Edgar Filing: NUWAY MEDICAL INC

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

FORM 10-KSB
(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE TRANSITION PERIOD FROM _________TO __________

COMMISSION FILE NUMBER: 33-43423

NUWAY MEDICAL, INC. F/K/A NUWAY ENERGY, INC.
(Exact name of Registrant as specified in its charter)

DELAWARE 65-0159115
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(State or jurisdiction of incorporation or (IRS Employer Identification No.)
organization)

23461 SOUTH POINTE DRIVE, SUITE 200, LAGUNA HILLS, CA 92653
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(Address of principal executive offices, Zip Code

Registrant's telephone number, including area code: (949) 454-9011

Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $0.00067 Par Value

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

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

Issuer's revenue for its most recent fiscal year: $ -0-
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The aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
sold, or the average bid and asked price of such common equity, as of June 30,
2002 was $1,187,312.

The number of shares outstanding of the issuer's class of common equity as of
May 22, 2003 was 31,040,911.

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

TABLE OF CONTENTS

PART I

ITEM 1. DESCRIPTION OF BUSINESS Page 3
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ITEM 2. DESCRIPTION OF PROPERTY Page 16
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ITEM 3. LEGAL PROCEEDINGS Page 17
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Page 17
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PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS Page 18
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ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION Page 20
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ITEM 7. FINANCIAL STATEMENTS Page 31
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ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
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Page 31
PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION Page 31
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16(A) OF THE EXCHANGE ACT Page 34
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ITEM 10. EXECUTIVE COMPENSATION Page 35
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ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Page 38
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ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Page 40
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ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K Page 43
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ITEM 14. CONTROLS AND PROCEDURES Page 43
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SIGNATURES Page 44
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CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934,
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RULE 13A-14 AND 15D-14 AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 Page 45
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CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001 Page F-1
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EXHIBITS FILED WITH THIS REPORT
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PART I

ITEM 1. DESCRIPTION OF BUSINESS

OVERVIEW

NuWay Medical, Inc. (the "Company" or "NuWay") offers medical and health related
technology products and services with an initial focus on the health and
information software technology needs of the sports industry.

The Company's primary product is its Player Record Library System ("PRLS"), a
highly specialized electronic medical record and workflow process software
application designed to address the information technology needs of the sports
industry relating to player health including the immediate need to comply with
the Health Insurance Portability and Accountability Act ("HIPAA").

We market PRLS through our subsidiary NuWay Sports, LLC, a joint venture with ex
NFL football players formed in December 2002. NuWay Sports has recently signed
business agreements with several National Football League (NFL) teams and is
promoting its service to other NFL teams, the NFL League, NFL Trainers
Association, NFL Players Association and the NFL Player Safety Council. PRLS
will also be marketed to teams, leagues, and player associations in the National
Basketball Association (NBA), Major League Baseball (MLB), and other sports such
as hockey, soccer, boxing, motor sports, and entertainment sports. PRLS would
benefit not only professional sports, but also collegiate programs and in some
cases, high school athletics.

With PRLS, player medical data and images (x-rays, CT scans, MRIs, sonograms,
etc.) can be electronically acquired and archived in a digital format with
enough resolution to allow for medical diagnostics. The database of scanned
images and associated data is encoded, encrypted and password protected. The
records are accessible over a private network or the Internet, and can be
displayed, analyzed, and interpreted by team doctors and other authorized
officials. The system provides a complete audit trail of keystrokes and a
detailed workflow process for all users.

Competitive athletes require health management and training on a continual basis
throughout their career and NuWay's PRLS helps owners, players, trainers,
coaches, physicians, insurance companies, agents, attorneys and business
managers manage the athlete's health for maximum performance. Our marketing
slogan is "Maximum Technology for Maximum Performance."

BUSINESS DEVELOPMENT

NuWay was initially organized as Repossession Auction, Inc. under the laws of
the State of Florida in 1989. In 1991, the Company merged into a Delaware
corporation bearing the same name. In 1994, the Company's name was changed to
Latin American Casinos, Inc. to reflect its focus on the gaming and casino
business in South and Central America, and in 2001 the Company changed its name
to NuWay Energy, Inc. to reflect its new emphasis on the oil and gas development
industry. During October 2002 the Company's name was changed to NuWay Medical,
Inc. coincident with the divestiture of its non-medical assets and the retention
of new management with a new direction for the Company.

PLAN TO CHANGE BUSINESS FOCUS AND TURN AROUND THE COMPANY

Dennis Calvert was appointed president and CEO by the board of directors on June
28, 2002 to develop and execute an overall plan to redirect the business away
from its historically unprofitable focus on slot machine rentals, deep gas and
oil well exploration and cigar distribution towards its current business plan.
The board of directors and certain affiliates of the Company were aware of and
in support of that plan. That plan included the acquisition of certain
healthcare assets, the infusion of operating capital, the sale or disposal of
certain non-medical assets, and execution of the business plan. Camden Holdings,
Inc invested $250,000 during 2002 and was the only source of investment capital
during the year. While Mr. Calvert was successful in redirecting the Company's
business focus, $250,000 was not sufficient to accomplish the complete
turnaround of the business and the sale and disposal of former operating
divisions generated no cash to the Company because of their limited
marketability and increasing liabilities. These factors and the increased
operational activity of the Company led to a significantly increased level of
reliance upon the Company's 2002 Consultant Equity Plan and its 2003 Stock
Compensation Plan as more fully described in this filing document.

During the first quarter ending March 31, 2003, the Company made substantial
progress in its new business plan, creating a market ready product, landing
contracts with highly valued customers, and, according to customers and
prospects (and in the opinion of Management), distinguishing itself as a
marketplace leader in its area of expertise. However, the relative success or
failure of the new plan is not yet proven and Management believes it will only
be able to confirm that success when the Company achieves profitability.

NAME CHANGE

On July 19, 2002, the board of directors approved an amendment to the Company's
Certificate of Incorporation to change the name of the Company from "NuWay
Energy, Inc." to "NuWay Medical, Inc." (the "Name Change"). On August 12, 2002,
consenting stockholders representing 3,930,183 shares of a total 7,761,353
shares outstanding issued a consent approving the Name Change. It was the
opinion of the Board and the consenting shareholders that the Name Change was
desirable to more accurately reflect the nature of the ongoing business and
operations of the Company. The effectiveness of the Name Change was subject to
our compliance with Regulation 14C of the Securities and Exchange Act of 1934,
as amended, and NASDAQ regulations, including all requisite filings, which was
accomplished. The filing was made on September 23, 2002 and the Name Change
became effective October 30, 2002 upon the filing of the Amended Certificate of
Incorporation with the Secretary of State of Delaware.

INCREASE IN AUTHORIZED SHARES

On July 19, 2002, the board of directors approved an amendment to the Company's
Certificate of Incorporation increasing the authorized common stock from
15,000,000 to 100,000,000 shares, and authorizing the issuance of up to
25,000,000 shares of preferred stock, with terms to be defined at the time of
issuance. As detailed in the Form 14C filed on September 23, 2002, stockholders
owning 3,930,183 shares of the 7,761,353 total shares of common stock then
outstanding, consented to the increase in authorized common stock and the
creation of a preferred class of 25,000,000 shares. The amendment to the
Certificate of Incorporation was filed with the Delaware Secretary of State on
December 27, 2002.

PURCHASES NOT IN THE ORDINARY COURSE OF BUSINESS

GENESIS HEALTH TECH TRANSACTION

On June 28, 2002, the Company purchased certain assets from Genesis Health Tech,
Inc. ("Genesis"), a wholly owned subsidiary of Camden Holdings. These assets
included a database to be used for marketing NuWay's products and services.
Genesis compiled this database over a 24-month period and it includes a
comprehensive listing of healthcare providers in the United States, representing
a valuable marketing tool for phone, mail and direct marketing purposes. The
total purchase price was satisfied by the issuance of 666,667 shares of NuWay
restricted common stock. The transaction received the consent of a majority of
the stockholders. As detailed in the Form 14C filed on September 23, 2002,
stockholders owning 3,930,183 shares of the 7,761,353 total shares of common
stock then outstanding, consented to the transaction.

MED WIRELESS TRANSACTION

By way of an agreement, dated July 16, 2002, and amended August 21, 2002, the
Company acquired a 15-year, fully paid license to certain technology (described
below) from Med Wireless, Inc., a Nevada corporation ("Med Wireless"). As
detailed in the Company's prior filings, pursuant to this license agreement (i)
the Company would license from Med Wireless all of its rights and interest in
certain software applications relating to the movement of medical images and
data over the Internet and via handheld wireless devices as well as customer
lists; (ii) Med Wireless would assign its customers and distribution agreements
related to the licensed intellectual property to the Company; and (iii) the
Company would assume $1,120,000 of outstanding debt. In return, NuWay would
issue to the Med Wireless shareholders 6,600,000 shares of NuWay's restricted
common stock. When effectuated, the Med Wireless Agreement resulted in Med
Wireless shareholders owning approximately 44 percent of the Company's
outstanding shares. Two affiliated parties (Camden Holdings, Inc. and Summit
Healthcare, Inc.), each with minority interests in the Company, also own
minority interests in Med Wireless either directly or indirectly. Shareholders
owning 3,930,183 shares of the 7,761,353 shares then outstanding consented to
the transaction with Med Wireless. As a result of Mr. Calvert's agreement to
become the president of Med Wireless, Inc. on or about June 15, 2002, he
received in the name of New Millennium Capital Partners, LLC a right to, but not
the actual certificates for, a total of 1,327,700 shares of stock in Med
Wireless, Inc., representing 9.9% of the total number of shares of Med Wireless,
Inc., and received those shares by virtue of a corresponding reduction of shares
then currently held by Camden Holdings, Inc., which, upon its effective date,
resulted in New Millennium Capital Partners, LLC receiving 600,000 shares of
NuWay from the Med Wireless transaction with NuWay. Mr. Calvert was asked by the
board of directors to become president of NuWay Medical, (formerly NuWay Energy,
Inc.) for the purpose of executing the Plan to Change Business Focus and
Turn-Around the Company as referenced above.

Med Wireless develops applications for the medical industry that integrates
software, hardware, wireless technology and broadband delivery systems to
improve communications, increase diagnostic accuracy, and provide efficient
storage and retrieval of clinical information via the Internet. Over the course
of four years of research and development, Med Wireless represented that it had
spent nearly $5,000,000 to create a broad range of technology solutions for
hospitals, physicians, physician practice groups, nurses, administrators,
laboratories, pharmacies, and other provider organizations.

One portion of this technology known as "MedCast" was key to NuWay Sports'
ability to quickly implement its PRLS system while realizing significant R&D
savings. MedCast technology allows for the acquisition, delivery and storage of
ultrasound, MRI, X-RAY and CAT Scan images over a secure wireless or broadband
connection, assuring the highest quality and broadest availability of this
medical information. Med Wireless' proprietary compression algorithms allow for
real-time transmission of "diagnostic quality" medical images over the Internet
to be viewed online in real time.

With a few modifications, Med Wireless's unique MedCast communication and
compression technologies and high-availability server clusters formed the robust
backbone of PRLS. With these key technology elements in place, NuWay Sports was
able to focus its resources on developing the front-end and user interface of
the PRLS product.

FORMATION OF NUWAY SPORTS, LLC

In December 2002, NuWay entered into a joint venture agreement with Rasheed and
Associates (founded by former NFL player and Academic All-American Kenyon
Rasheed) to form a California limited liability company called "NuWay Sports
Medicine Ventures, LLC." The LLC was formally registered with the California
Secretary of State during January 2003 and the name was later changed to "NuWay
Sports LLC" ("NuWay Sports"). NuWay Sports is owned 51 percent by NuWay Medical,
Inc. and 49 percent by Rasheed and Associates.

SALES OF ASSETS NOT IN THE ORDINARY COURSE OF BUSINESS

In order to focus on our primary business opportunity, we divested our non-core
businesses during the year 2002. These businesses included a slot machine rental
and remanufacturing subsidiary in South and Central America, the distribution
and sale of premium brand cigars, and an oil and gas development subsidiary in
Canada. The stock of both the slot machine rental subsidiaries (Latin American
Casinos Del Peru S.A., a Peruvian corporation and Latin American Casinos of
Colombia LTDA, a Colombian corporation), and the oil and gas subsidiary, NuWay
Resources, Ltd., were sold effective October 1, 2002. The cigar business was
shut down and discontinued effective November 30, 2002.

A description of the discontinued operations is as follows:

LATIN AMERICAN CASINOS SUBSIDIARIES - HISTORY AND SALE

The Company entered the gaming and casino industry in Peru in 1994. Since
January 1995, the Company had been engaged in the renting of slot machines and
other gaming equipment to licensed gaming establishments in various cities
through its wholly owned subsidiaries Latin American Casinos Del Peru S.A., a
Peruvian corporation and Latin American Casinos of Colombia LTDA, a Colombian
corporation. In 1994, the Company formed its Peruvian subsidiary, and in late
1995 the Company formed its Colombian subsidiary.

The Company had concentrated its efforts on the rental of used five reel slot
machines. These machines were purchased at a fraction of the cost of new
machines and were refurbished for use in South and Central America. As of
September 30, 2002, the Company had approximately 300 machines under rental
contracts in Peru and Colombia.

On December 15, 2002, the Company entered into an agreement to sell 100 percent
of the stock of the Latin American Casinos subsidiaries, with an effective date
of October 1, 2002. The Company realized no cash from the sale of those
operating units, but was able to contractually insure that NuWay would retain no
liabilities related to this business after October 1, 2002. As a result of the
sale, the Company recorded a loss of $1,376,733 during the fourth quarter of
2002.

WORLD'S BEST RATED CIGAR COMPANY - HISTORY AND SALE

In September 1997, the Company incorporated World's Best Rated Cigar Company, as
a wholly owned subsidiary to distribute premium cigars within the United States.
During November 2002, the Company discontinued operations and disposed of the
remaining inventory and other assets. A loss of $179,750 was recorded in the
fourth quarter of 2002 as a result of this disposal.

NUWAY RESOURCES, LTD. - HISTORY AND SALE

Since July 2001, the Company directed part of its efforts to oil and gas
exploration and development in Canada. The Company (through its wholly owned
subsidiary NuWay Resources, Ltd., a Nevada corporation) purchased a 30 percent
working interest in the Superb area of Saskatchewan, Canada and a 20 percent
working interest in the Altares Gas project in Northeast British Columbia. The
subsidiary's ownership interests in the oil fields were characterized as
"minority" ownership working interests. This classification meant that future
development and capital expenditures and losses would be directed by the
controlling owners, (who were parties unaffiliated with the Company) and not
NuWay. Despite that lack of control, NuWay would continue to be obligated to
share in the costs on a pro-rata basis.

While these properties had proven reserves of oil and natural gas, the
controlling owners ultimately found the extraction and processing of the natural
reserves had become too difficult and too costly to continue. Neither project
had generated positive cash flow to NuWay after considering the cost of
development and administrative and management expenses. Further, neither project
had any expectation of generating positive cash flow to the Company for the
foreseeable future, and as a working interest owner, the NuWay would be liable
for the cost of continued development, maintenance and re-drilling efforts. The
managing owners of the properties have significant ownership interests in other
oil and gas projects and they had communicated to management their intent to
invest their resources in other projects, rather than focus on these properties.

On September 3, 2002, the Company indicated in a press release that it intended
to spin off the oil and gas subsidiary NuWay Resources, Ltd. into a separate
public company. At that time, the Company began negotiations with the senior
ownership party in Canada to determine the value and explore the feasibility of
such a plan. At the same time, the Company began a process to determine if
additional energy related assets could be acquired by the subsidiary as part and
parcel to the spin-off. Management was notified during these negotiations (in
the fourth quarter) that the senior management partner intended to redirect
their business focus away from these assets and into more lucrative properties.
The uncertainty as to the future disposition of the assets, as well as
uncertainty of the potential for additional capital call provisions and thus
unknown future liabilities made the spin-off unworkable.

BUSINESS OF THE COMPANY

COMPANY OVERVIEW

NuWay offers medical and health related technology products and services with an
initial focus on the health and information software technology needs of the
sports industry.

The Company, through its joint-venture subsidiary, NuWay Sports, LLC, markets
the "Player Record Library System", or "PRLS". PRLS (described in detail below)
is an electronic medical record and workflow process software application
designed to address the specialized information technology needs of the sports
industry relating to player health including the immediate need to comply with
the Health Insurance Portability and Accountability Act ("HIPAA").

The Company also is involved in sports event management services as demonstrated
in its work with the Texas Sports Combine described below. It has invested time
and development in an ultrasound rental business subject to financing which has
yet to be obtained.

While the Company's competition is robust and highly competitive, the Company
distinguishes itself by its uniquely designed and sports oriented focus for its
niche market. The Company acquired its core technology through its 15 year
license agreement with Med Wireless and has invested considerable time and money
with a technology development team that continues to enhance and update the
products. At the current time, the Company is reliant on a narrowly defined
sports industry customer base for its primary source of revenue. The Company
expects to apply its technology to additional vertical markets as they are
identified. The core technology is unique, proprietary and custom designed.

MANAGEMENT

Our management has been active in the healthcare industry since 1986 and has
experience and demonstrated competency in the creation, transfer, management,
compression, communication, storage and organization of medical information in a
digital format. Our information technology team was instrumental in the
development of the technology developed by Med Wireless and licensed by NuWay
Medical prior to the formation of NuWay Sports. Furthermore, members of NuWay's
business team, including Mr. Calvert and several consultants, were competitive
athletes in collegiate Division I basketball, collegiate Division I baseball,
collegiate Division I football, professional soccer, professional baseball and
motocross. Having dedicated a significant portion of their lives to sports, they
are familiar with player and team healthcare needs.

PRODUCTS AND SERVICES

The Company's products and services consist at the present time of its Player
Record Library System, its event management services, and its Ultrasound rental
program. Each of these is described below.

PLAYER RECORD LIBRARY SYSTEM ("PRLS")

The proprietary Player Record Library System, ("PRLS") PRLS is an electronic
medical record and work flow process software application designed to address
the highly specialized information technology needs of the sports industry
relating to player health. PRLS gathers images electronically, organizes them,
hosts them, and distributes them to authorized end users. It is designed to
deliver vital player medical information at the point of need. It helps teams
comply with the requirements of the Health Insurance Portability and
Accountability Act ("HIPAA"). The name Player Record Library System is the
creation of Rasheed and Associates and was marketed under that name for
approximately 18 months prior to the formation of NuWay Sports, LLC. This name
and its use was contributed to NuWay Sports by Rasheed and Associates at the
inception of NuWay Sports LLC.

Competitive athletes require health management and training on a continual basis
throughout their career and NuWay's PRLS helps owners, players, trainers,
coaches, physicians, insurance companies, agents, attorneys and business
managers monitor and manage the player's health for maximum performance.

With PRLS, player medical data and images (x-rays, CT scans, MRIs, sonograms,
etc.) can be electronically acquired, and archived in a digital format with
enough resolution to allow for medical diagnostics. The database of scanned
images and associated data is encoded, encrypted and password protected. The
records are accessible over a private network or the Internet, and can be
displayed, analyzed, and interpreted by team doctors and other authorized
officials. The system provides a complete audit trail of keystrokes and a
detailed workflow process for all users.

The PRLS system incorporates "MedCast" technology licensed from Med Wireless,
Inc. MedCast enables the acquisition, delivery and storage of ultrasound, MRI,
X-RAY and CAT Scan images over a secure wireless or broadband connection,
assuring the highest quality and broadest availability of this medical
information. Med Wireless' proprietary compression algorithms allowed for
real-time transmission of "diagnostic quality" medical images over the Internet
to be viewed online in real time.

At the core of the MedCast solution is a cluster of powerful database servers
running the Sybase relational database. These "DICOM-compliant" PACs servers are
designed to maintain data integrity and ensure secure communication utilizing
industry-standard 128-bit encryption. 100 percent fault tolerant servers are an
integral part of the MedCast solution. High availability is achieved by use of
"fail over" clusters, in which resources can automatically move between several
nodes in the event of a failure. Scalability is achieved by balancing the load
of an application across several servers.

The MedCast software solution consists of 3 key modules: Acquisition,
Communication and Access. The Acquisition Module is responsible for interfacing
with industry standard DICOM-compatible medical devices for the purpose of
acquiring medical image data and passing it on to a Communications Module. The
latter module is responsible for Compression, Encryption and Secure Transfer of
acquired medical data to our secure data storage facility. The Access module
allows authorized healthcare personnel to seamlessly access stored medical data
over the Internet. The ccess module utilizes Secure Socket Layers and 128-bit
encryption to ensure security of the sensitive medical data transmitted over the
Internet.

With a few modifications, MedCast's unique communication and compression
technologies, and high-availability server clusters formed the robust backbone
of PRLS. With these key technology elements in place, NuWay Sports was able to
focus its resources on developing the front-end and user interface for PRLS.

The basic PRLS software application will be sold on a license basis. Each
license sold will also have an annual maintenance fee at an amount equal to 20
percent to 30 percent of the initial cost of the application.

THE OPPORTUNITY

The PRLS system helps reduce liability cost at both the team and league level by
providing athletic trainers and their medical staff detailed information at the
point of treatment. In the last year, for example, teams, leagues and university
athletic departments have faced litigation brought by athletes (or their
families) totaling more than $600 million (notable examples include suits
brought by the families of Rashidi Wheeler of Northwestern University and Korey
Stringer of the NFL Minnesota Vikings).

TARGET MARKET FOR PRLS

We intend to sell a menu of sports related products and services through our
subsidiary, NuWay Sports with an emphasis on our Player Record Library System,
("PRLS").

NuWay Sports is actively marketing the PRLS system throughout the professional
and collegiate sports industry. The initial response has been encouraging. The
flexibility of the core technology was demonstrated by the Company's rapid and
successful implementation of a scaled down version of the PRLS product for the
2003 NFL Combine, which took place in Indianapolis, Indiana the week of February
17, 2003. The Company is promoting its full scale PRLS product to other NFL
teams, the NFL League, and NFL Players Association. PRLS will also be marketed
to other teams, leagues, and player associations such as the National Basketball
Association (NBA), Major League Baseball (MLB), and other sports including
hockey, soccer, boxing, motor sports, and entertainment sports. PRLS can benefit
not only men's and women's professional sports, but also collegiate programs and
in some cases, high school athletics.

Professional sports in the United States includes 32 NFL Teams, 30 NBA Teams, 30
NHL Teams, 30 MLB Teams, 12 MLS Teams, 8 WUSA Teams, 19 AFL Teams, 16 WNBA
Teams, 115 Division 1A Athletic Departments, 50 CONCACAF International Club
Soccer Teams, 250 collegiate Division 1AA Athletic Departments, 40,000
high-schools, and players' unions for each of the professional sports leagues.
PRLS is also suited to boxing, extreme sports, entertainment sports and motor
sports.

SALES AND IMPLEMENTATION

Rasheed and Associates, managed by Kenyon Rasheed, leads the sales effort on
behalf of NuWay Sports. Rasheed and Associates' sales force is comprised of an
extensive network of former professional and collegiate athletes who have the
contacts and relationships to reach out to most of the major sporting
organizations in the United States and to expand that reach worldwide. NuWay
Medical is funding the development of NuWay Sports' products and is providing
additional management support.

2003 NFL COMBINE

NuWay Sports was invited to participate in the 2003 NFL Combine held the week of
February 17, 2003, in Indianapolis Indiana. The "NFL Combine" is an annual event
held by the NFL to evaluate the top collegiate prospects available for selection
in the upcoming NFL draft. These NFL prospects are put through intensive
physical, mental, athletic and medical evaluations by coaches, trainers and
doctors for the benefit of NFL owners, trainers and team physicians. The teams
use this information in evaluating which athletes to draft with their valuable
and limited draft choices.

NuWay Sports contracted with the NFL Combine to implement a scaled down version
of its PRLS system to digitally store the medical records created at the 2003
NFL Combine. After the Combine was completed, the Company was given access to
the approximately 60,000 medical images taken of the draft prospects and we
converted those images to a digital format and implemented a proprietary system
for use by the NFL teams. The Company sold access to these images to 18 of 32
NFL teams and acted on this business opportunity in less than 30 days.
Additionally, NuWay Sports trained each team on the system and was able to
provide a real time demonstration for each NFL team under contract.

SPORTS EVENT MANAGEMENT SERVICES

In addition to PRLS, NuWay Sports offers its clients sports industry related
events and promotion services, product and services marketing and sales and
distribution services. A recent example of the Company's involvement in sports
event management is the Texas Sports Combine.

TEXAS SPORTS COMBINE

The Texas Sports Combine was held on May 17, 2003 on the campus of Houston's
Reliant Park. Approximately 6,000 high school athletes from the greater Houston
Metropolitan area were registered to attend. The Combine is an event where
physicians from the Baylor Sports Medicine Institute in partnership with
physical therapists from The Institute of Rehabilitation Research (TIRR) provide
thorough physical exams for the high school athletes attending, as required for
their participation in athletics. The player participants also enjoy a variety
of entertaining activities and interesting exhibitions. NuWay was asked to
assist in the event as a co-event coordinator to help bring current and retired
professional athletes to interact with the high school students and their
parents as well as facilitate informal discussions on recruiting, sports
specific training, life as a student athlete or professional athlete, etc. We
assisted in securing corporate participation to help underwrite the costs of the
event for this year and future events. We will work with Baylor Sports Medicine
Institute to create a PRLS library of the reports generated for each athlete
attending the event.

ULTRASOUND AND MED WIRELESS RELATED ASSETS
Included in the license from Med Wireless, Inc. were relationships developed by
Med Wireless for the distribution of ultrasound machines used primarily by
obstetricians. The Company developed a sale and leaseback program and made a
public announcement by press release on January 7, 2003, that it received over
$7 million in orders that were contingent on obtaining financing for the
equipment. The sale and leaseback program was designed to provide inventory
financing for the Company. Under this plan, the Company would sell ultrasound
machines to third parties who would then in turn lease back the equipment to the
Company. The Company then would rent the machines to medical providers at a
premium to its cost. The $7 million in orders were comprised of 33 separate
orders by third parties for machines at a cost of $224,178 per machine. However,
as disclosed in the press release, financing was necessary to complete the
sales. The Company also indicated that with financing in place it expected to be
able to generate more than $20 million in sales during the first quarter of
2003. This expectation was based on the speed in which we obtained the orders
and management's discussions with finance brokers regarding the Company's
ability to obtain financing for these orders. Since that announcement the
Company spent considerable effort to obtain financing for these orders,
including the retention of multiple finance brokers. However, despite these best
efforts, the Company has yet to obtain financing for this equipment. The
principal reason these orders have not been financed successfully is the
Company's lack of credit worthiness. However, the business opportunity related
to the ultrasound lease program remains viable and management intends to
continue to review financing options and business opportunities related to the
ultrasound business when the Company has sufficient credit resources to qualify
as a borrower as well as evaluate its practical execution in light of all other
business developments in the Company at the time it is financially feasible.

THE MARKET

The Company's intellectual property and core technology has practical
applications and business opportunities in multiple industries. The Company has
demonstrated its ability to rapidly take advantage of these opportunities
through its successful execution of NuWay Sports' PRLS product offering to
service the 2003 NFL Combine.

NuWay Sports is actively marketing the PRLS system throughout the professional
and collegiate sports industry. The initial response has been encouraging. In
addition to its success at the NFL Combine (discussed above) it is promoting its
service to other NFL teams, the NFL League, and NFL Players Association. PRLS
will also be marketed to teams, leagues, and player associations in the National
Basketball Association (NBA), Major League Baseball (MLB), and other sports such
as hockey, soccer, boxing, motor sports, and entertainment sports. PRLS can
benefit not only professional sports, but also collegiate programs and in some
cases, high school athletics.

Professional sports in the United States includes 32 NFL Teams, 30 NBA Teams, 30
NHL Teams, 30 MLB Teams, 12 MLS Teams, 8 WUSA Teams, 19 AFL Teams, 16 WNBA
Teams, 115 Division 1A Athletic Departments, 50 CONCACAF International Club
Soccer Teams, 250 Division 1AA Athletic Departments, 40,000 high-schools, and
Player's Unions for each the Professional Sports Leagues. PRLS is also suited to
boxing, extreme sports, and entertainment and motor sports.

OTHER OPPORTUNITIES

The core technology, which comprises database management, communications systems
integration, user interface design and integration, web design, and e-commerce
solution capabilities, has practical applications that create business
opportunities in multiple industries. For example, the same advanced compression
technology that enables MedCast transmissions also enables us to offer hospitals
an inexpensive storage solution to meet federal mandates for maintaining
archival copies of diagnostic images. In addition to handling diagnostic imagery
recorded through MedCast, our data storage service is designed to provide
secure, off-site back up of a myriad of other medical records.

The Company intends to offer these applications and service capabilities to
other companies on a contract basis. In addition to sports medicine and broader
medical applications, there are numerous other potential vertical markets for
the core technology. Some examples include:

1. Department of Defense
2. Human Resources
3. Employers with High Physical Wellness Requirements (examples)
a. Law Enforcement
b. Emergency Personnel
c. Public Transportation Services
4. Health/Life Insurance Underwriting

NuWay Sports has an extensive network of relationships in the sports industry.
The Company is able to tap a worldwide network of former professional athletes
and related professionals to assist in the deployment of products and services.
In addition to PRLS, NuWay Sports offers its clients sports event management and
promotion services, product and services marketing, sales and distribution
services.

The Company intends to pursue these opportunities as they materialize. The
Company also intends to acquire companies to take advantage of economies of
scale and vertical market opportunities as well as pursue similar business
opportunities like NuWay Sports.

COMPETITION

There are several companies offering HIPAA compliance software solutions and
medical image transfer/management systems. Many are considerably larger and have
greater financial resources than NuWay Medical. There are few that integrate
systems to a unique customer workflow and even fewer marketed in the way that
NuWay markets its products. NuWay Sports is unique in its exclusive focus on the
sports industry.

The field is highly competitive and we compete with companies that are better
established and better capitalized. The Company distinguishes itself by its
product design, user interface and proprietary distribution and marketing
capabilities.

Compared to competitive products or the closest products available today the
Company's products are uniquely designed and geared towards the sports industry
and they can support its site-specific design and build capabilities. The
ability to adapt systems to the needs of a specific location is a unique
capability.

Significant competitors of whom the Company is aware are as follows:

GE MEDICAL SYSTEMS

GE Medical Systems Information Technologies is a leading global
provider of integrated clinical workflow solutions for the healthcare
industry. They are well capitalized and established. They help
healthcare providers streamline their workflow and move patients,
resources, and information across the continuum of care with maximum
efficiency. They combine advanced medical technologies and algorithms,
with years of clinical workflow experience and industry-leading
healthcare IT expertise. They back it all with support. GE generates
more than $11 billion in annual revenues and of that, the information
technology division represents more than $2 billion.

Data Acquisition and Analysis Systems offered by GE include:

- Monitoring systems and cardiac devices that acquire clinical
data.

- Communication Networks: GE's Unity Network(R) offers the option
of real-time, wireless and broadband communications.

- Information Systems: GE's Centricity Information Systems provides
a comprehensive central, source of patient and clinical data, to
enable faster diagnosis and better treatment.

- Services: GE offers a portfolio of IT Professional Services for
network design, application development, and systems integration,
as well as Technical Support Services.

SIEMENS

Siemens offers a wide array of technologically advanced solutions
including the new Online Medical Record module, which runs on the
proven Siemens Enterprise Document Management Platform. The Siemens
Online Medical Record with a browser-based user interface acts as an ex
tension of patient management and clinical applications as well as a
bridge to a web-based, paperless environment.

ERGO PARTNERS (EMERITUS)

Ergo Partners has a sophisticated Electronic Medical Record (EMR)
software system, called "EMERITUS," for physician and nursing clinical
documentation. It is a patient-centric electronic clinical
documentation system. It combines Ergo's Health Observation Language
with industry standard languages into a vast collection of dialogs to
support clinical documentation. Emeritus utilizes a comprehensive
selection of researched clinical languages to provide clinical
documentation of the patient encounter involving all health care
disciplines and in all health care settings. Physicians, Physicians
Assistants, Nurse Practitioners, Nurses, Therapists and Aides can all
use EMERITUS to facilitate a complete patient medical record. Complete
clinical detail can be recorded at the point of care.

MAGNA INFOTECH

Magna EMR is a comprehensive, customizable, Electronic Medical Record
system for doctors and hospitals. Magna EMR is secure, and the patient
registration data is saved in the encrypted format, for extra security.

COMMEDICA LTD.
ComMedica offers three technology solutions. PIRILIS includes a central
database combining workflow capability, compression, encryption and
DICOM in a single solution for managing patient information for the
delivery of patient care across radiology, cardiology and
ophthalmology. ComMedica claims to bring immediate competencies in
clinical data and image handling through their three technology
offerings: ComMedica Image Viewer, ComMedica PACS Broker and ComMedica
Image Server. The ComMedica Image Viewer claims to be one of the most
complete and powerful DICOM Viewers on the market today capable of
handling DICOM files of any modality (X-Ray angiogram, ultrasound, CT,
MRI, Nuclear Medicine), compression, depth or color. The ComMedica PACS
Broker connects Imaging departments such as radiology, cardiology and
ophthalmology to the various information systems in the hospital
including diverse imaging modalities, physiological recording devices,
information and administrative software.
According to ConMedica's website, "ComMedica's flagship product,
PIRILIS, is the world's most sophisticated web-based clinical record
system. At the heart of PIRILIS is a central database combining
workflow capability, exceptional compression and encryption
technologies for medical data and images, and ComMedica's unique and
complete DICOM library. The result is a powerful universal solution for
managing patient information.

PIRILIS allows all forms of health record, including textual, graphical
and complex imaging data to be shared securely at the point of clinical
decision-making - anywhere and any time using any browser on a
web-connected computer. PIRILIS is a scalable solution, which
integrates seamlessly into existing systems, thereby capitalizing on
previous investments in hardware and software."

Rasheed and Associates worked with ComMedica for approximately seven
months during 2002 to develop a product specifically for the sports
markets, prior to forming the relationship with NuWay. Rasheed and
Associates consulted with the staff at ComMedica about its experiences
in the sports market and his research about how to serve that
clientele. Prior to Rasheed and Associates' involvement, ComMedica had
no sports specific product. That relationship ended prior to the
formation of NuWay Sports, LLC when the parties could not agree on
economic terms.

SDMS LTD.
SDMS Ltd is a leading UK provider of Staff Development, Training
Administration, Personnel, and Human Resource Management Systems and
has developed a Sports related product serving the UK Football
industry.

Its current product range includes: Software for Personnel Management
and Administration, Staff Development Management, Recruitment and
Selection Management, Training Evaluation, Skills and Experience Audit,
NVQ / SVQ and Learning Skills Management, Training Needs Analysis, IIP
and Training Planning, Academy and Professional Players and Football
Management. Software for employee appraisals and staff reviews as well
as specialist software for Head Teacher Appraisal and Teacher appraisal
also is available. Products are available in Specialist Editions to
suit the unique requirements of particular organizations such as social
service organizations, businesses or football clubs).

ETRAUMA

On August 13, 1999 eTrauma acquired substantially all the assets of
RemoteImage, LLC, a company headquartered in Glendale, Arizona.
eTrauma, LLC merged into eTrauma.com Corp on May 17, 2000. eTrauma
Corporation is a private, closely held Delaware corporation formed in
June 1999 for the purpose of developing Internet based technology for
use by the medical community. The Company was the first to market an
Internet, web-centric, emergency medical imaging solution enabling
healthcare providers to make more informed medical decisions using a
web browser.

NuWay has differentiated itself from the competition with an integrated product
offering designed for the specific needs of the sports industry.

STRATEGIC PARTNERS

THINK TANK SYSTEMS
In February 2003, the Company formed a strategic alliance with Think Tank
Systems LLC, an IBM(R) Premier Business Partner. Think Tank Systems designs,
builds, and supports technology and e-business infrastructures that are wholly
aligned with their customers' short and long-term business goals. As an IBM(R)
Hardware and Software Premier Business Partner their solutions are aligned with
IBM strategic technology offerings, including eServer xSeries and pSeries, AIX,
Linux, Lotus messaging and collaboration, and Tivoli storage. Think Tank is also
a Cisco Premier Business Partner.

The alliance with Think Tank will allow us to value-add our PRLS system with a
range of IBM products.

RADLINK, INC.

In February 2003, the Company formed a strategic alliance with Radlink, a
digital medial image management specialist. Radlink provides a complete range of
medical-film-to-digital-image conversion, storage and delivery services to
healthcare providers worldwide. Its mission is to combine high performance
equipment technologies and Internet capabilities to provide customers with high
quality image acquisition and Internet Image Management services at a level of
economic ease that is unprecedented in the healthcare industry.
With, Radlink, NuWay can offer a sports team a complete digital medical image
management program that helps the team manage its medical images and medical
records as well as allowing its trainer to further manage his workflow process.

REGULATORY ENVIRONMENT

Federal regulations regarding the privacy and reporting standards for medical
records have been enacted with the Health Insurance Portability and
Accountability Act, ("HIPAA") taking affect in April of 2003. HIPAA. Relative to
the Sports Industry, HIPAA requires that organizations that have access and
control over health information maintain the privacy of that information and
that upon request, a patient/player must be provided with a legible, complete
and understandable copy of their medical record.

PRLS helps its user comply with HIPAA and helps provides better and more timely
information related to the health of a player.

EMPLOYEES

At December 31, 2002, NuWay employed 3 full time employees, while at December
31, 2001 NuWay had 32 full-time employees. Also, at May 22, 2003, NuWay employed
3 full time employees. The principal reason for the decline in headcount from
year to year is the change in business focus and the divestiture of non-medical
operations during 2002. NuWay has had numerous project oriented consultants
since June of 2002. It currently has an expectation of maintaining ongoing
consulting agreements with another 12 individuals who perform work on behalf of
the Company as independent contractors on an as-required basis. All independent
contractor agreements are short-term or on a project-by-project basis. The
Company intends to add some of these consultants to its full time staff as
employees and add additional staff members on an as needed basis. Based on its
anticipated growth in revenues, the company expects to add possibly 20 full time
employees before the end of the year.

ITEM 2. DESCRIPTION OF PROPERTY

The Company maintains its principal place of business at 23461 South Pointe
Drive, Suite 200, Laguna Hills, CA 92653 Phone: 949-454-9011 Fax: 949-454-9066

The lease for the office is currently on a month-to-month basis, cancelable by
either party with sixty days' written notice. Monthly rent is $7,850 payable in
NuWay restricted stock valued at the current market price.

ITEM 3. LEGAL PROCEEDINGS

The Company is party to various claims, legal actions and complaints arising in
the ordinary course of business. In the opinion of management, no such matters
will have a material adverse effect on the Company's financial position or
results of operations.

During 2002, Ms. Geraldine Lyons, the Company's former Chief Financial Officer,
sued the Company for breach of her employment contract. The lawsuit is venued in
the Circuit Court of the 11th Judicial Circuit in Miami-Dade County in the state
of Florida and was initiated by the filing of the complaint in June-2002. The
principal parties in the case are Ms. Lyons, the Company, and the Company's
former president Todd Sanders. The amount at issue in her affirmative claim is
the sum of approximately $25,000 due under the contract, and the issuance of
100,000 shares of common stock, with a guarantee that the stock could be sold by
Ms. Lyons for $300,000. Ms. Lyons alleges that additional funds are due under
her employment contract; that the contract requires the Company guarantee that
she can sell for $300,000 the 100,000 shares of stock the Company is required to
issue her; and, that Mr. Sanders promised to purchase from her 100,000 shares of
Company common stock held by her at the price of $4.00 per share. The Company
has counter-sued Ms. Lyons for breach of fiduciary duty, fraud, violation of
section 12(a)(2) of the 1933 Securities Act, violation of section 517.301 of the
Florida Statutes, negligent misrepresentation, conversion, and unjust enrichment
resulting from the required restatement of the Company's financial statements
for the years ended December 31, 2000 and December 31, 1999. The restatements
corrected the previous omission of certain material expenses related primarily
to compensation expense arising from warrants issued and repriced stock options,
as well as other errors. The case is ongoing at this time. The Company intends
to vigorously defend its actions and pursue its affirmative claims to the
fullest extent possible. Management does not expect that this case will have a
material adverse effect on the Company's financial position.

In December 2002, the Company settled an outstanding lawsuit filed by Devenshire
Management Corp., a company owned by NuWay's former president Todd Sanders. The
settlement involved no payment of cash by the Company, and resolved all issues
relating to the Company's obligation to remove restrictive legends from stock
owned by Devenshire. As part of this settlement the Company agreed to defend,
but not indemnify, Mr. Sanders in the Lyons lawsuit described immediately above.

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

None.

PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS

MARKET INFORMATION

From June 20, 1994 until October 30, 1998, the Company's Common Stock and
Warrants were listed on the NASDAQ Stock Market under the symbol "LACI" and
"LACIW", respectively. Beginning in October 31, 1998, the Company's Common Stock
and Warrants were listed on the NASDAQ Small Cap Market. In August 2001, the
Company changed the symbol of its Common Stock and Warrants to "NWAY" and
"NWAYW" respectively. On November 22, 2002 the Company changed its symbol to
"NMED" and "NMEDW".

The table below represents the quarterly high and low bid prices for the
Company's Common Stock and Warrants for the last two fiscal years as reported by
NASDAQ.

Common Stock High/Low Bid Prices:

---------- -------------- ----------------- -----------------
High Bid Price Low Bid Price
---------- -------------- ----------------- -----------------
2002 4th Quarter $0.60 $0.13
---------- -------------- ----------------- -----------------
3rd Quarter $1.00 $0.15
---------- -------------- ----------------- -----------------
2nd Quarter $1.66 $0.23
---------- -------------- ----------------- -----------------
1st Quarter $2.12 $1.25
---------- -------------- ----------------- -----------------
2001 4th Quarter $2.99 $1.67
---------- -------------- ----------------- -----------------
3rd Quarter $3.28 $2.10
---------- -------------- ----------------- -----------------
2nd Quarter $3.15 $2.00
---------- -------------- ----------------- -----------------
1st Quarter $4.25 $2.00
---------- -------------- ----------------- -----------------

Warrants High/ Low Sales Prices:

---------- -------------- ----------------- -----------------
High Sales Price Low Sales Price
---------- -------------- ----------------- -----------------
2002 4th Quarter $.12 $.01
---------- -------------- ----------------- -----------------
3rd Quarter $.14 $.07
---------- -------------- ----------------- -----------------
2nd Quarter $.26 $.14
---------- -------------- ----------------- -----------------
1st Quarter $.40 $.25
---------- -------------- ----------------- -----------------
2001 4th Quarter $0.58 $0.25
---------- -------------- ----------------- -----------------
3rd Quarter $0.85 $0.50
---------- -------------- ----------------- -----------------
2nd Quarter $1.03 $0.50
---------- -------------- ----------------- -----------------
1st Quarter $1.87 $0.56
---------- -------------- ----------------- -----------------

The closing price for the Company's common stock on May 22, 2003 was $0.181 per
share.

The NASDAQ Stock Market suspended trading of the Company's securities as of
March 11, 2002 pending discussion with the Company concerning the Company's
restatement of its financial statements for the years ending December 31, 1999
and 2000. There is pending litigation against the Company's former Chief
Financial Officer (Geraldine Lyons) regarding this restatement. (See Item III,
Legal Proceedings). Trading was reinstated on April 18, 2002.

HOLDERS OF COMMON EQUITY

There were 292 registered owners and approximately 1,285 beneficial owners of
the Common Stock of the Company as of December 31, 2002.

At December 31, 2002, the Company had outstanding 300,000 private five year
warrants to purchase common stock. These warrants allow for the holder to
purchase shares of common stock at an exercise price of $1.75 per share through
December 11, 2005. Also at December 31, 2002, the Company has outstanding 65,000
incentive stock options issued under its 1994 Incentive Stock Option Plan. The
Company also has 100,000 warrants outstanding that were granted in 2002 to a
former executive in connection with his resignation.

As of December 31, 2002, the Company had outstanding 1,725,000 publicly traded
Warrants to purchase one share of the Company's Common Stock at an exercise
price of $3.00 through December 11, 2002, which were extended to December 11,
2003 by the board of directors on October 13, 2002.

DIVIDENDS

During the years 2001 and 2002, the Company has not declared or paid a cash
dividend to stockholders. The board of directors presently intends to retain any
earnings to finance Company operations and does not expect to authorize cash
dividends in the foreseeable future. Any payment of cash dividends in the future
will depend upon the Company's earnings, capital requirements and other factors.

EQUITY SECURITIES SOLD WITHOUT REGISTRATION

The Company made the following sales of unregistered securities during the
fiscal year ended December 31, 2002:

During the first and second quarters of 2002, the Company issued a total of
350,000 shares for consulting services to two individuals.

During the third quarter of 2002, the Company sold 1,000,000 shares of its
common stock to one accredited investor for a total consideration of $250,000
($0.25 per share).

During the third quarter of 2002, the Company entered into a license agreement
with Med Wireless, Inc. where in exchange for a license, the Company issued
6,600,000 shares of its common stock.

During the third quarter of 2002, the Company issued 666,667 shares of its
common stock in exchange for a marketing database from Genesis Health Tech, Inc.

During the fourth quarter the Company issued 43,682 shares of its common stock
in exchange for lease space valued at $14,360.23.

The above offerings were made pursuant to Rule 506 of Regulation D by the fact
that:

a. The sales were made to sophisticated or accredited investors,
as defined in Rule 502;

b. The Company gave each purchaser the opportunity to ask
questions and receive answers concerning the terms and
conditions of the offering and to obtain any additional
information which the company possessed or could acquire
without unreasonable effort or expense that is necessary to
verify the accuracy of information furnished;

c. At a reasonable time prior to the sale of securities, the
Company advised the purchasers of the limitations on resale in
the manner contained in paragraph Rule 502(d)2 of this
section;

d. Neither the Company nor any person acting on its behalf sold
the securities by any form of general solicitation or general
advertising; and

e. The Company exercised reasonable care to assure that the
purchasers of the securities are not underwriters within the
meaning of Section 2(11) of the Act in compliance with Rule
502(d).

On December 14, 2000, the Company issued and sold $3,500,000 Principal amount of
Convertible Debentures to certain accredited investors. The Convertible
Debentures are convertible into shares of Common Stock at a price of $1.75 per
share and matured June 13, 2001. The Convertible Debentures were issued pursuant
to the exemption from registration requirements of the Securities Act of 1933
provided by Section 4(2) of such Act and Rule 506 promulgated by the Securities
and Exchange Commission under that Section. At December 31, 2002 $150,000 of the
original $3,500,000 principal amount of debentures had not yet been converted or
paid. The Company received a notice requesting conversion of the remaining
$150,000 of debentures plus accrued interest in December 2002 and issued 96,006
shares of common stock in the first quarter of 2003. However, as of May 22, 2003
the individuals requesting the conversion have not taken possession of the
shares and have indicated to the Company they now do not want to convert.

In December 2000 the Company issued private warrants to purchase 3,300,000
shares of common stock at an exercise price of $1.75 per share through December
11, 2005. These warrants were issued in connection with services rendered by
several individuals (including the CFO and COO pursuant to employment
agreements) and entities. In February 2002, the holders of 3,000,000 of the
Company's private warrants (including Todd Sanders (CEO at the time) and William
Bossung (CFO at the time)) agreed to terminate and cancel these warrants. At
December 31, 2002, 300,000 of these warrants remained outstanding.

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

INTRODUCTION AND FORWARD LOOKING STATEMENTS.

The following discussion and analyses should be read in conjunction with our
audited consolidated financial statements and the related notes to the
consolidated financial statements included elsewhere in this report.

The following Management's Discussion and Analysis of Financial Condition and
Results of Operations contains "forward looking statements" within the meaning
of Rule 175 under the Securities Act of 1933, as amended, and Rule 3b-6 under
the Securities Act of 1934, as amended, including statements regarding, among
other items, the Company's business strategies, continued growth in the
Company's markets, projections, and anticipated trends in the Company's business

and the industry in which it operates. The words "believe," "expect,"
"anticipate," "intends," "forecast," "project," and similar expressions identify
forward-looking statements. These forward-looking statements are based largely
on the Company's expectations and are subject to a number of risks and
uncertainties, certain of which are beyond the Company's control. The Company
cautions that these statements are further qualified by important factors that
could cause actual results to differ materially from those in the forward
looking statements, including, among others, the following: reduced or lack of
increase in demand for the Company's products, competitive pricing pressures,
changes in the market price of ingredients used in the Company's products and
the level of expenses incurred in the Company's operations. In light of these
risks and uncertainties, there can be no assurance that the forward-looking
information contained herein will in fact transpire or prove to be accurate. The
Company disclaims any intent or obligation to update "forward looking
statements."

OVERVIEW

This discussion compares the years ending December 31, 2002 and December 31,
2001. Due to the material change in NuWay's business focus, this discussion will
not address the discontinued operations in the areas of oil and gas exploration,
cigar distribution, and gaming equipment rentals which constituted the majority
of the Company's operations during the year 2001 and the first half of the year
2002.

PLAN OF OPERATION

The Company had approximately $40,000 of cash on hand as of May 1, 2003, which
is insufficient to meet operating expenses for any extended period, and is
inadequate to satisfy the Company's cash requirements for more than 60 days.
Management believes that the Company will be required to raise additional
capital to sustain operations for the next twelve months and is actively
reviewing proposals made by private investors and investment bankers. Management
anticipates securing investor funds within the next 30 days. It is unlikely that
the Company will be able to qualify for bank debt until such time as the Company
is able to demonstrate sufficient financial strength to provide confidence for a
lender.

Management plans on continually upgrading its PRLS software application through
additional research and development, including tailoring its application to the
specific needs of its clients as those needs are brought to the Company's
attention. However, the primary development of the PRLS system has been
completed.

Management believes it will be successful in selling its PRLS software
application. The Company expects to secure agreements during the second and
third quarters 2003. The Company's PRLS has only recently been introduced to the
marketplace and generated approximately $40,000 in revenues during the first 60
days of it becoming market ready during the first quarter of 2003. PRLS is being
used by very high profile NFL franchises and it is already being referred by its
customers and prospects as the best of brand for its sports industry focus. The
Company is marketing the PRLS to multiple sports leagues and is actively seeking
additional vertical market opportunities.

Management anticipates that the Company will need to add additional staff over
the next 12 months. While it has three full time employees as of May 22, 2003,
the Company also relies on at least 12 consultants who work on behalf of the
Company. The Company intends to add some of these consultants to its full time
staff as employees and add additional staff members on an as needed basis. Based
on its anticipated growth in revenues, the company expects to add possibly 20
full time employees before the end of the year.

ANALYSIS OF FINANCIAL CONDITION

NuWay's balance sheet changed significantly during 2002, largely due to the
Company's shift in business focus to medical technology and the corresponding
disposal of all non-medical assets and operations. Since NuWay was focused on
the implementation of its new business model during the latter half of 2002, it
earned no revenues and thus received no cash from operations. Consequently, Cash
and Cash Equivalents declined from $440,827 last year to $521 at December 31,
2002.

The reduction in Accounts Receivable, Net ($234,054), Inventory ($475,291) and
Prepaid Expenses and Other Current Assets ($156,958) from 2001 to 2002 all
relate to discontinued operations arising from the divestiture of all
non-medical assets and operations in October 2002 and the Company's new focus on
medical technology.

Accounts Receivable Long Term ($450,000), Deposits ($26,693), Notes Receivable -
Officers and Affiliates ($440,000) and Other Assets ($6,374) on the December 31,
2001 balance sheet were all reduced to zero at December 31, 2002 due to the
Company's divestiture of all non-medical assets and operations in October 2002.

Current Liabilities declined from $3,385,780 at December 31, 2001 to $2,401,579
at December 31, 2002. This was a decrease of $984,201, or 29%. The decrease is
due to (i) a decline in Debentures Payable of $2,250,004 arising from the
conversion by debenture holders of their debentures into equity; offset by (ii)
an increase in Notes Payable of $1,120,000 which reflects the assumption by
NuWay of a note payable to Summit Healthcare Inc. as part of the acquisition of
a technology license from Med Wireless, Inc.; and, (iii) further offset by an
increase in Accounts Payable and Accrued Expenses of $145,803, from $985,776 in
2001 to $1,131,579 at the end of 2002.

Total Stockholders' Equity grew by 64% to $1,972,786 at December 31, 2002. This
increase is due to the issuance of shares of our common stock in the acquisition
of the license agreement from Med Wireless, Inc., the acquisition of a marketing
database from Genesis Health Tech, Inc., and the use of common stock to
compensate consultants to our company, net of the effect of our 2002 net loss of
$4,937,097.

RESULTS OF OPERATIONS - COMPARISON OF THE YEARS ENDED DECEMBER 31, 2002 AND 2001

Revenues

During 2001, total revenues (from continuing operations only) were $3,600,
representing rental income earned by the Company. The Company had no revenues
during from continuing operations 2002 as it was engaged in the development of
new medical technology products. During the last half of 2002, the Company
shifted its focus toward the information technology needs of the sports industry
relating to player health. This change in focus led to the rapid development of
the PRLS system, which began to generate revenues in the first quarter of 2003.
Consequently, the results of our prior business line operations in gaming
machine rental, oil and gas development and distribution of cigars were
reclassified in our consolidated statements of operations as "discontinued
operations."

Selling, General and Administration Expense ("SG&A")

SG&A declined in 2002 by 17 percent to $2,157,289 from $2,600,371 in 2001. The
largest components of these expenses were:

a. Salaries and Payroll-related Expenses: These expenses were $329,622 in
2002 versus $576,041 in the prior year, a decrease of $246,419 or 43
percent. This is consistent with the reduction in employment
experienced by NuWay after its change in business focus and the

divestiture of all operations other than the new medical technology
business. At the end of 2002, NuWay employed 3 full time employees,
while at December 31, 2001 NuWay employed 32 full-time employees. The
principal reason for the decline in headcount from year to year is the
change in business focus and the divestiture of non-medical operations
during 2002.

b. Consulting Expense grew significantly in 2002, to $950,532 from
$250,628 in 2001, an increase of 280 percent. This increase is directly
related to new management's strategy of maintaining a very low
permanent staffing level and supplementing that with consultants on a
project-by-project basis. Further, the development of new products and
technology related to NuWay's shift in business focus required
additional staff in the areas of applications development, sales,
marketing and administration. These positions were primarily staffed by
independent contractors who were compensated with Company common stock.

c. Rent expense decreased by 50 percent from $192,543 in 2001 to $96,560
in 2002. This decrease is consistent with the reduced staffing levels
as well as limited requirement for warehouse space.

d. Legal Expenses grew from $108,474 in 2001 to $302,088 in 2002, an
increase of 178 percent. This growth is due to the high level of legal
assistance required in 2002 for transactions such as (i) the
acquisitions of the Genesis Healthcare database and the Med Wireless
technology license, (ii) financing completed with Camden Holdings,
(iii) a major shift in the Company's core business strategy, (iv) a
thorough change in management and (v) the need for stock issuances used
in lieu of cash to acquire services.

e. Travel and Entertainment Expense declined by 82 percent in 2002 from
$500,045 in 2001 to $90,293 in 2002. This decrease is due to a
conscious effort on the part of new management to minimize these
expenses as well as a reduced need for travel due to the divestiture of
operations that were remotely located in places like Latin and South
America and Canada.

Expenses Associated With Stock Issued for Services

Expenses associated with stock issued for services grew by 144% in 2002 over
2001, from $405,650 to $987,944. The primary reason for this increase was that
NuWay's limited cash position in 2002 caused management to seek other means of
compensating employees and contractors for services performed. The expenses
recorded in 2002 related to payment for legal, consulting and other services.
The fact that NuWay was focused on making the transition to a medical technology
business meant that no cash was being received while the transition was
occurring. Of the approximately $988,000 in expenses in 2002, approximately
$500,000 was for legal services, $474,000 was for consultants in several
different fields, and $14,000 related to payment of office rent.

Discontinued Operations

As discussed above and in the notes to our consolidated financial statements, we
disposed of several operations through the sale of two foreign subsidiaries,
Latin American Casinos and NuWay Resources effective October 1, 2002, and the
cessation of the operations of our World's Best Rated Cigar Company subsidiary
in November 2002. Due to the discontinuance of these operations, we have
reclassified the historical operating results from these ventures for 2001 and
the nine months ended September 30, 2002 and disclosed such below the results
from our continuing operations in our consolidated statements of operations.
These businesses generated losses from operations of $3,910,193 for the year
ended December 31, 2001 and $600,986 through the nine months ended September 30,
2002. We also recorded a loss on sale and disposal of the net assets of these
businesses of $2,847,431 in the fourth quarter of the year ended December 31,
2002.

Net Loss

Net Loss for the year ended December 31, 2002 was $4,937,097 or $0.50 per share
compared to a $6,652,433 loss or $1.56 per share for the year 2001.

Recent Accounting Pronouncements

In April 2002, the FASB issued Statement No. 145, "Rescission of FASB Statements
No. 4, 44, and 64, Amendment of FASB Statement No. 13 and Technical
Corrections." Statement No. 145 rescinds Statement No. 4, which required all
gains and losses from extinguishment of debt to be aggregated and, if material,
classified as an extraordinary item, net of related income tax effect. In
addition, Statement No. 145 amends Statement No. 13 on leasing to require that
certain lease modifications that have economic effects similar to sale-leaseback
transactions be accounted for in the same manner as sale-leaseback transactions.
Provisions of Statement No. 145 related to the rescission of Statement No. 4 are
effective for financial statements issued by the Company after January 1, 2003.
The provisions of the statement related to sale-leaseback transactions were
effective for any transactions occurring after May 15, 2002. All other
provisions of the statement were effective as of the end of the second quarter
of 2002. The changes required by Statement No. 145 are not expected to have a
material impact on the results of operations, financial position or liquidity of
the Company.

In July 2002, the FASB issued Statement No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." Statement No. 146 requires
companies to recognize costs associated with the exit or disposal of activities
as they are incurred rather than at the date a plan of disposal or commitment to
exit is initiated. Types of costs covered by Statement No. 146 include lease
termination costs and certain employee severance costs that are associated with
a restructuring, discontinued operation, facility closing, or other exit or
disposal activity. Statement No. 146 will apply to all exit or disposal
activities initiated after December 31, 2002. At this time, the Company does not
expect the adoption of the provisions of Statement No. 146 to have a material
impact on the Company's financial results.

In November 2002, the FASB issued Interpretation No. (Interpretation) 45,
"Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others." Interpretation 45 requires
certain guarantees to be recorded at fair value. In general, Interpretation 45
applies to contracts or indemnification agreements that contingently require the
guarantor to make payments to the guaranteed party based on changes in an
underlying that is related to an asset, liability, or an equity security of the
guaranteed party. The initial recognition and measurement provisions of
Interpretation 45 are applicable on a prospective basis to guarantees issued or
modified after December 31, 2002. Interpretation 45 also requires new
disclosures, even when the likelihood of making any payments under the guarantee
is remote. These disclosure requirements are effective for financial statements
of interim or annual periods ending after December 15, 2002. The changes
required by Interpretation 45 are not expected to have a material impact on the
results of operations, financial position or liquidity of the Company.

In January 2003, the FASB issued Interpretation 46, "Consolidation of Variable
Interest Entities, an Interpretation of ARB No. 51." Interpretation 46 addresses
consolidation by business enterprises of variable interest entities which have
one or both of the following characteristics: (1) the equity investment at risk
is not sufficient to permit the entity to finance its activities without
additional support from other parties, which is provided through other interests
that will absorb some or all of the expected losses of the entity; (2) the
equity investors lack one or more of the following essential characteristics of
a controlling financial interest: (a) the direct or indirect ability to make
decisions about the entity's activities through voting rights or similar rights,

(b) the obligation to absorb the expected losses of the entity if they occur,
which makes it possible for the entity to finance its activities, or (c) the
right to receive the expected residual returns of the entity if they occur,
which is the compensation for the risk of absorbing expected losses.
Interpretation 46 does not require consolidation by transferors to qualifying
special purpose entities. Interpretation 46 applies immediately to variable
interest entities created after January 31, 2003, and to variable interest
entities in which an enterprise obtains an interest after that date. It applies
in the first fiscal year or interim period beginning after June 15, 2003, to
variable interest entities in which an enterprise holds a variable interest that
it acquired before February 1, 2003. The Company is currently assessing the
impact of Interpretation 46.

In June 2001, the FASB issued Statement No. 143, "Accounting for Asset
Retirement Obligations," which addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs. The standard applies to legal obligations
associated with the retirement of long-lived assets that result from the
acquisition, construction, development and/or normal use of the asset. Statement
No. 143 requires that the fair value of a liability for an asset retirement
obligation be recognized in the period in which it is incurred if a reasonable
estimate of fair value can be made. The fair value of the liability is added to
the carrying value of the associated asset, and this additional carrying amount
is depreciated over the life of the asset. The liability is accreted at the end
of each period through charges to operating expense. If the obligation is
settled for other than the carrying amount of the liability, the Company will
recognize a gain or loss on settlement. As required, the Company adopted the
provisions of Statement No. 143 for the quarter ended March 31, 2003. Management
does not believe adoption of this standard will have a material adverse effect
on the Company's consolidated financial position, results of operations, or
liquidity.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents decreased by $440,302 to $521 at December 31, 2002,
reflecting the fact that the Company disposed of its operating entities on
October 1, 2002 and had earlier begun a major change in strategy towards medical
technology. As a result, NuWay had no revenues in 2002 and was forced to consume
cash on hand to fund its new operations. Due to our limited liquid resources,
among other things, our auditors have included an explanatory paragraph in this
report which expresses substantial doubt about our ability to continue as a
going concern.

At December 31, 2002, management believes the Company had no debt obligations
requiring future cash commitments other than as follows: Significant debts at
December 31, 2002 included $150,000 of convertible debentures, and a $1,120,000
note payable which was purchased in March of 2003 by New Millennium Capital
Partners, LLC, an entity controlled by NuWay's president. On March 26, 2003, the
Board voted to convert the note into equity of the Company at a 37.5% discount
to the current market rate. Prior to issuing the shares, and after receiving a
NASDAQ staff determination letter indicating that issuing the shares without
shareholder approval violated certain Nasdaq Marketplace Rules, the Board
modified its resolution to condition the conversion of the note into equity on
shareholder approval at the next shareholder meeting (scheduled to take place in
the third quarter of 2003). As we have had, and continue to have, limited cash
resources, we have engaged consultants to assist our company who are compensated
in shares of Company common stock. These agreements can generally be terminated
with fifteen-day notice.

Included in our aggregate accounts payable and accrued expenses of $1,131,579,
is approximately $210,000 of disputed invoices that we have received from
various law firms and other parties. Management expects to reach settlements

with these vendors for less than the recorded amounts based on dissatisfaction
with services provided and/or services provided that were outside the scope of
services contracted. There can be no assurance that we will be successful in
reaching any settlements in this regard.

The Company raised capital of $259,661 from January 1, 2003 to April 21, 2003
from the sale of an aggregate of 519,322 shares of convertible preferred stock
and warrants. The Company had a cash balance of approximately $40,000 as of May
1, 2003, which is insufficient to meet operating expenses for any extended
period. Management believes that the Company will be required to raise
additional capital to sustain operations for the next twelve months and is
actively reviewing a number of proposals being made to the Company by private
investors and investment bankers. It is unlikely that the Company will be able
to qualify for bank debt until such time as the Company is able to demonstrate
the financial strength to provide confidence for a lender.

From January 1, 2003 through May 12, 2003, the Company issued a total of
14,273,419 shares of common stock to officers and consultants for services
performed. Of this total 12,464,913 have been registered under a stock
compensation plan as filed on Form S-8, while the balance, 1,808,506 shares were
unregistered and are restricted in trading. Of the total issued in 2003 to date,
2,743,590 relate to services performed in 2002 and 11,529,829 relate to 2003.
The effect of the majority of shares issued for 2002 services in 2003 was
accrued in the Company's financial statements for the year ending December 31,
2002. Not included in the number of shares issued are 3,000,000 shares issued to
the Company's president, Dennis Calvert which have been returned to the Company
pending shareholder approval at the annual meeting of shareholders expected to
be held in the third quarter of 2003.

EFFECTS OF TRANSACTIONS WITH RELATED PARTIES

The Company has entered into a number of transactions that could be viewed as
related party transactions per SEC release 33-8056, 34-45321 and FR-61. The
following discusses the effects of these transactions to the extent necessary
for an understanding of the Company's current and prospective financial
condition and operating results. These transactions are:

FINANCING AGREEMENT WITH CAMDEN HOLDINGS

During June 2002, the Company entered into a financing agreement with
Camden Holdings, Inc., a diversified holding company with interests in
many industries including the healthcare industry. The Company received
$250,000 in exchange for 1,000,000 shares of its restricted common
stock ($0.25 per share). Stockholder consent was not required for the
agreement. The share price was determined by the trading price of the
stock during the few days leading up to the consummation of the
transaction (June 27, 2002), which was a range of $0.24 to $0.30 per
share. At the time of the transaction, Camden Holdings, Inc. owned no
shares in the Company. After the effect of the Med Wireless, Inc. and
Genesis Health Tech, Inc. transactions described below, Camden Holdings
owned approximately 1,017,548 shares in addition to the 1,000,000
shares received from the $250,000 investment.

This transaction was instrumental in meeting the cash needs of the
Company during 2002, but has no ongoing effect on liquidity or capital
resources. There are no ongoing contractual or other commitments as a
result of this transaction.

GENESIS HEALTH TECH, INC.

On June 28, 2002, the Company purchased certain assets from Genesis
Health Tech, Inc. ("Genesis"), a wholly owned subsidiary of Camden
Holdings. These assets included a database compiled over a 24-month
period of healthcare providers in the United States. The business
purpose of the transaction was to provide the Company a valuable tool
to market its Ultrasound program as well as for marketing any products
and services applicable to the medical provider market. The Company
also recognized potential value in is ability to manage, maintain,
update and then re-sell the database should the business opportunity
become commercially attractive. The total purchase price was satisfied
by the issuance of 666,667 restricted shares of NuWay restricted common
stock (at a price of $0.45 per share). The book value of the asset is
$255,000, which reflects a 15% discount attributed as a result of the
restrictions on the issued stock. The transaction received the consent
of a majority of NuWay's stockholders, as well as its board of
directors. As detailed in the Form 14C filed on September 23, 2002,
stockholders owning 3,930,183 shares of the 7,761,353 total shares of
common stock then outstanding, consented to the transaction. Camden
Holdings was the holder of 1,000,000 shares of common stock at the time
of the transaction as a result of the Financing Agreement described
immediately above.

There are no ongoing contractual or other commitments as a result of
this transaction.

MED WIRELESS, INC.

By way of an agreement dated July 16, 2002 and amended August 21, 2002,
the Company acquired a 15-year, fully paid license to certain
technology from Med Wireless, Inc. As detailed in the Company's prior
filings, pursuant to this license agreement (i) the Company would
license from Med Wireless all of its rights and interest in certain
software applications relating to the movement of medical images and
data over the Internet and via handheld wireless devices as well as
customer lists; (ii) Med Wireless would assign its customers and
distribution agreements related to the licensed intellectual property
to the Company; and (iii) the Company would assume $1,120,000 of
outstanding debt. In return, NuWay would issue to the Med Wireless
shareholders 6,600,000 shares of NuWay's restricted common stock. When
effectuated, the Med Wireless Agreement resulted in Med Wireless
shareholders owning approximately 44 percent of the Company's
outstanding shares. Camden Holdings, Inc. owned 1,000,000 shares
(12.9%) of the Company at the time this transaction was approved by the
shareholders, and also held a minority interest in Med Wireless equal
to 5.36%. In addition, Summit Healthcare, Inc., which shares a common
president with Camden Holdings, Inc., also owned an interest in Med
Wireless equal to 37.96%. Both Camden Holdings and Summit Healthcare
received stock in the Company as a result of this transaction. In
addition, the Company's president, Dennis Calvert, indirectly owns
approximately 9.9% of the shares of Med Wireless, and received 600,000
shares of the Company as a result of the transaction. Shareholders of
the Company owning 3,930,183 shares of the 7,761,353 shares then
outstanding consented to the transaction with Med Wireless. In
addition, the board of directors approved the transaction.

The business purpose of this transaction was to allow the Company to
proceed in a new direction - the medical technology field - and was
coincident with the Company's name change and change in management. As
a direct result of this transaction, the Company was able to customize
the software application licensed and market that product to the
National Football League.

The following factors were considered by the board of directors during
its negotiations a.) the estimated cost of developing the product by
Med Wireless as represented the Med Wireless team b.) the unique nature
of its technology, c.) the relative value of business opportunities
that management believed could be pursued with its technology platform,
d.) the offers, comparables and general business opportunities that had
been presented to Med Wireless over its brief history e.) and the need
to redirect the Company's operating efforts.

There are no ongoing contractual or other commitments as a result of
this transaction.

SALE OF OIL OPERATIONS

Since July 2001, the Company directed part of its efforts to oil and
gas exploration and development in Canada. The Company (through its
wholly owned subsidiary NuWay Resources, Ltd., a Nevada corporation)
purchased a 30 percent working interest in the Superb area of
Saskatchewan, Canada and a 20 percent working interest in the Altares
Gas project in Northeast British Columbia. The subsidiary's ownership
interests in the oil fields were characterized as "minority" ownership
working interests. This classification meant that the future
development and capital expenditures, costs and losses would be
directed by the controlling owners, (who were parties unaffiliated with
the Company) but that all owners would share costs on a pro-rata basis.

While these properties had proven reserves of oil and natural gas,
management found the extraction and processing of the natural reserves
had become too difficult and too costly to continue. Neither project
had generated positive cash flow to NuWay after considering the cost of
development and administrative and management expenses. Further,
neither project had any expectation of generating positive cash flow to
the Company for the foreseeable future, and as a working interest
owner, the Company would be liable for the cost of continued
development, maintenance and re-drilling efforts. The managing owners
of the properties have significant ownership interests in other oil and
gas projects and they had communicated to management their intent to
invest their resources in other projects, rather than focus on these
properties.

NuWay entered into an agreement on December 15, 2002 with Summit Oil
and Gas, Inc. to sell the stock of NuWay Resources, Ltd. for $100,000
less outstanding liabilities. The Company realized no cash from the
sale of these operating units, but was able to contractually insure
that it would not retain any liabilities beyond October 1, 2002. In
conjunction with the sale of these operations, NuWay recorded a loss of
$1,290,948 during the fourth quarter of 2002. The transaction price was
determined as a result of the Company receiving no viable suitors,
bidders or offers for the assets. In light of the rapidly increasing
liabilities and the carrying, management and auditing costs associated
with maintaining an unprofitable asset, the stock was sold. The
business purpose was to stop the negative cash flow, stop the
contingent losses, and the removal of the burden to management relative
to the investment.

The president of Summit Oil and Gas, Inc. is Mark Anderson. Mr.
Anderson is also president of Camden Holdings, Inc., and Summit
Healthcare, Inc., both shareholders of the Company at the time. A
shareholder vote was not held in relation to this transaction.
Additionally, Mr. Anderson served as a consultant to the Company and
received 1,241,884 shares of stock pursuant to the Company's 2002
Consultant Equity Plan.

This transaction was instrumental in stopping the drain on cash of the
Company during 2002, and has an ongoing effect on liquidity or capital
resources in the future as a result of limiting the liabilities and
therefore cash drain associated with those assets going forward. There
are no ongoing contractual or other commitments as a result of this
transaction.

SALE OF CASINO OPERATIONS

Effective October 1, 2002, the Company sold the stock of its wholly
owned casino rental subsidiaries (Latin American Casinos del Peru S.A.,
and Latin American Casinos of Colombia, LTDA) to Casino Ventures
Partners, a Nevada Partnership. The purchase price for the stock was
$300,000 less all outstanding liabilities of the two subsidiaries. The
transaction price was determined as a result of the Company receiving
no viable suitors, bidders or offers for the assets. In light of the
rapidly increasing liabilities and the carrying, management and
auditing costs of an unprofitable assets, the stock was sold. Business
purpose was to stop the negative cash flow, stop the contingent losses,
and the removal of the burden to management the investment. As the
offsetting liabilities exceeded the purchase price and the Company
received no funds. The Company recorded a loss from operations through
September 30, 2002 of $147,247 and a loss of $1,376,733 on disposal.

Mark Anderson signed the agreement between the Company and Casino
Ventures Partners, indicating he is a partner of Casino Ventures
Partners. Mr. Anderson is also president of Camden Holdings, Inc., and
Summit Healthcare, Inc., both shareholders of the Company.
Additionally, Mr. Anderson served as a consultant to the Company and
received shares of stock pursuant to the Company's 2002 Consultant
Equity Plan.

NEW MILLENNIUM CAPITAL PARTNERS, LLC PURCHASE OF STOCK AND NOTE FROM
CAMDEN HOLDINGS, INC., SUMMIT HEALTHCARE, INC., AND SUMMITT VENTURES,
INC.

New Millennium Capital Partners, LLC, a Nevada limited liability
company controlled by Company president Dennis Calvert, purchased a
$1,120,000 promissory note held by Summitt Ventures (see detail below),
and also purchased an aggregate of 4,182,107 shares of the Company's
common stock from Camden Holdings and Summit Healthcare, Inc. in
exchange for $900,000, payable in the form of a promissory note. The
share certificates representing these shares were delivered to Mr.
Calvert on April 9, 2003. This note is secured by the shares of common
stock of the Company sold in the transaction and is further secured by
common stock of the Company held by Mr. Calvert. Mark Anderson,
president of Camden Holdings, Summit Healthcare, and Summitt Ventures,
conditioned the purchase by New Millennium on the Company converting
the promissory note to common stock. The conversion of the note held by
New Millennium is a matter to be brought before the shareholders at the
next shareholder meeting scheduled for the third quarter 2003.

CONVERSION OF $1,120,000 NOTE TO STOCK

On March 26, 2003, the Company's board of directors voted to convert a
promissory note owed by the Company in the face amount of $1,120,000
held by New Millennium Capital Partners, LLC, a Nevada limited
liability company controlled by the Company's president Dennis Calvert,
into common stock of the Company at a 37.5% discount to market price.
New Millennium consented to the conversion.

The business purpose of this transaction was to retire $1,120,000 in
debt owed by the Company with the effect increasing shareholder equity

by that amount. The board of directors determined that a discount to
market price was appropriate given that (i) given the quantity of the
shares issued, a block of shares that size could not be liquidated
without affecting the market price of the shares, and (ii) the shares
would be labeled with a restrictive legend requiring fulfillment of
Rule 144 prior to sale on the open market, thus precluding their sale
prior to one year from the date of the transaction. The board of
directors at the time determined that a 37.5% discount was appropriate.

The board of directors has modified its resolution converting the
shares and made the conversion conditional upon receiving shareholder
approval of the conversion at the Company's next shareholder meeting
per Nasdaq Marketplace rules. New Millennium has agreed to extend the
terms of the note 90 days, from June 15, 2003 to September 15, 2003, to
allow sufficient time to obtain a shareholder vote. Management
anticipates that the Company will hold its annual shareholder meeting
in July or August 2003.

CRITICAL ACCOUNTING POLICIES

The Securities and Exchange Commission ("SEC") recently issued Financial
Reporting release No. 60, "Cautionary Advice Regarding Disclosure About Critical
Accounting Policies" (FRR 60"), suggesting companies provide additional
disclosure and commentary on their most critical accounting policies. In FRR 60,
the SEC defined the most critical accounting policies as the ones that are most
important to the portrayal of a company's financial condition and operating
results, and require management to make its most difficult and subjective
judgments, often as a result of the need to make estimates of matters that are
inherently uncertain. Based on this definition, the Company's most critical
accounting policies include: non-cash transactions and compensation valuations
that affect the total expenses reported in the current period and/or values of
assets received in exchange. Additionally, Management believes that the
accounting policies relating to Revenue Recognition, although not critical for
fiscal year 2002, will become critical for fiscal year 2003 as revenues grow.
The Company plans to recognize revenue from its new medical technology business
in accordance with SEC Staff Accounting Bulletin No. 101 "Revenue Recognition in
Financial Statements." For hardware sales, revenue will be recognized upon
shipment to customers. Revenue from the licensing of software products will be
recognized on shipment to and acceptance by customers, and over the applicable
license period. Revenue from software maintenance agreements will be recognized
ratably over the term of the agreement. Annual software maintenance charges and
upgrade fees will be recognized ratably over the period covered.

The Company has established a policy relative to the methodology to determine
the value assigned to each intangible acquired with or licensed by the Company,
with non cash consideration, shall be based on the market price of the Company's
common stock issued as consideration, at the date of agreement of each
transaction, as adjusted for applicable discounts.

The intangible assets will first be amortized when the product is available for
general release to customers, which occurred during the first quarter of 2003.
The annual amortization for the marketing database and the license agreement
will be recorded using the straight-line method over the estimated economic life
of the respective asset, initially estimated at 5 years for both intangible
assets. Should the economic life in the future be determined to be less than
initially expected the estimated life and resulting amortization will be
adjusted prospectively.

The methods, estimates and judgments the Company uses in applying these most
critical accounting policies have a significant impact on the results the
Company reports in its financial statements.

ITEM 7. FINANCIAL STATEMENTS.

Our consolidated financial statements as of and for the years ended December 31,
2002 and 2001 are presented in a separate section of this report following Item
14 and begin with the index on page F-1.

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

As disclosed in our Form 8-K filed on April 7, 2003 and amended on April 10,
2003, we dismissed Shubitz Rosenbloom & Co., PA ("Shubitz") as our principal
accounting firm as of March 31, 2003 and we engaged Haskell & White LLP ("H&W")
as our principal accounting firm. H&W was engaged to audit our consolidated
financial statements for the year ended December 31, 2002. The decision to
change auditors was approved by our board of directors.

In connection with the audits of the two years ended December 31, 2001, and
during the subsequent period through March 31, 2003, there were no disagreements
with Shubitz on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedures, which disagreements, if
not resolved to the satisfaction of Shubitz, would have caused them to make
reference to the subject matter of the disagreement in connection with its
opinion.

Previously, in November 2001, we filed a Form 8-K indicating that Shubitz had
resigned as our principal accountants. It was anticipated that Shubitz' role
would change from being our auditor to assisting with the preparation of
financial statements of certain of our subsidiaries to assist the successor
auditor. However, in March 2002, having not engaged another principal
accountant, we filed another Form 8-K to announce that we had re-engaged Shubitz
as our principal accountant to audit our financial statements for the year ended
December 31, 2001. Shubitz did not prepare any financial statements for our
company during the intervening period and maintained the required independence
from our company.

PART III.

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

DIRECTORS AND EXECUTIVE OFFICERS.

The names, ages, and respective positions of the directors and executive
officers of the Company are set forth below. The Directors named below will
serve until the next annual meeting of the Company's stockholders or until their
successors are duly elected and have qualified. Directors are elected for a
one-year term at the annual stockholders' meeting. Officers will hold their
positions at the will of the board of directors, absent any employment
agreement, of which two currently exist and none additional are contemplated.
There are no arrangements, agreements or understandings between non-management
shareholders and management under which non-management shareholders may directly
or indirectly participate in or influence the management of the Company's
affairs.

DENNIS CALVERT, President, Chief Executive Officer, Chairman of the
Board, Interim Chief Financial Officer

Dennis Calvert, age 40, has an extensive entrepreneurial background as
an operator, investor and consultant. From June 2002 to September 2002
he served as president of Med Wireless, Inc. In 1998 he was a founder,
president and board member of Utelecom Communications, Inc. where he
led the acquisition of four companies and secured a line of credit for
$7.5 million dollars. He remains an owner and board member of that
firm. He was an investor and served as a manager of Beep for Free.com,

LLC beginning in the year 2000, a consumer products and technology
related company. Mr. Calvert was a founder and chairman of ZZYZX
Technologies, Inc., a company that designed and produced high tech
equipment. ZZYZX was sold in 2001. From 1990 to 1996 Calvert served as
head of mergers and acquisitions for Medical Asset Management, Inc., a
company that acquired and managed medical-related businesses. During
his tenure he participated in more than 50 acquisitions and served in
numerous positions with the Company. Prior, he was a founder and
officer of a medical recruiting and consulting firm named Merritt
Hawkins and Associates from 1987 to 1990. Earlier, he was a top
producing sales associate for a leading physician recruitment firm,
Jackson and Coker, Inc. and served as a sales associate for Diamond
Shamrock, Inc. from 1985 to 1986.

Mr. Calvert holds a BA degree in Economics from Wake Forest University,
where he was a varsity basketball player on full scholarship. Mr.
Calvert also studied at Columbia University and Harding University. He
was an honor student in high school with numerous leadership awards. He
is also an Eagle Scout.

Dennis Calvert was appointed to the board of directors on June 28,
2002, assumed the role of president and CEO on June 28, 2002, and
served as interim Corporate Secretary from September 12, 2002 until
March 1, 2003, and Interim CFO beginning March 2003 to present.

JOSEPH PROVENZANO, Director / Secretary

Joseph Provenzano, age 34, heads the Investor Relations effort and
manages the mergers and acquisitions function for NuWay. He began his
corporate career in 1988 as a Personnel Manager and Recruiter for First
American Travel, a marketing company in Southern California. He then
entered into an entry-level Technician position within the Commercial
and Residential security industry. He left the industry as a General
Manager in the mid 1990's to apply his marketing and sales training to
the logistics industry. He was then employed by two major Southern
California moving and storage companies as head of Marketing. He formed
his own marketing company called Pre-Move Marketing Services (PMSA),
offering advertising and direct marketing products for the moving and
storage industry, in 1996. He joined Camden Holdings, Inc., an
investment holding company to manage their mergers and acquisitions
department, in mid 2001, and participated in more than 50 corporate
mergers and acquisitions. He was employed there until March 2003, at
which time he became employed full time by the Company. Mr. Provenzano
has participated in organized rodeo and motocross competitions.

Mr. Provenzano was appointed to the board of directors on June 28, 2002
and assumed the role of Corporate Secretary on March 26, 2003.

STEVEN V. HARRISON II, Director; Chairman, Audit Committee and
Compensation Committee

Steven V. Harrison, II, age 44, is the president of Empact, Inc. a
consumer products based marketing company. From 1997 to 2001, he was
the founder, president and CEO of In Touch Communications, Inc., a
Competitive Local Exchange Carrier (CLEC), providing residential and
business telephone services within the state of California, with annual
revenue of more than $15 million. During 2001and 2002 he was an
investor in a number of healthcare and consumer products based
companies including Beep for Free.com LLC. From 1991 to 1997, Mr.
Harrison was Chief Executive Officer of Resource Medical Group, Inc.,
providing management consultancy services to the healthcare industry
assisting hospitals, Health Maintenance Organizations, clinics, and
practice management firms with medical staff planning and contracting
issues, feasibility studies and physician recruitment and retention.

Mr. Harrison also played Division I football at Appalachian State
University.

GARY COX, Director Elect, member of Audit Committee

Mr. Gary A. Cox was elected to the board of directors on May 9, 2003,
subject to the completion of a standard background check. He was also
appointed to the Audit Committee. Mr. Cox has more than 10 years in the
healthcare field as consultant to hospitals and medical groups. He
started his own firm in 1995 named Resource Medical International and
is still active in that business. He served for more than 10 years with
UK firms in sales and marketing positions prior to beginning his
healthcare career. He holds a technical degree in engineering from
Leicester University in England. He was also a competitive athlete and
played for a number of professional soccer (football) clubs in England
in his early career.

PRIOR OFFICERS/DIRECTORS

On June 28, 2002, Todd Sanders resigned as president, and Dennis Calvert was
appointed president. Also on June 28, 2002, directors Jose Caballero and Dennis
R. Barry resigned.. On September 12, 2002 Todd Sanders, William Bossung and
Michael Iscove resigned from the board of directors. Mr. Bossung also resigned
as chief operating officer and secretary of the Company.

On October 9, 2002, the Company announced that Dr. James Seay was scheduled to
join the Board on November 1, 2002. Because the Company's Director's and
Officer's liability insurance lapsed prior to his joining the Board, Dr. Seay
did not accept his appointment. He did agree, however, to join the advisory
board, and has recently expressed renewed interest in become a full Board
member. The Company has applications to obtain Director's and Officer's
insurance. Once that is obtained, the Board will consider appointing Dr. Seay to
the Board.

COMMITTEES OF THE BOARD OF DIRECTORS

The Company established a Compensation Committee of the board of directors,
which reviews the compensation for all officers and directors and affiliates of
the Company. The Committee also administers the Company's stock option plan. Mr.
Harrison is Chairman of the Compensation Committee and Mr. Cox serves on the
Compensation Committee.

The Company established an Audit Committee of the board of directors that meets
with management and the Company's independent public accountants to review the
adequacy of internal controls and other financial reporting matters. Mr.
Harrison is Chairman of the Audit committee. Mr. Cox also serves on the audit
committee.

The Board has determined that each of Messrs. Harrison and Cox are independent
as defined under NASDAQ Marketplace rules. NASDAQ staff indicated in a May 7,
2003 staff determination letter that it questioned whether Mr. Harrison was
independent, and discussed those issues with the Company at the May 16, 2003
hearing. Mr. Harrison has no other business dealings or agreements with the
Company or its Officers or Directors other than in his role as Board Member and
Committee Member as described in this filing document.

ADVISORY BOARD MEMBERS

The board of directors of the Company has established a Board of Advisors (the
"Advisory Board") to assist the Company in the development and implementation of
its long-term strategy and goals. The Advisory Board holds no title or authority
over the Company or its management. They each serve in an advisory capacity
only. Members include:

JAMES L. SEAY, DDS, is a licensed practicing dentist located in Memphis
Tennessee. He joined the Board in October of 2002. His Professional
Affiliations include American Dental Association and the Christian
Medical/Dental Association. Dr. Seay holds a University Appointment
with the University of Tennessee Dental College. Dr. Seay brings a
wealth of knowledge and information regarding the dental care industry
and the health and management of athletes in competitive sports. In
addition, he was an accomplished basketball coach with more than 20
years experience, leading a number of Amateur Athletic Association,
(AAU) teams to State Championships (7 times), Regional Championships (3
times), including winning the National Championships at the AAU
tournament in 1980 and 1984. He coached at the University of Southern
Mississippi from 1982 to 1984 prior to embarking on his profession in
dentistry. He also had extensive post-graduate studies in exercise
physiology. Dr. Seay has agreed to join the Board of the Company upon
such time as the Company secures Directors and Officers Insurance,
which is in process.

JOHN RUNYAN joined the Advisory Board in October of 2002. He had 38
years with Fleming Companies, during which time the Company grew from
$300 million to $17 billion in annual revenue. Mr. Runyan retired as a
Senior Executive Officer to head up JSR&R Company with primary emphasis
in the United States and International Food Business. Mr. Runyan was
also appointed Senior Advisor to the Chairman and CEO, IGA, Inc., a
supermarket network with worldwide sales over $21 billion annually.
Additionally, he serves on the board of Madison Park REIT, Nietech
Corporation, Blast Cat Equipment Co., and S4R Managed Services, where
he also serves as Chairman.

KEVIN WOELFLEIN joined the Advisory Board in October of 2002. He is an
experienced financial executive with more than 25 years of domestic and
international banking experience in top-level positions. Mr. Woelflein
was the founding Vice President and General Manager of The First
National Bank of Chicago branch in Tokyo. First Chicago appointed him
to found the Arab American Bank in New York, where he served as
president and Chief Executive Officer. He was also President of
American Security Bank in Washington, D.C., and president of The
Massachusetts Company, a Boston-based specialty bank and a subsidiary
of Travelers Corporation. Mr. Woelflein has had overall responsibility
for managing bank investment portfolios, as large as $500 million, as a
banker, and has been a principal broker helping banks manage large
portfolios. Subsequent to this position, he served as Chairman of the
Board of Connecticut Bancorp. He currently holds a Series 7 securities
license. He is president of U.S. Capital Investments Company, a bank
advisory firm.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, certain officers and persons holding 10 percent or more of the
Company's common stock to file reports regarding their ownership and regarding
their acquisitions and dispositions of the Company's common stock with the
Securities and Exchange Commission. Such persons are required by SEC regulations
to furnish the Company with copies of all Section 16(a) forms they file.

To our knowledge, based solely upon review of Forms 3, 4, and 5 (and amendments
thereto) and written representations provided to the Company by executive
officers, directors and shareholders beneficially owning 10 percent or greater

of the outstanding shares, the Company believes that such persons filed pursuant
to the requirements of the Securities and Exchange Commission on a timely basis,
other than: (i) one late report filed by Mr. Calvert, (ii) one late report filed
by Mr. Provenzano, (iii) the failure of Camden Holdings, Inc. to file a report,
(iv) the failure of Summit Healthcare, Inc. to file a report, (v) one late
report filed by Augustine Fund LP containing three transactions, (vi) two late
reports filed by Todd Sanders (the Company's president at the time), each
containing one transaction, and (vii) one late report filed by William C.
Bossung (a member of the Company's board of directors at the time) containing
one transaction.

ITEM 10. EXECUTIVE COMPENSATION.

The following table sets forth the cash compensation paid by the Company to
executive officers that received compensation in excess of $100,000 (the "Named
Executive Officers") during 2001 and 2002:

---------------------------------------------------------------------------------------------------------------------------------
Long-term compensation
---------------------------------------------------------------------------------------------------------------------------------
Annual Compensation Awards Payouts
---------------------------------------------------------------------------------------------------------------------------------

Name and Year Salary ($) Other annual Restricted Securities LTIP payouts All other
principal (b) (c) compensation stock awards under- ($) compensation
position ($) ($) lying (h) ($)
(a) (e) (f) options/
SARs (i)
(#)
(g)
---------------------------------------------------------------------------------------------------------------------------------
Dennis Calvert, 2002 (1) 14,000 - - 4,000,000 - -
Chief Executive (5)
Officer
---------------------------------------------------------------------------------------------------------------------------------
Todd Sanders, 2002 (2) 94,000
Chief Executive 2001 - - 750,000 (3)
Officer 2000 - - 100,000 (3) - -

---------------------------------------------------------------------------------------------------------------------------------
William 2002 (2) 104,000 - -
Bossung, 2001 750,000 (4) - -
Chief Operating 2000 (4) - - 100,000 (4) - -
Officer
---------------------------------------------------------------------------------------------------------------------------------
Joseph 2002 (6)
Provenzano,
Director,
Secretary
---------------------------------------------------------------------------------------------------------------------------------

(1) Became Chief Executive Officer in June 2002.
(2) Including offset of loansfrom the Company.
(3) Became Chief Executive Officer in October 2000. Pursuant to an employment
arrangement the Company issued Mr. Sanders 100,000 shares of Common Stock and
warrants to purchase 750,000 shares of Common Stock for $1.75 per share. The
warrants were subsequently cancelled in February 2002.
(4) Became Chief Operating Officer in October 2000. Pursuant to an employment
arrangement the Company issued Mr. Bossung 100,000 shares of Common Stock and
warrants to purchase 750,000 shares of Common Stock for $1.75 per share.

(5) Mr. Calvert was issued 1,000,000 shares on January 9, 2003, and subsequently
returned the shares to the Company. He was also issued 3,000,000 shares on March
18, 2003, and subsequently returned the shares to the Company.

(6) Mr. Provenzano was appointed to the Board on June 28, 2002.

EMPLOYMENT CONTRACTS

The Company entered into employment agreements with Mr. Calvert in December 2002
and Mr. Provenzano in March 2003. Those agreements provide for a base annual
salary of $168,000 for Mr. Calvert and $130,800 for Mr. Provenzano with bonus
payments and certain other benefits.

Mr. Calvert's Agreement calls for him to be employed for five years at an annual
salary of $168,000 that he work with the Company on a full time basis, that the
office be located in Laguna Hills, California, that he receive annual increases
of 10% of his base income, that bonuses will be payable based on the greater of
a performance scale established by the Compensation Committee, assigned by the
board of directors, or 3% of the annual increase in market capitalization value.
The compensation plan includes benefits of a car allowance, insurance and a
standard vacation package. The agreement has certain minimum performance
standards and calls for a severance package equal to one year's base
compensation, plus an additional one half year's compensation for each year of
service beginning in 2003. Standard confidentiality, company ownership rights to
property and assets and arbitration clauses are included in the agreement.

Mr. Provenzano's Agreement calls for him to be employed for five years at an
annual salary of $130,800 that he work with the Company on a full time basis,
that the office be located in Laguna Hills, California, that he receive annual
increases of 5% of his base income, that bonuses will be payable based on the
greater of a performance scale established by the Compensation Committee,
assigned by the board of directors, or 1.5% of the annual increase in market
capitalization value. The compensation plan includes those benefits of car
allowance and insurance benefits and a standard vacation package. The agreement
has certain minimum performance standards and calls for a severance package
equal to one year's base compensation, plus an additional one half year's
compensation for each year of service beginning in 2003. Standard
confidentiality, company ownership rights to property and assets and arbitration
clauses are included in the agreement.

OPTIONS GRANTED DURING LAST FISCAL YEAR

In August 2002, the Company issued warrants to purchase 100,000 shares of common
stock at $0.30 per share through February 23, 2004 to a former executive in
connection with his resignation from the Company. The Company recorded
compensation expense of $25,000 based on the difference between the exercise
price and the market price at the date of issuance.

EQUITY COMPENSATION PLANS

------------------------------ ----------------------- ------------------------- -----------------------
(A) (B) (C)
------------------------------ ----------------------- ------------------------- -----------------------
Plan Category Number of securities Weighted average of Number of securities
to be issued upon exercise price of remaining available
exercise of outstanding options, for future issuance
outstanding options, warrants and rights under equity
warrants and rights compensation plans
(excluding securities
reflected in column
(a))
------------------------------ ----------------------- ------------------------- -----------------------
Equity compensation plans 65,000 $ 1.75 -0-
approved by security holders
------------------------------ ----------------------- ------------------------- -----------------------
Equity compensation plans 400,000 (1) 1.39 5,484,062
not approved by security
holders
------------------------------ ----------------------- ------------------------- -----------------------
Total 465,000 5,484,062
------------------------------ ----------------------- ------------------------- -----------------------

(1) 100,000 warrants were issued in 2002 at a strike price of $0.30; 300,000
warrants were issued prior to 2002 at a strike price of $1.75.

1994 STOCK OPTION PLAN

In June 1994, the board of directors adopted the 1994 Stock Option Plan (the
"Plan"). The maximum number of shares available for issuance under the Plan is
1,500,000 shares. The Plan terminates on June 13, 2004. The Plan is designed to
provide additional incentives for directors and officers and other key employees
of the Company, to promote the success of the business and to enhance the
Company's ability to attract and retain the services of qualified persons. The
board of directors administers the Plan. The Plan authorizes the board of
directors to grant key employees selected by it, incentive stock options and
non-qualified stock options. The exercise price of shares of Common Stock
subject to options qualifying as incentive stock options must not be less than
the fair market value of the Common Stock on the date of the grant. The exercise
price of incentive options granted under the Plan to any participant who owns
stock equal to more than 10% of the total combined voting power of all classes
of outstanding stock of the Company must be at least equal to 100% of the fair
market value on the date of grant. Fair market value has been determined to be
the closing price for the Company's common stock reported by NASDAQ on the date
of option grant.

The board of directors may amend the Plan at any time but may not, without
shareholder approval, adopt any amendment, which would materially increase the
benefits accruing to participants, or materially modify the eligibility
requirements. The Company also may not, without shareholder approval, adopt any
amendment, which would increase the maximum number of shares, which may be
issued under the Plan, unless the increase results from a stock dividend, stock
split or other change in the capital stock of the Company. In March 1999, the
board of directors authorized an amendment to the Plan increasing the number of
shares to be issued thereunder from 1,000,000 to 1,500,000. This amendment was
submitted for shareholder approval at the 1998 Annual Meeting and was approved.
At December 31, 2002, a total of 65,000 options remain outstanding and fully
vested as follows:

Number of Shares Price Per Share
------------------ ----------------------

Options Outstanding at January 1, 2001 237,500 $1.00 - $1.75
Options Outstanding at December 31, 2001 237,500 $1.00 - $1.75
Options Expired (172,500) $1.00
------------------
Options Outstanding at December 31, 2002 65,000 $1.00 - $1.75
==================

2002 CONSULTANT EQUITY PLAN

In August of 2002, the board approved the formation of the 2002 Consultant
Equity Plan designed to allow consultants to be compensated with shares of

Company common stock for services provided to the Company. A total of 1,500,000
shares were registered under this plan in a Form S-8 filing made by the Company
on August 8, 2002. This plan was amended by the Board in December 2002. A total
of 3,500,000 additional shares were registered under this plan in a Form S-8
filing made by the Company on December 27, 2002. Approval of this plan was not
submitted to the vote of the shareholders. Persons eligible to receive stock
awards under this plan included "consultants" that provide bona fide consulting
services to the Company, excluding any services incident to the raising of
capital or promotion or maintenance of a market for the Company's securities.
The plan is set to expire 10 years from its inception. The plan is administered
by a plan committee of two or more members of the Board. The plan committee can
award shares or options to purchase shares at a price in its discretion, so long
as the price chosen is not less than 85% of the fair market value of the
underlying shares as of the date of the grant.

From August 2002 through February 2003, the Company issued the 5,000,000 shares
available under this plan to approximately 26 consultants, employees and
directors. Part of this issuance was a grant of 1,000,000 shares to Mr. Dennis
Calvert, president and CEO of the Company, as consideration for his services.
Those 1,000,000 shares were issued in January of 2003, but were returned by Mr.
Calvert to the Company that same month.

2003 STOCK COMPENSATION PLAN

On February 14, 2003, the board of directors approved the Company's 2003 Stock
Compensation Plan as a means of providing directors, key employees and
consultants additional incentive to provide services to NuWay. Both stock
options and stock grants may be made under this plan. The Plan sets aside up to
15,000,000 shares of the Company's common stock for these purposes, which were
registered on a Form S-8 filing on February 27, 2003. Approval of this plan was
not submitted to the vote of the shareholders. The Board administers this plan.
The plan allows the Board to award grants of common shares or options to
purchase common shares. The board has discretion to set the price of the
options, but in no event shall that price be less than 100% of the fair market
value of the shares at the time of the grant. The Board may at any time amend or
terminate the plan. It does not expire on its terms.

During the months of February, March and April, 2003, the Company issued
9,515,938 shares to approximately 26 consultants, directors, and employees.

The board of directors approved a grant of 3,000,000 shares of stock pursuant to
the Company's 2003 Stock Compensation Plan to Mr. Dennis Calvert, president and
CEO of the Company, as consideration for his services. Those 3,000,000 shares
were issued in March of 2003. The Board subsequently modified its directive to
condition the issuance of shares for officers and directors on shareholder
approval of the plans. Mr. Calvert returned those 3,000,000 shares to the
Company.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The following table sets forth information regarding the beneficial ownership of
shares of the Company's common stock as of May 22, 2003 (31,041,911 common
shares issued and outstanding) by (i) all stockholders known to the Company to
be beneficial owners of more than 5 percent of the outstanding common stock; and
(ii) all directors and executive officers of the Company, individually and as a
group:

----------------- ---------------------------------- ------------------------- -----------------
Title of Class Name and Address of Beneficial Amount of Beneficial Percent of Class
Owner (1) Ownership (2)
----------------- ---------------------------------- ------------------------- -----------------
Common Dennis Calvert 4,782,000 15.4%
23461 S. Pointe Drive
Suite 200
Laguna Hills, CA 92653

----------------- ---------------------------------- ------------------------- -----------------
Common Joseph Provenzano 1,224,936 3.9%
23461 S. Pointe Drive
Suite 200
Laguna Hills, CA 92653

----------------- ---------------------------------- ------------------------- -----------------
Common Steven Harrison 622,043 2.0%
23461 S. Pointe Drive
Suite 200
Laguna Hills, CA 92653

----------------- ---------------------------------- ------------------------- -----------------
Common Gary Cox -0- -0-
23461 S. Pointe Drive
Suite 200
Laguna Hills, CA 92653

----------------- ---------------------------------- ------------------------- -----------------
Common Augustine Fund, LP 1,736,250 (3) 5.6%
141 W. Jackson, Ste. 2182
Chicago, IL 60604

----------------- ---------------------------------- ------------------------- -----------------
Common All directors and officers, 6,628,979 21.4%
individually and as a group

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

(1) Except as noted in any footnotes below, each person has sole voting power
and sole dispositive power as to all of the shares shown as beneficially owned
by them.

(2) Other than as footnoted below, none of these security holders has the right
to acquire any amount of the shares within sixty days from options, warrants,
rights, conversion privilege, or similar obligations. The amount owned is based
on issued common stock, as well as stock options, which are currently
exercisable.

(3) This information is according to the latest filing with the SEC by Augustine
Fund, LP as of May 22, 2003.

CHANGES IN CONTROL

The board of directors has voted to put to the shareholder vote the conversion
of a $1,120,000 note into equity of the Company. The board of directors has
elected to recognize the conversion of the note to equity upon the date at which
the board of directors approved the conversion to equity, which occurred in
March of 2003. The shareholders will vote to ratify the decision at the upcoming
meeting scheduled to occur during the third Quarter of 2003. The shares to be
issued in exchange for the conversion will not be issued until such time as the
proper shareholder approvals can be obtained. If, for any reason the
shareholders do not approve the conversion terms, then, the Company would be
required to re-state the Company's balance sheet to reverse the conversion
transaction. Management believes the shareholders will approve the conversion
terms.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Since the beginning of the last fiscal year, other than those described below,
there have not been any transactions that have occurred between the Company and
its officers, directors and five percent or greater shareholders.

CALVERT EMPLOYMENT AGREEMENT

In December 2002, the Company entered into an agreement with Dennis Calvert with
respect to his employment as president and Chief Executive Officer of the
Company. Mr. Calvert's Agreement calls for him to be paid an annual salary of
$168,000, be employed for five years, that he work with the Company on a full
time basis, that the office be located in Laguna Hills, California, that he
receive annual increases of 10% of his base income, that bonuses will be payable
based on the greater of a performance scale established by the Compensation
Committee, assigned by the board of directors, or 3% of the annual increase in
market capitalization value. The compensation plan includes benefits of a car
allowance, insurance and a standard vacation package. The agreement has certain
minimum performance standards and calls for a severance package equal to one
years base compensation, plus an additional one half years compensation for each
year of service beginning in 2003. Standard confidentiality, company ownership
rights to property and assets and arbitration clauses are included in the
agreement.

PROVENZANO EMPLOYMENT AGREEMENT

In March 2003, the Company entered into an agreement with Joseph Provenzano with
respect to his employment as a Director and Secretary of the Company. Mr.
Provenzano's Agreement calls for him to be paid an annual salary of $130,800, be
employed for five years, that he work with the Company on a full time basis,
that the office be located in Laguna Hills, California, that he receive annual
increases of 5% of his base income, that bonuses will be payable based on the
greater of a performance scale established by the Compensation Committee,
assigned by the board of directors, or 1.5% of the annual increase in market
capitalization value. The compensation plan includes those benefits of car
allowance and insurance benefits and a standard vacation package. The agreement
has certain minimum performance standards and calls for a severance package
equal to one years base compensation, plus an additional one half years
compensation for each year of service beginning in 2003. Standard
confidentiality, company ownership rights to property and assets and arbitration
clauses are included in the agreement.

FINANCING AGREEMENT WITH CAMDEN HOLDINGS

During June 2002, the Company entered into a financing agreement with Camden
Holdings, Inc., a diversified holding company with interests in many industries
including the healthcare industry. The Company received $250,000 in exchange for
1,000,000 shares of its restricted common stock ($0.25 per share). Stockholder
consent was not required for the agreement. The share price was determined by
the trading price of the stock during the few days leading up to the
consummation of the transaction (June 27, 2002), which was a range of $0.24 to
$0.30 per share. At the time of the transaction, Camden Holdings, Inc. owned no
shares in the Company. After the effect of the Med Wireless, Inc. and Genesis
Health Tech, Inc. transactions described below, Camden Holdings owned
approximately 1,017,548 shares in addition to the 1,000,000 shares received from
the $250,000 investment.

GENESIS HEALTH TECH, INC.

On June 28, 2002, the Company purchased certain assets from Genesis Health Tech,
Inc. ("Genesis"), a wholly owned subsidiary of Camden Holdings. These assets

included a database compiled over a 24-month period of healthcare providers in
the United States. The business purpose of the transaction was to provide the
Company a valuable tool to market its Ultrasound program. The total purchase
price of $300,000 was satisfied by the issuance of 666,667 restricted shares of
NuWay restricted common stock (at a price of $0.45 per share). The book value of
the asset is $255,000, which reflects a 15% discount due to the restrictions on
the issued stock. The $300,000 purchase price was a commercially reasonable
price in light of the value of the asset to the Company. The transaction
received the consent of a majority of NuWay's stockholders, as well as its board
of directors. As detailed in the Form 14C filed on September 23, 2002,
stockholders owning 3,930,183 shares of the 7,761,353 total shares of common
stock then outstanding, consented to the transaction. Camden Holdings was the
holder of 1,000,000 shares of common stock at the time of the transaction as a
result of the Financing Agreement described immediately above.

MED WIRELESS, INC.

Camden Holdings, Inc. owned 1,000,000 shares (12.9%) of the Company at the time
this transaction was approved by the shareholders, and also held a minority
interest in Med Wireless. In addition, Summit Healthcare, Inc., which shares a
common president with Camden Holdings, Inc., also owned an interest in Med
Wireless. Both Camden Holdings and Summit Healthcare received stock in the
Company as a result of this transaction. In addition, the Company's president,
Dennis Calvert, indirectly owns approximately 9.9% of the shares of Med
Wireless, and received 600,000 shares of the Company as a result of the
transaction. Shareholders of the Company owning 3,930,183 shares of the
7,761,353 shares then outstanding consented to the transaction with Med
Wireless. In addition, the board of directors approved the transaction.

As a result of Mr. Calvert's agreement to become the president of Med Wireless,
Inc. on or about June 15, 2002, he received in the name of New Millennium
Capital Partners, LLC a right to, but not actual certificates for, a total of
1,327,700 shares of stock in Med Wireless, Inc., representing 9.9% of the total
number of shares of Med Wireless, Inc., and received those shares by virtue of a
corresponding reduction of shares then currently held by Camden Holdings, Inc.,
which, upon its effective date, resulted in New Millennium Capital Partners
receiving 600,000 shares of NuWay from the Med Wireless transaction with NuWay.
Mr. Calvert was asked by the board of directors to become president of NuWay
Medical (known then as NuWay Energy) for the purpose of executing the Plan to
Change Business Focus and Turn Around the Company as referenced above in this
filing document.

SALE OF OIL OPERATIONS

NuWay entered into an agreement on December 15, 2002 with Summit Oil and Gas,
Inc. to sell the stock of NuWay Resources, Ltd. (its oil and gas subsidiary) for

$100,000 less outstanding liabilities. The Company realized no cash from the
sale of these operating units, but was able to contractually insure that it
would not retain any liabilities beyond October 1, 2002. In conjunction with the
sale of these operations, NuWay recorded a loss of $1,290,948 during the fourth
quarter of 2002. The transaction price was determined as a result of the Company
receiving no viable suitors, bidders or offers for the assets. In light of the
rapidly increasing liabilities and the carrying, management and auditing costs
of an unprofitable assets, the stock was sold. The business purpose was to stop
the negative cash flow, stop the contingent losses, and the removal of the
burden to management the investment.

The president of Summit Oil and Gas, Inc. is Mark Anderson. Mr. Anderson is also
president of Camden Holdings, Inc., and Summit Healthcare, Inc., both
shareholders of the Company. A shareholder vote was not held in relation to this
transaction. Mr. Anderson also served as a consultant to the Company, and
received shares of the Company pursuant to its 2002 Consultant Equity Plan.

SALE OF CASINO OPERATIONS

NuWay entered into an agreement on December 15, 2002, effective October 1, 2002,
to sell the stock of its wholly owned casino rental subsidiaries (Latin American
Casinos del Peru S.A., and Latin American Casinos of Colombia, LTDA) to Casino
Ventures Partners, a Nevada Partnership. The purchase price for the stock was
$300,000 less all outstanding liabilities of the two subsidiaries. The
transaction price was determined as a result of the Company receiving no viable
suitors, bidders or offers for the assets. In light of the rapidly increasing
liabilities and the carrying, management and auditing costs of unprofitable
assets, the stock was sold. The business purpose was to stop the negative cash
flow, stop the contingent losses, and the removal of the burden to management
the investment. As the offsetting liabilities exceeded the purchase price and
the Company received no funds. The Company recorded a loss from operations
through September 30, 2002 of $147,247 and a loss of $1,376,733 on disposal.

Management was alerted by its onsite managers employed by the Company that they
had received a notice of tax levy and seizure by the foreign government related
to more than $250,000 in US Dollars allegedly owed by the local operating
subsidiaries. Management found the representations by its managers to be
inconsistent and unreliable. Management suspected that its assets were being
illegally depleted by its local staff. Local police authorities notified the
Company that a former employee was being pursued criminally for embezzlement.
Management attempted to secure consultants who would travel to Peru and Columbia
to conduct a physical inspection and restore order to its operations, but was
unable to accomplish this goal due to the perceived risk to individual safety.
In light of the increasing liabilities, language and cultural barriers,
political unrest, cost of carrying the assets, cost of audit and maintenance,
relative age of the assets, and its lack of core value to the business plan as
going forward, the Board entered into the decision that was consummated.

NEW MILLENNIUM CAPITAL PARTNERS, LLC PURCHASE OF STOCK AND NOTE FROM
CAMDEN HOLDINGS, INC., AND SUMMITT VENTURES, INC.

New Millennium Capital Partners, LLC, a Nevada limited liability company
controlled by Company president Dennis Calvert, purchased a promissory note held
by Summitt Ventures (see detail below), and also purchased an aggregate of
4,182,107 shares of the Company's common stock from Camden Holdings and Summit
Healthcare, Inc. in exchange for $900,000, payable in the form of a promissory

note. The share certificates representing these shares were delivered to Mr.
Calvert on April 9, 2003. This note is secured by the shares of common stock of
the Company sold in the transaction and is further secured by common stock of
the Company held by Mr. Calvert. Mark Anderson, president of Camden Holdings,
Summit Healthcare, and Summitt Ventures, conditioned the purchase by New
Millennium on the Company converting the promissory note to common stock. The
conversion of the note held by New Millennium is a matter to be brought before
the shareholders at the next shareholder meeting scheduled for the third quarter
2003.

CONVERSION OF $1,120,000 NOTE TO STOCK

On March 26, 2003, the board of directors of the Company voted to convert a
promissory note owed by the Company in the face amount of $1,120,000 held by New
Millennium Capital Partners, LLC, a Nevada limited liability company controlled
by the Company's president Dennis Calvert, into common stock of the Company at a
37.5% discount to market price. New Millennium consented to the conversion.

The business purpose of this transaction was to retire $1,120,000 in debt owed
by the Company with the effect increasing shareholder equity by that amount. The
board of directors determined that a discount to market price was appropriate
given that (i) given the quantity of the shares issued, a block of shares that
size could not be liquidated without affecting the market price of the shares,
and (ii) the shares would be labeled with a restrictive legend requiring
fulfillment of Rule 144 prior to sale on the open market, thus precluding their
sale prior to one year from the date of the transaction. The board of directors
at the time determined that a 37.5% discount was appropriate.

The board of directors has modified its resolution converting the shares and
made the conversion conditional upon receiving shareholder approval of the
conversion at the Company's next shareholder meeting per NASDAQ Marketplace
rules. New Millennium has agreed to extend the terms of the note 90 days, from
June 15, 2003 to September 15, 2003, to allow sufficient time to obtain a
shareholder vote. Management anticipates that the Company will hold its annual
shareholder meeting in July or August 2003.

ITEM 13. EXHIBITS, REPORTS ON FORM 8-K, AND INDEX TO FINANCIAL STATEMENTS.

EXHIBITS.

Exhibits included or incorporated by reference in this document are set
forth in the Exhibit Index.

REPORTS ON FORM 8-K.

There were no reports on Form 8-K filed during the last quarter of the
fiscal year covered by this report.

ITEM 14. CONTROLS AND PROCEDURES.

(a) Evaluation of disclosure controls and procedures.

Within the 90 days prior to December 31, 2002, the Company carried out an
evaluation of the effectiveness of the design and operation of its disclosure
controls and procedures pursuant to Rule 13a-14 under the Securities and
Exchange Act of 1934 ("Exchange Act"). This evaluation was done under the
supervision and with the participation of the Company's president. Based upon
that evaluation, they concluded that the Company's disclosure controls and
procedures are effective in gathering, analyzing and disclosing information
needed to satisfy the Company's disclosure obligations under the Exchange Act.

(b) Changes in internal controls.

There were no significant changes in the Company's internal controls or in its
factors that could significantly affect those controls since the most recent
evaluation of such controls.

SIGNATURES

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

Dated: May 22, 2003 NuWay Medical, Inc.
By: /S/ Dennis Calvert
-----------------------------
Dennis Calvert, President,
Chief Executive Officer and
Interim Chief Financial Officer

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

NAME TITLE DATE

/s/ Dennis Calvert Chairman of the Board,
--------------------- Chief Executive Officer, President and
Dennis Calvert Interim Chief Financial Officer May 22, 2003

/s/ Joseph Provenzano
------------------------
Joseph Provenzano Director May 22, 2003

/s/ Steven V. Harrison II
------------------------------
Steven V. Harrison II Director May 22, 2003

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO THE SECURITIES EXCHANGE
--------------------------------------------------------------------------------
ACT OF 1934, RULES 13A-14 AND 15D-14 AS ADOPTED PURSUANT TO SECTION 302 OF THE
--------------------------------------------------------------------------------
SARBANES-OXLEY ACT OF 2002
-----------------------------

In connection with the Annual Report of NuWay Medical, Inc. (the "Company") on
Form 10-KSB for the year ended December 31, 2002 as filed with the Securities
and Exchange Commission on the date hereof (the "Report"), I, Dennis Calvert,
Chief Executive Officer of the Company, certify, pursuant to Rules 13a-14 and
15d-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section
302 of the Sarbanes-Oxley Act of 2002, that:

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

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

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

4. The Company's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Company and have:

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

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

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

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

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

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

6. The Company's other certifying officers and I have indicated in this annual
report whether there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date
of our most recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.

/s/ Dennis Calvert
--------------------
Dennis Calvert, President,
Chief Executive Officer, and
Interim Chief Financial Officer
May 22, 2003

INDEX TO FINANCIAL STATEMENTS

------------------------------------------------------------------------------------------------------ -----------------------
Page
------------------------------------------------------------------------------------------------------ -----------------------
Report of Independent Auditors - Haskell & White LLP F-2

------------------------------------------------------------------------------------------------------ -----------------------
Report of Independent Auditors - Shubitz Rosenbloom & Co., P.A. F-3

------------------------------------------------------------------------------------------------------ -----------------------
Consolidated Balance Sheets as of December 31, 2002 and December 31, 2001 F-4

------------------------------------------------------------------------------------------------------ -----------------------
Consolidated Statements of Operations for the years ended December 31, 2002 and 2001 F-5

------------------------------------------------------------------------------------------------------ -----------------------
Consolidated Statements of Changes in Stockholders' Equity for the years ended December 31, 2002 and F-6
2001

------------------------------------------------------------------------------------------------------ -----------------------
Consolidated Statements of Cash Flows for the years ended December 31, 2002 and 2001 F-8

------------------------------------------------------------------------------------------------------ -----------------------
Notes to Consolidated Financial Statements F-10

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

F-1

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders
NuWay Medical, Inc. (F/K/A NuWay Energy, Inc.)

We have audited the consolidated balance sheet of NuWay Medical,
Inc. and Subsidiaries (the "Company") as of December 31, 2002 and the related
consolidated statements of operations, stockholders' equity and cash flows for
the year then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.

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

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

As discussed in notes 1 and 3 to the consolidated financial
statements, the Company exited several business lines during 2002 through the
sale of interests in subsidiaries and the discontinuance of operations.

The accompanying consolidated financial statements have been
prepared assuming the Company will continue as a going concern. As discussed in
note 1 to the consolidated financial statements, the Company has limited liquid
resources, recurring losses from operations and is seeking to implement its
business plan with a new industry focus. These matters raise substantial doubt
about its ability to continue as a going concern. Management's plans in regard
to these matters are also discussed in note 1. The consolidated financial
statements do not include any adjustment that might result from the outcome of
this uncertainty.

/s/ HASKELL & WHITE LLP

Irvine, California
May 12, 2003

F-2

INDEPENDENT AUDITORS' REPORT

To the Board of Directors of
NuWay Energy, Inc. (F/K/A Latin American Casinos, Inc.) and Subsidiaries

We have audited the consolidated balance sheet of NuWay Energy, Inc.
and Subsidiaries as of December 31, 2001 and the related consolidated statements
of operations, changes in stockholders' equity and cash flows for the year then
ended. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.

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

As discussed in note 4 to the consolidated financial statements, the
Company reduced its asset values and has charged operations for 2001 with a
$3,015,182 asset impairment charge.

The accompanying consolidated financial statements have been
prepared assuming the Company will continue as a going concern. As discussed in
note 1 to the consolidated financial statements, the Company's significant
operating losses raise doubt about its ability to continue as a going concern.
The consolidated financial statements do not include any adjustment that might
result from the outcome of this uncertainty.

/s/ SHUBITZ ROSENBLOOM & CO., P.A.

Miami, Florida
April 10, 2002

F-3

ASSETS
------
December 31,

2002 2001
-------------- --------------
CURRENT ASSETS

Cash and Cash Equivalents $ 521 $ 440,827
Accounts Receivable, Net of $25,000 of Allowance
For Doubtful Accounts in 2001 - 234,054
Inventory - 475,291
Prepaid Expenses and Other Current Assets - 156,958
-------------- --------------
Total Current Assets 521 1,307,130
-------------- --------------
PROPERTY AND EQUIPMENT - NET 28,844 2,360,135
-------------- --------------

OTHER ASSETS
Accounts Receivable Long-Term, Net of Allowance For
Doubtful Accounts of $150,000 in 2001 - 450,000
Deposits - 26,693
Notes Receivable - Officers and Affiliates - 440,000
Other Assets - 6,374
Marketing Database (Note 5) 255,000 -
Med Wireless License (Note 5) 4,090,000 -
-------------- --------------

Total Other Assets 4,345,000 923,067
-------------- --------------
TOTAL ASSETS $ 4,374,365 $ 4,590,332
============== ==============

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------

CURRENT LIABILITIES
Accounts Payable and Accrued Expenses $ 1,131,579 $ 985,776
Note Payable (Notes 5 and 12) 1,120,000 -
Debentures Payable, net 150,000 2,400,004
-------------- --------------
Total Current Liabilities 2,401,579 3,385,780
-------------- --------------

COMMITMENTS, CONTINGENCIES AND SUBSEQUENT
EVENTS (NOTES 9, 11 and 12)

STOCKHOLDERS' EQUITY
Convertible Preferred Series A, $.00067 Par Value, 25,000,000

Shares Authorized, None Outstanding - -
Common Stock, $.00067 Par Value, 100,000,000 Shares
Authorized, 17,137,727 and 5,078,783 Shares Issued
at 2002 and 2001, respectively 11,483 3,402
Additional Paid-In Capital 20,289,936 15,137,225
Accumulated Other Comprehensive Loss - (544,539)
Accumulated Deficit (18,201,629) (13,264,532)
Treasury Stock, at cost, 44,900 Shares Held in 2002 and 2001 (127,004) (127,004)
-------------- --------------
Total Stockholders' Equity 1,972,786 1,204,552
-------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 4,374,365 $ 4,590,332
============== ==============

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

F-4

NUWAY MEDICAL, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATION
FOR THE YEARS ENDED
AS OF DECEMBER 31, 2002 AND 2001

Years Ended December 31,
2002 2001
--------------- --------------
Revenue

Rental Income $ - $ 3,600
--------------- --------------
Total Revenues - 3,600
--------------- --------------

Costs and Expenses
Selling, General and Administration 2,157,289 2,600,371
Depreciation, Depletion and Amortization 9,938 6,109
Expenses Associated With Stock Issued for Services 987,944 405,650
Cancellation of prior year warrant compensation (1,659,750) -
Repricing of Stock Options - (230,650)

Impairment Charges - 86,295
--------------- --------------
Total Costs and Expenses 1,495,421 2,867,775
--------------- --------------

Loss from operations (1,495,421) (2,864,175)
--------------- --------------

Other Income and Expense
Interest Income (Expense) (45,026) 121,695
Other Income 51,767 240
--------------- --------------
Net Other Income 6,741 121,935
--------------- --------------

Loss Before Income Taxes (1,488,680) (2,742,240)
Provision for Income Taxes (Benefit) - -
--------------- --------------
Net Loss from Continuing Operations (1,488,680) (2,742,240)
--------------- --------------

Loss from Discontinued Operations (Note 3) (3,448,417) (3,910,193)
--------------- --------------
Net Loss $(4,937,097) $(6,652,433)
============== ==============
Loss Per Common Share - Basic and Diluted
Loss per share from Continuing Operations $ (0.15) $ (0.65)
============ ============
Loss per share from Discontinued Operations $ (0.35) $ (0.93)
============ ============
Net Loss per Share $ (0.50) $ (1.56)
============ ============
Weighted Average Common Share Equivalents Outstanding 9,791,396 4,255,903
============ ============

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

F-5

NUWAY MEDICAL, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED
DECEMBER 31, 2002 AND 2001

Common Stock Accumulated
--------------------------------
Number Par Additional Other Retained Comprehensive
of Value Paid-In Comprehensive Earnings Treasury Income
Shares $.00067 Capital Income (Loss) (Deficit) Stock (Loss)
--------------- ------------ --------------- -------------- --------------- ------------ -------------

BALANCE DECEMBER 31, 2000 4,225,000 $ 2,830 $ 13,796,612 $ (560,326) $(6,612,099) $(5,235) $ -
ADJUSTMENT FOR FOREIGN
CURRENCY TRANSLATION
15,787 15,787

STOCK ISSUED FOR SERVICES 187,500 126 405,524
REPRICING ON VARIABLE
OPTION PLAN
(230,460)
TREASURY STOCK (121,769)
CONVERSION OF DEBENTURES 666,283 446 1,165,549
NET LOSS FOR THE YEAR
ENDED DECEMBER 31, 2001
(6,652,433) (6,652,433)
--------------- ------------ --------------- -------------- --------------- ------------ ------------
BALANCE DECEMBER 31, 2001 5,078,783 $ 3,402 $ 15,137,225 $ (544,539) $(13,264,532) $(127,004)

COMPREHENSIVE LOSS FOR
THE YEAR ENDED
DECEMBER 31, 2001 $ (6,636,646)
================

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

F-6

NUWAY MEDICAL, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED
DECEMBER 31, 2002 AND 2001
(CONTINUED)

Common Stock
----------------------------- Accumulated
Number Par Additional Other Retained Comprehensive
of Value Paid-In Comprehensive Earnings Treasury Income
Shares $.00067 Capital Income (Loss) (Deficit) Stock (Loss)
------------ ------------ --------------- ------------ --------------- ------------ ------------

STOCK ISSUED FOR SERVICES 2,459,707 1,649 986,295
CONVERSION OF DEBENTURES 1,332,570 893 2,331,705

CANCELLATION OF WARRANTS (1,659,750)

STOCK ISSUED FOR
INTANGIBLES 666,667 447 254,553
STOCK ISSUED FOR LICENSE OF
MED WIRELESS SOFTWARE
6,600,000 4,422 2,965,578
REALIZED LOSS OF FOREIGN
CURRENCY TRANSACTIONS
544,539 544,539
WARRANTS ISSUED UNDER
EMPLOYMENT AGREEMENT
25,000
STOCK ISSUED UNDER
COMMON STOCK
PURCHASE AGREEMENT
1,000,000 670 249,330
NET LOSS FOR THE YEAR
ENDED DECEMBER 31, 2002
(4,937,097) (4,937,097)
------------ ------------ --------------- ------------ -------------- ------------ -----------
BALANCE DECEMBER 31, 2002 17,137,727 $ 11,483 $20,289,936 $ - $ (18,201,629) $ (127,004)
============ ============ =============== ============ =============== ============

COMPREHENSIVE (LOSS) FOR
THE YEAR ENDED
DECEMBER 31, 2002 -------------
$ (4,392,558)
=============
The accompanying notes are an integral part of these financial statements.

F-7

NUWAY MEDICAL, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED
DECEMBER 31, 2002 AND 2001
(CONTINUED)

Years Ended December 31,
2002 2001
CASH FLOWS FROM OPERATING ACTIVITIES
-------------------------------------

Net Loss $(4,937,097) $(6,652,433)
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:
Depreciation, Depletion and Amortization 9,938 6,109
Issuance of Stock for Services 987,944 471,650
Cancellation of prior year warrant compensation (1,659,750) -
Asset Impairment Charges From Discontinued Operations - 3,015,182
Loss on disposal of Discontinued Operations 3,448,417 -
Cash Used in Discontinued Operations - 1,183,677
Realized Loss of Foreign Currency Translation 544,539 -
Issuance of Warrants as Compensation 25,000 -
Issuance of Warrants and Options
accounted for as compensation and repricing of options - (230,462)
Amortization of Deferred Debt Issuance Costs - 64,500
Increase (Decrease) in Prepaid Expenses and Other Current Assets 163,332 (18,484)
Increase in Accounts Payable and Accrued Expenses 287,371 542,225
------------ ------------
Net Cash Used In Operating Activities (1,130,306) (1,618,036)
------------ ------------

CASH FLOWS FROM INVESTING ACTIVITIES
------------------------------------
Cash Used in Discontinued operations - (1,802,655)
Acquisition of Treasury Stock - (121,197)
Issuance of Notes Receivable to Officers and Affiliates - (440,000)
Decrease in Notes Receivable to Officers and Affiliates from
Severance Packages 440,000 -
------------ ------------
Net Cash Provided By (Used In) Investing Activities 440,000 (2,363,852)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
-------------------------------------
Proceeds from Sale of Securities 250,000 -
------------ ------------
Net Cash Provided By Financing Activities 250,000 -
------------ ------------

NET DECREASE IN CASH AND CASH EQUIVALENTS (440,306) (3,981,888)

CASH AND CASH EQUIVALENTS - BEGINNING 440,827 4,422,715
------------ ------------

CASH AND CASH EQUIVALENTS - ENDING $ 521 $ 440,827
============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

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

F-8

NUWAY MEDICAL, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED
DECEMBER 31, 2002 AND 2001
(CONTINUED)

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Cash Paid During the Period for:
Interest $ - $ -
============ ============
Income Taxes $ - $ -
============ ============

Conversion of Debentures and Accrued Interest to Capital $ 2,332,598 $ 1,165,995
============ ============
Issuance of Stock for Capitalized Assets:

Database Purchase in Exchange for Common Stock $ 255,000 $ -
============ ============

License Rights from Med Wireless Inc. in Exchange for Common Stock valued
at $2,970,000 and the assumption of $1,120,000 Note Payable (Notes 5 and 12) $ 4,090,000 $ -
============ ============

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

F-9

NUWAY MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2002 AND 2001

Note 1. Business and Organization

NuWay Energy, Inc., a Delaware Corporation, (formerly known as Latin American
Casinos, Inc.) changed its name to NuWay Medical Inc. (NuWay) in October 2002.
The name change reflects the Company's new operating focus after NuWay acquired
fifteen-year licensing rights to certain medical technology from Med Wireless,
Inc. in July 2002. The Med Wireless software is a HIPAA compliant technological
solution to electronically organize, store, and retrieve medical records and
medical images.

The Company formed NuWay Sports Medicine Ventures, LLC (subsequently renamed
NuWay Sports LLC) in December 2002, and holds 51 percent ownership. Although
formed in 2002, the subsidiary did not become active until 2003. NuWay Sports
was created to market a variety of products and services to the sports industry
with an emphasis on health and technology related products. NuWay Sports'
flagship product is its Player Record Library System, ("PRLS"). PRLS is a secure
database for athlete/patient medical data that can be acquired, displayed,
analyzed, interpreted, and archived in a completely digital format.

As part of the new business strategy the Company sold, or discontinued
operations of, its four wholly owned subsidiaries at October 1, 2002: (i.) NuWay
Resources, Ltd., which conducted oil and gas exploration activities, primarily
in western Canada; (ii.) Latin American Casinos del Peru, S.A. and (iii.) Latin
American Casinos of Colombia LTDA, which were both engaged in the rental of slot
machines and other gaming equipment to casino operators in Latin America; and,
(iv.) World's Best Rated Cigars, Inc., a marketer of premium cigars at
discounted prices in the United States. World's Best Rated Cigars was dissolved
and the other three subsidiaries were sold in their entirety to third parties.
The sale of these operating segments was completed without recourse as all
liabilities and remaining assets were transferred to the purchaser in lieu of
any cash. The Company recorded a loss on disposal of these entities of
$3,448,417. (See Note 3)

These consolidated financial statements have been prepared assuming the Company
will continue as a going concern, which contemplates the realization of assets
and satisfaction of liabilities in the normal course of business. At December
31, 2002, the Company has limited liquid resources, recurring losses from
operations and is seeking to implement its business plan with a new industry
focus.

Although the Company raised capital of $259,661 from January 1, 2003 to April
21, 2003 (note 12), the Company had a cash balance of approximately $40,000 as
of May 1, 2003, which is insufficient to meet operating expenses for any
extended period. Management believes that the Company will be required to raise
additional capital to sustain operations for the next twelve months and is
actively reviewing a number of proposals being made to the Company by private
investors and investment bankers. It is unlikely that the Company will be able
to qualify for bank debt until such time as the Company is able to demonstrate
the financial strength to provide confidence for a lender.

Management believes it will be successful in selling its PRLS software
applications. The Company expects to secure agreements during the next quarter.
The Company's PRLS has recently been introduced to the marketplace and generated
approximately $40,000 in revenues during the first 60 days of it becoming market
ready in the first quarter of 2003. PRLS is being used by very high profile NFL
franchises and it is already being referred by its customers and prospects as
the best of brand for its sports industry focus. The Company is marketing the
PRLS to multiple sports leagues and is actively seeking additional vertical
market opportunities.

The Company is in negotiations with multiple parties to sell its PRLS system,
including certain significant agreements that can generate annual fees in excess
of $2,000,000 in revenues per contract, if the Company is successful in
concluding those negotiations. Management believes it will be successful in
selling its PRLS product offering, however that result cannot be assured.

F-10

NUWAY MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2002 AND 2001

The most recent agreement to retire the Company's only significant outstanding
debt ($1,120,000), which is subject to a shareholder vote at the Company's
annual shareholder meeting, which Management has scheduled to take place during
the third quarter 2003 means that if approved, the Company's need for capital is
primarily related to expansion, marketing and new business development.
Management believes the shareholder approvals for the conversion of the
outstanding note to equity will be approved.

The Company has relied upon its stock award plans (the 2002 Consultant Equity
Plan and the 2003 Stock Compensation Plan) to compensate consultants and
employees who have assisted in developing and executing the Company's business
plan. While the Company's reliance on its these plans has been significant, it
has allowed the Company to build its marketing, legal, technology, and
operations staffing needs. In many ways, the Company has been successful in
repositioning its business for success because of the availability of the plans
and its purposeful use. Management hopes to lessen its reliance upon these plans
as it collects revenues from sales and is able to raise additional capital.

In order to continue to upgrade its software technology the Company has an
ongoing commitment to invest in product development and research. Its current
budget includes a full staff of IT professionals working on a contract basis and
the staff will need additional manpower, equipment and resources. The budget for
this is currently estimated to be not less than $500,000 over the next 12 months
and will be increased as new customers enter into agreements with the Company.

Management anticipates that the Company will have need to add additional staff
over the next 12 months. While it has 3 full time employees as of May 12, 2003,
the Company also relies on at least 12 consultants who work on behalf of the
Company. The Company intends to add some of these consultants to its full time
staff as employees and add additional staff members on an as needed basis.

Ultimately, the Company's ability to continue as a going concern is dependent
upon its ability to establish and grow a revenue stream, attain a reasonable
threshold of operating efficiencies, achieve profitable operations and attract
new sources of capital. The consolidated financial statements do not include any
adjustments that might result from the outcome of these uncertainties.

Note 2. Summary of Significant Accounting Policies

a) Principles of Consolidation

The consolidated balance sheet at December 31, 2002 includes the accounts
of NuWay Medical, Inc. and NuWay Sports, LLC. The Company has significant
influence of the business operations of NuWay Sports and operations are
consolidated. All significant inter-company balances have been eliminated
in consolidation. Operations for NuWay Sports LLC were not significant
for the period from inception to December 31, 2002. The consolidated
statements of operations and cash flows for the year ended December 31,
2002, as well as the consolidated financial statements for the year ended
December 31, 2001 also include the results of the activities of the
subsidiaries mentioned in Note 1 above up to the date of disposal. See
Note 3.

b) Property and Equipment

Property and Equipment are stated at cost. Depreciation is provided on a
straight-line basis over the estimated useful life of the respective
asset. Maintenance and repairs are charged to expense as incurred; major
renewals and betterments are capitalized. When items of property or
equipment are sold or retired the related cost and accumulated
depreciation are removed from the accounts and any gain or loss is
included in the results of operations.

F-11

NUWAY MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2002 AND 2001

c) Impairment of Long-Lived Assets

The Company periodically reviews its long-lived assets for potential
impairment as required by Statement of Financial Accounting Standards No.
144, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of", which supercedes previous guidance.
As discussed in Note 3, the Company discontinued several operations
during the year ended December 31, 2002. For the year ended December 31,
2001, the Company had evaluated certain of the assets used in these
operations and recorded an impairment charge of $3,015,182 (Note 4).

d) Revenue Recognition

The Company plans to recognize revenue from its new medical technology
business in accordance with SEC Staff Accounting Bulletin No. 101
"Revenue Recognition in Financial Statements." For hardware sales,
revenue will be recognized upon shipment to customers. Revenue from the
licensing of software products will be recognized on shipment to and
acceptance by customers, and over the applicable license period. Revenue
from software maintenance agreements will be recognized ratably over the
term of the agreement. Annual software maintenance charges and upgrade
fees will be recognized ratably over the period covered.

e) Earnings (Loss) Per Share

The Company reports basic and diluted earnings per share (EPS) for common
and common share equivalents. Basic EPS is computed by dividing reported
earnings by the weighted average shares outstanding. Diluted EPS is
computed by adding to the weighted average shares the dilutive effect if
stock options and warrants were exercised into common stock. For the
years ended December 31, 2002 and 2001, the denominator in the diluted
EPS computation is the same as the denominator for basic EPS due to the
antidilutive effect of the warrants and stock options on the Company's
net loss.

For the years ended December 31, 2002 and 2001, the computation of basic
EPS was as follows:

2002 2001

------------------ -----------------
Numerator - net loss from
continuing operations $ 1,488,680 $ 2,742,240
Denominator - weighted shares
outstanding 9,791,396 4,255,903
------------------ -----------------
Loss per share $ (0.15) $ (0.64)
================== =================

2002 2001
------------------ -----------------
Numerator - net loss from
discontinued operations $ 3,448,417 $ 3,910,193
Denominator - weighted shares
outstanding 9,791,396 4,255,903
------------------ -----------------
Loss per share $ (0.35) $ (0.92)
================== =================

2002 2001
------------------ -----------------
Numerator - net loss $ 4,937,097 $ 6,652,433
Denominator - weighted shares
outstanding 9,791,396 4,255,903
------------------ -----------------
Loss per share $ (0.50) $ (1.56)
================== =================

F-12

NUWAY MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2002 AND 2001

f) Use of Estimates

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosure of contingent assets
and liabilities at the date of the financial statements, and revenues and
expenses during the period reported. Actual results could differ from
those estimates. Estimates are used when accounting for stock-based
transactions, uncollectible accounts receivable, asset depreciation and
amortization, and taxes, among others.

g) Stock Options and Warrants issued for Services

As permitted under the Statement of Financial Accounting Standards No.
123 (SFAS No. 123), "Accounting for Stock-Based Compensation," the
Company accounts for its stock-based compensation to employees in
accordance with the provisions of Accounting Principles Board (APB)
Opinion No. 25, "Accounting for Stock Issued to Employees," and related
interpretations. The Company provides the pro forma net earnings, pro
forma earnings per share, and stock based compensation plan disclosure
requirements set forth in SFAS No. 123.

Had compensation cost for options issued under the 1994 Stock Option
Plan, as described more fully in Note 7, been determined based upon the
fair value at the grant date for options granted, consistent with the
provision of SFAS 123, the Company's net loss and net loss per share
would have been reduced to the pro forma amounts indicated below:

2002 2001
---- ----

Net Loss - as reported $(4,937,097) $(6,652,433)
Deduct: stock-based employee compensation
expenses determined under fair value based
------------ -------------
method (10,021) -
------------ -------------
Net Loss - pro forma $(4,947,118) $(6,652,433)
============ ============
Loss per share - as reported -
$
Basic and Diluted $ (0.50) (1.56)
============ ============
Loss per share - pro forma
Basic and Diluted $ (0.51) $ (1.56)
============ ============

For stock issued to consultants and other non-employees for services, the
Company records the expense based on the fair market value of the
securities as of the date of the agreement for such services.

h) Advertising

The Company expenses all advertising costs as incurred. Included in the
statement of operations is approximately $13,000 and $111,000 of
advertising expense charged to operations for the years ended December
31, 2002 and 2001, respectively. Substantially all advertising expenses
incurred were paid through issuance of common stock.

i) Fair Value of Financial Instruments

F-13

As of December 31, 2001 and 2002, management believes the fair value of all
financial instruments approximated carrying value.

j) Recent Accounting Pronouncements

In April 2002, the FASB issued Statement No. 145, "Rescission of FASB
Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13 and
Technical Corrections." Statement No. 145 rescinds Statement No. 4, which
required all gains and losses from extinguishment of debt to be aggregated
and, if material, classified as an extraordinary item, net of related
income tax effect. In addition, Statement No. 145 amends Statement No. 13
on leasing to require that certain lease modifications that have economic
effects similar to sale-leaseback transactions be accounted for in the same
manner as sale-leaseback transactions. Provisions of Statement No. 145
related to the rescission of Statement No. 4 are effective for financial
statements issued by the Company after January 1, 2003. The provisions of
the statement related to sale-leaseback transactions were effective for any
transactions occurring after May 15, 2002. All other provisions of the
statement were effective as of the end of the second quarter of 2002. The
changes required by Statement No. 145 are not expected to have a material
impact on the results of operations, financial position or liquidity of the
Company.

In July 2002, the FASB issued Statement No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." Statement No. 146 requires
companies to recognize costs associated with the exit or disposal of
activities as they are incurred rather than at the date a plan of disposal
or commitment to exit is initiated. Types of costs covered by Statement No.
146 include lease termination costs and certain employee severance costs
that are associated with a restructuring, discontinued operation, facility
closing, or other exit or disposal activity. Statement No. 146 will apply
to all exit or disposal activities initiated after December 31, 2002. At
this time, the Company does not expect the adoption of the provisions of
Statement No. 146 to have a material impact on the Company's financial
results.

In November 2002, the FASB issued Interpretation No. (Interpretation) 45,
"Guarantor's Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others." Interpretation 45
requires certain guarantees to be recorded at fair value. In general,
Interpretation 45 applies to contracts or indemnification agreements that
contingently require the guarantor to make payments to the guaranteed party
based on changes in an underlying that is related to an asset, liability,
or an equity security of the guaranteed party. The initial recognition and
measurement provisions of Interpretation 45 are applicable on a prospective
basis to guarantees issued or modified after December 31, 2002.
Interpretation 45 also requires new disclosures, even when the likelihood
of making any payments under the guarantee is remote. These disclosure
requirements are effective for financial statements of interim or annual
periods ending after December 15, 2002. The changes required by
Interpretation 45 are not expected to have a material impact on the results
of operations, financial position or liquidity of the Company.

F-14

NUWAY MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2002 AND 2001

characteristics: (1) the equity investment at risk is not sufficient to
permit the entity to finance its activities without additional support from
other parties, which is provided through other interests that will absorb
some or all of the expected losses of the entity; (2) the equity investors
lack one or more of the following essential characteristics of a
controlling financial interest: (a) the direct or indirect ability to make
decisions about the entity's activities through voting rights or similar
rights, (b) the obligation to absorb the expected losses of the entity if
they occur, which makes it possible for the entity to finance its
activities, or (c) the right to receive the expected residual returns of
the entity if they occur, which is the compensation for the risk of
absorbing expected losses. Interpretation 46 does not require consolidation
by transferors to qualifying special purpose entities. Interpretation 46
applies immediately to variable interest entities created after January 31,
2003, and to variable interest entities in which an enterprise obtains an
interest after that date. It applies in the first fiscal year or interim
period beginning after June 15, 2003, to variable interest entities in
which an enterprise holds a variable interest that it acquired before
February 1, 2003. The Company is currently assessing the impact of
Interpretation 46.

In June 2001, the FASB issued Statement No. 143, "Accounting for Asset
Retirement Obligations," which addresses financial accounting and reporting
for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. The standard applies to
legal obligations associated with the retirement of long-lived assets that
result from the acquisition, construction, development and/or normal use of
the asset. Statement No. 143 requires that the fair value of a liability
for an asset retirement obligation be recognized in the period in which it
is incurred if a reasonable estimate of fair value can be made. The fair
value of the liability is added to the carrying value of the associated
asset, and this additional carrying amount is depreciated over the life of
the asset. The liability is accreted at the end of each period through
charges to operating expense. If the obligation is settled for other than
the carrying amount of the liability, the Company will recognize a gain or
loss on settlement. As required, the Company adopted the provisions of
Statement No. 143 for the quarter ended March 31, 2003. Management does not
believe adoption of this standard will have a material adverse effect on
the Company's consolidated financial position, results of operations or
liquidity.

F-15

NUWAY MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2002 AND 2001

k) Reclassifications

Certain amounts in the accompanying 2001 financial statements have been
reclassified to conform to 2002 presentation, primarily those items having
to do with discontinued operations. (See Note 3)

Note 3. Discontinued Operations

Sales of Assets Not in the Ordinary Course of Business

In order to focus on our primary business opportunity, the Company divested our
non-core businesses during the year 2002. These businesses included a slot
machine rental and remanufacturing subsidiary in South and Central America, the
distribution and sale of premium brand cigars, and an oil and gas development
subsidiary in Canada. The stock of both the slot machine rental subsidiaries
(Latin American Casinos Del Peru S.A., a Peruvian corporation and Latin American
Casinos of Colombia LTDA, a Colombian corporation), and the oil and gas
subsidiary, NuWay Resources, Ltd., were sold to third parties effective October
1, 2002. The cigar business was shut down and discontinued effective November
30, 2002.

A description of the discontinued operations is as follows:

Latin American Casinos Subsidiaries - History and Sale

World's Best Rated Cigar Company - History and Sale

F-16

NUWAY MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2002 AND 2001

NuWay Resources, Ltd. - History and Sale

On September 3, 2002, the Company indicated in a press release that it intended
to spin off the oil and gas subsidiary NuWay Resources, Inc. into a separate
public company. At that time, the Company began negotiations with the senior
ownership party in Canada to determine the value and explore the feasibility of
such a plan. At the same time, the Company began a process to determine if
additional energy related assets could be acquired by the subsidiary as part and
parcel to the spin-off. Management was notified during these negotiations (in
the fourth quarter) that the senior management partner intended to redirect
their business focus away from these assets and into more lucrative properties.
The uncertainty as to the future disposition of the assets, as well as
uncertainty of the potential for additional capital call provisions and thus
unknown future liabilities made the spin-off unworkable.

The results of operations of the Company's oil and gas, casino, and cigar
distribution operations have been shown as discontinued operations. The results
of operations for the discontinued operations for the years ended December 31,
2002 and 2001 are as follows:

2002 2001
------------------ ------------------

Revenues $ 629,415 $ 746,242
Operating expenses 1,230,401 1,641,253
Asset impairment charges -- 3,015,182
------------------ ------------------
Loss from discontinued operations
prior to disposal (600,986) (3,910,193)
Loss on disposal of discontinued
operations (2,847,431) -
------------------ ------------------
Loss from discontinued operations $ (3,448,417) $ (3,910,193)
================== ==================

F-17

NUWAY MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2002 AND 2001

Note 4. Property and Equipment

Property and Equipment are summarized as follows:

December 31,
2002 2001
---------------- ---------------
Furniture, Fixtures & Office Equipment $42,753 $ 151,818
Exploration & Development Equipment - 933,624
Oil and Gas Properties at Cost - 752,067
Land and Building - 35,000
Rental Equipment - 1,039,008
Transportation Equipment - 2,862
---------------- ---------------
Total 42,753 2,914,379
Less: Accumulated Depreciation 13,909 554,244
---------------- ---------------
Property and Equipment - Net $28,844 $ 2,360,135
================ ===============

During 2001, the Company recorded several asset impairment charges related to
the assets used in the now discontinued operations (Note 3). In 2001, the
Company recorded a reduction in value for certain slot machine parts of $194,000
and recorded an asset impairment charge for all gaming equipment of $2,789,182.
The reduction of value on the gaming equipment was the result of an appraisal,
which was used to determine the value in light of political changes and
government mandated review in Peru. The Company also recorded a $32,000
impairment charge relative to the value of a cigar factory owned in Nicaragua.
These aggregate impairment charges of $3,015,182 have been included in the
losses from discontinued operations (Note 3) as reclassified in the statement of
operations for the year ended December 31, 2001.

See Note 3 for discussion of operations discontinued during 2002 at which time
the Company's remaining assets, except for certain furniture, fixtures and
office equipment in its corporate offices, were sold or disposed of in
connection with the cessation of the related operations.

Furniture, fixtures and office equipment are carried at cost and depreciated
using the straight-line method over the estimated useful lives of the assets,
which is five years. This represents the only remaining property and equipment
as of December 31, 2002.

Note 5. Intangible Assets

The Company has the following Intangible Assets at December 31, 2002: a
marketing database purchased from Genesis Health Tech, Inc. on June 28, 2002 and
certain software technology licensed from Med Wireless, Inc. on August 21, 2002.
The database is a comprehensive listing of healthcare providers in the U.S. and
represents a valuable tool for phone, mail and direct marketing activities
related to NuWay's new medical technology products. The technology licensed from
Med Wireless relates to the movement of medical images and data over the
Internet and via handheld wireless devices and is critical to the Company's new
PRLS product as well as future products. No amortization was recorded for these
intangible assets in 2002 as the Company did not begin to utilize the database
nor generate sales of products derived from this technology until 2003.

F-18

NUWAY MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2002 AND 2001

Management has determined the value assigned to each of these intangibles based
on the market price of the Company's common stock at the date of agreement of
each transaction, as adjusted for applicable discounts. Based on additional
analyses, these valuations have been adjusted from those values originally
disclosed in the Company's quarterly report on Form 10-QSB for the period ended
September 30, 2002. The database acquired has been valued based on the 666,667
shares issued and the closing market price on June 28, 2002 of $.45 per share,
less a 15% discount for the restricted nature of the common stock issued, or
$255,000. The license agreement has been valued based on the 6,600,000 shares of
common stock issued, approximately 44% of the outstanding stock after issuance,
and the closing market price on August 21, 2002 of $.60 per share. This value
was reduced by a 25% discount relative to the restricted nature of the common
stock issued and the inherent lack of marketability associated with the issuance
of such a significant block. The value of the license agreement has been
recorded as the sum of the stock issued for the license agreement valued at
$2,970,000 and the note payable assumed of $1,120,000 (Note 12) or an aggregate
$4,090,000.

During the quarter ended September 30, 2002, we had valued the marketing
database at the fair market value of shares issued. On the date of issuance, the
NASDAQ closing price for NuWay common stock was $.45 per share, resulting in a
valuation of $300,000 for the 666,667 shares issued. Similarly, the license
agreement was valued at the value of the assumed note ($1,120,000) plus
$3,500,000, or $.53 per share, which was a discount of approximately 10% to the
closing price of the stock on the date of issuance ($.60). The discount of 10%
was applied to the value of the stock to reflect the restricted nature of the
common stock issued and the inherent lack of marketability associated with the
issuance of such a significant block. After discussions with valuation experts
and our accountants, we decided to discount the value of the database and
increase the discount on the license as described above.

Note 6. Stock, Stock Options and Warrants Issued for Services

At December 31, 2002, there were 2,636,000 of unrestricted shares scheduled to
be issued January 2003 for services performed in 2002. Of this amount, 1,200,000
shares were issued to executive officers and the remaining balance was issued to
various individuals for consulting, legal and accounting services. Compensation
and consulting expense equal to the market value of the stock at the date of
issuance totaling $645,000 was accrued in December 2002.

In December 2000, the board of directors authorized the issuance of 3,300,000
private five year stock warrants to acquire common stock at $1.75 per share.
1,500,000 of these warrants as well as 200,000 shares of restricted stock were
issued to the executive officers. Compensation expense was recorded equal to the
market value of the restricted stock, $350,000. The remaining warrants were
issued to consultants and the executive officers for services and were valued at
$1,991,700 using the Black-Scholes option pricing model using a 68.3% volatility
factor and an interest-free interest factor of 5.8%. This amount was originally
recorded as expense in December 2000. In February 2002, 3,000,000 of the
3,300,000 warrants issued in year 2000 were cancelled and $1,659,750 of expenses
previously recorded in year 2000 was reversed in accordance with the provisions
of Accounting Principles Board Opinion No. 25.

F-19

NUWAY MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2002 AND 2001

In August 2002, the Company issued a warrant to purchase 100,000 shares of
common stock at $0.30 per share through February 23, 2004 to a former executive
in connection with his resignation from the Company. The Company recorded
compensation expense of $25,000 based on the difference between the exercise
price and the market price at the date of issuance.

Note 7. Investment Banker Warrants

Effective June 5, 1998, the Company contracted with an investment banker to
provide on a non-exclusive basis to the Company assistance in possible mergers,
acquisitions and capital structuring. The duration of the contract is for five
years. In consideration for these services, the Company granted warrants to
purchase an aggregate of 225,000 shares of common stock at the closing bid price
of $1.875 as of June 5, 1998, which can be exercised through June 5, 2003.

Effective February 8, 2000, the board of directors reduced the exercise price to
$1.06, which was the closing price of the stock on that date. At December 31,
2002, these warrants have fully vested and are irrevocable.

Note 8. Stock Compensation Plans

1994 Stock Option Plan

On June 13, 1994, the board of directors adopted the 1994 Stock Option Plan in
which the aggregate number of shares for which options may be granted under the
Plan shall not exceed 1,000,000 shares. The term of each option shall not exceed
ten years from the date of granting (five years for options granted to employees
owning more than 10 percent of the outstanding shares of the voting stock of the
Company). The 1994 Plan will terminate in June 2004, unless terminated earlier
by action of the board of directors. In June 1999, the Company increased the
shares allocated to the plan to 1,500,000.

At December 31, 2002 and 2001, the Company had options outstanding and
exercisable as follows:

Number of Shares Price Per Share
------------------ ----------------------
Options Outstanding at January 1, 2001 237,500 $1.00 - $1.75
Options Outstanding at December 31, 2001 237,500 $1.00 - $1.75
Options Expired (172,500) $1.00
------------------
Options Outstanding at December 31, 2002 65,000 $1.00 - $1.75
======

All outstanding stock options and warrants were fully exercisable at December
31, 2002. The following shows the years in which these options and warrants will
expire:

Employee Stock
Investment Banker Options and
Private Warrants Warrants Warrants
------------------------ ----------------------- -------------------
Range of Prices $1.75 $1.06 $0.30 to- $1.75
---------------

To Expire in 2003 - 225,000 65,000
To Expire in 2004 - - 100,000 (1)
To Expire in 2005 300,000 - -
------------------------- ------------------------ ----------------------- -------------------

(1) See note 6

F-20

NUWAY MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2002 AND 2001

2002 Consultant Equity Plan

In August of 2002, the board approved the formation of the 2002 Consultant
Equity Plan designed to allow consultants to be compensated with shares of
Company common stock for services provided to the Company. A total of 1,500,000
shares were registered under this plan in a Form S-8 filing made by the Company
on August 8, 2002. This plan was amended by the Board in December 2002. A total
of 3,500,000 additional shares were registered under this plan in a Form S-8
filing made by the Company on December 27, 2002. Approval of this plan was not
submitted to the vote of the shareholders. Persons eligible to receive stock
awards under this plan included "consultants" that provide bona fide consulting
services to the Company, excluding any services incident to the raising of
capital or promotion or maintenance of a market for the Company's securities.
The plan is set to expire 10 years from its inception. The plan is administered
by a plan committee of two or more members of the Board. The plan committee can
award shares or options to purchase shares at a price in its discretion, so long
as the price chosen is not less than 85% of the fair market value of the
underlying shares as of the date of the grant.

2003 Stock Compensation Plan

During the months of February, March and April, 2003, the Company issued
9,764,688 shares to approximately 26 consultants, directors, and employees.

Note 9. Convertible Debentures

In December 2000, the Company, through a private placement, issued $3,500,000
principal amount of 6 percent Convertible Debentures. These debentures were
originally due June 13, 2001 and were subsequently extended to December 13,
2001. They are convertible into common stock at a price of $1.75 per share. The
Company incurred approximately $64,500 of costs in regard to this private

F-21

NUWAY MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2002 AND 2001

placement and these debt issuance costs were amortized over the life of the
debentures. Included as part of selling general and administrative expenses in
the Statement of Operations for year 2001 is $64,500 of amortization of deferred
debt issuance cost. The interest on the debentures is payable either in cash or
shares of common stock, at the discretion of the Company. During 2001,
$1,100,000 of the debentures plus accrued interest were converted into 666,283
shares. During 2002, $2,250,000 of the remaining debentures plus accrued
interest were converted into 1,332,570 shares of common stock. The Company
received a notice requesting conversion of the remaining $150,000 of debentures
plus accrued interest in December 2002 and issued 96,006 shares of common stock
in the first quarter of 2003. However, the individuals have not taken possession
of the shares and have indicated they do not want to convert.

Note 10. Provision for Income Taxes

No amount has been provided for income taxes in the accompanying financial
statements. At December 31, 2002 the Company had available unused net operating
loss carryforwards which may provide future tax benefits of approximately
$14,000,000. These carryforwards expire on various dates through the year 2022.
These deferred tax assets have been subjected to a 100% valuation allowance as
management is unable to determine that it is more likely than not that such will
be realized.

Due to changes in the Company's ownership through various issuance of common
stock during 2002 and continuing in 2003, the utilization of such net operating
loss carryforwards may be subjected to annual limitations under provisions of
the Internal Revenue Code. Such limitations could result in the permanent loss
of a portion of the net operating loss carryforwards. The Company has not yet
evaluated the status of its net operating loss carryforwards and may not do so
until such time as the Company expects operating profits.

Note 11. Commitments and Contingencies

a) Litigation

The Company is a defendant from time to time in litigation arising out of the
normal course of its business, none of which are expected to have a material
adverse effect on its business, operations, financial position or corporate
liquidity.

F-22

NUWAY MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2002 AND 2001

corrected the previous omission of certain material expenses related primarily
to compensation expense arising from warrants issued and repriced stock options,
as well as other errors. The case is ongoing at this time. The Company intends
to vigorously defend its actions and pursue its affirmative claims to the
fullest extent possible. Management does not expect that this case will have a
material adverse effect on the Company's financial position.

b) Employment Agreements

In January 1997, the Company entered into a five year employment agreement with
Lloyd Lyons, which provided in part that in the event of either a merger,
consolidation, sale or conveyance of substantially all the assets of the Company
which resulted in the discharge of Mr. Lyons, he would be entitled to 200
percent of the balance of payments remaining under the contract. The contract
provided salary continuation for a period of two years after his death. In
January 2000, Mr. Lyons passed away and effective August 2, 2000 the Company
amended its employment contract with his widow and primary beneficiary of his
estate, whereby the salary continuation clause included in his contract was
replaced with a severance arrangement that requires the Company to pay Mrs.
Lyons $100,000 over a one year period commencing on the first month following
the termination of her employment with the Company. Furthermore, upon her
termination she is to receive 100,000 shares of common stock pursuant to an
amendment to her employment agreement. The amended employment agreement will
obligate the Company to register these shares and reimburse her for the
difference in the gross proceeds upon the sale of such shares and $300,000,
regardless of the time she holds such shares. Effective October 29, 2001 Mrs.
Lyons tendered her resignation and based upon the terms of her severance
agreement, expenses of $350,000 had been recorded of which $308,000 is included
in accounts payable and accrued expenses at December 31, 2002.

In January 2000 the Company entered into employment contracts with two
additional individuals, both for the duration of two years and provides that The
Company be obligated for an aggregate compensation of $115,000 in year 2000 and
$126,500 in year 2001. Effective August 2, 2000 both of these employment
contracts were amended so that, upon the termination of employment of these
individuals, they would receive nine months continuation of compensation and
35,000 shares of common stock. The Company has agreed to reimburse the
respective employees the difference between the gross proceeds they receive upon
sale of the stock and $105,000, regardless of the term the employees hold such
shares.

In December of 2002, The Company entered into a five-year employment agreement
with the Company's current president, Dennis Calvert. His agreement calls for a
base monthly income of $14,000 plus performance bonuses and employee related
benefits. He serves as president, Chief Executive Officer, Interim CFO and
Chairman of the Board.

In March 2003, the Company entered into a five-year employment agreement with.
Joseph Provenzano serves the Company as Secretary, Board Member and Senior
Executive reporting to Mr. Calvert. His agreement calls for him to receive not
less than $10,900 per month in salary plus incentive bonuses, stock ownership
participation and employee related benefits. At the Company's discretion, the
Company may choose to pay up to $4,900 of this monthly salary with stock in lieu
of cash.

c) Lease Commitment

The Company is obligated on a month-to-month office lease at its California
facility. This lease requires monthly rentals of $7,850. All other leases are of

F-23

NUWAY MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2002 AND 2001

short duration or are on a month-to-month arrangement. Rent expense for each of
the years ended December 31, 2002 and 2001 was approximately $96,560 and
$192,500, respectively.

d) Stock-Based Commitments

The Company currently utilizes the services of a number of consultants who are
compensated with shares of common stock. While each agreement can generally be
terminated with a 15 day notice, the Company may be obligated to issue
additional shares to the consultants. (Note 12).

Note 12. Subsequent Events

Issuance of S-8 shares: From January 1, 2003 through May 12, 2003, the Company
issued a total of 14,273,419 shares of common stock to officers and consultants
for services performed. Of this total 12,464,913 have been registered under a
stock compensation plan as filed on Form S-8, while the balance, 1,808,506
shares were unregistered and are restricted in trading. Of the total issued in
2003 to date, 2,743,590 relate to services performed in 2002 and 11,529,829
relate to 2003. The effect of the majority of shares issued for 2002 services in
2003 was accrued in the Company's financial statements for the year ending
December 31, 2002. Not included in the number of shares issued are 3,000,000
shares issued to the Company's president, Dennis Calvert which have been
returned to the Company pending shareholder approval at the annual meeting of
shareholders expected to be held in the third quarter of 2003.

Sale of Preferred Stock and Warrants: During the first quarter 2003, the Company
entered into two Convertible Preferred Stock and Warrant Purchase Agreements
whereby the Company sold 338,022 shares of a new Convertible Preferred Series A
Stock, par value $.00067, for a total consideration of $169,011. Each share of
the Preferred Series A stock is convertible into one share of NuWay common
stock. In addition, each share of preferred sold entitles the purchaser to one
warrant to purchase one share of common stock at a price of $.20 per share. The
Preferred may be converted by the holder at any time after six months from the
purchase date and the warrant is exercisable for a period of three years from
the purchase date. The Company received an additional $90,650 from the sale of
an additional 181,300 shares in April 2003.

Addition of Board Members: On March 26, 2003, the Company added Steve Harrison
to its board of directors as an independent director as defined by the
Sarbanes-Oxley Act. Of 2002 While NASDAQ has issued a determination that Mr.
Harrison does not meet the definition of an "independent director" as set forth
in Nasdaq Marketplace Rules, the Board is of the opinion that no relationship of
Mr. Harrison, either past or present, would interfere with his exercise of
independent judgment in carrying out the responsibilities of a director. This
issue is scheduled for discussion at the NASDAQ hearing on May 16, 2003.On May
9, 2003 Mr. Gary Cox was elected to the board of directors subject to conclusion
of appropriate background checks.

New Millennium Capital Partners, LLC purchase of 4,182,107 shares and an
outstanding note of $1,120,000:

New Millennium Capital Partners, LLC, a Nevada limited liability company
partially owned and controlled by Dennis Calvert and his family as an investment
vehicle was formed in 1999. No individual, entity or party (s) associated with
NuWay or NuWay's business has ever had any ownership interest in New Millennium
and it is an independent company. New Millennium purchased a promissory note

F-24

NUWAY MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2002 AND 2001

held by Summitt Ventures, Inc. and also purchased an aggregate of 4,182,107
shares of the Company's common stock from Camden Holdings and Summitt Healthcare
in exchange for $900,000, payable in the form of a promissory note. The share
certificates representing these shares were delivered to Mr. Calvert on April 9,
2003. This note is secured by the shares of common stock of the Company sold in
the transaction and is further secured by common stock of the Company held by
Mr. Calvert. Mark Anderson, a principal of those companies, conditioned the
purchase by New Millennium on the Company converting the promissory note to
common stock. The conversion of the note held by New Millennium is a matter to
be brought before the NuWay shareholders during the third quarter of 2003.

New Millennium Capital Partners, LLC's Conversion of $1,120,000 to Stock

On March 26, 2003, the board of directors of the Company approved the conversion
of a promissory note in the face amount of $1,120,000 held by New Millennium
Capital Partners, LLC, a Nevada limited liability company controlled by Dennis
Calvert, into common stock of NuWay Medical. To effect the conversion, the Board
approved the issuance of 22,400,000 shares of common stock to New Millennium,
but did not obtain shareholder approved of this issuance. The issuance
constituted more than 20% of the Company's then outstanding shares of
32,370,911.

On April 10, 2003, the Company filed a Form 8-K reporting a change in control of
the Company. The Company did not issue share certificates to New Millennium. On
April 21, 2003, the Board determined that the Company should wait to convert the
note and issue shares to Mr. Calvert until shareholders had approved the
transaction. New Millennium has agreed to extend the terms of the note 60 days,
from June 15, 2003 to August 15, 2003 to allow sufficient time to obtain a
shareholder vote. On April 30, 2003, the Company filed an amendment to its Form
8-K to reflect these developments, except that New Millennium has extended the
note an additional 30 days. The Company plans to hold a shareholder meeting in
the third quarter to obtain shareholder approval of the issuance of shares.

F-25

EXHIBITS FILED WITH THIS REPORT

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a) Index of exhibits as required by Item 601 of Regulation S-B.

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

3.1 Certificate of Amendment of Articles of Incorporation

3.2 Certificate of Amendment of Articles of Incorporation

3.3 Certificate of Incorporation (1)

3.4 Certificate of Merger merging Repossession Auction, Inc. (Florida corporation) and Repossession, Inc. (Delaware
corporation) (1)

3.5 Bylaws, as amended and restated

4.3 Form of publicly traded Warrant Agreement (1)

4.4 Form of private warrant dated December 12, 2000 (1)

4.5 Form of 6% Convertible Debenture dated December 14, 2000 (1)

10.1 Form of Employment Agreement between the Company and Todd Sanders dated March 2001 (1)

10.2 Form of Employment Agreement between the Company and William Bossung dated March 2001 (1)

10.3 Form of Employment Agreement between the Company and Dennis Calvert dated December 11, 2002

10.4 Form of Employment Agreement between the Company and Joseph Provenzano dated March 1, 2003.

10.5 Joint Venture Agreement between the Company and Rasheed & Associates dated December 1, 2002.

10.6 Lease between the Company and BJP Properties Inc. dated September 15, 2002 for the premises located at 23461 South Pointe
Drive, Suite 200, Laguna Hills, California.

10.7 2002 Consultant Equity Plan filed under form S-8 on August 8, 2002, as amended on December 27, 2002. (2)

10.8 Form of Convertible Debenture Purchase Agreement dated December 14, 2001 (1)

10.9 1994 Stock Option Plan (1)

10.10 Asset Purchase Agreement by and among the Company, Camden Holdings and Genesis Health Tech, dated June 28, 2002.

10.11 License Agreement with Med Wireless Inc. dated August 21, 2002.

10.11a Amendment to License Agreement with Med Wireless Inc. dated September 18, 2002

10.12 Stock and Asset Purchase Agreement by and among the Company and Summit Oil & Gas, Inc. dated December 15, 2002.

10.13 Stock and Asset Purchase Agreement by and among the Company and Casino Ventures Partners dated December 15, 2002.

10.14 Asset Purchase Agreement by and Between New Millennium Capital Partners, LLC, Camden Holdings, Inc., Summit Healthcare,
Inc., Summitt Ventures, Inc., and Mark Anderson dated December 31, 2002.

10.15 Secured Promissory Note in the face amount of $1,120,000 (3)

10.16 Secured Term Promissory Note in the face amount of $900,000 (3)

20.1 Def 14c filed September 23, 2002 regarding shareholder consents Def
14c filed September 23, 2002 regarding shareholder consent Def A14a
filed February 25, 2002 regarding proxy solicitation Def 14a filed
February 5, 2002 regarding proxy solicitation

21.1 List of Subsidiaries of the Registrant

99.1 Certification pursuant to 18 U.S.C. section 1350, as adopted pursuant to section
906 of the Sarbanes-Oxley Act of 2002
--------------------------------

(1) Incorporated herein by reference from the 10-KSB filed by the Company for
the year ended December 31, 2001.

(2) Incorporated herein by reference from the Form S-8 filed by the Company on
August 8, 2002, and amended on Form S-8 filed by the Company on December
27, 2002.

(3) Incorporated herein by reference from the Form 8K filed by the Company on
May 1, 2003.

(b) Reports on Form 8-K

1/29/02 Changes in Registrant's Certifying Accountant
2/22/02 Other Events
3/6/02 Other Events
3/8/02 Changes in Registrant's Certifying Accountant
3/12/02 Changes in Registrant's Certifying Accountant
5/6/02 Financial Statements and Exhibits
9/20/02 Other Events