                                                                    Exhibit 99.1

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Hollywood Software, Inc.
Hollywood, California

We have audited the accompanying balance sheets of Hollywood Software, Inc. (the
"Company")  as of March  31,  2002  and  2003,  and the  related  statements  of
operations, stockholders' equity, and cash flows for the years then ended. These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

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

In our opinion,  the financial  statements referred to above, present fairly, in
all material respects, the financial position of Hollywood Software,  Inc. as of
March 31, 2002 and 2003,  and the results of its  operations  and its cash flows
for the years then ended,  in conformity with  accounting  principles  generally
accepted in the United States of America.

/s/ BDO Seidman, LLP
July 3, 2003
Los Angeles, California




                                       F-1
<PAGE>




                            HOLLYWOOD SOFTWARE, INC.
                                 BALANCE SHEETS


                                                     MARCH 31,
                                                     --------
                                                 2002      2003

                     Assets
Current assets
Cash and cash equivalents..................... $235,195  $262,297
Accounts receivable, net of allowance for
doubtful accounts of $0 and $5,325,
respectively..................................  187,099   332,322
Prepaids and other current assets.............   16,260     9,510
                                                 ------     -----

Total current assets..........................  438,554   604,129
Property and equipment, net (Note 3)..........   45,244    30,678
Capitalized software costs, net (Note 3)......  380,407   479,317
                                                -------   -------

Total assets.................................. $864,205$1,114,124
                                               ==================

Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued expenses
(Note 3)......................................  $53,381   $79,191
Current portion of notes payable (Note 5).....   12,500     8,333
Deferred taxes (Note 6).......................    3,200    51,300
Deferred revenue (Note 3).....................  459,853   530,124
                                                -------   -------

Total current liabilities.....................  528,934   668,948
Notes payable, net of current portion
(Note 5)......................................    8,333        --
                                                  -----        --

Total liabilities.............................  537,267   668,948
                                                -------   -------

Commitments and contingencies (Note 8)
Stockholders' equity
Common stock, no par value, 50,000,000 shares
authorized, 10,000,000 shares issued and
outstanding as of March 31, 2002 and 2003.....   20,000    20,000
Retained earnings.............................  306,938   425,176
                                                -------   -------

Total stockholders' equity....................  326,938   445,176
                                                -------   -------

Total liabilities and stockholders' equity.... $864,205$1,114,124
                                               ==================


See accompanying notes to financial statements.




                                       F-2
<PAGE>




                            HOLLYWOOD SOFTWARE, INC.
                            STATEMENTS OF OPERATIONS

                                              YEARS ENDED MARCH 31,
                                              ---------------------
                                                2002        2003
                                                ----        ----
Revenues
License fees...............................   $296,476   $546,914
Maintenance fees...........................    474,138    489,329
Development fees...........................    230,500    189,205
Consulting fees............................    890,451    682,798
                                               -------    -------

Total revenues.............................  1,891,565  1,908,246
                                             ---------  ---------

Costs and operating expenses
Costs of revenues..........................    367,593    318,710
Research and development...................    387,477    289,424
General and administrative.................  1,176,004  1,131,256
                                             ---------  ---------

Total costs and operating expenses.........  1,931,074  1,739,390
                                             ---------  ---------

Income (loss) from operations..............   (39,509)    168,856
Interest expense...........................    (4,769)     (2,264)
Other income...............................      7,473        546
                                                 -----        ---

Income (loss) before income taxes..........   (36,805)    167,138
Income taxes...............................        800     48,900
                                                   ---     ------

Net income (loss)..........................  $(37,605)   $118,238
                                             =========   ========

Earning (loss) per share (Note 2):
Basic......................................    $(0.00)      $0.01
                                               =======      =====

Diluted....................................    $(0.00)      $0.01
                                               =======      =====

Weighted average number of shares (Note 2):
Basic...................................... 10,000,000 10,000,000
                                            ========== ==========

Diluted.................................... 10,000,000 10,293,167
                                            ========== ==========




See accompanying notes to financial statements.




                                       F-3
<PAGE>




                            HOLLYWOOD SOFTWARE, INC.
                       STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>

                                                    Common   Retained
                                                     Stock   Earnings    Total
                                                   -------   --------   --------
<S>            <C>                                 <C>       <C>        <C>
Balance, April 1, 2001....................         $20,000   $344,543   $364,543

Net loss..................................              --   (37,605)   (37,605)
                                                        --   --------   --------

Balance, March 31, 2002...................          20,000    306,938    326,938

Net income................................              --    118,238    118,238
                                                        --    -------    -------



Balance, March 31, 2003...................         $20,000    425,176   $445,176
                                                   =======    =======   ========
</TABLE>




See accompanying notes to financial statements.




                                       F-4
<PAGE>




                            HOLLYWOOD SOFTWARE, INC.
                            STATEMENTS OF CASH FLOWS


                                               YEARS ENDED MARCH 31,
                                               ---------------------
                                                 2002       2003
                                                 ----       ----
Cash flows from operating activities
Net income (loss)............................. $(37,605) $118,238
Adjustments to reconcile net income (loss)
to cash provided by operating activities:
Depreciation..................................   21,020    27,067
Amortization of software development costs....  129,688   186,837
Provision for doubtful accounts...............       --     5,325
Deferred taxes................................       --    48,100
Changes in operating assets and liabilities:
Accounts receivable........................... (104,583) (150,548)
Prepaids and other current assets.............   13,560     6,750
Accounts payable and accrued liabilities......  (97,166)   25,810
Deferred revenue..............................   95,645    70,271
                                                 ------    ------

Net cash provided by operating activities.....   20,559   337,850
                                                 ------   -------

Cash flows from investing activities
Purchases of property and equipment...........  (14,790)  (12,501)
Capitalized software development costs........ (204,895) (285,747)
                                               --------- ---------

Net cash used in investing activities......... (219,685) (298,248)
                                               --------- ---------

Cash flows from financing activities
Proceeds from issuance of notes payable.......   25,000        --
Repayment of notes payable....................   (4,167)  (12,500)
                                                 -------  --------

Net cash provided (used) in financing
activities....................................   20,833   (12,500)
                                                 -------  --------

Net (decrease) increase in cash and cash
equivalents Cash and cash equivalents,.......  (178,293)   27,102
beginning of year.............................  413,488   235,195
                                                -------   -------

Cash and cash equivalents, end of year........ $235,195  $262,297
                                               ========  ========

Supplemental cash flow disclosures:
Interest paid.................................   $4,769    $2,264
Taxes paid....................................       --        --
                                                     ==        ==



See accompanying notes to financial statements.




                                       F-5
<PAGE>



                            HOLLYWOOD SOFTWARE, INC.
                          NOTES TO FINANCIAL STATEMENTS


NOTE 1--COMPANY ORGANIZATION AND NATURE OF OPERATIONS

Hollywood Software,  Inc.  ("Company") was incorporated in California in October
1997. The Company is a leading provider of proprietary  enterprise  software and
consulting  services for distributors and exhibitors of filmed  entertainment in
the United  States and Canada.  Its software  applications  manage the planning,
booking,  scheduling,  revenue sharing, cash flow, and reporting associated with
the distribution and exhibition of theatrical films.  Services include strategic
and technical consulting, systems implementation and training.

NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CASH AND CASH EQUIVALENTS

The Company  considers all liquid  assets with an initial  maturity date that is
less than three months from the date of purchase to be cash equivalents.

CONCENTRATIONS OF CREDIT RISK

Financial  instruments,  which potentially subject the Company to concentrations
of credit risk, consist of cash and cash equivalents,  to the extent they exceed
federal depository insurance limits, and accounts receivable. The Company places
its cash with high credit quality financial  institutions.  As of March 31, 2002
and  2003,   uninsured   cash   balances   aggregated   $135,195  and  $162,297,
respectively.

The Company  customer  base  primarily  includes film  distributors  and theatre
owners through the United States and Canada.  Allowances  for doubtful  accounts
are recorded for estimated  losses  resulting from the inability of customers to
make  required  payments.  The  amount of the  reserves  is based on  historical
experience  and the  Company's  analysis  of the  accounts  receivable  balances
outstanding.  As of March 31, 2002,  four customers  accounted for 26%, 24%, 21%
and 10% of  revenues  and  three  customers  accounted  for 45%,  23% and 14% of
accounts  receivable.  As of March 31, 2003, three customers  accounted for 28%,
14% and 13% of revenues and five customers  accounted for 26%, 16%, 15%, 10% and
10% of accounts receivable.

PROPERTY AND EQUIPMENT

Property  and  equipment  are  stated at cost,  less  accumulated  depreciation.
Depreciation  is computed  using the  double-declining  balance  method over the
useful lives of the respective assets as follows:


                                                     USEFUL LIVES
Computer software.................................       3
Computer equipment................................       5
Furniture and fixtures............................       7
Leasehold improvements............................   Lease term or
                                                      useful life

Leasehold improvements are depreciated over the shorter of the lease term or the
estimated  useful  life of the  improvement.  Maintenance  and repair  costs are
charged to expense as incurred.

IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF

The Company reviews the  recoverability  of its long-lived  assets on a periodic
basis in order to identify  business  conditions  which may  indicate a possible
impairment.  The assessment for potential  impairment is based  primarily on the
Company's  ability to recover the carrying  value of its long- lived assets from
expected  future   undiscounted   cash  flows.  If  the  total  expected  future
undiscounted  cash flows are less than the carrying amount of the assets, a loss
is recognized for the difference between the fair value (computed based upon the
expected future  discounted cash flows) and the carrying value of the assets. No
impairment was recorded during the years ended March 31, 2002 and 2003.



                                      F-6
<PAGE>

CAPITALIZED SOFTWARE COSTS

The  Company  has  adopted  SFAS No. 86,  "Accounting  for the Costs of Computer
Software to Be Sold, Leased, or Otherwise  Marketed." Software development costs
that are incurred  subsequent  to  establishing  technological  feasibility  are
capitalized.  Amounts  capitalized as software  development  costs are generally
amortized  on a  straight-line  basis  over  five  years.  The  company  reviews
capitalized software costs for impairment on an annual basis. To the extent that
the  carrying  amount  exceeds  the  estimated  net  realizable   value  of  the
capitalized  software cost, an impairment charge is recorded.  No impairment was
recorded in 2002 and 2003.

During the years ended March 31, 2002 and 2003, the company capitalized $204,895
and $285,747,  respectively.  Amortization of capitalized  software  development
costs,  included  in costs of  revenues,  for the years ended March 31, 2002 and
2003 amounted to $129,688 and $186,837, respectively.

REVENUE RECOGNITION

The Company  accounts  for  software  revenue  recognition  in  accordance  with
Statement of Position 97-2,  "Software Revenue  Recognition,"  ("SOP 97-2"). The
Company's revenues are generated from the following primary sources: i) software
licensing,  including customer licenses and ASP service agreements, ii) software
maintenance  contracts,  iii) professional  consulting services,  which includes
systems implementation, training, custom software development services and other
professional services.

Software licensing revenue is recognized when the following criteria are met: a)
persuasive  evidence of an arrangement  exists,  b) delivery has occurred and no
significant  obligations  remain,  c) the fee is  fixed or  determinable  and d)
collectivity is determined to be probable. Significant upfront fees are received
in addition to periodic amounts upon  achievement of contractual  milestones for
licensing of the Company's products. Such amounts are deferred until the revenue
recognition  criteria has been met,  which  typically  occurs after delivery and
acceptance.

For  arrangements  with  multiple  elements  (e.g.   delivered  and  undelivered
products,  maintenance and other services),  the Company  separately  negotiates
each element of the  arrangement  based on the fair value of the  elements.  The
fair  values for ongoing  maintenance  and  support  obligations  are based upon
separate sales of renewals to customers or upon substantive renewal rates quoted
in the agreements. The fair values for services, such as training or consulting,
are based upon hourly  billing rates of these  services when sold  separately to
other customers.

Customers not wishing to license and operate the Company's  software  themselves
may use the software through an ASP arrangement,  in which the Company hosts the
application and provides  customer  access via the internet.  Annual minimum ASP
service fees are recognized ratably over the contract term. Overage revenues for
usage in excess of stated minimums are recognized monthly.

Maintenance  services and website  subscription fees are recognized ratably over
the  contract  term.  Professional  consulting  services,  sales of third  party
products and resale  hardware  revenues are recognized as services are provided.
Software  development  revenues are recognized when delivery has occurred and no
significant obligations remain.

Deferred  revenue is recorded  when i) a portion or the entire  contract  amount
cannot be  recognized as revenue due to  non-delivery  or acceptance of licensed
software or custom  programming,  ii) incomplete  implementation  of ASP service
arrangements,  or iii) unexpired  pro-rata  periods of maintenance,  minimum ASP
service fees or website  subscription  fees. As license fees,  maintenance fees,
minimum  ASP  service  fees and  website  subscription  fees are  often  paid in
advance,  a portion of this revenue is deferred  until the contract  ends.  Such
amounts are included in the Company's  balance sheet under the caption "Deferred
Revenue," and are recognized as revenue in accordance with the Company's revenue
recognition policies described above.

INCOME TAXES

The Company  accounts  for income  taxes under the asset and  liability  method.
Deferred tax assets and  liabilities  are  determined  based upon the  temporary
differences  between the financial  statement  carrying amounts and tax bases of
assets and  liabilities  using enacted tax rates expected to be in effect in the
year in which the  temporary  differences  are expected to reverse.  A valuation
allowance is established  when it is more likely than not that some portion,  or
all, of the deferred tax asset will not be realized.



                                       F-7
<PAGE>

USE OF ESTIMATES

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

RESEARCH AND DEVELOPMENT

Research  and  development   costs  are  expensed  as  incurred.   Research  and
development  costs  amounted to $387,477  and $289,424 for the years ended March
31, 2002 and 2003, respectively.

ADVERTISING EXPENSES

Advertising  costs are expensed as incurred.  Advertising  costs totaled $17,058
and $7,912 for the years ended March 31, 2002 and 2003, respectively.

EMPLOYEE STOCK COMPENSATION

The Company accounts for its stock option plan in accordance with the provisions
of  Accounting  Principles  Board (APB)  Opinion No. 25,  "Accounting  for Stock
Issued to Employees",  and related  interpretations.  Under the intrinsic  value
method, the Company recognizes compensation expense on the date of grant only if
the estimated fair value of the underlying stock exceeds the exercise price. The
Company recorded no stock based employee  compensation  cost for the years ended
March 31, 2002 and 2003.

The Company has adopted the  disclosure  standards of SFAS No. 123,  "Accounting
for Stock-Based  Compensation",  which requires the Company to provide pro forma
net  income  disclosures  for  employee  stock  option  grants  made  as if  the
fair-value-based  method of accounting  for stock options as defined in SFAS 123
had been  applied.  The  following  table  illustrates  the effect on net income
(loss) if the Company had applied the fair value recognition  provisions of SFAS
No. 123 to stock based employee  compensation for the years ended March 31, 2002
and 2003:



                                       F-8
<PAGE>





                                                         MARCH 31,
                                                        ----------
                                                     2002      2003
                                                     ----      ----
Net income (loss), as reported....................$(37,605)  $118,238
Additional stock-based employee compensation
expense determined under the fair value based
method, net of income tax benefits.................(39,598)  (42,757)
                                                   --------  --------

Pro forma net income (loss).......................$(77,203)   $75,481
                                                  =========   =======

Income (loss) per share:
As reported:
Basic.............................................  $(0.00)     $0.01
                                                    =======     =====

Diluted...........................................  $(0.00)     $0.01
                                                    =======     =====

Pro forma:
Basic.............................................  $(0.01)     $0.01
                                                    =======     =====

Diluted...........................................  $(0.01)     $0.01
                                                    =======     =====

The fair value of each stock option  granted during the year is estimated on the
date of grant using the  Black-Scholes  option  pricing model with the following
assumptions:
                                                             MARCH 31,
                                                             ---------
                                                          2002       2003
                                                          ----       ----

Expected life (years)....................................   10         10
Expected volatility......................................    0%         0%
Expected dividend yield..................................    0%         0%
Risk-free interest rate.................................. 5.33%      5.11%

The weighted-average fair value of options granted during the year totaled $0.05
and $0.00 for March 31, 2002 and 2003, respectively.

EARNINGS (LOSS) PER SHARE

The Company  accounts for earnings  per share in  accordance  with SFAS No. 128,
"Earnings per Share".  SFAS No. 128 requires  presentation  of basic and diluted
earnings  per share.  Basic  earnings  (loss) per share is  computed by dividing
income (loss) available to common shareholders by the weighted average number of
common shares  outstanding for the reporting period.  Diluted earnings per share
is computed  based on the same shares plus the  potential  shares  issuable upon
assumed exercise of outstanding stock options or other security  contracts,  but
does not include the impact of dilutive securities that would be anti-dilutive.




                                       F-9
<PAGE>




The following  table sets forth the  computation  of basic and diluted  earnings
(loss) per share:

                                                   YEAR ENDED MARCH 31
                                                   -------------------
                                                  2002            2003
                                                  ----            ----
Numerator:
Net income (loss) available to common
shareholders.................................   $(37,605)    $118,238
                                                ---------    --------

Denominator:
Basic earnings per share - weighted average
shares....................................... 10,000,000   10,000,000
Effect of dilutive securities:
Stock options................................         --      293,167
                                                      --      -------

Denominator for diluted earnings per share --
weighted average shares...................... 10,000,000   10,293,167
                                              ----------   ----------

Earnings (loss) per share:
Basic........................................     $(0.00)       $0.01
                                                  =======       =====

Diluted......................................     $(0.00)       $0.01
                                                  =======       =====

For the years ended March 2002 and 2003,  total stock  options of 1,790,000  and
1,311,000  were not included in the  computation  of diluted  income  (loss) per
share because their effect was anti-dilutive.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 2002,  the FASB issued SFAS No. 146,  "Accounting  for Costs  Associated
with Exit or Disposal Activities".  This statement requires that a liability for
a cost  associated  with an exit or  disposal  activity be  recognized  when the
liability is incurred.  The  provisions of this statement are effective for exit
or disposal  activities  that are initiated after December 31, 2002. The Company
adopted  SFAS  No.  146 on  January  1,  2003  and it has had no  effect  on the
Company's financial position or operations.

In December  2002,  the FASB issued SFAS No. 148,  "Accounting  for  Stock-Based
Compensation-Transition  and Disclosures" which amends SFAS No. 123, "Accounting
for Stock-Based Compensation". SFAS 148 provides alternate methods of transition
for a voluntary  change to the fair value method of accounting  for  stock-based
employee compensation.  In addition, SFAS 148 amends the disclosure requirements
of SFAS 123 to require  more  prominent  and more  frequent  disclosures  in the
financial statement about the effects of stock- based compensation.  The Company
has adopted the  disclosure  provision  of SFAS 148 for the year ended March 31,
2003.

In April 2003, the FASB issued Statement of Financial  Accounting  Standards No.
149,  "Amendment  of  Statement  133  on  Derivative   Instruments  and  Hedging
Activities."  SFAS No.  149  amends  and  clarifies  accounting  for  derivative
instruments,   including  certain  derivative   instruments  embedded  in  other
contracts,  and for hedging  activities under Statement of Financial  Accounting
Standards No. 133. SFAS No. 149 clarifies  under what  circumstances  a contract
with an initial net  investment  meets the  characteristic  of a  derivative  as
discussed in SFAS No. 133. In addition,  it clarifies when a derivative contains
a financing  component that warrants special  reporting in the statement of cash
flows.  SFAS No. 149 is effective for contracts  entered into or modified  after
June 30, 2003, except as specifically noted in SFAS No. 149. SFAS No. 149 should
be applied  prospectively.  At this time,  the  adoption  of SFAS No. 149 is not
expected to materially  impact the Company's  financial  condition or results of
operations.

In May 2003,  the FASB Issued SFAS No. 150,  "Accounting  for Certain  Financial
Instruments with Characteristics of both Liabilities and Equity." This Statement
establishes  standards  for  how  an  issuer  classifies  and  measures  certain
financial  instruments with characteristics of both liabilities and equity. This
Statement is effective for financial  instruments entered into or modified after
May 31, 2003,  and  otherwise is effective at the beginning of the first interim
period  beginning  after  June  15,  2003,  except  for  mandatorily  redeemable


                                       F-10
<PAGE>

financial instruments of nonpublic entities. For nonpublic entities, mandatorily
redeemable financial instruments are subject to the provisions of this Statement
for the first fiscal period  beginning  after December 15, 2003. The Company has
not yet evaluated its mandatorily  redeemable financial  instruments and related
financial instruments for purposes of determining the impact of SFAS No. 150.

In November 2002, the FASB issued interpretation No. 45, "Guarantor's Accounting
and Disclosure  Requirements for Guarantees.  Including  indirect  Guarantees of
Indebtedness   of  Others,"  which   disclosures  are  effective  for  financial
statements  for periods  ending after  December 15, 2002.  While the Company has
various  guarantees  included in  contracts  in the normal  course of  business,
primarily  in the form of  indemnities,  these  guarantees  would only result in
immaterial  increases  in  future  costs,  but  do  not  represent   significant
commitments or contingent liabilities of the indebtedness of others.

In January  2003,  the FASB  issued  interpretation  No. 46,  "Consolidation  of
Variable  Interest  Entities"  (FIN 46)  which  requires  the  consolidation  of
variable interest  entities,  as defined.  FIN 46 is applicable  immediately for
variable  interest entities created after January 1, 2003. For variable interest
entities  created  prior  to  January  1,  2003,  the  provisions  of FIN 46 are
applicable no later than July 1, 2003.  The Company does not  currently  believe
that any material entities will be consolidated as a result of FIN 46.

In  November  2002,  the  EITF  reached  a  consensus  on EITF  00-21,  "Revenue
Arrangements  with  Multiple   Deliverables,"  related  to  the  separation  and
allocation of consideration for arrangements that include multiple deliverables.
The  EITF  requires  that  when  the  deliverables  included  in  this  type  of
arrangement  meet certain  criteria they should be accounted  for  separately as
separate units of  accounting.  This may result in a difference in the timing of
revenue  recognition  but will not  result in a change  in the  total  amount of
revenues  recognized in a bundled sales arrangement.  The allocation of revenues
to the separate  deliverables  is based on the relative fair value of each item.
If the fair value is not  available  for the  delivered  items then the residual
method  must be used.  This method  requires  that the amount  allocated  to the
undelivered items in the arrangement is their full fair value. This would result
in the discount,  if any, being allocated to the delivered items. This consensus
is effective  prospectively  for  arrangements  entered  into in fiscal  periods
beginning  after June 15,  2003.  We do not expect the adoption of EITF 00-21 to
have a material impact on our consolidated financial statements.




                                       F-11
<PAGE>




NOTE 3--BALANCE SHEET COMPONENTS

PROPERTY AND EQUIPMENT

Property and equipment consisted of the following as of March 31, 2002 and 2003:

                                                         MARCH 31,
                                                         ---------

                                                    2002      2003
                                                    ----      ----

Furniture and fixtures...........................   $9,426     $9,426
Computer equipment...............................  120,454    131,455
Computer software................................   11,482     12,982
Office furniture.................................   10,792     10,792
                                                    ------     ------

                                                   152,154    164,655
Less: Accumulated depreciation................... (106,910) (133,977)
                                                  --------- ---------

Total property and equipment, net................  $45,244    $30,678
                                                   =======    =======

Computer equipment  consists primarily of costs incurred for computers,  servers
and  backup  battery  devices  used in the  Company's  operations.  Depreciation
expense for the years  ended  March 31,  2002 and 2003 was $21,020 and  $27,067,
respectively.

CAPITALIZED SOFTWARE DEVELOPMENT COSTS

The Company capitalizes the cost of software development in accordance with SFAS
No. 86,  "Accounting for the Costs of Computer  Software to Be Sold,  Leased, or
Otherwise  Marketed."  Capitalized  software  development costs consisted of the
following as of March 31, 2002 and 2003:

                                                         MARCH 31,
                                                         ---------
                                                    2002      2003
                                                    ----      ----

Development costs................................ $648,440   $934,187
Less: Accumulated amortization................... (268,033) (454,870)
                                                  --------- ---------

Unamortized development costs, net............... $380,407   $479,317
                                                  ========   ========

Accounts payable and accrued expenses consisted of the following as of March 31,
2002 and 2003:

                                                         MARCH 31,
                        `                                ---------
                                                       2002    2003
                                                       ----    ----

Accounts payable....................................    $383  $16,013
Accrued compensation and benefits...................  47,265   36,615
Other accrued liabilities...........................   5,733   26,563
                                                       -----   ------

Total accounts payable and accrued expenses......... $53,381  $79,191
                                                     =======  =======

Accrued  compensation and benefits primarily relate to accrued employee vacation
costs. Other accrued liabilities relate to general business obligations incurred
prior to the  balance  sheet  date,  which  were  paid in  subsequent  reporting
periods.



                                       F-12
<PAGE>

DEFERRED REVENUES

Deferred revenues consisted of the following as of March 31, 2002 and 2003:

                                                          MARCH 31,
                                                          ---------
                                                     2002         2003
                                                     ----         ----

License fees...................................... $100,000     $     --
ASP service fees..................................   85,687      168,901
Maintenance fees..................................  249,749      238,826
Web site subscription fees........................   24,417       35,533
Development fees..................................       --       86,864
                                                        ---       ------

Total............................................. $459,853     $530,124
                                                   ========     ========

Deferred revenues represent amounts collected from customers prior to satisfying
the Company's revenue recognition criteria.

NOTE 4--LINE OF CREDIT

In  November  2001,  the Company  received a $200,000  line of credit from Wells
Fargo Bank for general  corporate  purposes.  The credit line bears  interest at
7.50% per annum.  The Company  has not  borrowed  any funds,  nor  incurred  any
interest  charges under the credit line.  The line of credit expires in November
2003.

NOTE 5--NOTES PAYABLE

In November 2001, the Company incurred a $25,000 term loan from Wells Fargo Bank
for the  purchase  of a battery  backup  system to mitigate  risks from  rolling
blackouts due to an energy crisis in California.  In addition to receivables and
other assets of the Company, two shareholders pledged certain personal assets as
collateral  for the loan.  The Company makes  monthly  payments of principal and
interest on the loan,  which is schedule  to expire in November  2003.  The term
loan bears interest at 8.25% per annum.

A summary of Notes Payable is as follows:
                                                           MARCH 31,
                                                           ---------
                                                        2002     2003
                                                        ----     ----

Notes payable......................................  $20,833   $8,333
Less: Current portion..............................  (12,500)  (8,333)
                                                     --------  -------

Notes payable, less current portion................   $8,333       $--
                                                     ========      ===





                                       F-13
<PAGE>




NOTE 6--INCOME TAXES

Provision for income taxes consists of the following:

                                                         Years ended
                                                           MARCH 31,
                                                         -----------
                                                        2002    2003
                                                        ----- -------

Current:
Federal................................................ $ --    $  --
State..................................................  800      800
Deferred:
Federal................................................   --   36,300
State..................................................   --   11,800
                                                        ----  -------

                                                        $800  $48,900


Net deferred tax  liabilities  consist of the following as of March 31, 2002 and
2003:

                                                         MARCH 31,
                                                         ---------
                                                    2002      2003
                                                    ----      ----

Deferred tax assets:
Net operating loss carryforwards.................  $22,200    $33,200
Deferred revenues................................  183,200    211,200
Accounts payable and accruals....................   21,300     31,500
                                                    ------     ------

Total deferred tax assets........................  226,700    275,900
                                                   -------    -------

Deferred tax liabilities:
Accounts receivable..............................  (74,500) (132,400)
Capitalized software costs....................... (151,500) (190,900)
Depreciation.....................................   (3,900)   (3,900)
                                                    -------   -------

Total deferred tax liabilities................... (229,900) (327,200)
                                                  --------- ---------

Net deferred tax liability.......................  $(3,200) $(51,300)
                                                   ======== =========

At  March  31,  2003,  the  Company  has net  operating  loss  carryforwards  of
approximately  $90,000 and $45,000  for Federal and State,  respectively,  which
will expire at various dates through 2020.

NOTE 7--STOCKHOLDER'S EQUITY

STOCK DIVIDEND

On November 7, 2000 the Board of Directors declared a 1,000:1 stock dividend and
increased the common shares  authorized from 50,000 to 50,000,000 and issued and
outstanding from 10,000 shares to 10,000,000  shares.  All stock related data in
the financial  statements  reflect the stock dividend for all periods presented.
The  amendment to the  Company's  articles of  incorporation  was filed with the
State of California subsequent to March 31, 2003.

STOCK OPTION PLAN

In December  2000,  the Company  adopted the 2000 Stock Option Plan (the "Plan")
under which  non-qualified  stock options may be granted to  employees,  outside
directors and  consultants.  The purpose of the Plan is to enable the Company to


                                       F-14
<PAGE>

attract, retain and motivate employees, directors, advisors and consultants. The
Company has reserved a total of 5,000,000  shares of the Company's  common stock
for issuance upon the exercise of options granted in accordance with the Plan.

Options granted under the Plan expire in 10 years following the date of grant (5
years for  stockholders  who own greater than 10% of outstanding  stock) and are
subject to  limitation  on transfer.  The Plan is  administered  by the Board of
Directors.

The Plan provides for granting of incentive  stock options at not less than 100%
of the fair  market  value of the  underlying  stock at the grant  date.  Option
grants under the Plan are subject to various  vesting  provisions,  all of which
are contingent upon the continuous  service of the optionee.  Options granted to
stockholders who own greater than 10% of the outstanding stock must be issued at
prices not less than 100% of the fair  market  value of the stock on the date of
grant as  determined  by the  Company's  Board of  Directors.  Upon a change  in
control of the  Company,  all shares  granted  under the Plan shall  immediately
vest.

The following table summarizes the activity of the Plan:

<TABLE>
<CAPTION>

                                                                      Weighted
                                                           Options     Average
                                             Shares       Granted -   Exercise
                                            Available     Number of   Price Per
                                            for Grant      Shares      Share
                                            -----------   ----------  ---------
<S>             <C> <C>                     <C>           <C>         <C>
Balances, March 31, 2001...............      3,379,000    1,621,000       $.55
Options granted .......................       (224,000)     224,000       $.78
Options forfeited......................         55,000      (55,000)      $.60
                                                -------   ----------      ----

Balances, March 31, 2002...............      3,210,000    1,790,000       $.58
Options granted........................       (300,000)     300,000      $1.00
                                             ----------   ----------     -----

Balances, March 31, 2003...............      2,910,000    2,090,000       $.64
                                             ==========   ==========      ====
</TABLE>


The following summarizes stock options outstanding as of March 31, 2003:

                          OPTIONS OUTSTANDING         OPTIONS EXERCISABLE
                          -------------------         -------------------
                                           Weighted
                               Weighted     Average              Weighted
                    Average    Exercise     Shares    Exercise   Average
Exercise Prices     Shares    Life (Years)   Price   Exercisable  Price
---------------    -------    ------------ --------  ----------- --------
$.25               150,000      7.7         $.25      75,000      $.25
$.40               605,000      7.7         $.40     302,500      $.40
$.50                24,000      8.2         $.50       6,000      $.50
$.60               561,000      7.7         $.60     280,500      $.60
$.75               150,000      8.1         $.75      37,500      $.75
$1.00              600,000      8.4        $1.00     137,500     $1.00
                   -------      ---        -----     -------     -----

                 2,090,000      8.0         $.64     839,000      $.57
                 =========      ===         ====     =======      ====

NOTE 8--COMMITMENTS AND CONTINGENCIES

LEASES

The Company leases its development  and Corporate  offices under non- cancelable
operating lease  agreements,  which expire at various dates through August 2005.
The lease  agreements  provide for base rental rates,  which increase at defined
intervals  during  the term of the  lease.  The  Company  does not  account  for
increasing base rentals using a straight-line  method over the lease term as the
differences between the straight-line method and cash payment is not material.



                                       F-15
<PAGE>

The Company's  rental  expense for operating  leases was $67,282 and $79,309 for
the years ended March 31, 2002 and 2003,  respectively.  Future minimum payments
under  non-cancelable  operating  leases with initial or remaining  terms of one
year or more consist of the following at March 31, 2003:
Years ending March 31,

                                                                AMOUNT

2004........................................................  $49,087
2005........................................................   28,804
2006........................................................   10,944
                                                               ------

                                                              $88,835
                                                              =======
Employee Benefit Plans

The Company's employees are covered by a profit sharing plan qualified under IRS
section 401.  The plan  provides  for the Company to make  discretionary  profit
contributions on behalf of eligible employees. The Company made no contributions
in 2002 or 2003.

NOTE 9--RELATED PARTY TRANSACTIONS

The Company leases office space from a company  controlled by the Company's CEO.
Office  rental  rates  approximate  market  value for the size,  type and office
location.  Rents paid under this lease totaled $28,260 and $31,170 for the years
ended March 31, 2002 or 2003, respectively.

From  time to time,  the  Company  uses an  outside  contractor  related  to the
Company's president. Rates paid for work provided are consistent with comparable
contractors. Fees paid during the years ended March 31, 2002 or 2003 amounted to
$11,695 and $47,483, respectively.





                                       F-16
