since Last Report)

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Forward-Looking Statements                                                      

This report contains "forward-looking" statements including statements that     
describe the proposed operations of X-Net and its subsidiary and statements with
respect to their future strategic plans, goals or objectives. Any               
forward-looking statements, including those regarding X-Net or its management's 
current beliefs, expectations, anticipations, estimations, projections,         
proposals, plans or intentions, are not guarantees of future performance or     
results and involve risks and uncertainties, such as those discussed herein     
under the caption "Risk Factors." The forward-looking statements are based on   
present circumstances and on X-Net's predictions respecting events that have not
occurred, that may not occur, or that may occur with different consequences and 
timing than those now assumed or anticipated. Any forward-looking statements are
made only as of the date of this report and X-Net assumes no obligation to      
update forward-looking statements to reflect subsequent events or circumstances.

ITEM 1. CHANGES IN CONTROL OF THE REGISTRANT                                    

As reported in Item 2. below, on August 22, 2003, X-Net Services Corp. ("X-Net" 
or the "registrant") experienced a change in control as a result of its         
acquisition of Third Millennium Industries, Inc., a Nevada corporation          
("Millennium"), in a "reverse merger" transaction. Prior to the transaction,    
there were a total of 1,500,000 shares of X-Net common stock issued and         
outstanding. In connection with the transaction, X-Net issued a total of        
10,200,000 restricted shares of X-Net common stock, or approximately 87.2% of   
X-Net's total issued and outstanding shares following the transaction, to the   
shareholders of Millennium in exchange for all issued and outstanding shares of 
Millennium. Concurrently with the closing of the reorganization, the former     
officers of X-Net resigned from their positions and the persons selected by     
Millennium were appointed as the new officers of X-Net. In addition, X-Net's    
board of directors was increased to two persons and a person designated by      
Millennium was appointed as a director of X-Net to fill the vacancy created by  
such increase. The Reorganization Agreement also provides that ten days after   
the closing date, or the earliest date permitted by Rule 14f-1, the other       
director shall resign and be replaced by a person designated by Millennium. The 
number of shares and percentage of the registrant's voting securities now held  
by each officer, director and 5% or greater shareholder following the           
reorganization is reported in Item 2 below.                                     

ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS                                    

On August 22, 2003, X-Net acquired Millennium as a wholly owned subsidiary in a 
"reverse merger transaction" pursuant to an Agreement and Plan of               
Reorganization, dated as of July 18, 2003, entered into among X-Net, X-Net      
Merger Co., and Millennium (the " Reorganization Agreement").                   

Pursuant to the terms of the Reorganization Agreement, X-Net formed a new,      
wholly owned subsidiary under the laws of Nevada by the name of X-Net Merger    
Co., that was merged into Millennium and the outstanding shares of Millennium   
were converted into restricted shares of X-Net common stock. In connection with 
the transaction, X-Net issued 10,200,000 restricted shares of X-Net common stock
to the Millennium shareholders. As a result of the transaction, X-Net has a     
total of 11,700,000 shares of common stock issued and outstanding, of which     
10,200,000 shares, or approximately 87.2% of its total issued and outstanding   
shares, are held by the persons who were shareholders of Millennium prior to the
merger and 1,500,000 shares, or approximately 12.8%, are held by the persons who
were shareholders of X-Net prior to the merger. At the closing of the           
reorganization, the former officers of X-Net resigned from their positions and  
the persons designated by Millennium were elected as the new officers of X-Net. 
In addition, X-Net's board of directors was increased to two persons and a      
person designated by Millennium was appointed as a director of X-Net to fill the
vacancy created by such increase. The Reorganization Agreement also provides    
that ten days after the closing date, or the earliest date permitted by Rule    
14f-1, the other director shall resign and be replaced by a person designated by
Millennium. The reorganization has been treated for accounting purposes as a    
reverse acquisition of X-Net by Millennium. In connection with the              
reorganization, X-Net adopted and assumed Millennium's outstanding stock options
and reserved 700,000 shares of its common stock for issuance upon the exercise  
of such options. X-Net also effectively assumed Millennium's outstanding 18%    
Convertible Promissory Notes in the aggregate principal amount of $625,000,     
which are convertible at the option of the holders into approximately 883,333   
shares of X-Net common stock.                                                   

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Directors and Executive Officers

The following table sets forth the names, ages, and titles of the executive     
officers and directors of X-Net.                                                

Name                       Age                    Title*      
----                       ---                    ------      
     Dennis K. DePriest         48                President and Director
      George G. Spencer          47                Secretary and Treasurer
Stephen D. Utley           42                Director         

----------------                                                                
*        The term of office of each director is one year and until his or her   
     successor is elected at X-Net's annual shareholders' meeting and is
       qualified, subject to removal by the shareholders. The term of office
      for each officer is for one year and until a successor is elected at
        the annual meeting of the board of directors and is qualified, subject
    to removal by the board of directors. Each of X-Net's officers and
      directors has served in the offices indicated above since August 22,
       2003, except that Stephen D. Utley has been a director of X-Net since
May 11, 2003.                                                 

       Certain biographical information of X-Net's directors and officers is
set forth below.                                                                

      Dennis K. DePriest. Mr. DePriest is a co-founder of Third Millennium
Industries, Inc. and served as its President from its organization in February  
2002 to the present. From February 2000 through February 2002, he was President 
of Springfield Venture, and from November 1987 through November 1999, he was    
President of Metropolymec Labs, Inc. Mr. DePriest is a nationally recognized    
speaker within the home schooling community. He is 48, married, and has eight   
children. Mr. DePriest has written and presented several seminars on parenting  
skills. He is the holder of two U.S. Patents covering both product designs and  
innovative manufacturing processes.                                             

    George G. Spencer. Mr. Spencer is a co-founder of Third Millennium
Industries, Inc. and served as its Secretary and Treasurer from its organization
in February 2002 to the present. From January 1999 through April 2002, Mr.      
Spencer was a managing member of Springfield Venture Capital LLC. In 1998 Mr.   
Spencer was President of Community Investment Alliances, LLC. Mr. Spencer has   
completed numerous merger and acquisition transactions during the past fifteen  
years. He most recently negotiated the acquisition of Gared Sports, the leading 
manufacturer of backboards and goal systems. His previous experience includes a 
two-year stay as CFO of a television station holding company where he was       
responsible for all financial affairs of the company. He also spent thirteen    
years in commercial banking, as a Vice President of commercial lending for      
Centerre Bank.                                                                  

      Stephen D. Utley. Mr. Utley is, and has for in excess of five years,
been employed as territory manager for a regional wholesale appliance,          
electronics and furniture distributor. Mr. Utley served as the President,       
Secretary and Treasurer of X-Net from May 11, 2003 to August 22, 2003.          

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Security Ownership of Certain Beneficial Owners and Management

The following table sets forth as of August 23, 2003, the number of shares of   
X-Net common stock, par value $0.001, owned of record or beneficially by each   
person known to be the beneficial owner of 5% or more of the issued and         
outstanding shares of X-Net common stock, and by each of X-Net's officers and   
directors, and by all officers and directors as a group. On August 23, 2003,    
there were 11,700,000 shares of X-Net common stock issued and outstanding.      

Title                                Number of        Nature of         Percent 
of Class          Name            Shares Owned(1)     Ownership        of Class 
--------          ----            ---------------     ---------        -------- 

Principal Shareholders                                                          

Common        HIC of MO, LLC        5,332,713           Direct           45.6%  
Common        Greg Meador           5,332,713(2)        Indirect         45.6%  

Officers and Directors                                                          

Common        Dennis K. DePriest      945,000           Direct            8.1%  
                                  5,332,713(3)        Indirect         45.6%
                                  6,277,713                            53.7%

Common        George G. Spencer       945,000           Direct            8.1%  
                                  5,332,713(3)        Indirect         45.6%
                                  6,277,713                            53.7%

Common        Stephen D. Utley              0             -                -    

Common        All Officers and                                                  
             Directors            1,890,000           Direct           16.2%
As a Group                                          
            (3 Persons)           5,332,713(3)        Indirect         45.6%
                                  7,222,713                            61.8%

----------------                                                                
(1)      Unless otherwise indicated, all shares are held beneficially and of    
record by the person indicated.                               
(2)      Consists of 5,332,713 shares owned by HIC of MO, LLC ("HIC") of which  
      Mr. Meador may be deemed to be a beneficial owner as a result of his
status as the manager and a member of HIC.                    
(3)      Consists of 5,332,713 shares owned by HIC of which Messrs. DePriest and
        Spencer may each be deemed to be a beneficial owner as result of their
       status as members of HIC with shared investment power over the shares
held by HIC.                                                  

INFORMATION ABOUT THIRD MILLENNIUM

History                                                                         

Millennium was incorporated in Nevada in February 2002 under the name Third     
Millennium Acquisitions, Inc. In March 2002, its name was changed to Third      
Millennium Industries, Inc. From the date of its incorporation through the date 
of its acquisition by X-Net on August 22, 2003, Millennium conducted research in
the aluminum trailer industry, developed a business plan, assembled an          
experienced management team, raised working capital through loans and the       
private placement of common stock, and                                          

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entered into acquisition agreements with three companies engaged in business in 
the aluminum horse trailer industry. Shortly before the consummation of X-Net's 
acquisition of Millennium, Millennium began the implementation of its business  
plan, and satisfied one of the conditions to closing of the X-Net acquisition,  
by acquiring all the capital stock of the following three companies: Campers    
World, Inc. of Tulsa, Oklahoma ("Campers World"); Twister Trailers              
Manufacturing, Inc., of Fort Scott, Kansas ("Twister"); and Clear Lake Trailers,
Inc. of Weatherford, Texas ("Clear Lake"), (which companies are sometimes       
referred to collectively in this report as the "Millennium Subsidiaries").      
Except as otherwise expressly indicated to the contrary, X-Net, Millennium and  
the Millennium Subsidiaries are referred to collectively in this report as      
"X-Net," the "Company," or the "Registrant."                                    

Business Plan                                                                   

Millennium was formed for the purpose of acquiring several aluminum horse       
trailer related companies as the platform for an industry roll-up of similar    
manufacturers located primarily within 350 miles of the company's Springfield,  
Missouri base of operations. Millennium believes the horse trailer manufacturing
industry is highly fragmented and largely populated by companies that began as  
small job shops or off-shoots of existing trailer manufacturers who have been   
allowed by market demand to grow without having to apply the efficiency         
enhancement methods and procedures common to most other industries. Millennium  
believes that by acquiring several of such companies and focusing its efforts on
quality control, economies of scale, better management techniques and strong    
employee relations, it can achieve significantly better results of operation on 
a consolidated basis than the companies have been able to achieve on an         
individual basis. Millennium believes the aluminum horse trailer market         
generates total revenues of over $1 billion per year and Millennium believes    
that its plan of consolidation will allow it to compete effectively in that     
industry.                                                                       

Millennium also plans to evaluate several opportunities for "tuck-in"           
acquisitions with strong possibilities for synergistic contributions (e.g. axle 
and suspension systems suppliers, aluminum extruders, living quarter conversion 
suppliers, retail dealers etc.), several of which have already been identified. 

Millennium ultimately plans to acquire up to approximately eight companies with 
consolidated annual revenues of $130 to $150 million per year. No assurances can
be given that Millennium will be successful in acquiring such companies or that 
if acquired, such companies will perform in the manner anticipated by           
Millennium. Further, Millennium anticipates that it will require substantial    
additional capital in the aggregate amount of approximately $20 million in order
to implement its full consolidation plan. Millennium has not received any       
commitment for the provision of such financing and no assurances can be given   
that such funding will be available to Millennium on terms acceptable to it or  
at all.                                                                         

Millennium believes that the success of its business plan will be primarily     
dependent on the following three factors:                                       

         1.       Adequate funding must be available for the cash portion of the
                 buy out. In some cases owners of the target companies are not
                willing to accept equity positions, preferring to be "cashed
                  out" entirely. However, Millennium believes that in most cases
   only a portion of the buy out will be for cash.

     2.       An active and liquid public market for the Company's stock
             will be necessary to satisfy that portion of the buy outs
taken in the Company's stock.               

       3.       Acceptance of new management techniques by current employees
            will be critical. The Company believes strongly that its
               success will depend in part on the acceptance of changes in
              policies, procedures and overall management methodology it
               intends to implement. This will require total participation
     and cooperation from the in-place infrastructure.

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Products                                                                        

Millennium plans to limit its activities to aluminum horse trailers, which are  
superior to steel trailers in terms of weight, durability, corrosion resistance,
maintenance and weight-to-load ratio. Millennium believes that aluminum horse   
trailers fall into two categories: (i) low-end, entry-level units that are of   
lesser quality, and that account for approximately 70% of the total market, or  
(ii) high-end units of very high quality that are designed specifically for a   
market that demands a higher benchmark and is willing to pay for it, which      
account for approximately 30% of the total market. Millennium believes that the 
higher end market segment is growing at a faster rate than the entry-level      
market and Millennium intends initially to focus its efforts on the higher end  
market. Millennium also plans to eventually market other products, which fit    
into the "lifestyle leisure" market category.                                   

Millennium plans to market several lines of all aluminum horse trailers. These  
units are designed as gooseneck trailers that can be pulled by a heavy pick-up  
truck equipped specifically for this purpose. Trailers will range in length from
25' to 48' and may be configured in any number of designs. Millennium's trailers
will generally include name brand tires, LED running lights, and full safety    
equipment. Other available options will include custom graphics, logos and      
lettering, generators, upgraded suspension systems, vents and special air flow  
designs. In some instances, living quarters for trainers or owners will be      
incorporated into the design specifications and may include options ranging from
simple shelves, cabinets, lockers and dressing rooms to complete living quarters
including upholstered furniture, wood or laminated finishes, air conditioning,  
refrigerators, electronics, central vacuum system, dinettes and bathrooms.      

Millennium believes that by consolidating the manufacturing functions of both   
trailer and living quarters, it will be possible to floor plan complete units at
the retail level more effectively. The manufacturer building both parts of the  
product will sign the repurchase agreement with the floor plan financing        
company. This is important because if a dealer cannot floor plan units, they    
cannot have them in inventory for sale, in which case the customer is forced to 
wait through the lead times of ordering and building both the trailer and living
quarters, which is currently estimated at four to five months. Millennium       
believes it will be able to provide dealers with a financing package that will  
accept the living quarters as valid collateral and thereby assist them in       
acquiring floor planning. This will enable dealers to maintain high quality     
products on their lots for immediate sale.                                      

As time progresses and Millennium can assess product performance, it plans to   
begin eliminating less profitable product lines, consolidating the best product 
features into the remaining lines and streamlining production around fewer      
focused products. New product introduction will be considered as Millennium's   
experience matures.                                                             

Potential Savings and Synergies                                                 

In determining which companies to select as acquisition targets, Millennium     
generally engages an independent consultant to conduct product and process      
evaluations on its potential acquisition candidates. This evaluation process    
covers facilities, operations, quality control systems, human resources, product
development and process improvement. Millennium believes it is essential to have
qualified third party confirmation of manufacturing efficiency enhancement      
potential before negotiating a final acquisition price. Millennium's initial    
research indicates that significant improvements can be achieved through the    
reduction of lead times and of work in progress, the improvement of product     
quality, the improvement of overall operating efficiency, and the more efficient
utilization of floor space.                                                     

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Effective use of economies of scale is also expected to have a significant      
impact. Certain raw materials such as aluminum extrusions, aluminum sheeting,   
windows, fasteners, suspension systems and a host of other universally used     
products can be purchased centrally in bulk and drop shipped to the             
manufacturing facility. Millennium believes that most of the raw materials and  
standard parts it will use in its operations, including aluminum and sheet      
metal, are available from multiple sources of supply.                           

One of the prime areas of concern for improvement in the industry has been in   
the area of standardization. Most manufacturers of upper market trailers do not 
have a standard product, preferring to `spec-out' each order. This requires     
individual engineering, construction and costly raw product inventorying.       
Typically, each manufacturer has its own unique extrusion specifications even   
for innocuous parts such as struts and beams.                                   

Millennium intends to institute a program of "Mass Customization" that will     
standardize the basic trailer for each of its acquired companies, while still   
giving service to some design and cosmetic individuality. Millennium will       
implement its customization program by evaluating past sales to identify product
groupings and making an assessment of specific customer needs. Design packages  
can be categorized within this same grouping for a cross reference and re-use   
type system. Target objectives would then be to develop a standard design       
package, production work instructions, bill of materials, etc., along with a    
customer management program to support both the needs of the customer and the   
company.                                                                        

Millennium believes that product costing and resource allocation can be improved
in all instances. Millennium plans to institute stricter cost accounting        
procedures to bring a higher level of financial discipline to the process by    
instituting a fully integrated Enterprise Resource Planning business software   
system.                                                                         

Centralized purchasing and allocation are expected to bring substantial savings 
through a more focused vendor relations program. It will not be necessary to    
inventory raw material in a central location. Most vendors drop ship as a sales 
accommodation, but centralized buying is anticipated to afford a better         
bargaining position and provide stricter cost controls.                         

By this process of consolidation Millennium expects to realize substantial      
savings in administrative costs that are currently being duplicated by each     
manufacturer.                                                                   

Millennium believes it can, to a degree, remedy the human resource dilemma and  
increase quality and performance at the same time by bringing the employees     
closer to not only the decision making process but through a sharing of the     
positive benefits that will accrue.                                             

       o        Better training programs. Each company is located in a state
                  with programs for training. In several instances cash stipends
         are made available directly to the enrolling company.

         o        Instituting employee involvement by bringing more of the floor
        personnel into production decision-making processes.

        o        Providing better benefits packages that make leaving a costly
proposition and staying a financial boon.   

       o        Insurance, retirement and profit sharing programs, and above
                all family involvement in the company, can result in greater
productivity and company loyalty.           

       o        Institution of stronger quality control programs will result
             in not only a higher degree of customer loyalty, but also
pride among the work force.                 

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Marketing                                                                       

Millennium believes the operations of all acquired companies can be improved    
through the implementation of centralized marketing procedures and the effective
use of cross marketing techniques. The following are among the marketing        
initiatives that Millennium plans to implement.                                 

   o        A more ambitious advertising campaign incorporating coop
                  advertising, stronger manufacturer involvement in trade shows,
Internet presence and sponsorship.          

      o        Steps to remedy the floor plan issues and lack of financial
                  support for sales have been instituted already. It is intended
              that Dealers who offer the living quarters package will be
                able to floor plan converted units through this system. This
            is important because flooring is difficult to obtain for
               conversion units which is a segment of the industry that is
         showing the most growth and the best overall margins.
                Millennium plans to engage in a blanket repurchase agreement
              with the financing resources on behalf of the consolidated
          companies. This will allow dealers more flexibility in
                  offering financing packages to customers. It will also tend to
                eliminate the `special order' factor and focus sales more on
standardized and dealer stocked products.   

      o        Better dealer support and education will be instituted from
                  the onset. Millennium expects to focus more toward leading the
              customer to a standard product and in that manner help the
  dealer lead the sale rather than be led by it.

The Millennium Subsidiaries                                                     

Millennium has implemented the initial phase of its consolidation plan through  
its recent August 2003 acquisitions of Campers World, Twister and Clear Lake,   
which together had total revenues in 2002 of approximately $22 Million. All of  
such companies are currently financially distressed and Millennium believes it  
can improve the operations of all three companies by centralizing and           
standardizing operations as discussed above. A brief description of each of the 
Millennium Subsidiaries is set forth below. The financial statements for each of
such companies have been filed as exhibits to this report.                      

Campers World                                                 

        Campers World was incorporated in the State of Oklahoma in 1986. It is
     a retail dealer of various types of recreational vehicles including
       Class "A" motor homes, travel trailers and horse trailers. It has two
       locations in the Tulsa, Oklahoma area and a total of thirty-five (35)
      employees. Campers World had total revenues in 2002 of approximately
$17.6 Million.                                                

Clear Lake Trailers                                           

        Clear Lake Trailers was incorporated in the State of Texas in 1999. It
  is a retail dealer of various types of trailers including cargo,
    utility and various lines of aluminum and steel horse trailers. It
 has one location in Weatherford, Texas and a total of seven (7)
      employees. Clear Lake had total revenues in 2002 of approximately $4
Million.                                                      

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Twister Trailers Manufacturing                                

        Twister Trailers Manufacturing was incorporated in the State of Kansas
         in 1995. It is a manufacturer of custom aluminum horse trailers. It has
        one location in Fort Scott, Kansas and a total of three (3) employees.
Twister had total revenues in 2002 of approximately $500,000. 

Planned Future Acquisitions                                                     

Millennium's business plan is to acquire several additional companies in the    
aluminum horse trailer industry and Millennium has entered into non-binding     
letters of intent for the acquisition of two other companies. On May 27, 2003   
Millennium entered into a non-binding letter of intent to acquire Ozark Mountain
Interiors, a privately held cabinet manufacturing company located in Missouri,  
and on August 15, 2003 Millennium entered into a non-binding letter of intent to
acquire Barrett Trailers, Inc., a trailer manufacturing company in Oklahoma. The
letters of intent are subject to the negotiation of definitive agreements       
acceptable to both parties and their counsel and to other conditions precedent. 
No assurances can be given that Millennium will be successful in entering into  
definitive agreements with either of such companies or that either acquisition  
will be completed.                                                              

Employees                                                                       

Millennium and the Millennium Subsidiaries have fifty (50) employees, including 
their officers. Millennium's employees are not represented by unions and it     
considers its relationship with its employees to be good.                       

Facilities                                                                      

The principal executive offices of X-Net have been relocated to Millennium's    
principal executive offices located at 4933 East Highway 60, Rogersville,       
Missouri 65742, where its telephone number is (417) 890-6556. Such office space 
is rented by Millennium from a related party on a month-to-month basis pursuant 
to an oral agreement. The current rent for such facility is $4,000 per month.   

Management                                                                      

The President and Secretary/Treasurer of X-Net hold the same offices with       
Millennium. In addition, Ron Connell serves as Millennium's Vice President of   
Operations. The current directors of Millennium are Dennis K. DePriest and      
George G. Spencer.                                                              

Competition                                                                     

The aluminum trailer business is highly fragmented and highly competitive.      
Competition is based on several factors including product quality, value, price,
reliability, turnaround time, brand name recognition, dealer services, available
financing, customer service, product development, and market research.          
Millennium believes that the aluminum horse trailer industry is made up of      
several small manufacturing organizations that account for over 70% of industry 
sales with the remaining 30% scattered among the regional manufacturers. Among  
Millennium's more prominent competitors are: Featherlite Corp., Exiss, Cherokee,
4 Star Trailers, Elite Trailers, C&C, Bloomer, Sooner Trailers, Sundowner       
Trailers, and Hart Trailers, most of which have substantially longer track      
records and greater financial resources and operating efficiencies than         
Millennium. There can be no assurance that Millennium will be able to compete   
effectively in the market.                                                      

Regulation                                                                      

Millennium and its subsidiary companies and products are subject to a number of 
federal, state and local laws, rules and regulations. Millennium and its        
subsidiaries manufacture their trailers to the standards of the U.S. Department 
of Transportation and are subject to regulations relating to employee safety,   
working conditions, protection of the environment, and other items. Changes in  
such laws, rules and regulations or the recall of any product by the National   
Highway Transportation Safety Board, could have a material adverse effect on    
Millennium's business and financial condition.                                  

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RISK FACTORS

The conduct and growth of X-Net's new business, as conducted through Millennium,
is subject to several significant risks, including those set forth below. You   
should carefully read and consider such risk factors.                           

X-Net will require substantial additional equity or debt financing to           
successfully implement its business plan and its failure to obtain such         
financing could delay or curtail its operations. X-Net must obtain substantial  
additional equity or debt financing to implement its business plan and to       
restructure the operations of Millennium and its subsidiaries to achieve the    
additional efficiencies that are expected to result in profitable operations.   
The Company anticipates that it will require substantial additional capital in  
the amount of approximately $20 million in order to implement its full          
consolidation plan. X-Net has not entered into any agreements or arrangements   
for the provision of such additional financing, and no assurance can be given   
that such financing will be available on terms acceptable to X-Net or at all.   

X-Net's subsidiary, Millennium, has a limited operating history and it is       
difficult to evaluate its business. Millennium was only recently incorporated in
February 2002 and does not have an established history of operations. Millennium
faces all the risks inherent in a new business and there can be no assurance it 
will be successful and/or profitable. Millennium's entry into the aluminum      
trailer industry and its lack of a significant operating history make it        
difficult to evaluate the risks and uncertainties it faces. Millennium's failure
to address these risks and uncertainties could cause its business results to    
suffer.                                                                         

The first three companies acquired by Millennium are financially distressed and 
Millennium's failure to achieve the planned improvements in efficiencies and    
operating results in a short time frame could have a materially adverse effect  
on X-Net and could threaten its ability to continue as a going concern. Each of 
the Millennium Subsidiaries is currently financially distressed and if X-Net    
fails to achieve the planned improvements in efficiencies and operating results,
X-Net may be forced to obtain significant additional financing to fund losses   
from operations. If such financing is not available to X-Net and/or if such     
losses continue for a prolonged period of time, X-Net could be forced to        
discontinue its operations.                                                     

The Millennium Subsidiaries are parties to financing arrangements that could    
become immediately due and payable as result of Millennium's acquisition of such
companies, which would require Millennium to refinance such loans. The          
Millennium Subsidiaries are parties to promissory notes and other loan          
agreements with various lenders that entitle the lenders to declare the         
outstanding balance of such loans to be immediately due and payable in the event
of a change in control of the borrower. Millennium's acquisition of the         
Millennium Subsidiaries may constitute a change in control of each such company.
If the lenders should declare their loans to be immediately due and payable,    
Millennium would be forced to obtain additional financing and no assurances can 
be given that such financing would be available on terms acceptable to it or at 
all. If it were not able to obtain the required financing it would be in default
under the loan documents and the lenders could foreclose on the collateral.     

Millennium will be dependent on its ability to acquire the aluminum used in its 
manufacturing operations at favorable prices, and increases in price or         
interruptions in supply could have a material adverse effect on Millennium's    
business and financial condition. Millennium uses significant amounts of        
aluminum in its manufacturing operations, including aluminum extrusions and     
sheets. Unforeseen upward fluctuations in the world wide prices of aluminum or  
the inability of a major supplier to deliver raw materials on a timely basis    
could have a material adverse effect on Millennium's business and financial     
condition.                                                                      

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Millennium is subject to the risk of product liability claims and the loss of   
any such claim in excess of its insurance coverage could have a material adverse
effect on Millennium. As a manufacturer, Millennium is subject to the inherent  
risk of product liability claims. Millennium maintains product liability        
insurance in amounts it believes adequate but no assurance can given that its   
coverage will continue to be available at acceptable prices or that such        
coverage will be adequate in scope and coverage to protect Millennium from      
product liability claims.                                                       

The Registrant is substantially dependent on Dennis K. DePriest and George G.   
Spencer, the founders of Millennium, and the loss of their services would have  
an adverse effect on its business. The Registrant is dependent on Dennis K.     
DePriest, president and a director of X-Net and Millennium, George G. Spencer,  
secretary and treasurer of X-Net and secretary, treasurer and a director of     
Millennium, and Ron Connell, vice president of operations of Millennium, to     
operate the company and the loss of any of their services may be expected to    
have an adverse impact on its operations until such time as they could be       
replaced, if they could be replaced. The Company does not carry key man life    
insurance on the lives of Messrs. DePriest, Spencer or Connell, although        
Millennium has entered into employment agreements with each of such persons.    

The limited operating history and limited resources of X-Net put it at a        
significant competitive disadvantage in the aluminum trailer industry.          
Millennium competes with a number of other businesses, most of which have       
substantially greater resources and operating efficiencies than Millennium, such
as Featherlite Corp., Exiss, Cherokee, 4 Star Trailers, Elite Trailers, C&C,    
Bloomer, Sooner Trailers, Sundowner Trailers, and Hart Trailers. The intense    
competition among aluminum trailer manufacturers, and Millennium's relative lack
of resources may prevent it from successfully competing for customers.          

The shares of common stock available for sale in the future could adversely     
affect the market price for X-Net's common stock. Of the approximately          
11,700,000 shares outstanding, approximately 1,500,000 shares are freely        
tradable or eligible for resale under Rule 144 promulgated under the Securities 
Act of 1933, as amended. Sales of substantial amounts of this common stock in   
the public market could adversely affect the market price for X-Net's common    
stock. The approximately 10,200,000 remaining shares will become available for  
sale under Rule 144 on August 22, 2004, and the availability of those shares for
sale could also adversely affect the market price for X-Net's common stock.     

The price for X-Net's stock could be volatile. In the event an established      
market for X-Net's common stock should develop, market prices will be subject to
significant fluctuation in response to many factors, including: variations in   
X-Net's operations; investors' perception of X-Net; developments with regard to 
X-Net's activities, financial condition and management; investors' perceptions  
of the aluminum trailer industry in general; supply and demand; interest rates; 
and general economic conditions.                                                

Control by Officers, Directors, and Principal Shareholders. The officers,       
directors and principal shareholders of X-Net own approximately 62% of X-Net's  
outstanding shares of common stock. As a result, these shareholders will be able
to control the management and policies of X-Net through their ability to        
determine the outcome of elections for X-Net's board of directors and other     
matters requiring the vote or consent of shareholders.                          

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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.     

(a) Financial statements of businesses acquired.              

 The following financial statements are included in this report,
immediately following the signature page:                                       

Audited Financial Statements of Third       
  Millennium Industries, Inc. as of December 31,
  2002 and for the period from February 11, 2002
(inception) to December 31, 2002.           

  Audited Financial Statements of Campers World,
  Inc. as of December 31, 2002 and for the years
ended December 31, 2002 and 2001.           

Audited Financial Statements of Clear Lake  
   Trailers, Inc. as of December 31, 2002 and 2001
and for the years then ended.               

Audited Financial Statements of Twister     
   Trailers Manufacturing, Inc. as of December 31,
  2002 and for the years ended December 31, 2002
and 2001.                                   

      The following unaudited financial information will be included in an
amendment to this report to be filed as soon as practicable, but not later than 
sixty days after the due date for this report on Form 8-K:                      

Unaudited Financial Statements of Third     
   Millennium Industries, Inc. as of June 30, 2003
and for the six months then ended.          

Unaudited Financial Statements of Campers   
   World, Inc. as of June 30, 2003 and for the six
months then ended.                          

Unaudited Financial Statements of Clear Lake
  Trailers, Inc. as of June 30, 2003 and for the
six months then ended.                      

Unaudited Financial Statements of Twister   
Trailers Manufacturing, Inc. as of June 30, 
2003 and for the six months then ended.     

(b) Pro forma financial information.                          

      The following pro forma financial information will be included in an
amendment to this report to be filed as soon as practicable, but not later than 
sixty days after the due date for this report on Form 8-K:                      

               The Unaudited Pro-forma Condensed Combined Balance Sheet at
                June 30, 2003, and the related Unaudited Pro-forma Condensed
                 Combined Statements of Operations for the year ended December
               31, 2002 and the six months ended June 30, 2003, which give
            effect to the acquisition by X-Net Services Corp. of all
           issued and outstanding shares of capital stock of Third
Millennium Industries, Inc.                 

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(c) Exhibits.                                                 

  The following documents are included as exhibits to this report:

Exhibit    SEC Ref.                                                             
  No.        No.          Title of Document                             Location
  ---        ---          -----------------                             --------
2.1         2         Agreement and Plan of Reorganization              This
                        among X-Net Services Corp., X-Net Merger Co.,     Filing
           and Third Millennium Industries Inc., dated
as of July 18, 2003*            

* The exhibits to the Agreement and Plan of Reorganization are not included in  
  the foregoing exhibits. The Registrant undertakes to furnish supplementally to
the Commission copies of any omitted items on request.                      

SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the    
undersigned hereunto duly authorized.                                           

                                              X-Net Services Corp.

Dated: September 3, 2003                             By  /s/ Dennis K. DePriest 
                                                        ------------------------
                                                  Dennis K. DePriest
                                         President

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 INDEX TO EXHIBITS

Exhibit     SEC Ref.                                                            
 No.          No.        Title of Document                              Location
-------     --------     -----------------                              --------
2.1            2         Agreement and Plan of Reorganization among      This   
                        X-Net Services Corp., X-Net Merger Co., and     Filing
             Third Millennium Industries, Inc., dated as
of July 18, 2003              

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THIRD MILLENNIUM INDUSTRIES, INC. 
Financial Statements

 For the Period From February 11, 2002 (Inception)
to December 31, 2002
Together with Auditors' Report

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TABLE OF CONTENTS 

                                                                      Page
                                                                      ----

Independent Auditors' Report                                              1     
Balance Sheet                                                             2     
Statements of Operations                                                  3     
Statement of Stockholders' Equity                                         4     
Statement of Cash Flows                                                   5     
Notes to the Financial Statements                                        6-10   

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 MHM
 Murrell, Hall, McIntosh & Co., PLLP
Certified Public Accountants

INDEPENDENT AUDITORS' REPORT

To the Stockholders                                                             
of Third Millennium Industries, Inc.                                            

    We have audited the accompanying balance sheet of Third Millennium
Industries, Inc. (a Nevada development stage company) as of December 31, 2002,  
and the related statements of operations, stockholders' equity and cash flows   
for period from February 11, 2002 (inception) to December 31, 2002. These       
financial statements are the responsibility of the Company's management. Our    
responsibility is to express an opinion on these financial statements based on  
our audit.                                                                      

        We conducted our audit in accordance with 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 audit provides 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 Third Millennium    
Industries, Inc. as of December 31, 2002, and the results of its operations,    
stockholders' equity and cash flows for the period from February 11, 2002       
(inception) to December 31, 2002, in conformity with accounting principles      
generally accepted in the United States of America.                             

                                         /s/ MURRELL, HALL, McINTOSH & CO., PLLP

Norman, Oklahoma                                                                
May 29, 2003 (except for Note H which the                                       
Date is June 23, 2003)                                                          

--------------------------------------------------------------------------------
2402 Westport Drive              (405) 292-2900             P.O. Box 720360 
Norman, OK. 73069-6336          FAX (405) 321-4758       Norman, OK. 73070-4265 
WWW.MHMCPA.COM

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                                                                [Download Table]

                        THIRD MILLENNIUM INDUSTRIES, INC.                       
                          (A Development Stage Company)                         
                                 Balance Sheet                                  
                               December 31, 2002                                

                                     ASSETS                                     

                                                                                
Current Assets                                                                  
    Cash                                                       $          7,204 
    Advances to Shareholders                                            104,467 
                                                               -----------------

       Total Current Assets                                    $        111,671 
                                                               -----------------

Property and Equipment, at Cost                                                 
    Equipment                                                  $          6,326 
    Less: Accumulated Depreciation                                         (450)
                                                               -----------------

       Net Property and Equipment                              $          5,876 
                                                               -----------------

Other Assets                                                                    
    Deposits on Equipment                                      $         13,545 
                                                               -----------------

Total Assets                                                   $        131,092 
                                                               =================

                      LIABILITIES AND STOCKHOLDERS' EQUITY                      

Current Liabilities                                                             
       Notes Payable                                           $          2,000 
       Accounts Payable                                                  19,403 
       Accrued Salaries and Wages                                        75,000 
       Amounts Payable to Stockholders                                   79,253 
       Accrued Liabilities                                                  813 
                                                               -----------------

    Total Liabilities                                          $        176,469 
                                                               -----------------

Stockholders' Deficit                                                           
       Common Stock, .0001 par value, 50,000,000 shares                         
       authorized, 10,000,000 shares issued and outstanding    $          1,000 
       Paid-In Capital                                                  330,300 
       Deficit Accumulated During the  Development Stage               (376,677)
                                                               -----------------

       Total Stockholders' Equity                              $        (45,377)
                                                               -----------------

Total Liabilities and Stockholders' Equity                     $        131,092 
                                                               =================

                 See Accompanying Notes to Financial Statements                 


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                        THIRD MILLENNIUM INDUSTRIES, INC.                  
                          (A Development Stage Company)                    
                            Statement of Operations                        
     For the Period From February 11, 2002 (Inception) to December 31, 2002

                                                                           
Development Stage Costs                                                    
      Contract and Professional Services                   $        81,737 
      Depreciation Expense                                             450 
      Health Insurance                                              26,313 
      Interest Expense                                                 813 
      Relocation Expense                                            33,000 
      Rent                                                          38,958 
      Salaries and Wages                                            75,000 
      Telephone and Utilities                                       14,302 
      Travel and Entertainment                                      54,938 
      Vehicle Leases and Allowances                                 38,414 
      Miscellaneous Expenses                                        12,752 
                                                           ----------------

          Total Development Stage Costs                    $       376,677 
                                                           ----------------

Net Development Stage Loss                                 $      (376,677)
                                                           ================

                 See Accompanying Notes to Financial Statements            

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                        THIRD MILLENNIUM INDUSTRIES, INC.                                      
                          (A Development Stage Company)                                        
                        Statement of Stockholders' Equity                                      
     For the Period From February 11, 2002 (Inception) to December 31, 2002                    

                                                                     Deficit                   
                                                                   Accumulated                 
                                   Common Stock                    During the                  
                              ------------------------  Paid-In    Development                 
                                Shares       Amount     Capital       Stage           Total    
                              -----------  ----------- ----------- ------------  --------------
                                                                                               
Balance, February 11, 2002            --   $       --  $       --  $        --   $          -- 

Issuance of common stock       10,000,000       1,000     330,300           --         331,300 

Net Loss                              --           --          --     (376,677)       (376,677)
                              -----------  ----------- ----------- ------------  --------------

Balance, December 31, 2002     10,000,000  $    1,000  $  330,300  $  (376,677)  $     (45,377)
                              ===========  =========== =========== ============  ==============

                 See Accompanying Notes to Financial Statements                                


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                        THIRD MILLENNIUM INDUSTRIES, INC.                               
                          (A Development Stage Company)                                 
                             Statement of Cash Flows                                    
     For the Period From February 11, 2002 (Inception) to December 31, 2002             

                                                                                        
Cash Flows From Development Stage Activities                                            
     Net Development Stage Loss                                          $     (376,677)
     Adjustments to Reconcile Net Loss to Net Cash                                      
        Used by Development Stage Activities:                                           
           Depreciation and Amortization                                            450 
           Deferred Tax Benefit                                                         
        Increase  in Liabilities:                                                       
           Accounts Payable                                                      19,403 
           Accrued Salaries and Wages                                            75,000 
           Amounts Payable to Stockholders                                       79,253 
           Accrued Liabilities                                                      813 
                                                                         ---------------

              Net Cash Used By Development Stage Activities              $     (201,758)
                                                                         ---------------

Cash Flows From Investing Activities                                                    
     Advances to Stockholders                                            $     (104,467)
     Acquisition of equipment                                                   (19,871)
                                                                         ---------------

              Net Cash Used By Investing Activities                      $     (124,338)
                                                                         ---------------

Cash Flows From Financing Activities                                                    
     Proceeds from Current Debt                                          $       50,000 
     Reduction in Other Current Debt                                            (48,000)
     Issuance of Common Stock                                                   331,300 
                                                                         ---------------

              Net Cash Provided by Financing Activities                  $      333,300 
                                                                         ---------------

Net Increase in Cash                                                     $        7,204 

Cash at Beginning of Period                                                          -- 
                                                                         ---------------

Cash at End of Period                                                    $        7,204 
                                                                         ===============

Supplemental Disclosures:                                                               
     Property and Equipment Acquired with Debt                           $        6,326 
                                                                         ===============

                 See Accompanying Notes to Financial Statements                         


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 Third Millennium Industries, Inc.
 Notes to the Financial Statements
 December 31, 2002

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                             

Nature of Business                                                              

The Company was incorporated in Nevada on February 11, 2002. The Company is a   
development stage holding company, which has devoted substantially all of its   
efforts to develop a vertically integrated structure of manufacturing facilities
and retail outlets for recreational vehicles, with a primary emphasis on premium
horse trailers.                                                                 

The Company has entered into agreements to purchase three entities, including a 
horse trailer manufacturer in Kansas, a retail horse trailer outlet in Texas and
a retail recreational vehicle and horse trailer outlet in Oklahoma. The         
acquisitions will be made primarily with common stock of the Company. The       
Company has also entered into a non-binding agreement to be acquired, in a      
reverse merger, by an entity that is currently trading on the OTC Bulletin      
Board. The acquisition of the Company is contingent upon the Company completing 
the acquisition of the three entities described above. The transactions are all 
expected to be completed in July 2003. The agreement contemplates a one for one 
stock exchange.                                                                 

Cash and Cash Equivalents                                                       

The Company considers all short-term investments with a maturity of three months
or less at the date acquired as cash equivalents in the statement of cash flows.

Use of Estimates                                                                

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

Income Taxes                                                                    

The Company accounts for income taxes under the liability method of accounting  
for income taxes. Under the liability method, deferred tax assets and           
liabilities are determined from the expected future tax consequences of         
temporary differences between the reported amounts of assets and liabilities and
their tax basis.                                                                

Property and Equipment                                                          

Property and equipment are carried at cost. Depreciation of property and        
equipment is provided using the straight-line method, over 7 years. Expenditures
for repairs and maintenance that do not extend the useful lives of the assets   
are charged to expense as incurred. Depreciation expense for the eleven months  
ended December 31, 2002 was $450.                                               

Stock-based Compensation                                                        

The Company accounts for stock-based employee compensation plans under the      
recognition and measurement principles of APB Opinion No. 25, Accounting for    
Stock Issued to Employees, and related interpretations. No stock-based employee 
compensation plans have been issued as of December 31, 2002. One employee option
for 280,000 shares at $1.00 per share was granted during 2002. It is exercisable
one year after the Company stock becomes available to be traded on a public     
stock exchange.                                                                 

Stock-based non-employee compensation is measured under the fair value          
recognition standards of FASB Statement 123, Accounting for Stock-Based         
Compensation. There has not been any stock-based non-employee compensation plans
issued as of December 31, 2002.                                                 

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 Third Millennium Industries, Inc.
 Notes to the Financial Statements
 December 31, 2002

NOTE B - NOTES PAYABLE                                                          

The note payable is with an individual. Interest is 8% and maturity is on       
September 1, 2003. The note is unsecured.                                       

NOTE C - INCOME TAXES                                                           

No provision for income taxes has been recorded in the accompanying financial   
statements, because the Company has incurred net operating losses since its     
inception. At December 31, 2002, the Company had net operating loss             
carryforwards for federal income tax purposes of approximately $376,677 that    
expire in 2017. Because of the uncertainty that the Company will be able to use 
the tax benefit associated with its net operating losses to date, because its   
planned acquisitions may impose annual limitations in accordance with Internal  
Revenue Code Section 382 and there is no guarantee of future profitability of   
the Company, no tax benefit has been included in these financial statements.    

NOTE D - LEASE OBLIGATIONS                                                      

Operating Lease                                                                 

The Company rents facilities on a month-to-month basis at a current rate of $   
4,000 per month. The facilities are being rented from Springfield Venture       
Capital, LLC, which is controlled by two officers and directors of Third        
Millennium Industries Inc. The rental agreement is unwritten and Springfield    
Venture Capital and Third Millennium Industries, Inc. have agreed that rent paid
through December 31, 2002 is payment in full for the period. See also Note E.   

The Company also leases certain vehicles and equipment from related parties as  
described below in Note E.                                                      

Total rent expense for the period ended December 31, 2002 was $38,958.          

NOTE E - RELATED PARTY TRANSACTIONS                                             

The Company has advanced amounts to stockholders participating in the initial   
operations of the Company in the amount of $104,467. It is anticipated that     
these advances will be repaid when accrued salaries due these individuals are   
paid after the Company becomes an operating entity as described below.          

The Company has employment agreements with certain officers and stockholders of 
the Company to pay salaries and wages earned during the initial start up period 
of the Company. The amount of salaries and wages accrued through December 31,   
2002 is $75,000. This is less than amounts required to be paid under the        
employment agreements. The balance has been forgiven by written agreement. The  
Company anticipates that such salaries will continue to accrue until the Company
operations commence and cash flow is sufficient to pay these individuals.       

In addition to the salaries due to the officers and stockholders, additional    
amounts are due to them for travel and entertainment expenses, vehicle          
allowances and relocation expenses. As of December 31, 2002 the total amount due
was $79,253. The Company anticipates that such expenses will continue to accrue 
until the Company operations commence and cash flow is sufficient to pay these  
expenses.                                                                       

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 Third Millennium Industries, Inc.
 Notes to the Financial Statements
 December 31, 2002

NOTE E - RELATED PARTY TRANSACTIONS (continued)                                 

The Company leased certain vehicles and equipment, including vehicles and       
equipment from related parties on a month-to-month basis. The amount of such    
rents for the period ended December 31, 2002 was $31,414. Subsequent to December
31, 2002 the lease arrangements were terminated.                                

NOTE F - CONTINGENCIES                                                          

The Company is obligated to acquire other entities and has entered into a letter
of intent to be acquired in a reverse merger. Management of the Company has     
plans to expand business operations in the near future and has made commitments,
which will require more capital resources than are currently available to the   
Company. The Company's business plans include pursuing additional debt and or   
equity financing with financial institutions or strategic partner(s) which will 
include contracting for additional professional services in the area of         
investment banking and investor relations.                                      

In conjunction with the acquisition of the entities as described in Note A -    
"Nature of Business", the Company is obligated to enter into Employment         
Agreements with each of the individuals named below and the individuals will    
continue to manage the respective entities that they now own. The agreements    
will be for periods of five years and provide for annual salaries, which are    
considered to be competitive for equivalent management personnel.               

In addition the Company is obligated to grant the following options to purchase 
common stock of the Company to the current owners of those entities upon        
completion of the acquisitions.                                                 

Number                                          
  of Shares             Price                   Term *
  ---------             -----                   ------
   50,000           50% Mkt. Price             5 Years
  100,000           50% Mkt. Price             5 Years
  100,000           50% Mkt. Price             5 Years
  100,000                    $0.10             2 Years
  100,000                    $0.10             2 Years

The term shall begin on the date that the Company's stock first becomes         
available for trading on a public exchange. These options have not been         
recognized in the accounting records because they are considered unissued for   
accounting purposes until the acquisitions are finalized and the Company's stock
becomes available for trading on a public exchange. The optionable stock to be  
granted for $.10 per share will be issued from the stock holdings of two        
officers and directors.                                                         

Upon closing of the acquisition of Campers World, Inc., two officers and        
directors of the Company will purchase a parcel of real estate from the current 
owners and the Company will lease back the property, where the Campers World,   
Inc. facilities are located. The lease will include a stipulation that lease    
rates will not exceed local rates for similar properties.                       

The Company has paid a deposit of $13,545 on certain equipment that it intends  
to purchase for the amount of $301,489. The equipment was purchased on May 28,  
2003. See Note H "Subsequent Events".                                           

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 Third Millennium Industries, Inc.
 Notes to the Financial Statements
 December 31, 2002

NOTE F - CONTINGENCIES (continued)                                              

In October 2002 the Company entered into an agreement with a firm to provide    
certain investment banking services. The agreement provides for the payment of  
advisory fees in the amount of $10,000 per month and a $25,000 fee upon closing 
of the reverse merger transaction, the issuance of 300,000 shares of common     
stock with registration rights, and certain other fees based on services        
performed by the investment banker. Such agreement may be renegotiated by the   
parties as a result of changed circumstances and alleged deficiencies in        
performance.                                                                    

NOTE G - EQUITY TRANSACTIONS                                                    

Common Stock and Warrants                                                       
In February 2002, the Company issued a thirty-six month warrant to acquire      
50,000 shares of the Company's common stock for $.001 per share to a financial  
consultant. The consultant's agreement further provides that 50% of the fees    
earned by the consultant shall be paid in common stock of the Company. At       
December 31, 2002, the balance payable in stock was $2,903.                     

Stock Options                                                                   

The Company has agreements to grant the following options where the term of the 
options will begin on the date that the Company's stock first becomes available 
for trading on a public exchange.                                               

Number                                        
of Shares          Price              Term        
---------          -----              ----        
50,000            $0.75             2 Years     
250,000            $1.00             3 Years      
50,000            $0.75             2 Years     
100,000            $0.75             3 Years      

These options have not been recognized in the accounting records because they   
are considered unissued for accounting purposes until the Company's stock       
becomes available for trading on a public exchange.                             

NOTE H - SUBSEQUENT EVENTS                                                      

In March 2003, a consultant to the Company exercised a warrant to purchase      
50,000 shares of the Company's common stock at $.0001 per share.                

On February 19, 2003, the Company issued a promissory note for $15,000 to an    
entity the Company intends to be acquired by in a reverse acquisition, for the  
purpose of funding a portion of the financial audit costs for the Company and   
entities to be acquired. The note is payable sixty days from date of issue and  
accrues interest at 9% per annum on the unpaid balance until paid. The Company  
is presently in default on this note and intends to satisfy it in full upon     
closing of the reverse merger transaction. Personal guarantees are in effect    
with certain officers of the Company to secure this note.                       

During the first quarter of 2003, the Company issued 28,000 shares of its common
stock to an accredited investor in a private placement and received cash        
proceeds of $42,000.                                                            

During the first quarter of 2003, two officers and directors of the Company made
additional cash contributions to the Company in the aggregate amount of $42,500.

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 Third Millennium Industries, Inc.
 Notes to the Financial Statements
 December 31, 2002

NOTE H - SUBSEQUENT EVENTS (continued)                                          

In March 2003, the Company issued a ninety day, 18% Convertible Note in the     
amount of $75,000 to an accredited investor. The investor funded $37,500 in     
March and $37,500 in April of 2003, from which, $1,500 was paid in points to the
originator and $1,500 was paid in fees to a licensed placement agent. Net cash  
proceeds to the Company were $72,000. The note provides that the holder can     
convert the principal and interest of the note to shares of the Company's common
stock at the same price of the initial round of equity funding and, after       
default, at a value of $.50 per share. The Company is currently in default on   
the note. Personal guarantees are in effect with certain officers of the Company
to secure this note.                                                            

On May 27, 2003 the Company entered into a non-binding letter of intent to      
acquire a cabinet manufacturing company in Missouri for the consideration of    
250,000 shares of the Company's common stock. In addition, two officers and     
directors will grant options to the seller to purchase 100,000 shares of the    
Company's stock at 50% of its average selling price for the 30-day period       
immediately preceding exercise. The acquisition is contingent upon completion of
due diligence by the Company and completion of the acquisition of the Company as
described in Note A. In addition, the Company has entered into an agreement     
dated June 4, 2003 to manage the potential acquisition during the period it     
conducts its due diligence for a fee of $15,000 per month.                      

On May 28, 2003, the Company entered into a Sponsorship Agreement with the      
National Cutting Horse Association (NCHA), which shall become effective on      
January 1, 2004, and shall continue in effect until December 31, 2006. Under the
agreement the Company is obligated to pay an amount of $60,000 annually, provide
life member with discounts on trailer purchases and provide event winners with  
award vouchers that may be applied to the purchase of trailers. The Company is  
obligated to pay $10,000 per month during the period of July through December   
2003 for the 2004 sponsorship and to pay for the following two years in advance 
on a quarterly basis with payments of $15,000 per quarter.                      

On May 28, 2003, The Company entered into an agreement to purchase raw materials
from an individual for $189,610. The payment terms for the purchase require the 
Company to pay $50,000 upon the closing and the balance pursuant to the terms of
a promissory note at no interest payable 50% in cash and 50% in common stock of 
the Company, on a periodic basis as raw materials are used by the Company with  
any unpaid purchase price due by the cut-off date.                              

As part of the same transaction, the Company entered into an agreement to       
purchase equipment from an LLC. The total amount of the purchase price is       
$301,489. The appropriate asset and liability entries will be recorded in the   
second quarter of 2003. The payment terms for the purchase required the Company 
to issue a promissory note in the amount of $301,489 with principal and         
interest, at the rate of 6% per annum, payable monthly, beginning June 1, 2003  
and ending June 1, 2008. The Company will attempt to assume a long term loan    
payable to a bank and if it is successful, the amount of such loan will be      
offset against the promissory note.                                             

Both agreements are secured by personal guarantees with certain officers of the 
Company, security agreement and UCC financing statements.                       

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CAMPERS WORLD, INC. 
Financial Statements

As of December 31, 2002 and 
For the Years Ended December 31, 2002 and 2001
Together with Auditors' Report

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 MHM
 Murrell, Hall, McIntosh & Co., PLLP
Certified Public Accountants

INDEPENDENT AUDITORS' REPORT

To the Stockholders                                                             
of Campers World, Inc.                                                          

We have audited the accompanying balance sheet of Campers World, Inc., (an      
Oklahoma Corporation) as of December 31, 2002, and the related statements of    
operations, changes in stockholders' equity and cash flows for the years ended  
December 31, 2002 and 2001. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these  
financial statements based on our audit.                                        

We conducted our audit in accordance with 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 audit provides 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 Campers World, Inc. as of      
December 31, 2002, and the results of its operations and cash flows for the     
years ended December 31, 2002 and 2001, in conformity with accounting principles
generally accepted in the United States of America.                             

                                         /s/ MURRELL, HALL, McINTOSH & CO., PLLP

Norman, Oklahoma                                                                
April 25, 2003                                                                  

--------------------------------------------------------------------------------
2402 Westport Drive             (405) 292-2900              P.O. Box 720360 
Norman, OK. 73069-6336         FAX (405) 321-4758        Norman, OK. 73070-4265 
  WWW.MHMCPA.COM

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                              CAMPERS WORLD, INC.                          
                                 Balance Sheet                             
                               December 31, 2002                           

                                      ASSETS                               
                                                                           
Current Assets                                                             
      Cash                                                  $      155,677 
      Trade Accounts Receivable, less allowance                            
        for doubtful accounts of $13,700                           260,474 
      Inventory                                                  5,127,210 
      Deposits and Prepaid Expenses                                  4,190 
                                                            ---------------

    Total Current Assets                                    $    5,547,551 
                                                            ---------------

Property and Equipment                                                     
      Buildings and Land                                    $      107,687 
      Transportation Equipment                                     247,533 
      Equipment                                                    223,379 
      Office Furniture and Fixtures                                118,681 
      Livestock                                                     36,860 
      Leasehold Improvements                                        46,924 
                                                            ---------------
                                                            $      781,064 

      Less:  Accumulated Depreciation                             (458,045)
                                                            ---------------

    Net Property and Equipment                              $      323,019 
                                                            ---------------

Total Assets                                                $    5,870,570 
                                                            ===============

             LIABILITIES AND STOCKHOLDERS' DEFICIT                         

Current Liabilities                                                        
      Floor Plan Payable                                    $    4,787,809 
      Current Notes Payable                                        377,533 
      Accounts Payable                                             185,665 
      Accrued Liabilities                                           95,800 
      Current Portion of Long-Term Debt                            110,306 
                                                            ---------------

    Total Current Liabilities                               $    5,557,113 
                                                            ---------------

Long-Term Liabilities                                                      
      Long-Term Debt, Net of Current Portion                $      229,943 
      Related Party Debt                                           165,144 
                                                            ---------------

    Total Long-Term Liabilities                             $      395,087 
                                                            ---------------

      Total Liabilities                                     $    5,952,200 
                                                            ---------------

Stockholders' Deficit                                                      
      Common Stock, $.50 par value, 10,000 shares                          
      authorized, issued and outstanding                    $        5,000 
      Paid in Capital                                              396,305 
      Retained Deficit                                            (482,935)
                                                            ---------------

      Total Stockholders' Deficit                           $      (81,630)
                                                            ---------------

Total Liabilities and Stockholders' Deficit                 $    5,870,570 
                                                            ===============

                 See Accompanying Notes to Financial Statements            


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                              CAMPERS WORLD, INC.                                     
                            Statements of Operations                                  
                 For the Years Ended December 31, 2002 and 2001                       

                                                         2002               2001      
                                                  -----------------  -----------------
                                                                                      
Net Sales                                         $     17,641,514   $     17,754,808 

Cost of Sales                                           15,661,221         15,416,557 
                                                  -----------------  -----------------

      Gross Profit                                $      1,980,293   $      2,338,251 

Selling, General and Administrative Expense                                           
  (including interest expense of $32,141                                              
  and $514,401)                                          1,868,522          2,141,815 
                                                  -----------------  -----------------

      Income from Operations                      $        111,771   $        196,436 

Other Expense                                              (20,239)            (6,480)
                                                  -----------------  -----------------

Net Income                                        $         91,532   $        189,956 
                                                  =================  =================

                 See Accompanying Notes to Financial Statements                       


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                              CAMPERS WORLD, INC.                                        
                            Statements of Operations                                     
                 For the Years Ended December 31, 2002 and 2001                          

                                     Common Stock                                        
                                -----------------------                                  
                                 Shares      Amount     Paid in Capital  Retained Deficit
                                ---------  ------------ ---------------  --------------- 
                                                                                         
Balance, December 31, 2000        10,000   $     5,000  $      121,305   $     (722,193) 

Contributed Capital                   --            --         180,000               --  

Net Income                            --            --              --          189,956  
                                 --------- ------------ ---------------  --------------- 

Balance, December 2001            10,000   $     5,000  $      301,305   $     (532,237) 

Contributed Capital                   --            --          95,000               --  

Distributions to Shareholders         --            --              --          (42,230) 

Net Income                            --            --              --           91,532  
                                 --------- ------------ ---------------  --------------- 

Balance, December 2002            10,000   $     5,000  $      396,305   $     (482,935) 
                                 ========= ============ ===============  =============== 

                 See Accompanying Notes to Financial Statements                          

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                              CAMPERS WORLD, INC.                                       
                            Statements of Cash Flows                                    
                 For the Years Ended December 31, 2002 and 2001                         

                                                                                        
Cash Flows From Operating Activities                                                    
    Net Income                                              $     91,532   $    189,956 
    Adjustments to Reconcile Net Income to Net Cash                                     
      Provided (Used) by Operating Activities:                                          
         Depreciation                                             99,077         85,733 
         Loss on Disposition of Property and Equipment            24,924         14,350 
         Provision for Bad Debts                                  13,700             -- 
       (Increase) Decrease in Assets:                                                   
         Accounts Receivable                                     436,895       (488,750)
         Inventory                                            (1,480,332)     1,487,204 
         Prepaid Expenses                                          4,000             -- 
       Increase (Decrease) in Liabilities:                                              
         Accounts Payable and Floor Plan Payable               2,019,304     (2,121,673)
         Accrued Liabilities                                      (6,409)         2,154 
                                                            ------------   ------------ 

            Net Cash Provided (Used) by                                                 
              Operating Activities                          $  1,202,691   $   (831,026)
                                                            ------------   ------------ 

Cash Flows From Investing Activities                                                    
    Purchases of Property and Equipment                     $    (45,123)  $   (107,693)
    Proceeds from Sale of Property and Equipment                 136,962             -- 
                                                            ------------   ------------ 

            Net Cash Provided (Used) By                                                 
              Investing Activities                          $     91,839   $   (107,693)
                                                            ------------   ------------ 

Cash Flows From Financing Activities                                                    
    Proceeds From Short Term Debt                           $  1,419,286   $  3,511,504 
    Payments on Short Term Debt                               (2,849,935)    (2,675,709)
    Proceeds From Long Term Debt                                 260,412             -- 
    Reductions of Long Term Debt                                (148,552)       (14,890)
    Change in Related Party Debt                                  55,907          3,000 
    Distributions to Shareholders                                (42,230)            -- 
    Contribution of Capital                                       95,000        180,000 
                                                            ------------   ------------ 

            Net Cash Provided (Used) by                                                 
              Financing Activities                          $ (1,210,113)  $  1,003,905 
                                                            ------------   ------------ 

Net Increase in Cash                                        $     84,417   $     65,186 

Cash at Beginning of Year                                         71,260          6,074 
                                                            ------------   ------------ 

Cash at End of Year                                         $    155,677   $     71,260 
                                                            ============   ============ 

Supplemental Disclosures:                                                               
    Cash Paid for Interest                                  $    386,524   $    534,206 
                                                            ============   ============ 

    Total Purchases of Property and Equipment               $    200,100   $    128,598 
    Less:  Property and Equipment Acquired by Debt              (154,977)       (20,905)
                                                            ------------   ------------ 
    Cash Paid for Property and Equipment                    $     45,123   $    107,693 
                                                            ============   ============ 

                 See Accompanying Notes to Financial Statements                         

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 CAMPERS WORLD, INC.
 Notes to Financial Statements
 December 31, 2002

Note 1 - Summary of Significant Accounting Policies                             

Nature of Operations - Campers World, Inc. (the Company) was incorporated in    
Oklahoma in 1986 for the purpose of the retail sale of recreational vehicles and
horse trailers.                                                                 

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

Cash and Cash Equivalents - For the purposes of the statements of cash flows,   
the Company considers all checking, savings accounts and any highly liquid debt 
instruments with maturities of three months or less, when purchased, to be cash 
equivalents.                                                                    

Accounts Receivable - The Company requires that units sold be paid for in full  
and financing received prior to delivery. Accounts receivable consists generally
of amounts due from customers receiving repair services. Warranty claims older  
than one year are reserved and written off in the subsequent year. Other        
delinquent receivables deemed to be uncollectible are written off as incurred.  

Property and Equipment - Property and equipment is stated at cost. Maintenance  
and repairs which do not improve or extend the useful lives of the assets are   
expensed as incurred. Additions and betterments are capitalized. Upon retirement
or replacement, the costs and accumulated depreciation are removed from the     
respective accounts and the difference is included in income.                   

Depreciation is computed using both the straight-line method and declining      
balance methods. Estimated useful lives vary between 3 and 39 years.            
Depreciation expense for 2002 and 2001 was $99,077 and $85,733 respectively.    

Income Taxes - The Company has elected under the Internal Revenue Code to be    
taxed as an S Corporation. Under those provisions, the Company does not pay     
federal corporate taxes on its taxable income. Instead, the stockholders are    
liable for individual federal taxes on their proportionate share of the         
Company's taxable income. Accordingly no provision or liability for income taxes
has been made in the accompanying financial statements. There are no significant
differences between financial and taxable income.                               

Inventory - Inventory of new and used vehicles are stated at the lower of cost  
or market, on a specific unit basis. Inventory of parts and accessories are     
stated at replacement cost, which approximates cost on the first-in, first-out  
basis (FIF0).                                                                   

Concentrations of Credit Risk Arising from Cash Deposits in Excess of Insured   
Limits - The company maintains its cash balances in several financial           
institutions located in Tulsa, Oklahoma. The balances are insured by the Federal
Deposit Insurance Corporation up to $100,000. At December 31, 2002, the         
company's uninsured cash balance totaled $268,418.                              

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   CAMPERS WORLD, INC. .
 Notes to Financial Statements
 December 31, 2002

                                                        [Enlarge/Download Table]

Note 2 - Inventory                                                                          

Inventory consists of the following:                                                        
                                                                                            
         Recreational Vehicles and Horse Trailers                            $     5,005,812
         Parts and Supplies                                                          121,398
                                                                             ---------------
                                                                             $     5,127,210
                                                                             ===============

Note 3 - Long-Term Debt and Notes Payable                                                   

Long-Term Debt                                                                              

Long-term debt consists of the following as of December 31, 2002:                           
                                                                                            
         Note  payable to a finance company, interest at 0%,                                
               monthly payments of $1,031, through                                          
               December, 2004, collateralized by a vehicle         $       23,704           

         Note payable to a bank, interest at 7.5%,                                          
               monthly payments of $421, through                                            
               August, 2006, collateralized by a vehicle                   16,477           

         Note payable to a bank, interest at 7.5%,                                          
               monthly payments of $655, through                                            
               January, 2007, collateralized by a vehicle                  30,441           

         Note payable to a bank, interest at 7.25%,                                         
               monthly payments of $843, through                                            
               March, 2006, collateralized by a vehicle                    29,841           

         Note payable to a bank, interest at 7.25%,                                         
               monthly payments of $848, through                                            
               March, 2006, collateralized by a vehicle                    30,050           

         Note payable to a bank, interest at 8.2%,                                          
               monthly payments of $691, through                                            
               July, 2003, collateralized by a vehicle                      5,443           

         Note payable to an individual, interest at 7.25%,                                  
               monthly payments of $5,000, through                                          
               January, 2006, collateralized by inventory                 166,358           

         Capital lease payable to a finance company                                         
              interest at 12.70%  monthly payments of $1,798,                               
              through December, 2004, collateralized by equipment          37,935           
                                                                   --------------           
                                                                   $      340,249           
              Less current portion                                       (110,306)          
                                                                   --------------           
         Net Long-Term Portion                                     $      229,943           
                                                                   ==============           

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  CAMPERS WORLD, INC..
 Notes to Financial Statements
 December 31, 2002

Note 3 - Long-Term Debt and Notes Payable                                       

                                                        [Enlarge/Download Table]

Maturities of Long-Term Debt at December 31, 2002 are:                                                     
                                                                                                           
                        2003                                              $         110,306                
                        2004                                                        112,917                
                        2005                                                         87,692                
                        2006                                                         25,593                
                        2007                                                          3,741                
                                                                          -----------------                

                                                                          $         340,249                
                                                                          =================                

Current Notes Payable                                                                                      

Current notes payable consists of the following as of December 31, 2002:                                   
                                                                                                           
         Note payable to a bank, interest at 5.25%,                                                        
               Maturing August 2003, collateralized by  inventory                         $          73,278

         Note payable to a bank, interest at 5.25%,                                                        
               Maturing August 2003, collateralized by  inventory                                   162,876

         Note payable to a bank, interest at 9.00%,                                                        
               Maturing October 2003, collateralized by  inventory                                   38,105

         Note payable to a bank, interest at 9.00%,                                                        
               Maturing October 2003, collateralized by  inventory                                   38,105

         Note payable to a bank, interest at 9.00%,                                                        
               Maturing October 2003, collateralized by  inventory                                   35,105

         Note payable to a bank, interest at 7.25%,                                                        
               Maturing March 2003, collateralized by  inventory                                     30,064
                                                                                          -----------------
         Total Current Notes Payable                                                      $         377,533
                                                                                          =================

Note 4 - Leases                                                                 

Capital Leases                                                                  

The Company leases its computer system under a capital lease expiring December, 
2004. The asset and liability under the capital lease is recorded at the present
value of the minimum lease payments. The asset is depreciated over the lease    
term of 48 months and is included with furniture and fixtures. Depreciation of  
the asset under the capital lease is included in depreciation expense.          

Following is a summary of property held under capital lease at December 31,     
2002.                                                                           

Computer System                                 $       67,398
Less:  Accumulated Depreciation                         35,047
                                                --------------
                                                $       32,351
                                                ==============

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Note 4 - Leases (continued)                                                     

Minimum future lease payments under capital leases as of December 31, 2002 for  
the next live of the lease and in the aggregate are:                            

Year ended December 31                      
----------------------                      
                           2003                                     $     21,763
                           2004                                           21,763
                                                                    ------------

             Total Minimum Lease Payments                           $     43,526
             Less:  amount Representing Interest                           5,591
                                                                    ------------

             Present Value of Net Minimum Lease                     $     37,935
                                                                    ============

The current portion of the obligation under capital lease is included as a part 
of the overall current portion of long-term debt.                               

Operating Leases-Related Party                                                  

The Company leases one of its sales facilities from a related party under an    
operating lease expiring April, 2004. Another facility lease from a related     
party expired in November, 2002, and is currently extended on a month-to-month  
basis.                                                                          

Minimum future rental payments under the operating lease in effect at December  
31, 2002 for each of the years remaining in the agreement are:                  

Year ended December 31                      
----------------------                      
                           2003                                     $    102,000
                           2004                                           34,000
                                                                    ------------

             Total Minimum Future Rental Payments-Related Party     $    136,000
                                                                    ============

Rent Expense under the operating leases for 2002 was $168,000.                  

Operating Leases-Other                                                          

The Company leases a forklift under an operating lease expiring May, 2003.      
Minimum future rental payments under the operating lease in effect at December  
31, 2002 are:                                                                   

Year ended December 31                      
----------------------                      
                           2003                                     $      1,951
                                                                    ============

Rent expense under this lease for 2002 was $4,682.                              

Note 5 - Related Party Transactions                                             

The Company buys and sells horse trailers with a company in Texas which is      
related thru the Company shareholders. Total sales to the company in 2002 were  
approximately $986,000. Included in accounts receivable from this related party 
is $48,268.                                                                     

See also Note 4.                                                                

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CLEAR LAKE TRAILERS, INC. 
dba TEXAS PRO STAR
Financial Statements

For the Years Ended December 31, 2002 and 2001
Together with Auditors' Report

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 MHM
 Murrell, Hall, McIntosh & Co., PLLP
Certified Public Accountants

INDEPENDENT AUDITORS' REPORT

To the Stockholders                                                             
of Clear Lake Trailers, Inc.                                                    

         We have audited the accompanying balance sheets of Clear Lake Trailers,
Inc., dba Texas Pro Star (a Texas Subchapter S Corporation) as of December 31,  
2002 and 2001, and the related statements of operations, stockholders' equity   
and cash flows for the years then ended. 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 audits.                      

         We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan  
and perform the audits to obtain reasonable assurance about whether the         
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 Clear Lake Trailers,
Inc. as of December 31, 2002 and 2001, and the results of its operations,       
stockholders' equity and cash flows for the years then ended in conformity with 
accounting principles generally accepted in the United States of America.       

        The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 9 to the     
financial statements, the Company has suffered recurring losses from operations 
and has a net capital deficiency, which raise substantial doubt about its       
ability to continue as a going concern. Management's plans regarding those      
matters also are described in Note 9. The financial statements do not include   
any adjustments that might result from the outcome of this uncertainty.         

                                         /s/ MURRELL, HALL, McINTOSH & CO., PLLP

Norman, Oklahoma                                                                
March 21, 2003                                                                  

--------------------------------------------------------------------------------
2402 Westport Drive             (405) 292-2900              P.O. Box 720360 
Norman, OK. 73069-6336         FAX (405) 321-4758        Norman, OK. 73070-4265 
  WWW.MHMCPA.COM

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                           CLEAR LAKE TRAILERS, INC.                                   
                               dba TEXAS PRO STAR                                      
                                 Balance Sheets                                        
                           December 31, 2002 and 2001                                  

                                        ASSETS                                         
                                                             2002             2001     
                                                        --------------   ------------- 
                                                                                       
Current Assets                                                                         
      Cash                                              $       69,053   $      21,325 
      Accounts Receivable                                       19,310          55,206 
      Inventory                                                566,635       1,116,245 
      Prepaid Expenses                                           3,350             350 
                                                        --------------   ------------- 

    Total Current Assets                                $      658,348   $   1,193,126 
                                                        --------------   ------------- 

Property and Equipment, at cost                                                        
      Furniture, Fixtures and Equipment                 $      172,240   $     182,810 
      Automobiles and Trucks                                    70,351          93,322 
      Livestock                                                 25,000          25,000 
                                                        --------------   ------------- 
                                                        $      267,591   $     301,132 
      Less:  Accumulated Depreciation                         (154,381)       (114,615)
                                                        --------------   ------------- 

    Net Property and Equipment                          $      113,210   $     186,517 
                                                        --------------   ------------- 

Other Assets                                                                           
    Intangibles, net of Accumulated                                                    
      Amortization of $19,167 and $91,611               $       55,833   $     393,389 
                                                        --------------   ------------- 

Total Assets                                            $      827,391   $   1,773,032 
                                                        ==============   ============= 

                         LIABILITIES AND STOCKHOLDERS' DEFICIT                         

Current Liabilities                                                                    
      Floor Plan Payable                                $      498,742   $     934,516 
      Current Note Payable                                      19,341          47,395 
      Accounts Payable                                         138,758          17,062 
      Customer Deposits                                         33,585          55,588 
      Accrued Liabilities                                       27,910           5,706 
      Current Portion of Long-Term Debt                         80,515          39,483 
                                                        --------------   ------------- 

    Total Current Liabilities                           $      798,851   $   1,099,750 
                                                        --------------   ------------- 

Long-Term Liabilities                                                                  
      Long-Term Debt, Net of Current Portion            $       95,094         295,518 
      Payable to Stockholder                                    20,109         524,902 
                                                        --------------   ------------- 

    Total Long-Term Liabilities                         $      115,203   $     820,420 
                                                        --------------   ------------- 

       Total Liabilities                                $      914,054   $   1,920,170 
                                                        --------------   ------------- 

Stockholders' Deficit                                                                  
      Common Stock, No par value, 10,000 shares                                        
      authorized, 1,000 shares issued and outstanding    $      70,000   $      70,000 
      Paid-In Capital                                          645,728              -- 
      Retained Deficit                                        (802,391)       (217,138)
                                                        --------------   ------------- 

      Total Stockholders' Deficit                       $      (86,663)  $    (147,138)
                                                        --------------   ------------- 

Total Liabilities and Stockholders' Deficit             $      827,391   $   1,773,032 
                                                        ==============   ============= 

                 See Accompanying Notes to Financial Statements                        


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                           CLEAR LAKE TRAILERS, INC.                                    
                               dba TEXAS PRO STAR                                       
                            Statements of Operations                                    
                 For the Years Ended December 31, 2002 and 2001                         

                                                             2002             2001      
                                                        --------------   -------------- 
                                                                                        
Net Sales                                               $    4,059,096   $    4,331,697 

Cost of Sales                                                3,490,592        3,499,988 
                                                        --------------   -------------- 

      Gross Profit                                      $      568,504   $      831,709 

Selling, General and Administrative Expense                                             
  (including interest expense of $34,587 and                                            
  $74,201)                                                     821,201          993,818 

Impairment of Goodwill                                         332,556               -- 
                                                        --------------   -------------- 

Net Loss                                                $     (585,253)  $     (162,109)
                                                        ==============   ============== 

                 See Accompanying Notes to Financial Statements                         


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                            CLEAR LAKE TRAILERS, INC.                                        
                               dba TEXAS PRO STAR                                            
                       Statements of Stockholders' Equity                                    
                 For the Years Ended December 31, 2002 and 2001                              

                                            Common Stock                                     
                                       ------------------------    Paid-In      Retained     
                                        Shares       Amount        Capital       Earnings    
                                       ----------  ------------  ------------  --------------
                                                                                             
Balance, December 31, 2000                 1,000   $    70,000   $        --   $     (55,029)

Net Loss                                      --            --            --        (162,109)
                                       ---------   -----------   -----------   ------------- 

Balance, December 31, 2001                 1,000   $    70,000   $        --   $    (217,138)

Owner Contributions                           --            --       645,728              -- 
Net Loss                                      --            --            --        (585,253)
                                       ---------   -----------   -----------   ------------- 

Balance, December 31, 2002                 1,000   $    70,000   $   645,728   $    (802,391)
                                       =========   ===========   ===========   ============= 

                 See Accompanying Notes to Financial Statements                              


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                            CLEAR LAKE TRAILERS, INC.                                   
                               dba TEXAS PRO STAR                                       
                       Statements of Stockholders' Equity                               
                 For the Years Ended December 31, 2002 and 2001                         

                                                                2002           2001     
                                                            ------------   ------------ 
                                                                                        
Cash Flows From Operating Activities                                                    
    Net Loss                                                $   (585,253)  $   (162,109)
    Adjustments to Reconcile Net Loss to Net Cash                                       
       Provided (Used) by Operating Activities:                                         
         Depreciation and Amortization                            58,199         94,272 
         Loss on Disposal of Equipment                            20,109             -- 
         Bad Debt Provision (Recovery)                                --         (1,500)
       (Increase) Decrease in Assets:                                                   
         Accounts Receivable                                      35,896        131,512 
         Inventory                                               549,610       (355,371)
         Prepaid Expense                                          (3,000)            -- 
         Other Assets                                            332,556             -- 
       Increase (Decrease) in Liabilities:                                              
         Accounts Payable                                       (314,079)       165,106 
         Accrued Liabilities                                         201         25,417 
                                                            ------------   ------------ 

            Net Cash Provided (Used) By                                                 
              Operating Activities                          $     94,239   $   (102,673)
                                                            ------------   ------------ 

Cash Flows From Investing Activities                                                    
    Purchases of Property and Equipment                     $         --   $    (14,220)
                                                            ------------   ------------ 

            Net Cash Used By Investing Activities           $         --   $    (14,220)
                                                            ------------   ------------ 

Cash Flows From Financing Activities                                                    
    Proceeds from Current Debt                              $    100,397   $     97,815 
    Reductions in Current Debt                                  (128,451)       (78,792)
    Proceeds from Long Term Debt                                  45,000        179,268 
    Reductions of Long-Term Debt                                (709,185)      (144,205)
    Owner Contributions                                          645,728             -- 
                                                            ------------   ------------ 

            Net Cash Provided (Used) By                                                 
              Financing Activities                          $    (46,511)  $     54,086 
                                                            ------------   ------------ 

Net Increase (Decrease) in Cash                             $     47,728   $    (62,807)

Cash at Beginning of Year                                         21,325         84,132 
                                                            ------------   ------------ 

Cash at End of Year                                         $     69,053   $     21,325 
                                                            ============   ============ 

Supplemental Disclosures:                                                               
    Interest Paid                                           $     34,587   $     74,201 
                                                            ============   ============ 

    Property and Equipment Acquired with Debt               $         --   $     40,490 
    Property and Equipment Acquired with Cash                         --         14,220 
                                                            ------------   ------------ 

       Total Property and Equipment Acquisitions            $         --   $     54,710 
                                                            ============   ============ 

                 See Accompanying Notes to Financial Statements                         

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 CLEAR LAKE TRAILERS, INC.
dba TEXAS PRO STAR
 Notes to Financial Statements
December 31, 2002 and 2001

Note 1 - Summary of Significant Accounting Policies                             

Nature of Operations - The Company was incorporated as a Texas corporation for  
the primary purpose of operating as a distributor of livestock trailers for     
Sooner Trailers, Inc.                                                           

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

Cash Equivalents - Short-term investments which have an original maturity date  
of 90 days or less are included as cash equivalents in the statement of cash    
flows. There were no cash equivalents at December 31, 2002 and December 31,     
2001.                                                                           

Property and Equipment - Property and equipment are stated at cost. Maintenance 
and repairs which do not improve or extend the useful lives of the assets are   
expensed as incurred. Additions and betterments are capitalized. Upon retirement
or replacement, the costs and accumulated depreciation are removed from the     
respective accounts and the difference is included in income.                   

Depreciation is provided over the estimated useful lives of the related assets  
using the declining balance method. Estimated useful lives vary between 5 and 15
years.                                                                          

Income Taxes - The Company has elected under the Internal Revenue Code to be    
taxed as an S Corporation. Under those provisions, the Company does not pay     
federal corporate taxes on its taxable income. Instead, the stockholders are    
liable for individual federal taxes on their proportionate share of the         
Company's taxable income. Accordingly no provision or liability for income taxes
has been made in the accompanying financial statements.                         

There were no significant differences between book and tax income for 2001. In  
2002, due to the adoption of new required accounting rules for goodwill (see    
Note 7), goodwill is no longer amortized for book purposes but continues to be  
amortized for tax purposes. This difference results in an approximately $333,000
difference between financial and taxable income which will reverse as the       
goodwill is amortized for tax purposes.                                         

Inventory - Inventories of parts are valued at the lower of first-in, first-out 
(FIFO) cost or market. Trailer inventories are valued at the lower of specific  
cost or market.                                                                 

Accounts Receivable - The Company requires that trailers be paid for in full or 
that financing be in place prior to delivery. Accounts receivable consists      
generally of amounts due from customers receiving repair services. There have   
been very few instances of uncollectible accounts. Delinquent receivables deemed
to be uncollectible are written off as incurred. The Company does not believe a 
reserve for uncollectible accounts is needed as of December 31, 2002 and 2001.  

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CLEAR LAKE TRAILERS, INC. 
dba TEXAS PRO STAR
 Notes to Financial Statements
December 31, 2002 and 2001

Note 2 - Inventories                                                            

                                                        [Enlarge/Download Table]

     Inventory consists of the following:                                                                        

                                                                                                                 
         Trailers and Related Parts                     $   559,685              $   1,109,382                   
         Supplies                                             6,950                      6,863                   
                                                        -----------              -------------                   
                                                        $   566,635              $   1,116,245                   
                                                        ===========              =============                   

Note 3 - Long-Term Debt and Notes Payable                                                                        

     Long-term debt consists of the following as of December 31, 2002 and 2001:                                  

                                                                                       2002            2001      
                                                                                  -------------   -------------- 
                                                                                                                 
         Note payable to a bank, interest at 8.49%,                                                              
               monthly payments of $531, through                                                                 
               July, 2005, collateralized by a vehicle                            $      14,883   $       19,691 

         Note  payable to a credit union, interest at 8.75%, monthly                                             
               payments of $474, through July, 2005, collateralized                                              
               by a vehicle, paid off in 2002                                                --           17,568 

         Note payable to a bank, interest at 12%,                                                                
               monthly payments of $134, through                                                                 
               March, 2002, collateralized by furniture                                      --              395 

         Note payable to a bank, interest at 11%,                                                                
               monthly payments of $806, through                                                                 
               October, 2007, collateralized by furniture                                33,481           40,738 

         Note payable to a bank, interest at 11.25%,                                                             
               monthly payments of $835, through                                                                 
               April, 2008, collateralized by furniture                                  39,165           46,353 

         Note payable to a finance company, interest at 2.9%,                                                    
               monthly payments of $894, through                                                                 
              October, 2005, collateralized by a vehicle                                 29,152           38,885 

         Note payable to an individual related party Interest at 8%, monthly                                     
              payments of $1,255, through May, 2021, Uncollateralized,                                           
              (see Note 9)                                                                   --          148,218 

         Note payable to an individual related party,                                                            
              interest at 8.5%,  monthly payments of $614,                                                       
              through April, 2005, collateralized by a vehicle                           11,957           21,166 

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                           CLEAR LAKE TRAILERS, INC.                                                             
                               dba TEXAS PRO STAR                                                                
                          Notes to Financial Statements                                                          
                           December 31, 2002 and 2001                                                            


Note 3 - Long-Term Debt and Notes Payable (continued)                                                            
                                                                                                                 
         Lease payable to a finance company, interest at 2.92%,                                                  
               monthly payments of $63, through                                                                  
              May, 2005, collateralized by equipment                                      1,971            1,987 

         Note payable to an individual related party,                                                            
              interest at 8%, monthly payments of $3,914,                                                        
              through October, 2003, Uncollateralized                                    45,000               -- 

         Notes payable to shareholders, no stated interest rate                                                  
              or monthly payments (see Note 9)                                           20,109          524,902 
                                                                                  -------------   -------------- 

                                                                                  $     195,718   $      859,903 
              Less current portion                                                      (80,515)         (39,483)
                                                                                  -------------   -------------- 

         Net Long-Term Portion                                                    $     115,203   $      820,420 
                                                                                  =============   ============== 

Maturities of Long-Term Debt at December 31, 2002 are:                          

            2003                       $          80,515
            2004                                  38,848
            2005                                  33,911
            2006                                  20,918
            2007                                  18,866
            Thereafter                             2,660
                                       -----------------
                                       $         195,718
                                       =================

   The Company has a $50,000 line of credit with a bank of which $30,659 and
$2,605 was unused at December 31, 2002 and 2001, respectively. The note matures 
on May 1, 2003 and carries an interest rate of 2% above the Wall Street Journal 
prime rate. At December 31, 2002 and 2001, the rate was 6.25% and 6.75%,        
respectively. Interest is payable on maturity. The line of credit is            
collateralized by inventory.                                                    

Note 4 - Related Party Transactions                                             

The Company leases its sales facility from its stockholders on a      
month-to-month basis. Lease expense for 2002 and 2001 was $103,255 and $96,000  
respectively. At December 31, 2002, the Company also has two notes payable to a 
party related to the shareholders totaling $56,957. Similar notes totaled       
$169,384 at December 31, 2001.                                                  
(See also note 3)                                                               

Note 5 - Concentration of Financing Activities                                  

 The Company conducts substantially all of its financing activities with
three finance companies. These activities include floor plan payable totaling   
$498,742 at December 31, 2002 and $934,516 at December 31, 2001.                

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CLEAR LAKE TRAILERS, INC. 
dba TEXAS PRO STAR
 Notes to Financial Statements
December 31, 2002 and 2001

Note 6 - Long-Term Lease                                                        

 The Company leased a sales facility in 2001 in Denton, Texas, which was
closed in December 2001. Lease expense for 2001 was $16,425. The lease was      
settled with the lessor in 2002 for an additional $3,000.                       

Note 7 - Intangibles                                                            

    Included in Intangibles is a franchise agreement of $75,000. The franchise
agreement is being amortized using the straight-line method over 15 years.      
Accumulated amortization at December 31, 2002 and 2001 was $19,167 and $14,167, 
respectively.                                                                   

     Also included in Intangibles at December 31, 2001 was goodwill of $410,000.
Goodwill was being amortized using the straight-line method over 15 years during
2001. Accumulated amortization at December 31, 2001 was $77,444.                

    Effective January 1, 2002, the Company has adopted required new accounting
rules for goodwill. These rules require the Company to discontinue amortizing   
goodwill and to evaluate the goodwill for possible impairment each year. The    
goodwill was evaluated as if the operations were on a stand alone basis.        
Evaluation indicated total impairment and the goodwill, net of accumulated      
amortization, was charged to expense in 2002.                                   

Note 8 - Contingencies                                                          

     The Company has guaranteed a personal note payable of the stockholders to a
finance company. The amount of the loan outstanding at December 31, 2002 and    
2001 was $426,222 and $436,186, respectively.                                   

Note 9 - Going Concern                                                          

    During 2002, the shareholders converted some long-term debt into equity by
canceling the debt without issuing additional shares. The company still has an  
equity deficit and their continued operations are dependent on additional       
financing or being acquired by a company that can provide this needed capital.  

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TWISTER TRAILER MANUFACTURING, INC. 
Financial Statements

As of December 31, 2002 and 
For the Years Ended December 31, 2002 and 2001
Together with Auditors' Report

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 MHM
 Murrell, Hall, McIntosh & Co., PLLP
Certified Public Accountants

INDEPENDENT AUDITORS' REPORT

To the Stockholders                                                             
of Twister Trailer Manufacturing, Inc.                                          

   We have audited the accompanying balance sheet of Twister Trailer
Manufacturing, Inc. (a Kansas Subchapter S Corporation) as of December 31, 2002,
and the related statements of operations, stockholder's equity and cash flows   
for the years ended December 31, 2002 and 2001. 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 audits.                   

         We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan  
and perform the audits to obtain reasonable assurance about whether the         
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 Twister Trailer     
Manufacturing, Inc. as of December 31, 2002, and the results of its operations, 
stockholder's equity and cash flows for the years ended December 31, 2002 and   
2001 in conformity with accounting principles generally accepted in the United  
States of America.                                                              

        The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 5 to the     
financial statements, the Company has suffered recurring losses from operations 
and has a net capital deficiency, which raise substantial doubt about its       
ability to continue as a going concern. Management's plans regarding those      
matters also are described in Note 5. The financial statements do not include   
any adjustments that might result from the outcome of this uncertainty.         

                                         /s/ MURRELL, HALL, McINTOSH & CO., PLLP

Norman, Oklahoma                                                                
April 4, 2003                                                                   

--------------------------------------------------------------------------------
2402 Westport Drive             (405) 292-2900              P.O. Box 720360 
Norman, OK. 73069-6336         FAX (405) 321-4758        Norman, OK. 73070-4265 
  WWW.MHMCPA.COM

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                      TWISTER TRAILER MANUFACTURING, INC.                         
                                 Balance Sheet                                    
                               December 31, 2002                                  

                                     ASSETS                                       

                                                                                  
Current Assets                                                                    
       Cash                                                      $          7,845 
       Inventory                                                          104,633 
                                                                 ---------------- 

    Total Current Assets                                         $        112,478 
                                                                 ---------------- 

Property and Equipment, at cost                                                   
       Machinery and Equipment                                   $         40,928 
       Automobiles and Trucks                                              19,049 
                                                                 ---------------- 
                                                                 $         59,977 
       Less:  Accumulated Depreciation                                    (37,167)
                                                                 ---------------- 

    Net Property and Equipment                                   $         22,810 
                                                                 ---------------- 

Total Assets                                                     $        135,288 
                                                                 ================ 

                      LIABILITIES AND STOCKHOLDER'S DEFICIT                       

Current Liabilities                                                               
       Current Notes Payable                                     $        109,255 
       Accounts Payable                                                    16,064 
       Customer Deposits                                                   20,000 
       Accrued Liabilities                                                 12,756 
       Current Portion of Long-Term Debt                                   11,346 
                                                                 ---------------- 

    Total Current Liabilities                                    $        169,421 

Long-Term Liabilities                                                             
       Long-Term Debt, Net of Current Portion                             160,838 
                                                                 ---------------- 

        Total Liabilities                                        $        330,259 
                                                                 ---------------- 

Stockholder's Deficit                                                             
       Common Stock, No par value, 100 shares                                     
       authorized, issued and outstanding                         $        54,196 
       Retained Deficit                                                  (249,167)
                                                                 ---------------- 

       Total Stockholder's Deficit                               $       (194,971)
                                                                 ---------------- 

Total Liabilities and Stockholder's Deficit                      $        135,288 
                                                                 ================ 

                 See Accompanying Notes to Financial Statements                   

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                      TWISTER TRAILER MANUFACTURING, INC.                                
                            Statements of Operations                                     
                 For the Years Ended December 31, 2002 and 2001                          

                                                              2002             2001      
                                                         --------------   -------------- 
                                                                                         
Net Sales                                                $      479,151   $      394,931 

Cost of Sales                                                   380,198          335,196 
                                                         --------------   -------------- 

      Gross Profit                                       $       98,953   $       59,735 

Selling, General and Administrative Expense                                              
  (including interest expense of $22,815 and                                             
  $11,634)                                                      123,240          121,027 
                                                         --------------   -------------- 

Net Loss                                                 $      (24,287)  $      (61,292)
                                                         ==============   ============== 

                 See Accompanying Notes to Financial Statements                          


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                      TWISTER TRAILER MANUFACTURING, INC.                       
                       Statements of Stockholders' Equity                       
                 For the Years Ended December 31, 2002 and 2001                 

                                            Common Stock                        
                                       ------------------------      Retained   
                                          Shares       Amount         Deficit   
                                       ----------  ------------  ---------------
                                                                                
Balance, December 31, 2000                   100   $    54,196   $     (108,690)

Net Loss                                      --            --          (61,292)

Distributions to Stockholder                  --            --          (33,472)
                                       ---------   -----------   -------------- 

Balance, December 31, 2001                   100   $    54,196   $     (203,454)

Net Loss                                      --            --          (24,287)

Distributions to Stockholder                  --            --          (21,426)
                                       ---------   -----------   -------------- 

Balance, December 2002                       100   $    54,196   $     (249,167)
                                       ==========  ===========   ============== 

                 See Accompanying Notes to Financial Statements                 

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                      TWISTER TRAILER MANUFACTURING, INC.                               
                            Statements of Cash Flows                                    
                 For the Years Ended December 31, 2002 and 2001                         

                                                                2002           2001     
                                                            ------------   ------------ 
                                                                                        
Cash Flows From Operating Activities                                                    
    Net Loss                                                $    (24,287)  $    (61,292)
    Adjustments to Reconcile Net Loss to Net Cash                                       
       Provided (Used) by Operating Activities:                                         
         Depreciation and Amortization                            10,978          4,645 
       (Increase) Decrease in Assets:                                                   
         Accounts Receivable                                          --         26,180 
         Inventory                                                31,547        (51,603)
         Other Assets                                                 --             90 
       Increase (Decrease) in Liabilities:                                              
         Accounts Payable                                         13,341        (22,252)
         Accrued Liabilities                                      31,634        (23,812)
                                                            ------------   ------------ 

            Net Cash Provided (Used) By                                                 
              Operating Activities                          $     63,213   $   (128,044)
                                                            ------------   ------------ 

Cash Flows From Investing Activities                                                    
    Purchases of Property and Equipment                     $    (19,049)  $         -- 
                                                            ------------   ------------ 

            Net Cash Used By Investing Activities           $    (19,049)  $         -- 
                                                            ------------   ------------ 

Cash Flows From Financing Activities                                                    
    Proceeds from Current Debt                              $    120,960   $    247,134 
    Reductions in Current Debt                                  (126,685)      (187,318)
    Proceeds from Long Term Debt                                      --        160,000 
    Reductions of Long-Term Debt                                  (9,947)       (20,696)
    Distributions to Stockholder                                 (21,426)       (33,472)
    Book Overdraft                                                    --        (36,825)
                                                            ------------   ------------ 

            Net Cash Provided (Used) By                                                 
              Financing Activities                          $    (37,098)  $    128,823 
                                                            ------------   ------------ 

Net Increase (Decrease) in Cash                             $      7,066   $        779 

Cash at Beginning of Year                                            779             -- 
                                                            ------------   ------------ 

Cash at End of Year                                         $      7,845   $        779 
                                                            ============   ============ 

Supplemental Disclosures:                                                               
    Interest Paid                                           $     22,815   $     15,366 
                                                            ============   ============ 

                 See Accompanying Notes to Financial Statements                         


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 TWISTER TRAILER MANUFACTURING, INC.
 Notes to Financial Statements
 December 31, 2002

Note 1 - Summary of Significant Accounting Policies                             

Nature of Operations - The Company was incorporated in 1995 as a Kansas         
corporation for the primary purpose of manufacturing livestock trailers. The    
Company also has a retail sales operation for Travalong Trailers.               

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

Cash Equivalents - Short-term investments which have an original maturity date  
of 90 days or less are included as cash equivalents in the statement of cash    
flows. There were no cash equivalents at December 31, 2002.                     

Accounts Receivable - Custom manufacturing of trailers requires a deposit from  
the customer. The balance of the sales price is due on completion and delivery  
of the unit. Retail sales of trailers require payment in full at the time of the
sale. The Company has no accounts receivable at December 31, 2002.              

Inventory - Inventories are valued at the lower of cost or market determined on 
a first-in, first-out (FIFO) basis.                                             

Property and Equipment - Property and equipment are stated at cost. Maintenance 
and repairs which do not improve or extend the useful lives of the assets are   
expensed as incurred. Additions and betterments are capitalized. Upon retirement
or replacement, the costs and accumulated depreciation are removed from the     
respective accounts and the difference is included in income.                   

Depreciation is provided over the estimated useful lives of the related assets  
using the declining balance method. Estimated useful lives vary between 3 and 39
years.                                                                          

Income Taxes - The Company has elected under the Internal Revenue Code to be    
taxed as an S Corporation. Under those provisions, the Company does not pay     
federal corporate taxes on its taxable income. Instead, the stockholder is      
liable for individual federal taxes on the Company's taxable income. There are  
no significant differences between financial and taxable income.                

Note 2 - Inventories                                                            

Inventory consists of the following:                                  

Work-in-Process                                  $      11,600
Trailers Purchased                                      34,088
Parts and Supplies                                      58,945
                                                 -------------
                                                 $     104,633
                                                 =============

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 TWISTER TRAILER MANUFACTURING, INC.
 Notes to Financial Statements
 December 31, 2002

Note 3 - Long-Term Debt and Notes Payable                                       

Long-Term Debt                                                                  

                                                        [Enlarge/Download Table]

Long-term debt consists of the following as of December 31, 2002:                         
                                                                                          
    Note payable to a bank, interest at 9.0%, monthly payments of $1,647,                 
         through July, 2016, collateralized by personal                                   
         guarantee from a related party                                    $      152,523 

    Note payable to a finance company, interest at 4.5%, monthly payments                 
         of $517, through May, 2006, collateralized by equipment and the                  
         personal guarantee from a related party                                   19,661 
                                                                           -------------- 
                                                                           $      172,184 
         Less current portion                                                     (11,346)
                                                                           -------------- 
    Net Long-Term Portion                                                  $      160,838 
                                                                           ============== 

Maturities of Long-Term Debt at December 31, 2002 are:                          

                   2003                              $          11,346
                   2004                                         12,161
                   2005                                         13,042
                   2006                                         10,127
                   2007                                          8,525
                   Thereafter                                  116,983
                                                     -----------------
                                                     $         172,184
                                                     =================

Current Notes Payable                                                           

The Company has two lines of credit:                                  
         (1)    A $70,000 line of credit with a bank of which $11,670 was unused
           at December 31, 2002. The note matures on June 17, 2003 and
        carries an interest rate of 7.5%. Interest is payable on
            maturity. The line of credit is collateralized by inventory,
        equipment and the personal guarantee of a related party.
         (2)    A $65,000 line of credit with a bank of which $14,075 was unused
              at December 31, 2002. The note matured on January 16, 2003 and
             was renewed at that time. It carries an interest rate of 1/2%
             below the bank's base rate. The interest rate at December 31,
       2002 was 8.00%. The line of credit is collateralized by
inventory.                                      

Note 4 - Related Party Transactions                                             

 The Company leases its manufacturing facility from its stockholder on a
month-to-month basis thru payment of the stockholder's mortgage payments on the 
property and the payment of property taxes. Rent expense for 2002 was $10,265   

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 TWISTER TRAILER MANUFACTURING, INC.
 Notes to Financial Statements
 December 31, 2002

Note 5 - Going Concern                                                          

The company has an equity deficit and their continued operations are  
dependent on additional financing or being acquired by a company that can       
provide this needed capital.                                                    

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘8-K’ Filing		Date		First		Last			Other Filings
		6/1/08		26
		12/31/06		26
		8/22/04		11
		1/1/04		26
Filed as of:		9/4/03
Filed on:		9/3/03		13
		9/1/03		23
		8/23/03		4
For Period End:		8/22/03		1		4			3,  8-K/A
		8/15/03		9					NT 10-Q
		7/18/03		2		14
		6/30/03		12					10QSB,  NT 10-Q
		6/23/03		17
		6/17/03		54
		6/4/03		26
		6/1/03		26
		5/29/03		17
		5/28/03		24		26
		5/27/03		9		26
		5/11/03		3					3
		5/1/03		45
		4/25/03		28
		4/4/03		48
		3/21/03		38
		2/19/03		25
		1/16/03		54
		12/31/02		12		55			10KSB
		2/11/02		12		22
		1/1/02		46
		12/31/01		12		52			10KSB,  NT 10-K
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