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<SEC-DOCUMENT>0000950144-02-008820.txt : 20020814
<SEC-HEADER>0000950144-02-008820.hdr.sgml : 20020814
<ACCEPTANCE-DATETIME>20020814161118
ACCESSION NUMBER:		0000950144-02-008820
CONFORMED SUBMISSION TYPE:	10QSB
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20020630
FILED AS OF DATE:		20020814

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			CDSI HOLDINGS INC
		CENTRAL INDEX KEY:			0001023994
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374]
		IRS NUMBER:				954463937
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10QSB
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-22563
		FILM NUMBER:		02736676

	BUSINESS ADDRESS:	
		STREET 1:		100 S E SECOND STREET
		CITY:			MIAMI
		STATE:			FL
		ZIP:			33131
		BUSINESS PHONE:		3055798000

	MAIL ADDRESS:	
		STREET 1:		100 S E SECOND STREET
		CITY:			MIAMI
		STATE:			FL
		ZIP:			33131

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	PC411 INC
		DATE OF NAME CHANGE:	19961001
</SEC-HEADER>
<DOCUMENT>
<TYPE>10QSB
<SEQUENCE>1
<FILENAME>g77748e10qsb.txt
<DESCRIPTION>CDSI HOLDINGS INC. FORM 10QSB 06/30/02
<TEXT>
<PAGE>
+===============================================================================



                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB


                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the Quarterly Period Ended June 30, 2002

                        COMMISSION FILE NUMBER 0001-22563

                               CDSI HOLDINGS INC.
        (Exact name of small business issuer as specified in its charter)


                Delaware                                        95-4463937
     (State or Other Jurisdiction of                         (I.R.S. Employer
     Incorporation or Organization)                       Identification Number)


   100 S.E. Second Street, 32nd Floor
                Miami, FL                                          33131
(Address of Principal Executive Offices)                        (Zip Code)


                                 (305) 579-8000
                (Issuer's telephone number, including area code)


     CHECK WHETHER THE ISSUER (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED BY
SECTION 13 OR 15(d) OF THE EXCHANGE ACT 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.
YES [X] NO [ ]

     AS OF AUGUST 14, 2002, THERE WERE OUTSTANDING 3,120,000 SHARES OF THE
ISSUER'S COMMON STOCK, $.01 PAR VALUE.




================================================================================


<PAGE>

                               CDSI HOLDINGS INC.
                         QUARTERLY REPORT ON FORM 10-QSB
                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2002


                                TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION

                                                                            Page
                                                                            ----

  Item 1.    Condensed Consolidated Financial Statements (Unaudited):

             Condensed Consolidated Balance Sheets as of June 30, 2002
                 and December 31, 2001.....................................  2

             Condensed Consolidated Statements of Operations for the
                 three months and six months ended June 30, 2002 and
                 2001......................................................  3

             Condensed Consolidated Statements of Cash Flows for the
                 six months ended June 30, 2002 and 2001...................  4

             Notes to the Condensed Quarterly Consolidated Financial
                 Statements................................................  5

  Item 2.    Management's Discussion and Analysis of Financial
                 Condition and Results of Operations.......................  8


PART  II. OTHER INFORMATION

  Item 6.    Exhibits and Reports on Form 8-K.............................. 12

  SIGNATURE................................................................ 13



<PAGE>
                               CDSI HOLDINGS INC.

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)


<TABLE>
<CAPTION>

                                                                      June 30,           December 31,
                                                                        2002                2001
                                                                    -----------           -----------
<S>                                                                 <C>                   <C>
                                ASSETS:

Current assets:
    Cash and cash equivalents ............................          $   237,939           $   265,685

         Total current assets ............................              237,969               265,685

    Other assets .........................................               18,505                18,505
                                                                    -----------           -----------

         Total assets ....................................          $   256,444           $   284,190
                                                                    ===========           ===========

                 LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
    Accounts payable and accrued expenses ................          $    26,381           $    33,831
                                                                    -----------           -----------

         Total current liabilities .......................               26,381                33,831
                                                                    -----------           -----------

Commitments and contingencies ............................                                         --

Stockholders' equity:
    Preferred stock, $.01 par value. Authorized 5,000,000
       shares; no shares issued and outstanding ..........                   --                    --
    Common stock, $.01 par value. Authorized 25,000,000
       shares; 3,120,000 shares issued and outstanding ...               31,200                31,200
    Additional paid-in capital ...........................            8,209,944             8,209,944
    Accumulated deficit ..................................           (8,011,081)           (7,990,784)
                                                                    -----------           -----------

         Total stockholders' equity ......................              230,063               250,360
                                                                    -----------           -----------

         Total liabilities and stockholders' equity ......          $   256,444           $   284,190
                                                                    ===========           ===========
</TABLE>



      See accompanying Notes to Condensed Consolidated Financial Statements




                                       2
<PAGE>
                               CDSI HOLDINGS INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                   Three Months Ended                      Six Months Ended
                                                            -------------------------------         -------------------------------
                                                              June 30,           June 30,            June 30,            June 30,
                                                               2002                2001                2002                2001
                                                            -----------         -----------         -----------         -----------
<S>                                                         <C>                 <C>                 <C>                 <C>
Revenues ...........................................        $        --         $        --         $        --         $        --

Cost and expenses:
     General and administrative ....................             12,408              16,278              21,328              35,681
                                                            -----------         -----------         -----------         -----------
                                                                 12,408              16,278              21,328              35,681
                                                            -----------         -----------         -----------         -----------

Operating loss .....................................            (12,408)            (16,278)            (21,328)            (35,681)
                                                            -----------         -----------         -----------         -----------

Other income (expense):
     Interest and other income .....................                503               1,933               1,031               5,008
     Payment of note receivable from
       TDMI ........................................                 --             100,000                  --             100,000
                                                            -----------         -----------         -----------         -----------

                                                                    503             101,933               1,031             105,008
                                                            -----------         -----------         -----------         -----------

Net (loss) income ..................................        $   (11,905)        $    85,655         $   (20,297)        $    69,327
                                                            ===========         ===========         ===========         ===========

Net (loss) income per share (basic and diluted) ....        $     (0.00)        $      0.03         $     (0.01)        $      0.02
                                                            ===========         ===========         ===========         ===========

Shares used in computing net (loss) income per share          3,120,000           3,120,000           3,120,000           3,120,000
                                                            ===========         ===========         ===========         ===========

</TABLE>


      See accompanying Notes to Condensed Consolidated Financial Statements



                                       3
<PAGE>

                               CDSI HOLDINGS INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                          Six Months Ended
                                                                    -----------------------------
                                                                     June 30,            June 30,
                                                                       2002                2001
                                                                    ---------           ---------
<S>                                                                 <C>                 <C>
Cash flows from operating activities:
   Net (loss) income .....................................          $ (20,297)          $  69,327
   Adjustments to reconcile net (loss) income to net cash
    Used in operating activities:
     Payment of note receivable from TDMI ................                 --            (100,000)
     Changes in assets and liabilities:
        Accounts payable and accrued expenses ............             (7,449)            (34,801)
                                                                    ---------           ---------

Net cash used in operating activities ....................            (27,746)            (65,474)
                                                                    ---------           ---------

Cash flows used in investing activities:
   Payment of note receivable from TDMI ..................                 --             100,000
                                                                    ---------           ---------

Net cash flows used in investing activities ..............                 --             100,000
                                                                    ---------           ---------

Net cash flows from financing activities .................                 --                  --
                                                                    ---------           ---------

Net (decrease) increase in cash ..........................            (27,746)             34,526
Cash and cash equivalents at beginning of period .........            265,685             253,187
                                                                    ---------           ---------

Cash and cash equivalents at end of period ...............          $ 237,939           $ 287,713
                                                                    =========           =========

</TABLE>








      See accompanying Notes to Condensed Consolidated Financial Statements



                                       4
<PAGE>

                       CDSI HOLDINGS INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)



(1)    BUSINESS AND ORGANIZATION

       CDSI Holdings Inc. (the "Company" or "CDSI") was incorporated in Delaware
       on December 29, 1993. On January 12, 1999, the Company's stockholders
       voted to change the corporate name of the Company from PC411, Inc. to
       CDSI Holdings Inc. Prior to May 8, 1998, the Company's principal business
       was an on-line electronic delivery information service that transmits
       name, address, telephone number and other related information digitally
       to users of personal computers (the "PC411 Service"). On May 8, 1998, the
       Company acquired Controlled Distribution Systems, Inc. ("CDS", formerly
       known as Coinexx Corporation), a company engaged in the marketing and
       leasing of an inventory control system (the "Coinexx Star 10") for
       tobacco products. In February 2000, CDSI announced CDS will no longer
       actively engage in the business of marketing and leasing an inventory
       control system for tobacco products.

       At June 30, 2002, the Company had an accumulated deficit of approximately
       $8.0 million. The Company has reported an operating loss in each of its
       fiscal quarters since inception and it expects to continue to incur
       operating losses in the immediate future. The Company has reduced
       operating expenses and is seeking acquisition and investment
       opportunities. No assurance can be given that the Company will not
       continue to incur operating losses.

       CDSI intends to explore investments in other Internet-related businesses
       as well as other business opportunities. As CDSI has only limited cash
       resources, CDSI's ability to complete any acquisition or investment
       opportunities it may identify will depend on its ability to raise
       additional financing, as to which there can be no assurance.

(2)    PRINCIPLES OF REPORTING

       The financial statements of the Company as of June 30, 2002 presented
       herein have been prepared by the Company and are unaudited. In the
       opinion of management, all adjustments, consisting only of normal
       recurring adjustments, necessary to present fairly the financial position
       as of June 30, 2002 and the results of operations and cash flows for all
       periods presented have been made. Results for the interim periods are not
       necessarily indicative of the results for the entire year.

       These financial statements should be read in conjunction with the audited
       financial statements and notes thereto for the year ended December 31,
       2001 included in the Company's Form 10-KSB filed with the Securities and
       Exchange Commission (Commission File No. 0001-22563).





                                       5
<PAGE>
                       CDSI HOLDINGS INC. AND SUBSIDIARIES

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                                   (Unaudited)



       USE OF ESTIMATES

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

(3)    THINKDIRECTMARKETING TRANSACTION


       On November 5, 1998, the Company contributed the non-cash assets and
       certain liabilities of the PC411 Service to ThinkDirectMarketing, Inc.
       ("TDMI") (formerly known as Digital Asset Management, Inc.). TDMI was
       organized by Dean Eaker, the former President, Chief Executive Officer
       and director of the Company, and Edward Fleiss, the former Vice President
       and Chief Technology Officer of the Company, to continue to operate and
       develop the PC411 Service. The Company received 1,250 shares of preferred
       stock representing an initial 42.5% interest in TDMI in exchange for the
       contribution of the PC411 Service's net assets. Acxiom Corporation
       ("Acxiom") purchased preferred stock representing a 42.5% interest in
       TDMI for $1,250,000 and initially designated a majority of the Board of
       Directors of TDMI. TDMI's management, including Messrs. Eaker and Fleiss,
       held an initial 15% interest in TDMI with options which would have
       increased their ownership position to 50% upon satisfaction of
       operational and financial benchmarks over a three-year period. The
       Company's carrying value in the net assets contributed to TDMI totaled
       $73,438. The Company recorded $462,360 as a capital contribution in
       connection with the transaction, which represented the Company's 42.5%
       interest in the capital raised by TDMI in excess of the carrying value of
       the Company's net assets contributed to TDMI. The Company agreed, under
       certain conditions, to fund up to $200,000 of an $800,000 working capital
       line to be provided to TDMI by Acxiom, the Company and Dean Eaker. The
       Company funded $100,000 of the working capital line in the second quarter
       of 1999. In July 1999, the Company agreed to extend the maturity of its
       working capital line and was released from any further obligation to fund
       additional amounts under the working capital line.

       In October 2000, TDMI and Cater Barnard plc ("Cater Barnard", formerly
       known as VoyagerIT.com) entered into an agreement whereby Cater Barnard
       purchased for $5,000,000 shares of TDMI's convertible preferred stock and
       convertible notes on various dates between November 10, 2000 and June 8,
       2001. On October 16, 2001, Cater Barnard agreed to use its best efforts
       to fund an additional $1,250,000 to TDMI by January 31, 2002 and on the
       same date, the TDMI stockholders granted Cater Barnard an option to
       purchase by January 31, 2002 all of TDMI's common stock not held by Cater
       Barnard for an aggregate purchase price of 78,750 shares of Convertible
       Preferred Stock of IMX Pharmaceuticals, Inc. ("IMXI"). IMXI is a
       majority-owned subsidiary of Cater Barnard to which Cater Barnard had
       transferred its interest in TDMI. The preferred stock is convertible into
       1,575,000 shares of IMXI common stock.

       On January 31, 2002, IMXI acquired all the shares of TDMI it did not
       already own by exercising the option previously granted to Cater Barnard.
       CDSI received 8,250 shares of IMXI Class B Convertible Preferred Stock in
       exchange for its interest in TDMI. Each share of IMXI Class B




                                       6
<PAGE>
                       CDSI HOLDINGS INC. AND SUBSIDIARIES

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                                   (Unaudited)


       Preferred Stock is entitled to receive an annual dividend of $4.00 on
       December 31 of each year. The dividend may be paid at the option of IMXI
       in shares of its Common Stock, which trades on the NASD OTC Electronic
       Bulletin Board under the symbol "IMXI". The shares of IMXI Class B
       Preferred Stock to be received by the Company are convertible into
       165,000 shares of IMXI Common Stock and may be converted on the earlier
       of (i) October 1, 2002 or (ii) the effective date of a registration
       statement under the Securities Act of 1933 for the Common Stock into
       which the Class B Preferred Stock may be converted. Under an Investors'
       Rights Agreement dated January 31, 2002 between IMXI and the former TDMI
       stockholders, if IMXI receives after July 31, 2002 a written request from
       at least 50% of the former TDMI stockholders to register the IMXI Common
       Stock issuable on conversion of the IMXI Class B Preferred Stock, it must
       use its best efforts to file, within 90 days of the receipt of such
       request, a registration statement covering the registration of such
       securities under the Securities Act of 1933. Management estimates that
       CDSI's interest in IMXI is approximately 1% on a fully-diluted basis.

       The Company accounted for its non-controlling interest in TDMI using the
       equity basis of accounting since November 5, 1998. In the second quarter
       of 1999, the carrying value of the Company's investment in TDMI,
       including the $100,000 note receivable, was reduced to zero as the
       cumulative equity in TDMI's losses exceeded the Company's investment in
       TDMI. Since the Company had no intention or commitment to fund future
       TDMI losses, commencing in the second quarter of 1999, the Company
       suspended recognizing its share of the additional losses of TDMI. The
       Company recorded income of $100,000 for the three and six months ended
       June 30, 2001 in connection with the repayment of the $100,000 note
       receivable from TDMI.


(4)    RELATED PARTY TRANSACTIONS

       Certain accounting and related finance functions are performed on behalf
       of the Company by employees of New Valley Corporation, the principal
       stockholder of the Company. Expenses incurred relating to these functions
       are allocated to the Company and paid as incurred to New Valley based on
       management's best estimate of the cost involved. The amounts allocated
       were immaterial for all periods presented herein.

(5)    NET INCOME (LOSS) PER SHARE

       Basic loss per share of common stock is computed by dividing net loss
       applicable to common stockholders by the weighted average shares of
       common stock outstanding during the period (3,120,000 shares). Diluted
       per share results reflect the potential dilution from the exercise or
       conversion of securities into common stock.

       Stock options and warrants (both vested and non-vested) totaling 656,798
       and 2,979,288 shares at June 30, 2002 and 2001, respectively, were
       excluded from the calculation of diluted per share results presented
       because their effect was anti-dilutive. Accordingly, diluted net income
       (loss) per common share is the same as basic net loss per common share.
       On May 13, 2002, a total of 2,322,500 of the stock options and warrants
       expired.



                                       7
<PAGE>
                       CDSI HOLDINGS INC. AND SUBSIDIARIES


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

OVERVIEW


         The Company owns an approximate 1% interest on a fully diluted basis in
IMXI. The Company intends to seek new Internet-related businesses or other
business opportunities. As the Company has only limited cash resources, the
Company's ability to complete any acquisition or investment opportunities it may
identify will depend on its ability to raise additional financing, as to which
there can be no assurance. As of the date of this report, the Company has not
identified any potential acquisition or investment. There can be no assurance
that the Company will successfully identify, complete or integrate any future
acquisition or investment, or that acquisitions or investments, if completed,
will contribute favorably to its operations and future financial condition.

THINKDIRECTMARKETING, INC.

         On November 5, 1998, the Company contributed substantially all the
non-cash assets and certain liabilities related to its on-line electronic
delivery information service to TDMI, and received preferred stock of TDMI. See
Note 3 to the Condensed Consolidated Financial Statements for additional
information concerning the Company's former investment in TDMI.

         The Company's interest in TDMI was accounted for using the equity
method of accounting. Commencing in the second quarter of 1999, the carrying
value of the Company's investment in TDMI was reduced to zero, and the Company
suspended recognizing its share of the additional losses of TDMI. In the second
quarter of 2001, TDMI repaid a $100,000 note receivable due to the Company. As a
result, the Company recorded $100,000 of income associated with the repayment
for the year ended December 31, 2001.

         On January 31, 2002, IMXI acquired all the shares of TDMI it did not
already own by exercising an option previously granted by the remaining TDMI
stockholders. The Company received preferred stock of IMXI in exchange for its
interest in TDMI. The preferred stock is convertible into IMXI common stock
representing an approximate 1% interest in IMXI on a fully diluted basis.





                                       8
<PAGE>

                       CDSI HOLDINGS INC. AND SUBSIDIARIES


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS - (Continued)


RESULTS OF OPERATIONS

         REVENUES

         For the three and six months ended June 30, 2002 and 2001, the Company
did not generate revenues from operations.

         EXPENSES

         Expenses associated with corporate activities were $12,408 and $21,328
for the three and six months ended June 30, 2002, respectively, as compared to
$16,278 and $35,681 for the same periods in the prior year. The expenses were
primarily associated with costs necessary to maintain a public company. The
decrease in expenses is associated with lower audit expenses in 2002 and a
$1,688 refund of prepaid franchise taxes in 2002. The expenses have been reduced
by adjustments of previously established accruals of $1,250 and $2,500 for the
three and six months ended June 30, 2002, respectively, as compared to $5,000
and $10,000 for the same periods in the prior year. These adjustments related to
liabilities established when the Company conducted an on-line electronic
directory service. The Company evaluates accruals on a quarterly basis and
adjusts as appropriate.

         OTHER INCOME (EXPENSE)

         Interest and other income was $503 and $1,031 for the three and six
months ended June 30, 2002, compared to $1,993 and $5,008 for the three and six
months ended June 30, 2001. The difference was primarily due to lower interest
rates in 2002. The Company recorded $100,000 in income in the second quarter of
2001 relating to the repayment of a loan receivable from TDMI. The carrying
value of the loan had been reduced to zero in the second quarter of 1999 when
the Company suspended recognizing its share of the additional losses of TDMI.

LIQUIDITY AND CAPITAL RESOURCES

         At June 30, 2002, the Company had an accumulated deficit of
approximately $8.0 million. The Company has reported an operating loss in each
of its fiscal quarters since inception and it expects to continue to incur
operating losses in the immediate future. The Company has reduced operating
expenses and is seeking acquisition and investment opportunities. No assurance
can be given that the Company will not continue to incur operating losses.

         The Company has limited available cash, limited cash flow, limited
liquid assets and no credit facilities. The Company has not been able to
generate sufficient cash from operations and, as a consequence, financing has
been required to fund ongoing operations. Since completion of the Company's
initial public offering of its common stock (the "IPO") in May 1997, the Company
has primarily financed its operations with the net proceeds of the IPO. The
funds were used to complete




                                       9
<PAGE>
                       CDSI HOLDINGS INC. AND SUBSIDIARIES

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS - (Continued)


the introduction of the PC411 Service over the Internet, to expand marketing,
sales and advertising, to develop or acquire new services or databases, to
acquire CDS and for general corporate purposes.

           In connection with the IPO, the Company issued 2,322,500 Redeemable
Class A Warrants (the "Warrants"), including 1,000,000 of which were held by New
Valley. The Warrants, which entitled the holder to purchase one share of Common
Stock at an initial exercise price of $6.10, expired unexercised on May 13,
2002.

         Cash used for operations for the six months ended June 31, 2002 and
2001 was $27,746 and $65,474, respectively. The decrease is primarily due to a
lower balance in accrued expenses at December 31, 2001 versus December 31, 2000,
which resulted in lower payments of accounts payable and accrued liabilities for
the six months ended June 30, 2002 as compared to the six months ended June 30,
2001. Included in the Company's accrued liabilities as of June 30, 2002 are
$1,250 of accruals related to the Company's former on-line electronic directory
service and $14,725 of liabilities established in the disposal of the Company's
former business of marketing and leasing an inventory control system for tobacco
products. The Company evaluates its accruals on a quarterly basis and makes
adjustments when appropriate.

         The Company does not expect significant capital expenditures during the
year ended December 31, 2002.

         At June 30, 2002, the Company had cash and cash equivalents of
$237,939. The Company does not currently have any commitments for any additional
financing, and there can be no assurance that any such commitments can be
obtained. Any additional equity financing may be dilutive to its existing
stockholders, and debt financing, if available, may involve pledging some or all
of its assets and may contain restrictive covenants with respect to raising
future capital and other financial and operational matters.

         Inflation and changing prices had no material impact on revenues or the
results of operations for the six months ended June 30, 2002 and 2001.

         Management is currently evaluating alternatives to supplement the
Company's present cash and cash equivalents to meet its liquidity requirements
over the next twelve months. Such alternatives include seeking additional
investors and/or lenders and disposing of the interest in IMXI. Although there
can be no assurance, the Company believes that it will be able to continue as a
going concern for the next twelve months.

         The Company or its affiliates, including New Valley, may, from time to
time, based upon present market conditions, purchase shares of the Common Stock
in the open market or in privately negotiated transactions.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

         The Company and its representatives may from time to time make oral or
written "forward-looking statements" within the meaning of the Private
Securities Reform Act of 1995 (the "Reform Act"), including any statements that
may be contained in the foregoing "Management's Discussion and Analysis of
Financial Condition and Results of Operations", in this report and in other




                                       10
<PAGE>
                       CDSI HOLDINGS INC. AND SUBSIDIARIES

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS - (Continued)

filings with the Securities and Exchange Commission and in its reports to
stockholders, which represent the Company's expectations or beliefs with respect
to future events and financial performance. These forward-looking statements are
subject to certain risks and uncertainties and, in connection with the
"safe-harbor" provisions of the Reform Act, the Company has identified under
"Risk Factors" in Item 1 of the Company's Form 10-KSB for the year ended
December 31, 2001 filed with the Securities and Exchange Commission and in this
section important factors that could cause actual results to differ materially
from those contained in any forward-looking statements made by or on behalf of
the Company.

         The Company's plans and objectives are based, in part, on assumptions
involving judgments with respect to, among other things, future economic,
competitive and market conditions and future business decisions, all of which
are difficult or impossible to predict accurately and many of which are beyond
the control of the Company. Although the Company believes that its assumptions
underlying the forward-looking statements are reasonable, any of the assumptions
could prove inaccurate and, therefore, there can be no assurance that the
forward-looking statements included in this report will prove to be accurate. In
light of the significant uncertainties inherent in the forward-looking
statements included herein, particularly in view of the Company's limited
operations, the inclusion of such information should not be regarded as a
representation by the Company or any other person that the objectives and plans
of the Company will be achieved. Readers are cautioned not to place undue
reliance on such forward-looking statements, which speak only as of the date on
which such statements are made. The Company does not undertake to update any
forward-looking statement that may be made from time to time on its behalf.



                                       11
<PAGE>

                       CDSI HOLDINGS INC. AND SUBSIDIARIES


                           PART II. OTHER INFORMATION



Item 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a) EXHIBITS

             99.1   Certification of Chief Executive Officer, Pursuant to 18
                    U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
                    the Sarbanes-Oxley Act of 2002.

             99.2   Certification of Chief Financial Officer, Pursuant to 18
                    U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
                    the Sarbanes-Oxley Act of 2002.

         (b) REPORTS ON FORM 8-K

             None.




                                       12
<PAGE>



                                    SIGNATURE

         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.




                                       CDSI HOLDINGS INC.
                                       (Registrant)



Date: August 14, 2002                  By: /s/ J. BRYANT KIRKLAND III
                                           -------------------------------------
                                           J. Bryant Kirkland III
                                           Vice President, Treasurer
                                           and Chief Financial Officer
                                           (Duly Authorized Officer and
                                             Chief Accounting Officer)




                                       13

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>3
<FILENAME>g77748exv99w1.txt
<DESCRIPTION>CERTIFICATION OF CHIEF EXECUTIVE OFFICER
<TEXT>
<PAGE>
                                                                    EXHIBIT 99.1






              CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO
                 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


         In connection with the Quarterly Report of CDSI Holdings Inc. (the
"Company") on Form 10-Q for the period ended June 30, 2002 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, Richard
J. Lampen, Chief Executive Officer of the Company, certify, pursuant to 18
U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley
Act of 2002, that, to my knowledge:

         1. The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

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











August 14, 2002                        /s/ RICHARD J. LAMPEN
                                       -----------------------------------------
                                       Richard J. Lampen
                                       President and Chief Executive Officer





</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2
<SEQUENCE>4
<FILENAME>g77748exv99w2.txt
<DESCRIPTION>CERTIFICATION OF CHIEF FINANCIAL OFFICER
<TEXT>
<PAGE>
                                                                    EXHIBIT 99.2




              CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO
                 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


         In connection with the Quarterly Report of CDSI Holdings Inc. (the
"Company") on Form 10-Q for the period ended June 30, 2002 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, J.
Bryant Kirkland III, Chief Financial Officer of the Company, certify, pursuant
to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the
Sarbanes-Oxley Act of 2002, that, to my knowledge:

         1. The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

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







August 14, 2002                       /s/ J. BRYANT KIRKLAND III
                                      -----------------------------------------
                                      J. Bryant Kirkland III
                                      Vice President and Chief Financial Officer






</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
