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<SEC-DOCUMENT>0001082324-03-000006.txt : 20031103
<SEC-HEADER>0001082324-03-000006.hdr.sgml : 20031103
<ACCEPTANCE-DATETIME>20031103132130
ACCESSION NUMBER:		0001082324-03-000006
CONFORMED SUBMISSION TYPE:	10QSB
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20030930
FILED AS OF DATE:		20031103

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			PASW INC
		CENTRAL INDEX KEY:			0001082324
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-COMPUTER PROGRAMMING SERVICES [7371]
		IRS NUMBER:				770390628
		STATE OF INCORPORATION:			CA
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10QSB
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-26895
		FILM NUMBER:		03972339

	BUSINESS ADDRESS:	
		STREET 1:		703 RANCHO CONEJO BLVD
		CITY:			NEWBURY PARK
		STATE:			CA
		ZIP:			75081
		BUSINESS PHONE:		8054997722

	MAIL ADDRESS:	
		STREET 1:		703 RANCHO CONEJO BLVD
		STREET 2:		10390 SANTA MONICA BLVD, FOURTH FL
		CITY:			NEWBURY PARK
		STATE:			CA
		ZIP:			75801

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	PACIFIC SOFTWORKS INC
		DATE OF NAME CHANGE:	19990322
</SEC-HEADER>
<DOCUMENT>
<TYPE>10QSB
<SEQUENCE>1
<FILENAME>q303pasw.htm
<TEXT>
<html>

<head>
<title></title>
</head>

<body LINK="#0000ff">
<font SIZE="3"><b>

<p ALIGN="CENTER">UNITED STATES</p>

<p ALIGN="CENTER">SECURITIES AND EXCHANGE COMMISSION</p>

<p ALIGN="CENTER">WASHINGTON, D.C. 20549</p>

<p ALIGN="CENTER">FORM 10-QSB</p>

<blockquote>
  <p align="center">QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE</p>
</blockquote>

<p ALIGN="CENTER">SECURITIES EXCHANGE ACT OF 1934</p>

<p ALIGN="CENTER">For the quarterly period ended September 30, 2003</p>

<p ALIGN="CENTER">OR</p>

<p ALIGN="CENTER">( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934</p>

<p ALIGN="CENTER">Commission file number 333-75137</p>

<p ALIGN="CENTER">PASW, INC.</p>

<p ALIGN="CENTER">(Exact name of registrant as specified in its charter)</p>
</b></font>

<table CELLSPACING="0" BORDER="0" CELLPADDING="7" WIDTH="852">
  <tr>
    <td WIDTH="147" VALIGN="TOP"></td>
    <td WIDTH="311" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="CENTER">California</b></font></td>
    <td WIDTH="352" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="CENTER">77-0390628</b></font></td>
  </tr>
  <tr>
    <td WIDTH="147" VALIGN="TOP"></td>
    <td WIDTH="311" VALIGN="TOP"><b><p ALIGN="CENTER">(State or other jurisdiction of<font
    SIZE="3"> incorporation or organization)</font></b></td>
    <td WIDTH="352" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="CENTER">(I.R.S. Employer
    Identification No.)</b></font></td>
  </tr>
</table>

<table CELLSPACING="0" BORDER="0" CELLPADDING="7" WIDTH="852">
  <tr>
    <td WIDTH="147" VALIGN="TOP"></td>
    <td WIDTH="312" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="CENTER">9453 Alcosta Boulevard </p>
    <p ALIGN="CENTER">San Ramon, California</b></font></td>
    <td WIDTH="351" VALIGN="BOTTOM"><font SIZE="3"><b><p ALIGN="CENTER">94583</b></font></td>
  </tr>
  <tr>
    <td WIDTH="147" VALIGN="TOP"></td>
    <td WIDTH="312" VALIGN="TOP"><font SIZE="3"><b>(Address of principal executive offices)</b></font></td>
    <td WIDTH="351" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="CENTER">(Zip Code)</b></font></td>
  </tr>
</table>
<font SIZE="3"><b>

<p ALIGN="CENTER">(925) 828-0934</p>

<p ALIGN="CENTER">Registrant&#146;s telephone number, including area code)</p>

<p>Indicate by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90 days.</p>

<p>Yes _<u> X</u>__ No____</p>

<p>There were 4,997,400 shares outstanding of the registrant&#146;s Common Stock, par
value $.001 per share, as of October 24, 2003.</p>

<p ALIGN="CENTER">PASW, INC.</p>
</b></font>

<table CELLSPACING="0" BORDER="0" CELLPADDING="7" WIDTH="618">
  <tr>
    <td WIDTH="8%" VALIGN="TOP"></td>
    <td WIDTH="82%" VALIGN="BOTTOM"><font SIZE="3"><b>&nbsp;<p ALIGN="CENTER">INDEX</b></font></td>
    <td WIDTH="11%" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="CENTER">Page No.</b></font></td>
  </tr>
  <tr>
    <td WIDTH="8%" VALIGN="TOP"></td>
    <td WIDTH="82%" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="CENTER">PART I &#150; FINANCIAL
    INFORMATION</b></font></td>
    <td WIDTH="11%" VALIGN="TOP"></td>
  </tr>
  <tr>
    <td WIDTH="89%" VALIGN="TOP" COLSPAN="2"><font SIZE="3"><b>Item l. Financial Statements
    (Unaudited):</b></font></td>
    <td WIDTH="11%" VALIGN="TOP"></td>
  </tr>
  <tr>
    <td WIDTH="8%" VALIGN="TOP"></td>
    <td WIDTH="82%" VALIGN="TOP"><font SIZE="3"><b>Balance Sheets at September 30, 2003 and
    December 31, 2002</b></font></td>
    <td WIDTH="11%" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="CENTER">3</b></font></td>
  </tr>
  <tr>
    <td WIDTH="8%" VALIGN="TOP"></td>
    <td WIDTH="82%" VALIGN="TOP"><font SIZE="3"><b>Statements of Operations for the three and
    nine months ended September 30, 2003 and 2002 </b></font></td>
    <td WIDTH="11%" VALIGN="BOTTOM"><font SIZE="3"><b><p ALIGN="CENTER">5</b></font></td>
  </tr>
  <tr>
    <td WIDTH="8%" VALIGN="TOP"></td>
    <td WIDTH="82%" VALIGN="TOP"><font SIZE="3"><b>Statements of Cash Flows for the nine
    months ended September 30, 2003 and 2002</b></font></td>
    <td WIDTH="11%" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="CENTER">9</b></font></td>
  </tr>
  <tr>
    <td WIDTH="8%" VALIGN="TOP"></td>
    <td WIDTH="82%" VALIGN="TOP"><font SIZE="3"><b>Notes to Condensed Financial Statements</b></font></td>
    <td WIDTH="11%" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="CENTER">10</b></font></td>
  </tr>
  <tr>
    <td WIDTH="89%" VALIGN="TOP" COLSPAN="2"><b><font SIZE="3">Item 2. Management&#146;s
    Discussion and Analysis or</font> <font SIZE="3">Plan of Operations</font></b></td>
    <td WIDTH="11%" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="CENTER">11</b></font></td>
  </tr>
  <tr>
    <td WIDTH="8%" VALIGN="TOP"></td>
    <td WIDTH="82%" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="CENTER">PART II &#150; OTHER
    INFORMATION</b></font></td>
    <td WIDTH="11%" VALIGN="TOP"></td>
  </tr>
  <tr>
    <td WIDTH="89%" VALIGN="TOP" COLSPAN="2"><font SIZE="3"><b>Item 1. Legal Proceedings</b></font></td>
    <td WIDTH="11%" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="CENTER">18</b></font></td>
  </tr>
  <tr>
    <td WIDTH="89%" VALIGN="TOP" COLSPAN="2"><font SIZE="3"><b>Item 2. Changes in Securities
    and Use of Proceeds</b></font></td>
    <td WIDTH="11%" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="CENTER">18</b></font></td>
  </tr>
  <tr>
    <td WIDTH="89%" VALIGN="TOP" COLSPAN="2"><font SIZE="3"><b>Item 3. Defaults Upon Senior
    Securities</b></font></td>
    <td WIDTH="11%" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="CENTER">18</b></font></td>
  </tr>
  <tr>
    <td WIDTH="89%" VALIGN="TOP" COLSPAN="2"><font SIZE="3"><b>Item 4. Submission of Matters
    to a Vote of Security Holders</b></font></td>
    <td WIDTH="11%" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="CENTER">18</b></font></td>
  </tr>
  <tr>
    <td WIDTH="89%" VALIGN="TOP" COLSPAN="2"><font SIZE="3"><b>Item 5. Other Information</b></font></td>
    <td WIDTH="11%" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="CENTER">18</b></font></td>
  </tr>
  <tr>
    <td WIDTH="89%" VALIGN="TOP" COLSPAN="2"><font SIZE="3"><b>Item 6. Exhibits and Reports on
    Form 8-K</b></font></td>
    <td WIDTH="11%" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="CENTER">18</b></font></td>
  </tr>
  <tr>
    <td WIDTH="89%" VALIGN="TOP" COLSPAN="2" HEIGHT="19"><font SIZE="3"><b>Signatures</b></font></td>
    <td WIDTH="11%" VALIGN="TOP" HEIGHT="19"><font SIZE="3"><b><p ALIGN="CENTER">19</b></font></td>
  </tr>
  <tr>
    <td WIDTH="89%" VALIGN="TOP" COLSPAN="2"><b style="mso-bidi-font-weight:normal">CEO -
    Sarbanes-Oxley Section 302 Certification </b></td>
    <td WIDTH="11%" VALIGN="TOP"><p align="center"><strong>20</strong></td>
  </tr>
  <tr>
    <td WIDTH="89%" VALIGN="TOP" COLSPAN="2"><b style="mso-bidi-font-weight:normal">CFO -
    Sarbanes-Oxley Section 302 Certification </b></td>
    <td WIDTH="11%" VALIGN="TOP"><p align="center"><strong>21</strong></td>
  </tr>
</table>
<font SIZE="3"><b>

<p align="center">&nbsp;</p>

<p align="center">- 2 -</p>

<p ALIGN="CENTER">PART I &#150; FINANCIAL INFORMATION</p>

<p>ITEM 1. FINANCIAL STATEMENTS</p>

<p ALIGN="CENTER">PASW, INC.</p>

<p ALIGN="CENTER">CONSOLIDATED BALANCE SHEETS</p>

<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        <blockquote>
          <blockquote>
            <blockquote>
              <blockquote>
                <blockquote>
                  <blockquote>
                    <p>&nbsp;</p>
                  </blockquote>
                </blockquote>
              </blockquote>
            </blockquote>
          </blockquote>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>
</b></font>

<table BORDER="0" CELLSPACING="0" CELLPADDING="7" WIDTH="608">
  <tr>
    <td WIDTH="333" VALIGN="TOP"></td>
    <td WIDTH="106" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="CENTER">September 30,</p>
    <p ALIGN="CENTER">2003</b></font></td>
    <td WIDTH="2" VALIGN="TOP"></td>
    <td WIDTH="95" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="CENTER">December 31, </p>
    <p ALIGN="CENTER">2002</b></font></td>
  </tr>
  <tr>
    <td WIDTH="333" VALIGN="TOP" HEIGHT="20"><font SIZE="3"><b>ASSETS</b></font></td>
    <td WIDTH="106" VALIGN="TOP" HEIGHT="20"><p align="center"><font SIZE="3"><b>(Unaudited)</b></font></td>
    <td WIDTH="2" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="95" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="333" VALIGN="TOP"><font SIZE="3"><b>Current assets:</b></font></td>
    <td WIDTH="106" VALIGN="TOP"></td>
    <td WIDTH="2" VALIGN="TOP"></td>
    <td WIDTH="95" VALIGN="TOP"></td>
  </tr>
  <tr>
    <td WIDTH="333" VALIGN="TOP"><font SIZE="3"><b>Cash and cash equivalents</b></font></td>
    <td WIDTH="106" VALIGN="BOTTOM"><font SIZE="3"><b><p ALIGN="RIGHT">$ 137,553</b></font></td>
    <td WIDTH="2" VALIGN="BOTTOM"></td>
    <td WIDTH="95" VALIGN="BOTTOM"><font SIZE="3"><b><p ALIGN="RIGHT">$ 98,901</b></font></td>
  </tr>
  <tr>
    <td WIDTH="333" VALIGN="TOP"><font SIZE="3"><b>Accounts receivable, net of allowance of <p>$0
    and $0</b></font></td>
    <td WIDTH="106" VALIGN="BOTTOM"><font SIZE="3"><b><p ALIGN="RIGHT"><u>&nbsp;&nbsp; 27,165</u></b></font></td>
    <td WIDTH="2" VALIGN="BOTTOM"></td>
    <td WIDTH="95" VALIGN="BOTTOM"><font SIZE="3"><b><p ALIGN="RIGHT"><u>&nbsp;&nbsp; 32,842</u></b></font></td>
  </tr>
  <tr>
    <td WIDTH="333" VALIGN="TOP"></td>
    <td WIDTH="106" VALIGN="BOTTOM"></td>
    <td WIDTH="2" VALIGN="BOTTOM"></td>
    <td WIDTH="95" VALIGN="BOTTOM"></td>
  </tr>
  <tr>
    <td WIDTH="333" VALIGN="TOP"><font SIZE="3"><b>Total current assets</b></font></td>
    <td WIDTH="106" VALIGN="BOTTOM"><font SIZE="3"><b><p ALIGN="RIGHT">164,718</b></font></td>
    <td WIDTH="2" VALIGN="BOTTOM"></td>
    <td WIDTH="95" VALIGN="BOTTOM"><font SIZE="3"><b><p ALIGN="RIGHT">131,743</b></font></td>
  </tr>
  <tr>
    <td WIDTH="333" VALIGN="TOP"></td>
    <td WIDTH="106" VALIGN="BOTTOM"></td>
    <td WIDTH="2" VALIGN="BOTTOM"></td>
    <td WIDTH="95" VALIGN="BOTTOM"></td>
  </tr>
  <tr>
    <td WIDTH="333" VALIGN="TOP" HEIGHT="55"><font SIZE="3"><b>Property and equipment less
    accumulated depreciation and amortization of $0 and $17,985</b></font></td>
    <td WIDTH="106" VALIGN="BOTTOM" HEIGHT="55"></td>
    <td WIDTH="2" VALIGN="BOTTOM" HEIGHT="55"></td>
    <td WIDTH="95" VALIGN="BOTTOM" HEIGHT="55"><font SIZE="3"><b><p ALIGN="RIGHT">4,242</b></font></td>
  </tr>
  <tr>
    <td WIDTH="333" VALIGN="TOP" HEIGHT="24"><font SIZE="3"><b>Other assets</b></font></td>
    <td WIDTH="106" VALIGN="BOTTOM" HEIGHT="24"><u><font SIZE="3"><b><p ALIGN="RIGHT"></b></font><strong>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    0</strong></u></td>
    <td WIDTH="2" VALIGN="BOTTOM" HEIGHT="24"></td>
    <td WIDTH="95" VALIGN="BOTTOM" HEIGHT="24"><u><font SIZE="3"><b><p ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    6,116</b></font></u></td>
  </tr>
  <tr>
    <td WIDTH="333" VALIGN="TOP" HEIGHT="24"><font SIZE="3"><b>Total assets</b></font></td>
    <td WIDTH="106" VALIGN="BOTTOM" HEIGHT="24"><font SIZE="3"><b><p ALIGN="RIGHT"><u>$
    164,718</u></b></font></td>
    <td WIDTH="2" VALIGN="BOTTOM" HEIGHT="24"></td>
    <td WIDTH="95" VALIGN="BOTTOM" HEIGHT="24"><u><font SIZE="3"><b><p ALIGN="RIGHT">$ 142,101</b></font></u></td>
  </tr>
</table>
<b><font FACE="Courier New" SIZE="3">

<p>&nbsp;</p>
</font><font SIZE="3">

<p>See accompanying notes to condensed financial statements.</p>

<p>&nbsp;</p>

<p align="center">- 3 -</p>

<p ALIGN="CENTER">PASW, INC.</p>

<p ALIGN="CENTER">CONSOLIDATED BALANCE SHEETS</p>
</font></b>

<table BORDER="0" CELLSPACING="0" CELLPADDING="7" WIDTH="632">
  <tr>
    <td WIDTH="348" VALIGN="TOP"></td>
    <td WIDTH="103" VALIGN="bottom"><font SIZE="3"><b><p ALIGN="CENTER">&nbsp;</p>
    <p ALIGN="CENTER">September 30,</p>
    <p ALIGN="CENTER">2003</b></font></td>
    <td WIDTH="2" VALIGN="bottom"></td>
    <td WIDTH="107" VALIGN="bottom"><font SIZE="3"><b><p ALIGN="CENTER">December 31, </p>
    <p ALIGN="CENTER">2002</b></font></td>
  </tr>
  <tr>
    <td WIDTH="348" VALIGN="TOP"><font SIZE="3"><b>LIABILITIES AND STOCKHOLDERS&#146;EQUITY</b></font></td>
    <td WIDTH="103" VALIGN="TOP"><p align="center"><b><font SIZE="3">(Unaudited)</font></b></td>
    <td WIDTH="2" VALIGN="TOP"></td>
    <td WIDTH="107" VALIGN="TOP"></td>
  </tr>
  <tr>
    <td WIDTH="348" VALIGN="TOP"><font SIZE="3"><b>Current liabilities:</b></font></td>
    <td WIDTH="103" VALIGN="TOP"></td>
    <td WIDTH="2" VALIGN="TOP"></td>
    <td WIDTH="107" VALIGN="TOP"></td>
  </tr>
  <tr>
    <td WIDTH="348" VALIGN="TOP"><font SIZE="3"><b>Accounts payable and accrued expenses</b></font></td>
    <td WIDTH="103" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="RIGHT">$ 81,619</b></font></td>
    <td WIDTH="2" VALIGN="TOP"></td>
    <td WIDTH="107" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="RIGHT">$ 108,859</b></font></td>
  </tr>
  <tr>
    <td WIDTH="348" VALIGN="TOP"><font SIZE="3"><b>Advances payable &#150; related party</b></font></td>
    <td WIDTH="103" VALIGN="TOP"><font SIZE="3"><u><b><p ALIGN="RIGHT">&nbsp;&nbsp; 32,075</b></u></font></td>
    <td WIDTH="2" VALIGN="TOP"></td>
    <td WIDTH="107" VALIGN="TOP"><font SIZE="3"><u><b><p ALIGN="RIGHT"></b>&nbsp;&nbsp; <b>32,075</b></u></font></td>
  </tr>
  <tr>
    <td WIDTH="348" VALIGN="TOP"><font SIZE="3"><b>Total current liabilities</b></font></td>
    <td WIDTH="103" VALIGN="TOP"><font SIZE="3"><u><b><p ALIGN="RIGHT">&nbsp; 113,694</b></u></font></td>
    <td WIDTH="2" VALIGN="TOP"></td>
    <td WIDTH="107" VALIGN="TOP"><font SIZE="3"><u><b><p ALIGN="RIGHT">&nbsp; 140,934</b></u></font></td>
  </tr>
  <tr>
    <td WIDTH="348" VALIGN="TOP" HEIGHT="20"><font SIZE="3"><b>Commitments and contingencies</b></font></td>
    <td WIDTH="103" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="107" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="348" VALIGN="TOP"><font SIZE="3"><b>Stockholders&#146; equity:</b></font></td>
    <td WIDTH="103" VALIGN="TOP"></td>
    <td WIDTH="2" VALIGN="TOP"></td>
    <td WIDTH="107" VALIGN="TOP"></td>
  </tr>
  <tr>
    <td WIDTH="348" VALIGN="TOP"><font SIZE="3"><b>Preferred stock, par value $.01 per share,
    10,000,000 shares authorized; no shares outstanding</b></font></td>
    <td WIDTH="103" VALIGN="BOTTOM"><font SIZE="3"><b><p ALIGN="RIGHT">0</b></font></td>
    <td WIDTH="2" VALIGN="BOTTOM"></td>
    <td WIDTH="107" VALIGN="BOTTOM"><font SIZE="3"><b><p ALIGN="RIGHT">0</b></font></td>
  </tr>
  <tr>
    <td WIDTH="348" VALIGN="TOP"><font SIZE="3"><b>Common stock, par value $.001 per share,
    50,000,000 shares authorized; 4,997,400 and 4,997,400 shares issued and outstanding</b></font></td>
    <td WIDTH="103" VALIGN="bottom"><font SIZE="3"><b><p ALIGN="RIGHT">4,998</b></font></td>
    <td WIDTH="2" VALIGN="bottom"></td>
    <td WIDTH="107" VALIGN="bottom"><font SIZE="3"><b><p ALIGN="RIGHT">4,998</b></font></td>
  </tr>
  <tr>
    <td WIDTH="348" VALIGN="TOP"><font SIZE="3"><b>Additional paid-in capital</b></font></td>
    <td WIDTH="103" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="RIGHT">6,398,754</b></font></td>
    <td WIDTH="2" VALIGN="TOP"></td>
    <td WIDTH="107" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="RIGHT">6,398,754</b></font></td>
  </tr>
  <tr>
    <td WIDTH="348" VALIGN="TOP"><font SIZE="3"><b>Accumulated deficit</b></font></td>
    <td WIDTH="103" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="RIGHT">(6,352,781)</b></font></td>
    <td WIDTH="2" VALIGN="TOP"></td>
    <td WIDTH="107" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="RIGHT">(6,402,763)</b></font></td>
  </tr>
  <tr>
    <td WIDTH="348" VALIGN="TOP"><font SIZE="3"><b>Cumulative adjustment for currency
    translation</b></font></td>
    <td WIDTH="103" VALIGN="TOP"><font SIZE="3"><u><b><p ALIGN="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    53 </b></u></font></td>
    <td WIDTH="2" VALIGN="TOP"></td>
    <td WIDTH="107" VALIGN="TOP"><u><font SIZE="3"><b><p ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    178</b></font></u></td>
  </tr>
  <tr>
    <td WIDTH="348" VALIGN="TOP"><font SIZE="3"><b>Total stockholders&#146; equity</b></font></td>
    <td WIDTH="103" VALIGN="TOP"><font SIZE="3"><u><b><p ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;
    51,024</b></u></font></td>
    <td WIDTH="2" VALIGN="TOP"></td>
    <td WIDTH="107" VALIGN="TOP"><font SIZE="3"><u><b><p ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    1,167</b></u></font></td>
  </tr>
  <tr>
    <td WIDTH="348" VALIGN="TOP"></td>
    <td WIDTH="103" VALIGN="TOP"><font SIZE="3"><u><b><p ALIGN="RIGHT">$ 164,718</b></u></font></td>
    <td WIDTH="2" VALIGN="TOP"></td>
    <td WIDTH="107" VALIGN="TOP"><font SIZE="3"><u><b><p ALIGN="RIGHT">$ 142,101</b></u></font></td>
  </tr>
</table>
<b><font SIZE="3">

<p>See accompanying notes to condensed financial statements.</p>
</font><font FACE="Courier New" SIZE="3">

<p align="center"></font><font SIZE="3">- 4 -</font><font FACE="Courier New" SIZE="3"></p>
</font><font SIZE="3">

<p ALIGN="CENTER">PASW, INC.</p>

<p ALIGN="CENTER">CONSOLIDATED STATEMENTS OF OPERATIONS</p>
</font></b>

<table BORDER="0" CELLSPACING="0" CELLPADDING="7" WIDTH="622">
  <tr>
    <td WIDTH="347" VALIGN="TOP"></td>
    <td WIDTH="224" VALIGN="TOP" COLSPAN="3"><font SIZE="3"><b><p ALIGN="CENTER">For the Three
    Months Ended </b></font></td>
  </tr>
  <tr>
    <td WIDTH="347" VALIGN="TOP"></td>
    <td WIDTH="104" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="CENTER">September 30,</p>
    <p ALIGN="CENTER">2003</b></font></td>
    <td WIDTH="2" VALIGN="TOP"></td>
    <td WIDTH="97" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="CENTER">September 30,</p>
    <p ALIGN="CENTER">2002</b></font></td>
  </tr>
  <tr>
    <td WIDTH="347" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="104" VALIGN="TOP" HEIGHT="5"><p align="center"><b><font SIZE="3">(Unaudited)</font></b></td>
    <td WIDTH="2" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="97" VALIGN="TOP" HEIGHT="5"><u><font SIZE="3"><b><p ALIGN="CENTER">Restated</b></font></u></td>
  </tr>
  <tr>
    <td WIDTH="347" VALIGN="TOP" HEIGHT="5"><font SIZE="3"><b>Revenue</b></font></td>
    <td WIDTH="104" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="2" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="97" VALIGN="TOP" HEIGHT="5"></td>
  </tr>
  <tr>
    <td WIDTH="347" VALIGN="TOP"><font SIZE="3"><b>Product sales</b></font></td>
    <td WIDTH="104" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="RIGHT">$ 0 </b></font></td>
    <td WIDTH="2" VALIGN="TOP"></td>
    <td WIDTH="97" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="RIGHT">$ 0 </b></font></td>
  </tr>
  <tr>
    <td WIDTH="347" VALIGN="TOP"><font SIZE="3"><b>Royalties and other </b></font></td>
    <td WIDTH="104" VALIGN="TOP"><font SIZE="3"><u><b><p ALIGN="RIGHT">&nbsp;&nbsp; 53,919</b></u></font></td>
    <td WIDTH="2" VALIGN="TOP"></td>
    <td WIDTH="97" VALIGN="TOP"><font SIZE="3"><u><b><p ALIGN="RIGHT">&nbsp;&nbsp; 20,576</b></u></font></td>
  </tr>
  <tr>
    <td WIDTH="347" VALIGN="TOP"></td>
    <td WIDTH="104" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="RIGHT">53,919</b></font></td>
    <td WIDTH="2" VALIGN="TOP"></td>
    <td WIDTH="97" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="RIGHT">20,576</b></font></td>
  </tr>
  <tr>
    <td WIDTH="347" VALIGN="TOP"></td>
    <td WIDTH="104" VALIGN="TOP"></td>
    <td WIDTH="2" VALIGN="TOP"></td>
    <td WIDTH="97" VALIGN="TOP"></td>
  </tr>
  <tr>
    <td WIDTH="347" VALIGN="TOP"><font SIZE="3"><b>Cost of revenue </b></font></td>
    <td WIDTH="104" VALIGN="TOP"></td>
    <td WIDTH="2" VALIGN="TOP"></td>
    <td WIDTH="97" VALIGN="TOP"></td>
  </tr>
  <tr>
    <td WIDTH="347" VALIGN="TOP"><font SIZE="3"><b>Purchases and royalty fees</b></font></td>
    <td WIDTH="104" VALIGN="TOP"><font SIZE="3"><u><b><p ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    0</b></u></font></td>
    <td WIDTH="2" VALIGN="TOP"></td>
    <td WIDTH="97" VALIGN="TOP"><font SIZE="3"><u><b><p ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    0</b></u></font></td>
  </tr>
  <tr>
    <td WIDTH="347" VALIGN="TOP"></td>
    <td WIDTH="104" VALIGN="TOP"></td>
    <td WIDTH="2" VALIGN="TOP"></td>
    <td WIDTH="97" VALIGN="TOP"></td>
  </tr>
  <tr>
    <td WIDTH="347" VALIGN="TOP"><font SIZE="3"><b>Gross profit</b></font></td>
    <td WIDTH="104" VALIGN="TOP" align="right"><font SIZE="3"><b><p ALIGN="right"><u>&nbsp;&nbsp;
    53,919</u></b></font></td>
    <td WIDTH="2" VALIGN="TOP" align="right"></td>
    <td WIDTH="97" VALIGN="TOP" align="right"><font SIZE="3"><b><p ALIGN="right"><u>&nbsp;&nbsp;
    20,576</u></b></font></td>
  </tr>
  <tr>
    <td WIDTH="347" VALIGN="TOP"></td>
    <td WIDTH="104" VALIGN="TOP"></td>
    <td WIDTH="2" VALIGN="TOP"></td>
    <td WIDTH="97" VALIGN="TOP"></td>
  </tr>
  <tr>
    <td WIDTH="347" VALIGN="TOP"><font SIZE="3"><b>Expenses:</b></font></td>
    <td WIDTH="104" VALIGN="TOP"></td>
    <td WIDTH="2" VALIGN="TOP"></td>
    <td WIDTH="97" VALIGN="TOP"></td>
  </tr>
  <tr>
    <td WIDTH="347" VALIGN="TOP"><font SIZE="3"><b>Selling, general and administrative</b></font></td>
    <td WIDTH="104" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="RIGHT">22,561</b></font></td>
    <td WIDTH="2" VALIGN="TOP"></td>
    <td WIDTH="97" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="right">8,995</b></font></td>
  </tr>
  <tr>
    <td WIDTH="347" VALIGN="TOP"><font SIZE="3"><b>Depreciation and amortization</b></font></td>
    <td WIDTH="104" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="right"><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    0</u> </b></font></td>
    <td WIDTH="2" VALIGN="TOP"></td>
    <td WIDTH="97" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="right"><u>&nbsp;&nbsp;&nbsp; 1,600</u></b></font></td>
  </tr>
  <tr>
    <td WIDTH="347" VALIGN="TOP" HEIGHT="6"><font SIZE="3"><b>Total operating expenses</b></font></td>
    <td WIDTH="104" VALIGN="TOP" HEIGHT="6"><font SIZE="3"><b><p ALIGN="RIGHT"><u>&nbsp;
    22,561</u></b></font></td>
    <td WIDTH="2" VALIGN="TOP" HEIGHT="6"></td>
    <td WIDTH="97" VALIGN="TOP" HEIGHT="6"><font SIZE="3"><b><p ALIGN="RIGHT"><u>&nbsp;&nbsp;
    10,595</u></b></font></td>
  </tr>
  <tr>
    <td WIDTH="347" VALIGN="TOP" HEIGHT="42"><font SIZE="3"><b>Gain (loss) from continuing
    operations before income taxes</b></font></td>
    <td WIDTH="104" VALIGN="bottom" HEIGHT="42"><font SIZE="3"><b><p ALIGN="right"><u>&nbsp;
    31,358</u></b></font></td>
    <td WIDTH="2" VALIGN="bottom" HEIGHT="42"></td>
    <td WIDTH="97" VALIGN="bottom" HEIGHT="42"><font SIZE="3"><u><b><p ALIGN="RIGHT">&nbsp;&nbsp;
    9,981</b></u></font></td>
  </tr>
  <tr>
    <td WIDTH="347" VALIGN="TOP"><font SIZE="3"><b>Other income:<p>Gain on sale of fixed
    assets &#150; net of depreciation</b></font></td>
    <td WIDTH="104" VALIGN="bottom"><font SIZE="3"><b><u><p ALIGN="RIGHT">&nbsp;</p>
    </u><p ALIGN="right"><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0</u></b></font></td>
    <td WIDTH="2" VALIGN="TOP"></td>
    <td WIDTH="97" VALIGN="bottom"><p align="right"><font SIZE="3"><b><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    0</u></b></font></td>
  </tr>
  <tr>
    <td WIDTH="347" VALIGN="TOP" HEIGHT="19"><font SIZE="3"><b>Gain (loss) from continuing
    operations</b></font></td>
    <td WIDTH="104" VALIGN="TOP" HEIGHT="19"><font SIZE="3"><u><b><p ALIGN="RIGHT">&nbsp;
    31,358</b></u></font></td>
    <td WIDTH="2" VALIGN="TOP" HEIGHT="19"></td>
    <td WIDTH="97" VALIGN="TOP" HEIGHT="19"><font SIZE="3"><b><p ALIGN="RIGHT"><u>&nbsp; 9,981</u></b></font></td>
  </tr>
  <tr>
    <td WIDTH="347" VALIGN="TOP" HEIGHT="19"><font SIZE="3"><b>Gain (loss) from discontinued
    operations</b></font></td>
    <td WIDTH="104" VALIGN="TOP" HEIGHT="19"><font SIZE="3"><u><b><p ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    0</b></u></font></td>
    <td WIDTH="2" VALIGN="TOP" HEIGHT="19"></td>
    <td WIDTH="97" VALIGN="TOP" HEIGHT="19"><font SIZE="3"><b><p ALIGN="RIGHT"><u>(8,475)</u></b></font></td>
  </tr>
  <tr>
    <td WIDTH="347" VALIGN="TOP" HEIGHT="19"><font SIZE="3"><b>Income taxes</b></font></td>
    <td WIDTH="104" VALIGN="TOP" HEIGHT="19"><p align="right"><font SIZE="3"><b><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    0</u></b></font></td>
    <td WIDTH="2" VALIGN="TOP" HEIGHT="19"></td>
    <td WIDTH="97" VALIGN="TOP" HEIGHT="19"><p align="right"><font SIZE="3"><b><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    0</u></b></font></td>
  </tr>
  <tr>
    <td WIDTH="347" VALIGN="TOP"><font SIZE="3"><b>Net income (loss)</b></font></td>
    <td WIDTH="104" VALIGN="TOP"><font SIZE="3"><u><b><p ALIGN="RIGHT">$ 31,358</b></u></font></td>
    <td WIDTH="2" VALIGN="TOP"></td>
    <td WIDTH="97" VALIGN="TOP"><font SIZE="3"><u><b><p ALIGN="RIGHT">$ 1,506</b></u></font></td>
  </tr>
  <tr>
    <td WIDTH="347" VALIGN="TOP"></td>
    <td WIDTH="104" VALIGN="TOP"></td>
    <td WIDTH="2" VALIGN="TOP"></td>
    <td WIDTH="97" VALIGN="TOP"></td>
  </tr>
  <tr>
    <td WIDTH="347" VALIGN="TOP"><font SIZE="3"><b>Net income (loss) per common share:<p>Basic
    and diluted</b></font></td>
    <td WIDTH="104" VALIGN="bottom"><font SIZE="3"><b><p ALIGN="RIGHT">$ 0.00</b></font></td>
    <td WIDTH="2" VALIGN="bottom"></td>
    <td WIDTH="97" VALIGN="bottom"><font SIZE="3"><b><p ALIGN="RIGHT">$ 0.00</b></font></td>
  </tr>
  <tr>
    <td WIDTH="347" VALIGN="TOP"></td>
    <td WIDTH="104" VALIGN="TOP"></td>
    <td WIDTH="2" VALIGN="TOP"></td>
    <td WIDTH="97" VALIGN="TOP"></td>
  </tr>
  <tr>
    <td WIDTH="347" VALIGN="TOP"><font SIZE="3"><b>Weighted average common stock shares
    outstanding Basic and diluted</b></font></td>
    <td WIDTH="104" VALIGN="bottom"><font SIZE="3"><u><b><p ALIGN="RIGHT">4,997,400</b></u></font></td>
    <td WIDTH="2" VALIGN="bottom"></td>
    <td WIDTH="97" VALIGN="bottom"><font SIZE="3"><u><b><p ALIGN="RIGHT">4,997,400</b></u></font></td>
  </tr>
</table>
<font SIZE="3"><b>

<p>See accompanying notes to condensed financial statements.</p>

<p align="center">- 5 -</p>

<p>&nbsp;</p>

<p ALIGN="CENTER">PASW, INC.</p>

<p ALIGN="CENTER">CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)</p>
</b></font>

<table BORDER="0" CELLSPACING="1" CELLPADDING="7" WIDTH="636">
  <tr>
    <td WIDTH="353" VALIGN="TOP"></td>
    <td WIDTH="214" VALIGN="TOP" COLSPAN="3"><font SIZE="3"><b><p ALIGN="CENTER">For the Three
    Months Ended </b></font></td>
  </tr>
  <tr>
    <td WIDTH="353" VALIGN="TOP"></td>
    <td WIDTH="104" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="CENTER">September 30, 2003</b></font></td>
    <td WIDTH="2" VALIGN="TOP"></td>
    <td WIDTH="105" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="CENTER">September 30, 2002</b></font></td>
  </tr>
  <tr>
    <td WIDTH="353" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="104" VALIGN="TOP" HEIGHT="4"><p align="center"><font SIZE="3"><b>(Unaudited)</b></font></td>
    <td WIDTH="2" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="105" VALIGN="TOP" HEIGHT="4"><font SIZE="3"><b><p ALIGN="CENTER"><u>Restated</u></b></font></td>
  </tr>
  <tr>
    <td WIDTH="353" VALIGN="TOP"><font SIZE="3"><b>Net income (loss)</b></font></td>
    <td WIDTH="104" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="RIGHT">$ 31,358</b></font></td>
    <td WIDTH="2" VALIGN="TOP"></td>
    <td WIDTH="105" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="RIGHT">$ 1,506</b></font></td>
  </tr>
  <tr>
    <td WIDTH="353" VALIGN="TOP"><font SIZE="3"><b>Other comprehensive income (loss):</b></font></td>
    <td WIDTH="104" VALIGN="TOP"></td>
    <td WIDTH="2" VALIGN="TOP"></td>
    <td WIDTH="105" VALIGN="TOP"></td>
  </tr>
  <tr>
    <td WIDTH="353" VALIGN="TOP"><blockquote>
      <font SIZE="3"><b><p>Foreign currency translation adjustment</b></font></p>
    </blockquote>
    </td>
    <td WIDTH="104" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="RIGHT"><u>&nbsp;&nbsp;&nbsp;
    7,287</u></b></font></td>
    <td WIDTH="2" VALIGN="TOP"></td>
    <td WIDTH="105" VALIGN="TOP"><font SIZE="3"><u><b><p ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;
    (2,531)</b></u></font></td>
  </tr>
  <tr>
    <td WIDTH="353" VALIGN="TOP"><font SIZE="3"><b>Comprehensive income gain (loss)</b></font></td>
    <td WIDTH="104" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="right"><u>$ 38,645</u></b></font></td>
    <td WIDTH="2" VALIGN="TOP"></td>
    <td WIDTH="105" VALIGN="TOP"><p align="right"><u><font SIZE="3"><b>$ ( 1,025)</b></font></u></td>
  </tr>
</table>
<b><font SIZE="3">

<p align="left">&nbsp;</p>
</font>

<p class="MsoNormal">See accompanying notes to condensed financial statements.</p>

<p class="MsoNormal">&nbsp;</p>

<p align="center"><font SIZE="3">- 6 -</font></p>
<font FACE="Courier New" SIZE="3">

<p>&nbsp;</p>
</font><font SIZE="3">

<p ALIGN="CENTER">PASW, INC.</p>

<p ALIGN="CENTER">CONSOLIDATED STATEMENTS OF OPERATIONS</p>

<p>&nbsp;</p>
</font></b>

<table BORDER="0" CELLSPACING="1" CELLPADDING="7" WIDTH="620">
  <tr>
    <td WIDTH="355" VALIGN="TOP"></td>
    <td WIDTH="220" VALIGN="bottom" COLSPAN="3"><font SIZE="3"><b><p ALIGN="CENTER">For the
    Nine Months Ended </b></font></td>
  </tr>
  <tr>
    <td WIDTH="355" VALIGN="TOP"></td>
    <td WIDTH="98" VALIGN="bottom"><font SIZE="3"><b><p ALIGN="CENTER">September 30,</p>
    <p ALIGN="CENTER">2003</b></font></td>
    <td WIDTH="4" VALIGN="bottom"></td>
    <td WIDTH="99" VALIGN="bottom"><font SIZE="3"><b><p ALIGN="CENTER">September 30,</p>
    <p ALIGN="CENTER">2002</b></font></td>
  </tr>
  <tr>
    <td WIDTH="355" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="98" VALIGN="bottom" HEIGHT="5"><p align="center"><b><font SIZE="3">(Unaudited)</font></b></td>
    <td WIDTH="4" VALIGN="bottom" HEIGHT="5"></td>
    <td WIDTH="99" VALIGN="bottom" HEIGHT="5"><font SIZE="3"><u><b><p ALIGN="CENTER">Restated</b></u></font></td>
  </tr>
  <tr>
    <td WIDTH="355" VALIGN="TOP" HEIGHT="5"><font SIZE="3"><b>Revenue</b></font></td>
    <td WIDTH="98" VALIGN="bottom" HEIGHT="5"></td>
    <td WIDTH="4" VALIGN="bottom" HEIGHT="5"></td>
    <td WIDTH="99" VALIGN="bottom" HEIGHT="5"></td>
  </tr>
  <tr>
    <td WIDTH="355" VALIGN="TOP"><font SIZE="3"><b>Product sales</b></font></td>
    <td WIDTH="98" VALIGN="bottom"><font SIZE="3"><b><p ALIGN="RIGHT">$ 0 </b></font></td>
    <td WIDTH="4" VALIGN="bottom"></td>
    <td WIDTH="99" VALIGN="bottom"><font SIZE="3"><b><p ALIGN="RIGHT">$ 0 </b></font></td>
  </tr>
  <tr>
    <td WIDTH="355" VALIGN="TOP"><font SIZE="3"><b>Royalties and other </b></font></td>
    <td WIDTH="98" VALIGN="bottom"><font SIZE="3"><u><b><p ALIGN="RIGHT">151,477</b></u></font></td>
    <td WIDTH="4" VALIGN="bottom"></td>
    <td WIDTH="99" VALIGN="bottom"><font SIZE="3"><u><b><p ALIGN="RIGHT">97,044</b></u></font></td>
  </tr>
  <tr>
    <td WIDTH="355" VALIGN="TOP"></td>
    <td WIDTH="98" VALIGN="bottom"><font SIZE="3"><b><p ALIGN="RIGHT">151,477</b></font></td>
    <td WIDTH="4" VALIGN="bottom"></td>
    <td WIDTH="99" VALIGN="bottom"><font SIZE="3"><b><p ALIGN="RIGHT">97,044</b></font></td>
  </tr>
  <tr>
    <td WIDTH="355" VALIGN="TOP"><font SIZE="3"><b>Cost of revenue </b></font></td>
    <td WIDTH="98" VALIGN="bottom"></td>
    <td WIDTH="4" VALIGN="bottom"></td>
    <td WIDTH="99" VALIGN="bottom"></td>
  </tr>
  <tr>
    <td WIDTH="355" VALIGN="TOP"><font SIZE="3"><b>Purchases and royalty fees</b></font></td>
    <td WIDTH="98" VALIGN="bottom"><font SIZE="3"><u><b><p ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    0</b></u></font></td>
    <td WIDTH="4" VALIGN="bottom"></td>
    <td WIDTH="99" VALIGN="bottom"><font SIZE="3"><u><b><p ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    0</b></u></font></td>
  </tr>
  <tr>
    <td WIDTH="355" VALIGN="TOP"></td>
    <td WIDTH="98" VALIGN="bottom"></td>
    <td WIDTH="4" VALIGN="bottom"></td>
    <td WIDTH="99" VALIGN="bottom"></td>
  </tr>
  <tr>
    <td WIDTH="355" VALIGN="TOP"><font SIZE="3"><b>Gross profit</b></font></td>
    <td WIDTH="98" VALIGN="bottom"><font SIZE="3"><b><p ALIGN="RIGHT"><u>151,477</u></b></font></td>
    <td WIDTH="4" VALIGN="bottom"></td>
    <td WIDTH="99" VALIGN="bottom"><font SIZE="3"><b><p ALIGN="RIGHT"><u>97,044</u></b></font></td>
  </tr>
  <tr>
    <td WIDTH="355" VALIGN="TOP"></td>
    <td WIDTH="98" VALIGN="bottom"></td>
    <td WIDTH="4" VALIGN="bottom"></td>
    <td WIDTH="99" VALIGN="bottom"></td>
  </tr>
  <tr>
    <td WIDTH="355" VALIGN="TOP"><font SIZE="3"><b>Expenses:</b></font></td>
    <td WIDTH="98" VALIGN="bottom"></td>
    <td WIDTH="4" VALIGN="bottom"></td>
    <td WIDTH="99" VALIGN="bottom"></td>
  </tr>
  <tr>
    <td WIDTH="355" VALIGN="TOP"><font SIZE="3"><b>Selling, general and administrative</b></font></td>
    <td WIDTH="98" VALIGN="bottom"><font SIZE="3"><b><p ALIGN="RIGHT">102,986</b></font></td>
    <td WIDTH="4" VALIGN="bottom"></td>
    <td WIDTH="99" VALIGN="bottom"><font SIZE="3"><b><p ALIGN="right">70,896</b></font></td>
  </tr>
  <tr>
    <td WIDTH="355" VALIGN="TOP"><font SIZE="3"><b>Depreciation and amortization</b></font></td>
    <td WIDTH="98" VALIGN="bottom"><font SIZE="3"><b><p ALIGN="RIGHT"><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    0</u> </b></font></td>
    <td WIDTH="4" VALIGN="bottom"></td>
    <td WIDTH="99" VALIGN="bottom"><font SIZE="3"><b><p ALIGN="RIGHT"><u>&nbsp; 3,200</u></b></font></td>
  </tr>
  <tr>
    <td WIDTH="355" VALIGN="TOP" HEIGHT="6"><font SIZE="3"><b>Total operating expenses</b></font></td>
    <td WIDTH="98" VALIGN="bottom" HEIGHT="6"><font SIZE="3"><b><p ALIGN="RIGHT"><u>102,986</u></b></font></td>
    <td WIDTH="4" VALIGN="bottom" HEIGHT="6"></td>
    <td WIDTH="99" VALIGN="bottom" HEIGHT="6"><font SIZE="3"><b><p ALIGN="RIGHT"><u>&nbsp;
    74,096</u></b></font></td>
  </tr>
  <tr>
    <td WIDTH="355" VALIGN="TOP" HEIGHT="42"><font SIZE="3"><b>Gain (loss) from continuing
    operations before income taxes</b></font></td>
    <td WIDTH="98" VALIGN="bottom" HEIGHT="42"><font SIZE="3"><b><p ALIGN="RIGHT"><u>&nbsp;
    48,491</u></b></font></td>
    <td WIDTH="4" VALIGN="bottom" HEIGHT="42"></td>
    <td WIDTH="99" VALIGN="bottom" HEIGHT="42"><font SIZE="3"><u><b><p ALIGN="RIGHT">&nbsp;
    22,948</b></u></font></td>
  </tr>
  <tr>
    <td WIDTH="355" VALIGN="TOP"><font SIZE="3"><b>Other income:<p>Gain on sale of fixed
    assets &#150; net of depreciation</b></font></td>
    <td WIDTH="98" VALIGN="bottom"><font SIZE="3"><b><p ALIGN="RIGHT"><u>&nbsp;&nbsp; 4,652</u></b></font></td>
    <td WIDTH="4" VALIGN="bottom"></td>
    <td WIDTH="99" VALIGN="bottom"><font SIZE="3"><b><p ALIGN="RIGHT"><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    0</u></b></font></td>
  </tr>
  <tr>
    <td WIDTH="355" VALIGN="TOP" HEIGHT="19"><font SIZE="3"><b>Gain (loss) from continuing
    operations </b></font></td>
    <td WIDTH="98" VALIGN="bottom" HEIGHT="19"><font SIZE="3"><u><b><p ALIGN="RIGHT">&nbsp;&nbsp;
    53,143</b></u></font></td>
    <td WIDTH="4" VALIGN="bottom" HEIGHT="19"></td>
    <td WIDTH="99" VALIGN="bottom" HEIGHT="19"><font SIZE="3"><b><p ALIGN="RIGHT"><u>&nbsp;&nbsp;&nbsp;
    22,948</u></b></font></td>
  </tr>
  <tr>
    <td WIDTH="355" VALIGN="TOP" HEIGHT="19"><font SIZE="3"><b>Gain (loss) from discontinued
    operations</b></font></td>
    <td WIDTH="98" VALIGN="bottom" HEIGHT="19"><font SIZE="3"><u><b><p ALIGN="RIGHT">&nbsp;
    (3,161)</b></u></font></td>
    <td WIDTH="4" VALIGN="bottom" HEIGHT="19"></td>
    <td WIDTH="99" VALIGN="bottom" HEIGHT="19"><p align="right"><font SIZE="3"><b><u>&nbsp;
    (44,466)</u></b></font></td>
  </tr>
  <tr>
    <td WIDTH="355" VALIGN="TOP" HEIGHT="19"><font SIZE="3"><b>Income taxes</b></font></td>
    <td WIDTH="98" VALIGN="bottom" HEIGHT="19"><font SIZE="3"><b><p ALIGN="RIGHT"><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    0</u></b></font></td>
    <td WIDTH="4" VALIGN="bottom" HEIGHT="19"></td>
    <td WIDTH="99" VALIGN="bottom" HEIGHT="19"><font SIZE="3"><b><p ALIGN="RIGHT"><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    0</u></b></font></td>
  </tr>
  <tr>
    <td WIDTH="355" VALIGN="TOP"><font SIZE="3"><b>Net income (loss)</b></font></td>
    <td WIDTH="98" VALIGN="bottom"><font SIZE="3"><u><b><p ALIGN="RIGHT">$ 49,982</b></u></font></td>
    <td WIDTH="4" VALIGN="bottom"></td>
    <td WIDTH="99" VALIGN="bottom"><font SIZE="3"><u><b><p ALIGN="RIGHT">$ (21,518)</b></u></font></td>
  </tr>
  <tr>
    <td WIDTH="355" VALIGN="TOP"></td>
    <td WIDTH="98" VALIGN="bottom"></td>
    <td WIDTH="4" VALIGN="bottom"></td>
    <td WIDTH="99" VALIGN="bottom"></td>
  </tr>
  <tr>
    <td WIDTH="355" VALIGN="TOP"><font SIZE="3"><b>Net income (loss) per common share:<p>Basic
    and diluted</b></font></td>
    <td WIDTH="98" VALIGN="bottom"><font SIZE="3"><b><p ALIGN="RIGHT">$ 0.01</b></font></td>
    <td WIDTH="4" VALIGN="bottom"></td>
    <td WIDTH="99" VALIGN="bottom"><font SIZE="3"><b><p ALIGN="RIGHT">$ (0.00)</b></font></td>
  </tr>
  <tr>
    <td WIDTH="355" VALIGN="TOP"><font SIZE="3"><b>Weighted average common stock shares
    outstanding Basic and diluted</b></font></td>
    <td WIDTH="98" VALIGN="BOTTOM"><font SIZE="3"><u><b><p ALIGN="RIGHT">4,997,400</b></u></font></td>
    <td WIDTH="4" VALIGN="BOTTOM"></td>
    <td WIDTH="99" VALIGN="BOTTOM"><font SIZE="3"><u><b><p ALIGN="RIGHT">4,997,400</b></u></font></td>
  </tr>
</table>
<font SIZE="3"><b>

<p>See accompanying notes to condensed financial statements.</p>

<p align="center">- 7 -</p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p ALIGN="CENTER">PASW, INC.</p>

<p ALIGN="CENTER">CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)</p>
</b></font>

<table BORDER="0" CELLSPACING="1" CELLPADDING="7" WIDTH="631">
  <tr>
    <td WIDTH="349" VALIGN="TOP"></td>
    <td WIDTH="217" VALIGN="TOP" COLSPAN="3"><font SIZE="3"><b><p ALIGN="CENTER">For the Nine
    Months Ended </b></font></td>
  </tr>
  <tr>
    <td WIDTH="349" VALIGN="TOP"></td>
    <td WIDTH="105" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="CENTER">September 30, 2003</b></font></td>
    <td WIDTH="2" VALIGN="TOP"></td>
    <td WIDTH="103" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="CENTER">September 30, 2002</b></font></td>
  </tr>
  <tr>
    <td WIDTH="349" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="105" VALIGN="TOP" HEIGHT="4"><p align="center"><font SIZE="3"><b>(Unaudited)</b></font></td>
    <td WIDTH="2" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="103" VALIGN="TOP" HEIGHT="4"><font SIZE="3"><b><p ALIGN="CENTER"><u>Restated</u></b></font></td>
  </tr>
  <tr>
    <td WIDTH="349" VALIGN="TOP"><font SIZE="3"><b>Net income (loss)</b></font></td>
    <td WIDTH="105" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="RIGHT">$ 49,982</b></font></td>
    <td WIDTH="2" VALIGN="TOP"></td>
    <td WIDTH="103" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="RIGHT">$ (21,518)</b></font></td>
  </tr>
  <tr>
    <td WIDTH="349" VALIGN="TOP"><font SIZE="3"><b>Other comprehensive income (loss):</b></font></td>
    <td WIDTH="105" VALIGN="TOP"></td>
    <td WIDTH="2" VALIGN="TOP"></td>
    <td WIDTH="103" VALIGN="TOP"></td>
  </tr>
  <tr>
    <td WIDTH="349" VALIGN="TOP"></td>
    <td WIDTH="105" VALIGN="TOP"></td>
    <td WIDTH="2" VALIGN="TOP"></td>
    <td WIDTH="103" VALIGN="TOP"></td>
  </tr>
  <tr>
    <td WIDTH="349" VALIGN="TOP"><blockquote>
      <font SIZE="3"><b><p>Foreign currency translation adjustment</b></font></p>
    </blockquote>
    </td>
    <td WIDTH="105" VALIGN="TOP"><font SIZE="3"><u><b><p ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    125</b></u></font></td>
    <td WIDTH="2" VALIGN="TOP"></td>
    <td WIDTH="103" VALIGN="TOP"><font SIZE="3"><u><b><p ALIGN="RIGHT">&nbsp;&nbsp;&nbsp; (
    7,452)</b></u></font></td>
  </tr>
  <tr>
    <td WIDTH="349" VALIGN="TOP"><font SIZE="3"><b>Comprehensive income gain (loss)</b></font></td>
    <td WIDTH="105" VALIGN="TOP"><font SIZE="3"><u><b><p ALIGN="RIGHT">$ 50,107</b></u></font></td>
    <td WIDTH="2" VALIGN="TOP"></td>
    <td WIDTH="103" VALIGN="TOP"><p align="right"><font SIZE="3"><u><b>$ (28,970)</b></u></font></td>
  </tr>
</table>
<b><font SIZE="3">

<p>&nbsp;</p>

<p>See accompanying notes to condensed financial statements.</p>
</font><font FACE="Courier New" SIZE="3">

<p>&nbsp;</p>
</font><font SIZE="3">

<p align="center">- 8 -</p>

<p>&nbsp;</p>

<p ALIGN="CENTER">PASW, INC.</p>

<p ALIGN="CENTER">CONSOLIDATED STATEMENTS OF CASH FLOWS</p>

<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        <blockquote>
          <blockquote>
            <blockquote>
              <blockquote>
                <blockquote>
                  <blockquote>
                    <p>&nbsp;</p>
                  </blockquote>
                </blockquote>
              </blockquote>
            </blockquote>
          </blockquote>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>
</font></b>

<table BORDER="0" CELLSPACING="1" CELLPADDING="7" WIDTH="625" height="1188">
  <tr>
    <td WIDTH="62%" VALIGN="TOP" height="19"></td>
    <td WIDTH="38%" VALIGN="TOP" COLSPAN="3" height="19"><font SIZE="3"><b><p ALIGN="CENTER">For
    the Nine Months Ended </b></font></td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP" height="76"></td>
    <td WIDTH="18%" VALIGN="TOP" height="76"><font SIZE="3"><b><p ALIGN="CENTER">September 30,</p>
    <p ALIGN="CENTER">2003</b></font></td>
    <td WIDTH="3%" VALIGN="TOP" height="76"></td>
    <td WIDTH="17%" VALIGN="TOP" height="76"><font SIZE="3"><b><p ALIGN="CENTER">September 30,</p>
    <p ALIGN="CENTER">2002</b></font></td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP" height="57"><font SIZE="3"><b>Cash flows from operating
    activities:<p>Continuing operations</b></font></td>
    <td WIDTH="18%" VALIGN="TOP" height="57"><b><font SIZE="3">(Unaudited)</font></b></td>
    <td WIDTH="3%" VALIGN="TOP" height="57"></td>
    <td WIDTH="17%" VALIGN="TOP" height="57"><font SIZE="3"><b><p ALIGN="CENTER">Restated</b></font></td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP" height="19"><font SIZE="3"><b>Net income (loss)</b></font></td>
    <td WIDTH="18%" VALIGN="TOP" height="19"><font SIZE="3"><b><p ALIGN="RIGHT">$ 49,982</b></font></td>
    <td WIDTH="3%" VALIGN="TOP" height="19"></td>
    <td WIDTH="17%" VALIGN="TOP" height="19"><font SIZE="3"><b><p ALIGN="RIGHT">$ 22,948</b></font></td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP" height="38"><font SIZE="3"><b>Adjustments to reconcile net
    loss to net cash used in operating activities:</b></font></td>
    <td WIDTH="18%" VALIGN="TOP" height="38"></td>
    <td WIDTH="3%" VALIGN="TOP" height="38"></td>
    <td WIDTH="17%" VALIGN="TOP" height="38"></td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP" height="19"><font SIZE="3"><b>Depreciation and amortization</b></font></td>
    <td WIDTH="18%" VALIGN="TOP" height="19"><p align="right"><strong>0</strong></td>
    <td WIDTH="3%" VALIGN="TOP" height="19"></td>
    <td WIDTH="17%" VALIGN="TOP" height="19"><font SIZE="3"><b><p ALIGN="right">(3,200)</b></font></td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP" height="20"><font SIZE="3"><b>(Increase) decrease in assets:</b></font></td>
    <td WIDTH="18%" VALIGN="TOP" height="20"></td>
    <td WIDTH="3%" VALIGN="TOP" height="20"></td>
    <td WIDTH="17%" VALIGN="TOP" height="20"></td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP" height="19"><font SIZE="3"><b>Accounts receivable</b></font></td>
    <td WIDTH="18%" VALIGN="TOP" height="19"><font SIZE="3"><b><p ALIGN="RIGHT">5,677</b></font></td>
    <td WIDTH="3%" VALIGN="TOP" height="19"></td>
    <td WIDTH="17%" VALIGN="TOP" height="19"><font SIZE="3"><b><p ALIGN="RIGHT">43,855</b></font></td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP" height="19"><font SIZE="3"><b>Prepaid expenses</b></font></td>
    <td WIDTH="18%" VALIGN="TOP" height="19"><p align="right"><font SIZE="3"><b>6,116</b></font></td>
    <td WIDTH="3%" VALIGN="TOP" height="19"></td>
    <td WIDTH="17%" VALIGN="TOP" height="19"><p align="right"><strong>0</strong></td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP" height="19"><font SIZE="3"><b>Sale of fixed assets &#150; net
    of depreciation of $449</b></font></td>
    <td WIDTH="18%" VALIGN="TOP" height="19"><font SIZE="3"><b><p ALIGN="RIGHT">3,992</b></font></td>
    <td WIDTH="3%" VALIGN="TOP" height="19"></td>
    <td WIDTH="17%" VALIGN="TOP" height="19"><p align="right"><strong>0</strong></td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP" height="19"><font SIZE="3"><b>Increase (decrease) in
    liabilities:</b></font></td>
    <td WIDTH="18%" VALIGN="TOP" height="19"></td>
    <td WIDTH="3%" VALIGN="TOP" height="19"></td>
    <td WIDTH="17%" VALIGN="TOP" height="19"></td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP" height="19"><font SIZE="3"><b>Accounts payable and accrued
    expenses</b></font></td>
    <td WIDTH="18%" VALIGN="TOP" height="19"><font SIZE="3"><u><b><p ALIGN="RIGHT">(27,240)</b></u></font></td>
    <td WIDTH="3%" VALIGN="TOP" height="19"></td>
    <td WIDTH="17%" VALIGN="TOP" height="19"><font SIZE="3"><u><b><p ALIGN="RIGHT">(43,207)</b></u></font></td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP" height="19"></td>
    <td WIDTH="18%" VALIGN="TOP" height="19"><font SIZE="3"><b><p ALIGN="RIGHT">38,527 </b></font></td>
    <td WIDTH="3%" VALIGN="TOP" height="19"></td>
    <td WIDTH="17%" VALIGN="TOP" height="19"><font SIZE="3"><b><p ALIGN="RIGHT">20,396</b></font></td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP" height="19"><font SIZE="3"><b>Gain (loss) from discontinued
    operations</b></font></td>
    <td WIDTH="18%" VALIGN="TOP" height="19"><font SIZE="3"><u><b><p ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    0 </b></u></font></td>
    <td WIDTH="3%" VALIGN="TOP" height="19"></td>
    <td WIDTH="17%" VALIGN="TOP" height="19"><font SIZE="3"><u><b><p ALIGN="RIGHT">&nbsp;
    (44,466) </b></u></font></td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP" height="19"><font SIZE="3"><b>Net cash used in operating
    activities </b></font></td>
    <td WIDTH="18%" VALIGN="TOP" height="19"><font SIZE="3"><b><p ALIGN="RIGHT"><u>&nbsp;
    38,527</u></b></font></td>
    <td WIDTH="3%" VALIGN="TOP" height="19"></td>
    <td WIDTH="17%" VALIGN="TOP" height="19"><font SIZE="3"><b><p ALIGN="RIGHT"><u>&nbsp;
    (24,070)</u></b></font></td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP" height="19"></td>
    <td WIDTH="18%" VALIGN="TOP" height="19"></td>
    <td WIDTH="3%" VALIGN="TOP" height="19"></td>
    <td WIDTH="17%" VALIGN="TOP" height="19"></td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP" height="19"><font SIZE="3"><b>Cash flows from investing
    activities:</b></font></td>
    <td WIDTH="18%" VALIGN="TOP" height="19"></td>
    <td WIDTH="3%" VALIGN="TOP" height="19"></td>
    <td WIDTH="17%" VALIGN="TOP" height="19"></td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP" height="19"><font SIZE="3"><b>Net cash from (used) in
    investing activities</b></font></td>
    <td WIDTH="18%" VALIGN="TOP" height="19"><font SIZE="3"><b><p ALIGN="RIGHT">0</b></font></td>
    <td WIDTH="3%" VALIGN="TOP" height="19"></td>
    <td WIDTH="17%" VALIGN="TOP" height="19"><font SIZE="3"><b><p ALIGN="RIGHT">0</b></font></td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP" height="19"></td>
    <td WIDTH="18%" VALIGN="TOP" height="19"></td>
    <td WIDTH="3%" VALIGN="TOP" height="19"></td>
    <td WIDTH="17%" VALIGN="TOP" height="19"></td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP" height="19"><font SIZE="3"><b>Cash flows from financing
    activities</b></font></td>
    <td WIDTH="18%" VALIGN="TOP" height="19"></td>
    <td WIDTH="3%" VALIGN="TOP" height="19"></td>
    <td WIDTH="17%" VALIGN="TOP" height="19"></td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP" height="19"><font SIZE="3"><b>Net cash provided by financing
    activities</b></font></td>
    <td WIDTH="18%" VALIGN="TOP" height="19"><font SIZE="3"><b><p ALIGN="RIGHT">0</b></font></td>
    <td WIDTH="3%" VALIGN="TOP" height="19"></td>
    <td WIDTH="17%" VALIGN="TOP" height="19"><font SIZE="3"><b><p ALIGN="RIGHT">0</b></font></td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP" height="19"></td>
    <td WIDTH="18%" VALIGN="TOP" height="19"></td>
    <td WIDTH="3%" VALIGN="TOP" height="19"></td>
    <td WIDTH="17%" VALIGN="TOP" height="19"></td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP" height="19"><font SIZE="3"><b>Effect of exchange rate changes
    on cash</b></font></td>
    <td WIDTH="18%" VALIGN="TOP" height="19"><font SIZE="3"><u><b><p ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;
    125</b></u></font></td>
    <td WIDTH="3%" VALIGN="TOP" height="19"></td>
    <td WIDTH="17%" VALIGN="TOP" height="19"><font SIZE="3"><u><b><p ALIGN="RIGHT">&nbsp;&nbsp;
    1,664</b></u></font></td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP" height="19"></td>
    <td WIDTH="18%" VALIGN="TOP" height="19"></td>
    <td WIDTH="3%" VALIGN="TOP" height="19"></td>
    <td WIDTH="17%" VALIGN="TOP" height="19"></td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP" height="19"><font SIZE="3"><b>Net increase (decrease) in cash</b></font></td>
    <td WIDTH="18%" VALIGN="TOP" height="19"><font SIZE="3"><b><p ALIGN="RIGHT">38,652</b></font></td>
    <td WIDTH="3%" VALIGN="TOP" height="19"></td>
    <td WIDTH="17%" VALIGN="TOP" height="19"><font SIZE="3"><b><p ALIGN="RIGHT">(22,406)</b></font></td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP" height="19"></td>
    <td WIDTH="18%" VALIGN="TOP" height="19"></td>
    <td WIDTH="3%" VALIGN="TOP" height="19"></td>
    <td WIDTH="17%" VALIGN="TOP" height="19"></td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP" height="19"><font SIZE="3"><b>Cash &#150; Beginning</b></font></td>
    <td WIDTH="18%" VALIGN="TOP" height="19"><font SIZE="3"><u><b><p ALIGN="RIGHT">&nbsp;
    98,901</b></u></font></td>
    <td WIDTH="3%" VALIGN="TOP" height="19"></td>
    <td WIDTH="17%" VALIGN="TOP" height="19"><font SIZE="3"><u><b><p ALIGN="RIGHT">152,148</b></u></font></td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP" height="19"><font SIZE="3"><b>Cash &#150; Ending</b></font></td>
    <td WIDTH="18%" VALIGN="TOP" height="19"><font SIZE="3"><u><b><p ALIGN="RIGHT">$ 137,553</b></u></font></td>
    <td WIDTH="3%" VALIGN="TOP" height="19"></td>
    <td WIDTH="17%" VALIGN="TOP" height="19"><u><font SIZE="3"><b><p ALIGN="RIGHT">$ 129,742</b></font></u></td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP" height="19"></td>
    <td WIDTH="18%" VALIGN="TOP" height="19"></td>
    <td WIDTH="3%" VALIGN="TOP" height="19"></td>
    <td WIDTH="17%" VALIGN="TOP" height="19"></td>
  </tr>
</table>
<b><font SIZE="3">

<p>Supplemental non-cash financing activities: None</p>

<p>See accompanying notes to condensed financial statements.</p>
</font><font FACE="Courier New" SIZE="3">

<p align="center"></font><font SIZE="3">- 9 -</font><font FACE="Courier New" SIZE="3"></p>
<font SIZE="3">

<p align="center">&nbsp;</p>
</font>

<p>&nbsp;</p>
</font><font SIZE="3">

<p ALIGN="CENTER">PASW, INC.</p>

<p ALIGN="CENTER">NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</p>

<p ALIGN="CENTER">(UNAUDITED)</p>

<blockquote>
  <p ALIGN="JUSTIFY">(1) Basis of presentation</p>
</blockquote>
</b>

<p ALIGN="JUSTIFY">The accompanying unaudited consolidated financial statements of PASW,
INC. (&quot;PASW&quot;, or the &quot;Company&quot;) have been prepared in accordance with
generally accepted accounting principles for interim financial information and the
instructions to Form 10-QSB. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of only normal
recurring accruals) considered necessary for a fair presentation of the Company&#146;s
financial position at September 30, 2003, the results of operations for the three months
and nine months ended September 30, 2003 and September 30, 2002, and the cash flows for
the nine months ended September 30, 2003 and September 30, 2002 are included. Operating
results for the three-month and nine month periods ended September 30, 2003 are not
necessarily indicative of the results that may be expected for the year ending December
31, 2003.</p>

<p ALIGN="JUSTIFY">&nbsp;</p>

<p ALIGN="JUSTIFY">The information contained in this Form 10-QSB should be read in
conjunction with audited financial statements and related notes for the year ended
December 31, 2002 which are contained in the Company&#146;s Annual Report on Form 10-KSB
filed with the Securities and Exchange Commission (the &quot;SEC&quot;) on March 31, 2003,
and the Company&#146;s Registration Statement on Form SB-2 filed with the Securities and
Exchange Commission on July 29, 1999 (File 333-75137).</p>
<b>

<blockquote>
  <p ALIGN="JUSTIFY">(2) Earnings per share</p>
</blockquote>
</b>

<p ALIGN="JUSTIFY">The Company adopted SFAS No. 128, &quot;Earnings Per Share&quot;,
during 1998. SFAS No. 128 requires presentation of basic and diluted earnings per share.
Basic earnings per share is computed by dividing income available to common stockholders
by the weighted average number of common shares outstanding for the reporting period.
Diluted earnings per share reflect the potential dilution that could occur if securities
or other contracts, such as stock options, to issue common stock were exercised or
converted into common stock. All prior period weighted average and per share information
has been restated in accordance with SFAS No. 128.</p>
<b>

<p ALIGN="CENTER">&nbsp;</p>

<p ALIGN="CENTER">COMPUTATION OF WEIGHTED AVERAGE</p>

<p ALIGN="CENTER">COMMON SHARES OUTSTANDING</p>
</b></font>

<table BORDER="0" CELLSPACING="1" CELLPADDING="7" WIDTH="722">
  <tr>
    <td WIDTH="340" VALIGN="TOP"></td>
    <td WIDTH="88" VALIGN="bottom"><font SIZE="3"><b><p ALIGN="CENTER">Total Number of Shares</b></font></td>
    <td WIDTH="3" VALIGN="bottom"></td>
    <td WIDTH="104" VALIGN="bottom"><font SIZE="3"><b><p ALIGN="CENTER">Three Months <u>Ended</u></p>
    <p ALIGN="CENTER">September 30, 2003</b></font></td>
    <td WIDTH="79" VALIGN="bottom"><font SIZE="3"><b><p ALIGN="CENTER">Nine Months <u>Ended</u></p>
    <p ALIGN="CENTER">September 30, 2003</b></font></td>
  </tr>
  <tr>
    <td WIDTH="340" VALIGN="TOP"><font SIZE="3"><b>Outstanding shares as of January 1, 2003</b></font></td>
    <td WIDTH="88" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="RIGHT">4,997,400</b></font></td>
    <td WIDTH="3" VALIGN="TOP"></td>
    <td WIDTH="104" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="RIGHT">4,997,400</b></font></td>
    <td WIDTH="97" VALIGN="TOP"><font SIZE="3"><b><p ALIGN="RIGHT">4,997,400</b></font></td>
  </tr>
  <tr>
    <td WIDTH="340" VALIGN="TOP" HEIGHT="22"><font SIZE="3"><b>Options treated as Common Stock</b></font></td>
    <td WIDTH="88" VALIGN="TOP" HEIGHT="22"><font SIZE="3"><u><b><p ALIGN="RIGHT">1,142,674</b></u></font></td>
    <td WIDTH="3" VALIGN="TOP" HEIGHT="22"></td>
    <td WIDTH="104" VALIGN="TOP" HEIGHT="22"><font SIZE="3"><u><b><p ALIGN="RIGHT">1,142,674</b></u></font></td>
    <td WIDTH="97" VALIGN="TOP" HEIGHT="22"><font SIZE="3"><u><b><p ALIGN="RIGHT">1,142,674</b></u></font></td>
  </tr>
  <tr>
    <td WIDTH="340" VALIGN="TOP"><b><font SIZE="3">Total weighted average</font> <font
    SIZE="3">shares outstanding</font></b></td>
    <td WIDTH="88" VALIGN="TOP"><font SIZE="3"><u><b><p ALIGN="RIGHT">6,140,074</b></u></font></td>
    <td WIDTH="3" VALIGN="TOP"></td>
    <td WIDTH="104" VALIGN="TOP"><font SIZE="3"><u><b><p ALIGN="RIGHT">6,140,074</b></u></font></td>
    <td WIDTH="97" VALIGN="TOP"><font SIZE="3"><u><b><p ALIGN="RIGHT">6,140,074</b></u></font></td>
  </tr>
  <tr>
    <td WIDTH="340" VALIGN="TOP"><font SIZE="3"><b>Net income</b></font></td>
    <td WIDTH="88" VALIGN="TOP"></td>
    <td WIDTH="3" VALIGN="TOP"></td>
    <td WIDTH="104" VALIGN="TOP"><font SIZE="3"><u><b><p ALIGN="RIGHT">$ 31,358</b></u></font></td>
    <td WIDTH="97" VALIGN="TOP"><font SIZE="3"><u><b><p ALIGN="RIGHT">$ 49,982</b></u></font></td>
  </tr>
  <tr>
    <td WIDTH="340" VALIGN="TOP"><font SIZE="3"><b>Net gain (loss) per common share basic and
    diluted</b></font></td>
    <td WIDTH="88" VALIGN="TOP"></td>
    <td WIDTH="3" VALIGN="TOP"></td>
    <td WIDTH="104" VALIGN="TOP"><font SIZE="3"><b><u><p ALIGN="RIGHT">$ 0.00</u> </b></font></td>
    <td WIDTH="97" VALIGN="TOP"><font SIZE="3"><b><u><p ALIGN="RIGHT">$ 0.00</u> </b></font></td>
  </tr>
</table>
<font SIZE="3"><b>

<p ALIGN="center">&nbsp;</p>
<font FACE="Courier New" SIZE="3">

<p align="center"></font>- 10 -<font FACE="Courier New" SIZE="3"></p>
</font>

<blockquote>
  <p ALIGN="JUSTIFY">(3) Sale of Network Research Corporation &#150; Japan Distribution
  Business (&quot;NRCJ&quot;)</p>
</blockquote>
</b>

<p>Our NRCJ subsidiary is a distributor for products supplied by Net Silicon, Inc. Revenue
from licenses of the suite of Internet and Web products and sales of services accounted
for the major portion of its revenue in the year ended December 31, 2002. In July 2002 Net
Silicon, Inc. ceased producing products used by NRCJ. During the remainder of 2002 the
sales of licenses of the subsidiary decreased to a point where operations became
unprofitable. On January 31, 2003 the Company sold the operating assets and certain
liabilities of the NRCJ distribution business to Network Technology, Inc., a new company
formed by the former employees of NRCJ, for 1.0 million Japanese Yen (US $8,400). NRCJ
will continue to receive royalty income from former NRCJ customers. The Company is
accounting for this transaction as a discontinued operation in 2003.</p>
<b>

<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (4) Change of Accountants</p>

<p></b>The Company has used the services of Merdinger, Fruchter, Rosen &amp; Co.
(&quot;MFRC&quot;) as its independent accountant since 1996. In January 2003 the Company
was informed by MRFC that it was exiting the business of auditing publicly traded
companies. The Company has selected Skeehan and Company as its new auditor effective
February 27, 2003. The Company&#146;s Board of Directors recommended and approved the
change in the Company&#146;s certifying accountants. </p>
<b>

<p ALIGN="JUSTIFY">&nbsp;</p>

<p ALIGN="JUSTIFY">ITEM 2. MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION</p>

<p ALIGN="JUSTIFY">AND RESULTS OF OPERATIONS.</p>

<p ALIGN="JUSTIFY">Cautionary Note Regarding Forward-Looking Statements</p>

<p ALIGN="JUSTIFY"></b>Except for historical information contained herein, the statements
in this report (including without limitation, statements indicating that the Company
&quot;expects,&quot; &quot;estimates,&quot; anticipates,&quot; or &quot;believes&quot; and
all other statements concerning future financial results, product offerings, proposed
acquisitions or combinations or other events that have not yet occurred) are
forward-looking statements that are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995, Section 21E of the Securities Exchange
Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended.</p>

<p ALIGN="JUSTIFY">Forward-looking statements involve known and unknown factors, risks and
uncertainties, which may cause the Company&#146;s actual results in future periods to
differ materially from forecasted results. Those factors, risks and uncertainties include,
but are not limited to; the consummation of possible acquisitions or combinations; and the
Company&#146;s ability to integrate acquired or combined operations with its existing
business and otherwise manage growth; and the Company&#146;s ability to generate or obtain
additional capital resources to fund its operations and growth. </p>

<p ALIGN="JUSTIFY">Additional information on these and other risk factors are included in
the &quot;Factors That May Affect Future Results&quot; section in the Company&#146;s
Annual Report on Form 10-KSB filed with the SEC on March 31, 2003, Readers are cautioned
not to place undue reliance on these forward-looking statements, which reflect
management&#146;s analysis, judgement, belief and expectations only as of the date hereof.
PASW undertakes no obligation to publicly revise these forward-looking statements to
reflect events or circumstances that arise after the date hereof.</p>

<p ALIGN="center">&nbsp;</p>
<b><font FACE="Courier New" SIZE="3">

<p align="center"></font>- 11 -<font FACE="Courier New" SIZE="3"></p>
</font>

<p ALIGN="JUSTIFY">General</p>
</b></font>

<p ALIGN="JUSTIFY"><font SIZE="3">PASW, Inc., formerly Pacific Softworks, Inc.,
incorporated in California in November 1992, has historically developed and licensed
Internet and Web related software and software development tools that enable
communications, based on a set of rules known as protocols. The Company&#146;s products
were embedded into systems and developed or manufactured by others. In August 2000, the
Company sold all of the assets of its Internet and Web operations. Since that time, the
Company&#146;s operations, consisting of sales of software and licenses, have been
conducted principally through an administrative office in Northern California and, until
January 2003, a sales office in Japan. Since January 2003 the Company has maintained an
administrative function in Japan.</p>
</font>

<p ALIGN="JUSTIFY"><font SIZE="3">The Company operates in one business segment. The
Company&#146;s fiscal year ends on December 31</p>
<b>

<p ALIGN="JUSTIFY">Results of Operations </p>
</b>

<p ALIGN="JUSTIFY">The following table sets forth, for the periods indicated, the
percentage relationship to net revenue of certain items in the consolidated statements of
operations and comprehensive income</p>
</font><div align="center"><center>

<table CELLSPACING="0" BORDER="0" CELLPADDING="7" WIDTH="615">
  <tr>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="26"></td>
    <td WIDTH="31%" VALIGN="BOTTOM" COLSPAN="2" HEIGHT="26"><font SIZE="3"><p ALIGN="CENTER">Unaudited</font></td>
    <td WIDTH="30%" VALIGN="BOTTOM" COLSPAN="2" HEIGHT="26"><font SIZE="3"><p ALIGN="CENTER">Unaudited</font></td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="37"></td>
    <td WIDTH="31%" VALIGN="BOTTOM" COLSPAN="2" HEIGHT="37"><font SIZE="3"><p ALIGN="CENTER">For
    the Three Months Ended</p>
    <u><p ALIGN="CENTER">September 30,</u></font></td>
    <td WIDTH="30%" VALIGN="BOTTOM" COLSPAN="2" HEIGHT="37"><font SIZE="3"><p ALIGN="CENTER">For
    the Nine Months Ended</p>
    <u><p ALIGN="CENTER">September 30,</u></font></td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="9"></td>
    <td WIDTH="16%" VALIGN="bottom" HEIGHT="9" align="center"><font SIZE="3"><u><p
    ALIGN="CENTER">2003</u></font></p>
    <p ALIGN="CENTER">&nbsp;</td>
    <td WIDTH="16%" VALIGN="bottom" HEIGHT="9" align="center"><font SIZE="3"><u><p
    ALIGN="CENTER">2002</u></font></p>
    <p ALIGN="CENTER"><u><font SIZE="3">Restated</font></u></td>
    <td WIDTH="16%" VALIGN="bottom" HEIGHT="9" align="center"><font SIZE="3"><u><p
    ALIGN="CENTER">2003</u></font></p>
    <p ALIGN="CENTER">&nbsp;</td>
    <td WIDTH="16%" VALIGN="bottom" HEIGHT="9" align="center"><font SIZE="3"><u><p
    ALIGN="CENTER">2002</u></font></p>
    <p ALIGN="CENTER"><u><font SIZE="3">Restated</font></u></td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="4"><font SIZE="3"><p ALIGN="JUSTIFY">&nbsp;</p>
    <p ALIGN="JUSTIFY">Net revenue</font></td>
    <td WIDTH="16%" VALIGN="bottom" HEIGHT="4" align="center"><font SIZE="3"><p ALIGN="center">100.00%&nbsp;</font></td>
    <td WIDTH="16%" VALIGN="bottom" HEIGHT="4" align="center"><font SIZE="3"><u><p
    ALIGN="JUSTIFY">&nbsp;</p>
    </u><p ALIGN="center">100.00%&nbsp;</font></td>
    <td WIDTH="15%" VALIGN="bottom" HEIGHT="4" align="center"><font SIZE="3"><p ALIGN="center">100.00%&nbsp;</font></td>
    <td WIDTH="15%" VALIGN="bottom" HEIGHT="4" align="center"><font SIZE="3"><p ALIGN="center">100.00%&nbsp;</font></td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="4"><font SIZE="3"><p ALIGN="JUSTIFY">Cost of revenue</font></td>
    <td WIDTH="16%" VALIGN="bottom" HEIGHT="4" align="center"><font SIZE="3"><u><p
    ALIGN="center">0.00</u></font></td>
    <td WIDTH="16%" VALIGN="bottom" HEIGHT="4" align="center"><font SIZE="3"><u><p
    ALIGN="center">0.00</u></font></td>
    <td WIDTH="15%" VALIGN="bottom" HEIGHT="4" align="center"><font SIZE="3"><u><p
    ALIGN="center">0.00</u></font></td>
    <td WIDTH="15%" VALIGN="bottom" HEIGHT="4" align="center"><font SIZE="3"><u><p
    ALIGN="center">0.00</u></font></td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="4"><font SIZE="3"><p ALIGN="JUSTIFY">Gross profit</font></td>
    <td WIDTH="16%" VALIGN="bottom" HEIGHT="4" align="center"><font SIZE="3"><u><p
    ALIGN="center">100.00</u></font></td>
    <td WIDTH="16%" VALIGN="bottom" HEIGHT="4" align="center"><font SIZE="3"><p ALIGN="center"><u>100,00&nbsp;</u></font></td>
    <td WIDTH="15%" VALIGN="bottom" HEIGHT="4" align="center"><font SIZE="3"><u><p
    ALIGN="center">100.00</u></font></td>
    <td WIDTH="15%" VALIGN="bottom" HEIGHT="4" align="center"><font SIZE="3"><p ALIGN="center"><u>100,00&nbsp;</u></font></td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="4"><font SIZE="3"><p ALIGN="JUSTIFY">Selling, general
    and administrative</font></td>
    <td WIDTH="16%" VALIGN="bottom" HEIGHT="4" align="center"><font SIZE="3"><p ALIGN="center">41.84</font></td>
    <td WIDTH="16%" VALIGN="bottom" HEIGHT="4" align="center"><font SIZE="3"><p
    ALIGN="JUSTIFY">&nbsp;</p>
    <p ALIGN="center">43.72</font></td>
    <td WIDTH="15%" VALIGN="bottom" HEIGHT="4" align="center"><font SIZE="3"><p ALIGN="center">67.99</font></td>
    <td WIDTH="15%" VALIGN="bottom" HEIGHT="4" align="center"><font SIZE="3"><p
    ALIGN="JUSTIFY">&nbsp;</p>
    <p ALIGN="center">73.05</font></td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="4"><font SIZE="3"><p ALIGN="JUSTIFY">Research and
    development</font></td>
    <td WIDTH="16%" VALIGN="bottom" HEIGHT="4" align="center"><font SIZE="3"><p ALIGN="center">0.00&nbsp;</font></td>
    <td WIDTH="16%" VALIGN="bottom" HEIGHT="4" align="center"><font SIZE="3"><p ALIGN="center">0.00</font></td>
    <td WIDTH="15%" VALIGN="bottom" HEIGHT="4" align="center"><font SIZE="3"><p ALIGN="center">0.00&nbsp;</font></td>
    <td WIDTH="15%" VALIGN="bottom" HEIGHT="4" align="center"><font SIZE="3"><p ALIGN="center">0.00</font></td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="4"><font SIZE="3"><p ALIGN="JUSTIFY">Depreciation and
    </p>
    <p ALIGN="JUSTIFY">Amortization</font></td>
    <td WIDTH="16%" VALIGN="bottom" HEIGHT="4" align="center"><font SIZE="3"><u><p
    ALIGN="center">0.00</u></font></td>
    <td WIDTH="16%" VALIGN="bottom" HEIGHT="4" align="center"><font SIZE="3"><u><p
    ALIGN="center">7.77&nbsp;</u></font></td>
    <td WIDTH="15%" VALIGN="bottom" HEIGHT="4" align="center"><u><p ALIGN="center">0.00</u></td>
    <td WIDTH="15%" VALIGN="bottom" HEIGHT="4" align="center"><font SIZE="3"><u><p
    ALIGN="center">3.30&nbsp;</u></font></td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="4"><font SIZE="3"><p ALIGN="JUSTIFY">Total expenses</font></td>
    <td WIDTH="16%" VALIGN="bottom" HEIGHT="4" align="center"><font SIZE="3"><u><p
    ALIGN="center">41.84</u></font></td>
    <td WIDTH="16%" VALIGN="bottom" HEIGHT="4" align="center"><font SIZE="3"><p ALIGN="center"><u>51.49&nbsp;</u></font></td>
    <td WIDTH="15%" VALIGN="bottom" HEIGHT="4" align="center"><font SIZE="3"><u><p
    ALIGN="center">67.99</u></font></td>
    <td WIDTH="15%" VALIGN="bottom" HEIGHT="4" align="center"><font SIZE="3"><p ALIGN="center"><u>76.35&nbsp;</u></font></td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="5"><font SIZE="3"><p ALIGN="JUSTIFY">Other income:</p>
    <p ALIGN="JUSTIFY">Gain in sale of fixed assets</font></td>
    <td WIDTH="16%" VALIGN="bottom" HEIGHT="5" align="center"><font SIZE="3"><u><p
    ALIGN="center">0.00</u></font></td>
    <td WIDTH="16%" VALIGN="bottom" HEIGHT="5" align="center"><font SIZE="3"><u>0.00</u></font></td>
    <td WIDTH="15%" VALIGN="bottom" HEIGHT="5" align="center"><font SIZE="3"><u><p
    ALIGN="center">3.07</u></font></td>
    <td WIDTH="15%" VALIGN="bottom" HEIGHT="5" align="center"><font SIZE="3"><u>0.00</u></font></td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="4"><font SIZE="3"><p ALIGN="JUSTIFY">Net gain (loss)
    from continuing </p>
    <p ALIGN="JUSTIFY">Operations</font></td>
    <td WIDTH="16%" VALIGN="bottom" HEIGHT="4" align="center"><font SIZE="3"><p ALIGN="center">58.16</font></td>
    <td WIDTH="16%" VALIGN="bottom" HEIGHT="4" align="center"><font SIZE="3"><p ALIGN="center">48.51</font></td>
    <td WIDTH="15%" VALIGN="bottom" HEIGHT="4" align="center"><font SIZE="3"><p ALIGN="center">35.08</font></td>
    <td WIDTH="15%" VALIGN="bottom" HEIGHT="4" align="center"><font SIZE="3"><p ALIGN="center">23.65</font></td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="5"><font SIZE="3"><p ALIGN="JUSTIFY">Gain (loss) from
    discontinued</p>
    <p ALIGN="JUSTIFY">Operations</font></td>
    <td WIDTH="16%" VALIGN="bottom" HEIGHT="5" align="center"><font SIZE="3"><u><p
    ALIGN="center">0.00&nbsp;</u></font></td>
    <td WIDTH="16%" VALIGN="bottom" HEIGHT="5" align="center"><font SIZE="3"><u>( 41.19)</u></font></td>
    <td WIDTH="15%" VALIGN="bottom" HEIGHT="5" align="center"><font SIZE="3"><u><p
    ALIGN="center">(2.08)&nbsp;</u></font></td>
    <td WIDTH="15%" VALIGN="bottom" HEIGHT="5" align="center"><font SIZE="3"><u><p
    ALIGN="center">(45.82)&nbsp;</u></font></td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="4"><font SIZE="3"><p ALIGN="JUSTIFY">Net income
    (loss)</font></td>
    <td WIDTH="16%" VALIGN="bottom" HEIGHT="4"><font SIZE="3"><u><p ALIGN="center">58.16%</u></font></td>
    <td WIDTH="16%" VALIGN="bottom" HEIGHT="4"><font SIZE="3"><u><p ALIGN="CENTER">7.32%</u></font></td>
    <td WIDTH="15%" VALIGN="bottom" HEIGHT="4"><font SIZE="3"><u><p ALIGN="center">33.00%</u></font></td>
    <td WIDTH="15%" VALIGN="bottom" HEIGHT="4"><font SIZE="3"><u><p ALIGN="center">(22.17)%</u></font></td>
  </tr>
</table>
</center></div><font SIZE="3">

<p ALIGN="center"><b>- 12 -</b></p>

<p ALIGN="JUSTIFY">The following table sets forth, for the periods indicated, the
percentage of net revenue by principal geographic area to total revenue:</p>
</font><div align="center"><center>

<table CELLSPACING="0" BORDER="0" CELLPADDING="7" WIDTH="738">
  <tr>
    <td WIDTH="153" VALIGN="TOP" COLSPAN="2" HEIGHT="9"></td>
    <td WIDTH="11" VALIGN="TOP" HEIGHT="9"></td>
    <td WIDTH="42" VALIGN="TOP" HEIGHT="9"></td>
    <td WIDTH="434" VALIGN="TOP" HEIGHT="9" colspan="4"><p align="center"><font SIZE="3">Unaudited</font></td>
  </tr>
  <tr>
    <td WIDTH="153" VALIGN="TOP" COLSPAN="2" HEIGHT="9"></td>
    <td WIDTH="11" VALIGN="TOP" HEIGHT="9"></td>
    <td WIDTH="42" VALIGN="TOP" HEIGHT="9"></td>
    <td WIDTH="206" VALIGN="TOP" HEIGHT="9" colspan="2"><font SIZE="3"><p ALIGN="CENTER">For
    the Three Months Ended</p>
    <u><p ALIGN="CENTER">September 30,</u></font></td>
    <td WIDTH="228" VALIGN="TOP" HEIGHT="9" colspan="2"><font SIZE="3"><p ALIGN="CENTER">For
    the Nine Months Ended</p>
    <u><p ALIGN="CENTER">September 30,</u></font></td>
  </tr>
  <tr>
    <td WIDTH="153" VALIGN="TOP" COLSPAN="2" HEIGHT="9"></td>
    <td WIDTH="11" VALIGN="TOP" HEIGHT="9"></td>
    <td WIDTH="42" VALIGN="TOP" HEIGHT="9"></td>
    <td WIDTH="117" VALIGN="TOP" HEIGHT="9"><font SIZE="3"><u><p ALIGN="CENTER">2003</u></font></td>
    <td WIDTH="89" VALIGN="TOP" HEIGHT="9"><font SIZE="3"><u><p ALIGN="CENTER">2002</u></font></td>
    <td WIDTH="102" VALIGN="TOP" HEIGHT="9"><font SIZE="3"><u><p ALIGN="CENTER">2003</u></font></td>
    <td WIDTH="126" VALIGN="TOP" HEIGHT="9"><font SIZE="3"><u><p ALIGN="CENTER">2002</u></font></td>
  </tr>
  <tr>
    <td WIDTH="147" VALIGN="TOP" HEIGHT="4"><font SIZE="3"><p ALIGN="JUSTIFY">United States</font></td>
    <td WIDTH="17" VALIGN="TOP" COLSPAN="2" HEIGHT="4"></td>
    <td WIDTH="42" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="117" VALIGN="TOP" HEIGHT="4"><font SIZE="3"><p ALIGN="CENTER">0%</font></td>
    <td WIDTH="89" VALIGN="TOP" HEIGHT="4"><font SIZE="3"><p ALIGN="CENTER">0%</font></td>
    <td WIDTH="102" VALIGN="TOP" HEIGHT="4"><font SIZE="3"><p ALIGN="CENTER">0%</font></td>
    <td WIDTH="126" VALIGN="TOP" HEIGHT="4"><p ALIGN="CENTER">0%</td>
  </tr>
  <tr>
    <td WIDTH="153" VALIGN="TOP" COLSPAN="2" HEIGHT="4"><font SIZE="3"><p ALIGN="JUSTIFY">United
    Kingdom and Europe </font></td>
    <td WIDTH="11" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="42" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="117" VALIGN="TOP" HEIGHT="4"><font SIZE="3"><p ALIGN="CENTER">0%</font></td>
    <td WIDTH="89" VALIGN="TOP" HEIGHT="4"><font SIZE="3"><p ALIGN="CENTER">0%</font></td>
    <td WIDTH="102" VALIGN="TOP" HEIGHT="4"><font SIZE="3"><p ALIGN="CENTER">0%</font></td>
    <td WIDTH="126" VALIGN="TOP" HEIGHT="4"><font SIZE="3"><p ALIGN="CENTER">0%</font></td>
  </tr>
  <tr>
    <td WIDTH="153" VALIGN="TOP" COLSPAN="2" HEIGHT="4"><font SIZE="3"><p ALIGN="JUSTIFY">Japan
    and Asia</font></td>
    <td WIDTH="11" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="42" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="117" VALIGN="TOP" HEIGHT="4"><font SIZE="3"><p ALIGN="CENTER">100%</font></td>
    <td WIDTH="89" VALIGN="TOP" HEIGHT="4"><font SIZE="3"><p ALIGN="CENTER">100%</font></td>
    <td WIDTH="102" VALIGN="TOP" HEIGHT="4"><font SIZE="3"><p ALIGN="CENTER">100%</font></td>
    <td WIDTH="126" VALIGN="TOP" HEIGHT="4"><font SIZE="3"><p ALIGN="CENTER">100%</font></td>
  </tr>
  <tr>
    <td WIDTH="153" VALIGN="TOP" COLSPAN="2" HEIGHT="4"><font SIZE="3"><p ALIGN="JUSTIFY">Other</font></td>
    <td WIDTH="11" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="42" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="117" VALIGN="TOP" HEIGHT="4"><font SIZE="3"><u><p ALIGN="CENTER">0%</u></font></td>
    <td WIDTH="89" VALIGN="TOP" HEIGHT="4"><font SIZE="3"><u><p ALIGN="CENTER">0%</u></font></td>
    <td WIDTH="102" VALIGN="TOP" HEIGHT="4"><font SIZE="3"><u><p ALIGN="CENTER">0%</u></font></td>
    <td WIDTH="126" VALIGN="TOP" HEIGHT="4"><font SIZE="3"><u><p ALIGN="CENTER">0%</u></font></td>
  </tr>
  <tr>
    <td WIDTH="153" VALIGN="TOP" COLSPAN="2" HEIGHT="4"><font SIZE="3"><p ALIGN="JUSTIFY">Total</font></td>
    <td WIDTH="11" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="42" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="117" VALIGN="TOP" HEIGHT="4"><font SIZE="3"><u><p ALIGN="CENTER">100%</u></font></td>
    <td WIDTH="89" VALIGN="TOP" HEIGHT="4"><font SIZE="3"><u><p ALIGN="CENTER">100%</u></font></td>
    <td WIDTH="102" VALIGN="TOP" HEIGHT="4"><font SIZE="3"><u><p ALIGN="CENTER">100%</u></font></td>
    <td WIDTH="126" VALIGN="TOP" HEIGHT="4"><font SIZE="3"><u><p ALIGN="CENTER">100%</u></font></td>
  </tr>
</table>
</center></div><font SIZE="3"><b>

<p ALIGN="JUSTIFY">&nbsp;</p>

<p ALIGN="JUSTIFY">Three months ended September 30, 2003 and 2002.</p>

<p ALIGN="JUSTIFY">Net revenue from continuing operations</p>
</b>

<p ALIGN="JUSTIFY">For the three months ended September 30, 2003 royalty revenues
increased 162% to $53,919 from $20,576 for the three months ended September 30, 2002.
Revenue for the three months ended September 30, 2003 consists exclusively of royalty
revenue since the distribution portion of the business was sold in January 2003.</p>
<b>

<p ALIGN="JUSTIFY">Cost of revenue</p>

<p ALIGN="JUSTIFY"></b>There is no cost associated with receipt of the royalty revenue in
either the three months ended September 30, 2003 or the three months ended September 30,
2002. </p>
<b>

<p ALIGN="JUSTIFY">Selling, general and administrative</p>

<p ALIGN="JUSTIFY"></b>Selling, general and administrative expense was $22,561 for the
three months ended September 30, 2003 compared to $8,995 for the three months ended
September 30, 2002. The amounts in both periods reflect the continuing expenses of a
corporate office, which is associated with seeking a reverse merger or other financial
transaction for the Company and expenses for legal and accounting fees in processing the
royalty receipts in Japan.</p>
<b>

<p ALIGN="JUSTIFY">Depreciation and amortization</p>

<p ALIGN="JUSTIFY"></b>Depreciation and amortization was $0 in the three months ended
September 30, 2003 and $1,600 for the three months ended September 30, 2002 principally
related to fixed assets in our Japanese office which was sold in January 2003.</p>
<b>

<p ALIGN="JUSTIFY">Other income and expenses</p>

<p ALIGN="JUSTIFY"></b>The Company had no other income or expense items in either the
three months ended September 30, 2003 or the three months ended September 30, 2002. </p>

<p ALIGN="center"><strong>- 13 -</strong></p>

<p ALIGN="JUSTIFY">&nbsp;</p>
<b>

<p ALIGN="JUSTIFY">Provision for taxes</p>

<p ALIGN="JUSTIFY"></b>Commencing in 1995 the Company elected to be treated as a
subchapter S corporation. Through 1998 all federal tax liabilities were recognized at the
individual stockholder level. In February 1999 the Company terminated the S election and
became subject to taxation at the corporate level. Had the Company been subject to
taxation as a C corporation in 1998, it would have received a pro forma tax benefit of
$1,099. For the three months ended September 30, 2003 the Company had no income tax
liability. </p>
<b>

<p ALIGN="JUSTIFY">Nine months ended September 30, 2003 and 2002.</p>

<p ALIGN="JUSTIFY">Net revenue from continuing operations</p>
</b>

<p ALIGN="JUSTIFY">For the nine months ended September 30, 2003 royalty revenues increased
56% to $151,477 from $97,044 for the nine months ended September 30, 2002. Revenue for the
nine months ended September 30, 2003 consists exclusively of royalty revenue since the
distribution portion of the business was sold in January 2003 and is being classified as a
discontinued operation.</p>
<b>

<p ALIGN="JUSTIFY">Cost of revenue</p>

<p ALIGN="JUSTIFY"></b>There is no cost associated with receipt of the royalty revenue in
either the nine months ended September 30, 2003 or the nine months ended September 30,
2002. </p>
<b>

<p ALIGN="JUSTIFY">Selling, general and administrative</p>

<p ALIGN="JUSTIFY"></b>Selling, general and administrative expense was $102,915 for the
nine months ended September 30, 2003 compared to $70,896 for the nine months ended
September 30, 2002. The amounts in both periods reflect the continuing expenses of a
corporate office, which is associated with seeking a reverse merger or other financial
transaction for the Company and expenses for legal and accounting fees in processing the
royalty receipts in Japan.</p>
<b>

<p ALIGN="JUSTIFY">Depreciation and amortization</p>

<p ALIGN="JUSTIFY"></b>Depreciation and amortization was $0 in the nine months ended
September 30, 2003 and $3,200 for the nine months ended June 30, 2002 principally related
to fixed assets in our Japanese office which was sold in January 2003.</p>
<b>

<p ALIGN="JUSTIFY">Other income and expenses</p>

<p ALIGN="JUSTIFY"></b>During the nine months ended September 30, 2003 the Company had
$4,627 in other income, net of depreciation of $449, representing the gain on sale of
assets in the closing of the Japanese office. The Company had no activity in the nine
months ended September 30, 2002.</p>
<b>

<p ALIGN="JUSTIFY">Provision for taxes</p>

<p ALIGN="JUSTIFY"></b>Commencing in 1995 the Company elected to be treated as a
subchapter S corporation. Through 1998 all federal tax liabilities were recognized at the
individual stockholder level. In February 1999 the Company terminated the S election and
became subject to taxation at the corporate level. Had the Company been subject to
taxation as a C corporation in 1998, it would have received a pro forma tax benefit of
$1,099. For the nine months ended September 30, 2003 the Company had no income tax
liability. </p>
<b>

<p ALIGN="center">&nbsp;</p>

<p ALIGN="center">- 14 -</p>

<p ALIGN="JUSTIFY">Liquidity and capital resources</p>
</b>

<p ALIGN="JUSTIFY">At September 30, 2003 and December 31, 2002 the Company had working
capital of $51,024 and $(9,191) and cash and cash equivalents of $137,553 and $98,901.</p>

<p ALIGN="JUSTIFY">The Company generated $38,527 in cash flow from operating activities in
the nine months ended September 30, 2003 compared to $(24,070) in the nine months ended
September 30, 2002. The principal reasons for the decrease in use of cash of $62,597 was
the result of an decrease of $38,178 in accounts receivable, a write off of fixed assets
of $3,992, a recovery of a security deposit of 6,116, a decrease of $15,967 in accounts
payable and a decrease of $44,466 primarily associated with the operation of the Japanese
distribution activities which was sold in January 2003 and is classified as a discontinued
operation. Cash generated or used in operating activities principally reflects the gain or
loss from operations and the related changes in working capital components.</p>

<p ALIGN="JUSTIFY">There were no investing or financing activities in either the nine
months ended September 30, 2003. or the nine months ended September 30, 2002. </p>
<b><u>

<p ALIGN="JUSTIFY">Factors That May Affect Future Results</p>
</u>

<p ALIGN="JUSTIFY"></b>This report, including Management&#146;s Discussion and Analysis or
Plan of Operation, contains forward-looking statements and other prospective information
relating to future events. These forward-looking statements and other information are
subject to certain risks and uncertainties that could cause results to differ materially
from historical or anticipated results, including the following:</p>

<p ALIGN="JUSTIFY"><b>We received a Going Concern opinion from our auditors on our
financial statements for the years ended December 31, 2002 and December 31, 2001. Those
statements indicate that we have reported losses for our last two years and if we do not
become profitable our business could be adversely affected.</p>

<p ALIGN="JUSTIFY"></b>We reported losses of $1,306,954 and $37,093 for 2001 and 2002. We
also have an accumulated deficit of $6,402,763 and a stockholders' equity of $1,167 as of
December 31, 2002. We can provide no assurance we will be profitable in the future and if
we do not become profitable our business could be adversely affected.</p>

<p ALIGN="JUSTIFY"><b>We were delisted by the NASDAQ Stock Market on October 9, 2001 and
our stock has been trading on the OTC Bulletin Board Market (OTCBB) since that time.</font><font
FACE="Courier New" SIZE="3"> </p>
</font></b><font SIZE="3">

<p ALIGN="JUSTIFY">The NASDAQ National/Small Cap Market delisted our stock at the opening
of business on October 9, 2001. The securities were removed from NASDAQ and subsequent to
that date the PASW Common Stock traded on the OTC Bulletin Board Market (OTCBB) as were
the Warrants (PASWW) until their expiration on November 30, 2002. While we still have
market makers for our securities there can be no assurance we can continue to rely on our
current market makers and that the price and trading volume of our securities could not be
materially affected.</p>
</font><b><font SIZE="3" COLOR="#ff0000">

<p ALIGN="JUSTIFY"></font><font SIZE="3">Our only operating subsidiary lost its major
supplier of product in July 2002. </p>

<p ALIGN="JUSTIFY"></b>Our NRCJ subsidiary is a distributor for products supplied by
NetSilicon, Inc. Revenue from licenses of the suite of Internet and Web products and sales
of services accounted for substantially all of its revenue in the years ended December 31,
2002 and 2001. In July 2002 Net Silicon, Inc. ceased producing products used by NRCJ.
During the remainder of 2002 the sales of licenses of the subsidiary decreased to a point
where operations became unprofitable. The operations were sold in January 2003. There is
no assurance that the remaining royalty income is sufficient to allow the Company to
continue operations. </p>

<p ALIGN="center"><strong>- 15 -</strong></p>

<p ALIGN="JUSTIFY"><b>We have limited resources available to continue operations unless a
successful transaction is completed with a merger partner or that additional funding can
be obtained from outside sources.</p>
</b>

<p ALIGN="JUSTIFY">At the present time we have limited resources available to continue
operations other than maintaining day-to-day activities without any capabilities for
expansion. The revenue received from royalties of our NRCJ subsidiary is sufficient to
handle only maintenance administrative operations for the Company. While efforts are in
process to seek a merger partner or other means of financing there is no assurance that
any means can be obtained to permit the Company to resume any form of operations which
could expand the business.</p>
<b>

<p ALIGN="JUSTIFY">Because our ownership is concentrated, our officers and directors and
independently our majority stockholder will be able to control all matters requiring
stockholder approval including delaying or preventing a change in our corporate control or
taking other actions of which individual shareholders may disapprove.</p>

<p ALIGN="JUSTIFY"></b>Our officers, directors and independently the majority stockholder
beneficially own approximately 60% of our outstanding common stock. These parties will be
able to exercise control over all matters requiring stockholder approval and other
investors will have minimal influence over the election of directors or other stockholder
actions. As a result, our officers, directors and independently the majority stockholder
could approve or cause the Company to take actions of which you disapprove or that are
contrary to your interests. </p>

<p ALIGN="JUSTIFY"><b>Issuance of our authorized preferred stock could discourage a change
in control, could reduce the market price of our common stock and could result in the
holders of preferred stock being granted voting rights that are superior to those of the
holders of common stock.</p>

<p ALIGN="JUSTIFY"></b>The Company is authorized to issue preferred stock without
obtaining the consent or approval of stockholders. The issuance of preferred stock could
have the effect of delaying, deferring, or preventing a change in control. Management also
has the right to grant superior voting rights to the holders of preferred stock. Any
issuance of preferred stock could materially and adversely affect the market price of the
common stock and the voting rights of the holders of common stock. The issuance of
preferred stock may also result in the loss of the voting control of holders of common
stock to the holders of preferred stock.</p>

<p ALIGN="JUSTIFY"><b>Trading in our common stock may be limited and could negatively
affect the ability to sell your securities.</p>

<p ALIGN="JUSTIFY"></b>A public market for our common stock has existed only since July
29, 1999, the date of our initial public offering. We do not know how liquid the market
for our stock will remain and if the market becomes illiquid, it may negatively affect
your ability to resell your securities. </p>

<p ALIGN="center"><strong>- 16 -</strong></p>

<p><b>ITEM 3. CONTROLS AND PROCEDURES </p>

<p>Evaluation of Disclosure Controls and Procedures</p>
</b>

<p ALIGN="JUSTIFY">Within the 90 days prior to the date of this report, PASW carried out
an evaluation, under the supervision and with the participation of the Company&#146;s
management, including the Company&#146;s Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of the Company&#146;s disclosure
controls and procedures. The Company&#146;s disclosure controls and procedures are
designed to ensure that information required to be disclosed by the Company in its
periodic Securities and Exchange Commission (&quot;SEC&quot;) filings is recorded,
processed and reported within the time periods specified in the SEC&#146;s rules and
forms. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that the Company&#146;s disclosure controls and procedures are effective in
timely alerting them to material information relating to the Company required to be
included in the Company&#146;s periodic SEC filings.</p>

<p ALIGN="JUSTIFY"><strong>Changes in Internal Controls</strong></p>

<p>There were no significant changes in the Company&#146;s internal controls or in other
factors that could significantly affect these controls subsequent to the date of their
evaluation.</p>

<p align="center">&nbsp;</p>

<p ALIGN="center"><strong>- 17 -</strong></p>
<b>

<p>PART II - OTHER INFORMATION</p>

<p ALIGN="JUSTIFY">ITEM 1. LEGAL PROCEEDINGS</p>
</b>

<p ALIGN="JUSTIFY">The Company is not currently involved in any litigation that is
expected to have a material adverse effect on the Company's business or financial
position. There can be no assurance, however, that third parties will not assert
infringement or other claims against the Company in the future which, regardless of the
outcome, could have an adverse impact on the Company as a result of defense costs,
diversion of management resources and other factors. </p>
<b>

<p ALIGN="JUSTIFY">ITEM 2. CHANGES IN SECURITIES.</p>

<p ALIGN="JUSTIFY">Not Applicable.</p>

<p ALIGN="JUSTIFY">ITEM 3. DEFAULTS UPON SENIOR SECURITIES.</p>

<p ALIGN="JUSTIFY">Not Applicable.</p>

<p ALIGN="JUSTIFY">ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.</p>

<p ALIGN="JUSTIFY">Not Applicable</p>

<p>ITEM 5. OTHER INFORMATION.</p>

<p ALIGN="JUSTIFY">Not Applicable.</p>

<p ALIGN="JUSTIFY">ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.</p>

<blockquote>
  <blockquote>
    <p ALIGN="JUSTIFY">Exhibits &#150; </p>
    <p ALIGN="JUSTIFY">99.1 Certification of Chief Executive Officer pursuant to 18
    U.S.C.ss.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.</p>
    <p ALIGN="JUSTIFY">99.2 Certification of Chief Financial Officer pursuant to 18
    U.S.C.ss.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.</p>
    <p ALIGN="JUSTIFY">&nbsp;</p>
  </blockquote>
</blockquote>

<p ALIGN="JUSTIFY">Reports on Form 8-K - None</p>
</b>

<p align="center"><strong>- 18 -</strong></p>
<b>

<p ALIGN="JUSTIFY">&nbsp;</p>

<p ALIGN="CENTER">SIGNATURES</p>
</b>

<p ALIGN="JUSTIFY">Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.</p>
<b>

<p ALIGN="JUSTIFY">Date: October 31, 2003</p>

<p ALIGN="JUSTIFY">PASW, INC.</p>

<p ALIGN="JUSTIFY">&nbsp;</p>

<p ALIGN="JUSTIFY"><u>/s/ WILLIAM E. SLINEY</u></p>

<p ALIGN="JUSTIFY">William E. Sliney</p>

<p ALIGN="JUSTIFY">President and Chief Financial Officer</p>

<p ALIGN="JUSTIFY">(Duly Authorized Officer and Principal</p>

<p ALIGN="JUSTIFY">Financial and Accounting Officer)</p>

<p ALIGN="JUSTIFY">&nbsp;</p>

<p ALIGN="center">&nbsp;</p>

<p align="center"><strong>- 19 -</strong></p>
</font><font FACE="Courier New">

<p ALIGN="JUSTIFY">&nbsp;</p>
</font><font SIZE="3">

<p ALIGN="JUSTIFY">Sarbanes-Oxley Section 302 Certification </p>

<p ALIGN="JUSTIFY">I, Glenn P. Russell, certify that: </p>

<blockquote>
  <p ALIGN="JUSTIFY">I have reviewed this quarterly report on Form 10-QSB of PASW, Inc.; </p>
  <p ALIGN="JUSTIFY">2. Based on my knowledge, this quarterly 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 quarterly report; </p>
  <p ALIGN="JUSTIFY">Based on my knowledge, the financial statements, and other financial
  information included in this quarterly report, fairly present in all material respects the
  financial condition, results of operations and cash flows of the registrant as of, and
  for, the periods presented in this quarterly report; </p>
  <p ALIGN="JUSTIFY">The registrant'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 registrant and we have: a) designed such disclosure
  controls and procedures to ensure that material information relating to the registrant,
  including its consolidated subsidiaries, is made known to us by others within those
  entities, particularly during the period in which this quarterly report is being prepared;
  b) evaluated the effectiveness of the registrant's disclosure controls and procedures as
  of a date within 90 days prior to the filing date of this quarterly report (the
  &quot;Evaluation Date&quot;); and c) presented in this quarterly report our conclusions
  about the effectiveness of the disclosure controls and procedures based on our evaluation
  as of the Evaluation Date;</p>
  <p ALIGN="JUSTIFY">The registrant's other certifying officers and I have disclosed, based
  on our most recent evaluation, to the registrant's auditors and the audit committee of
  registrant's board of directors (or persons performing the equivalent function): a) all
  significant deficiencies in the design or operation of internal controls which could
  adversely affect the registrant's ability to record, process, summarize and report
  financial data and have identified for the registrant'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 registrant's internal controls; and </p>
  <p ALIGN="JUSTIFY">The registrant's other certifying officers and I have indicated in this
  quarterly report whether or not 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. </p>
  <p ALIGN="JUSTIFY">&nbsp;</p>
</blockquote>

<p ALIGN="JUSTIFY">Date: October 31, 2003</p>
</b><u>

<p ALIGN="JUSTIFY">/s/ Glenn P. Russell</u> </p>
<b>

<p ALIGN="JUSTIFY">Glenn P. Russell</p>

<p ALIGN="JUSTIFY">Chief Executive Officer </p>
</b>

<p ALIGN="center">- 20 -</p>
<b>

<p ALIGN="JUSTIFY">Sarbanes-Oxley Section 302 Certification </p>

<p ALIGN="JUSTIFY">I, William E. Sliney, certify that: </p>

<blockquote>
  <p ALIGN="JUSTIFY">I have reviewed this quarterly report on Form 10-QSB of PASW, Inc.; </p>
  <p ALIGN="JUSTIFY">Based on my knowledge, this quarterly 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 quarterly report; </p>
  <p ALIGN="JUSTIFY">Based on my knowledge, the financial statements, and other financial
  information included in this quarterly report, fairly present in all material respects the
  financial condition, results of operations and cash flows of the registrant as of, and
  for, the periods presented in this quarterly report; </p>
  <p ALIGN="JUSTIFY">The registrant'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 registrant and we have: a) designed such disclosure
  controls and procedures to ensure that material information relating to the registrant,
  including its consolidated subsidiaries, is made known to us by others within those
  entities, particularly during the period in which this quarterly report is being prepared;
  b) evaluated the effectiveness of the registrant's disclosure controls and procedures as
  of a date within 90 days prior to the filing date of this quarterly report (the
  &quot;Evaluation Date&quot;); and c) presented in this quarterly report our conclusions
  about the effectiveness of the disclosure controls and procedures based on our evaluation
  as of the Evaluation Date; </p>
  <p ALIGN="JUSTIFY">The registrant's other certifying officers and I have disclosed, based
  on our most recent evaluation, to the registrant's auditors and the audit committee of
  registrant's board of directors (or persons performing the equivalent function): a) all
  significant deficiencies in the design or operation of internal controls which could
  adversely affect the registrant's ability to record, process, summarize and report
  financial data and have identified for the registrant'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 registrant's internal controls; and </p>
  <p ALIGN="JUSTIFY">The registrant's other certifying officers and I have indicated in this
  quarterly report whether or not 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. </p>
</blockquote>

<p ALIGN="JUSTIFY">Date: October 31, 2003</p>
<u>

<p ALIGN="JUSTIFY">/s</u>/ <u>William E. Sliney</p>
</u>

<p ALIGN="JUSTIFY">William E. Sliney </p>

<p ALIGN="JUSTIFY">President and</p>

<p ALIGN="JUSTIFY">Chief Financial Officer </p>
</b></font><font SIZE="2">

<p align="center"></font><font SIZE="3"><strong>- 21 -</strong></font><font SIZE="2"></p>
</font>
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<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>3
<FILENAME>exhibit991q303.htm
<TEXT>
<html>

<head>
<title></title>
</head>

<body>
<font SIZE="2">

<p>Exhibit 99.1</p>

<p>&nbsp;</p>

<p ALIGN="CENTER">CERTIFICATION PURSUANT TO</p>

<p ALIGN="CENTER">18 U.S.C. SECTION 1350,</p>

<p ALIGN="CENTER">AS ADOPTED PURSUANT TO</p>

<p ALIGN="CENTER">SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002</p>

<p>In connection with the Quarterly Report of PASW, Inc. (the &quot;Company&quot;) on Form
10-QSB for the period ended September 30, 2003 as filed with the Securities and Exchange
Commission on the date hereof (the &quot;Report&quot;), I, Glenn P. Russell, Chief
Executive Officer of the Company, certify, solely for the purpose of complying with 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that: </p>

<p>The Report fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and </p>

<p>The information contained in the Report fairly presents, in all material respects, the
financial condition and results of operations of the Company. </p>

<p>&nbsp;</p>
</font><font FACE="Courier New" SIZE="2">

<p></font><font SIZE="2"><u>/s/ Glenn P. Russell</p>
</u></font>
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<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>4
<FILENAME>exhibit992q303.htm
<TEXT>
<html>

<head>
<title></title>
</head>

<body>
<font SIZE="2">

<p>Exhibit 99.2</p>

<p>&nbsp;</p>

<p ALIGN="CENTER">CERTIFICATION PURSUANT TO</p>

<p ALIGN="CENTER">18 U.S.C. SECTION 1350,</p>

<p ALIGN="CENTER">AS ADOPTED PURSUANT TO</p>

<p ALIGN="CENTER">SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002</p>

<p>In connection with the Quarterly Report of PASW, Inc. (the &quot;Company&quot;) on Form
10-QSB for the period ended September 30, 2003 as filed with the Securities and Exchange
Commission on the date hereof (the &quot;Report&quot;), I, William E. Sliney, President
and Chief Financial Officer of the Company, certify, solely for the purpose of complying
with 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, that: </p>

<p>The Report fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and </p>

<p>The information contained in the Report fairly presents, in all material respects, the
financial condition and results of operations of the Company. </p>

<p>&nbsp;</p>
</font><font FACE="Courier New">

<p></font><u>/s/ William E. Sliney</p>
</u>
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