1

                     U.S. Securities and Exchange Commission
                             Washington, D.C. 20594

                                   FORM 10-KSB

(Mark One)

[X]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE ACT OF
     1934
     For the fiscal year ended: DECEMBER 31, 2003

[ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE ACT
     OF 1934
     For the transition period from: _____________ to  ______________


                         Commission file number 0-27145
                                                -------

                           1st Net Technologies, Inc.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


           Colorado                                      33-0756798
-------------------------------             ------------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
  incorporation or organization)


    1869 W. Littleton Boulevard                                          80120
------------------------------------------                            ----------
(Address of principal executive offices)                              (Zip Code)


                    Issuer's telephone number: (303) 738-8994
                                               --------------

Securities registered under Section 12(b) of the Exchange Act: None.

Securities registered under Section 12(g) of the Exchange Act:

                6,395,357 shares of Common Stock, $.001 par value
                -------------------------------------------------
                               Title of each class

Indicate  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 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
                    ----       ----

<PAGE>


Indicate if disclosure of delinquent  filers  pursuant to Item 405 of Regulation
S-B is not  contained in this Form,  and will not be  contained,  to the best of
Registrant's   knowledge,   in  definitive   proxy  or  information   statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB. [ ]

The issuer had no revenue for its most recent fiscal year.

The aggregate market value of the voting stock held by  non-affiliates  on March
31,  2004,  calculated  by taking the last sales price of the  Company's  common
stock  ($.17 as quoted on March 29,  2004) was  $965,066.  The  number of shares
outstanding of the issuer's common equity as of March 29, 2004 was 6,395,357.

Note:  If  determining  whether  a  person  is  an  affiliate  will  involve  an
unreasonable  effort and expense,  the issuer may calculate the aggregate market
value of the common  equity held by  non-affiliates  on the basis of  reasonable
assumptions, if the assumptions are stated.

                   (APPLICABLE ONLY TO CORPORATE REGISTRANTS)

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest  practicable  date.  6,395,357 common shares issued and
outstanding as of March 31, 2004

Transitional Small Business Disclosure Format (check one):  Yes       No  X .
                                                               ----     ----

                                        2
<PAGE>


                               TABLE OF CONTENTS


PART I

  ITEM 1.     Description of Business                                         4
  ITEM 2.     Description of Property                                         7
  ITEM 3.     Legal Proceedings                                               7
  ITEM 4.     Submission of Matters to a Vote of Security Holders             7

PART II

  ITEM 5.     Market for Common Equity, Related Stockholder Matters
                  and Small Business Issuer Purchases of Equity Securities    8
  ITEM 6.     Management's Discussion and Analysis or Plan of Operation       8
  ITEM 7.     Financial Statements                                           11
  ITEM 8.     Changes In and Disagreements With Accountants on
                  Accounting and Financial Disclosure                        11
  ITEM 8A.  Controls and Procedures                                          11

PART III

  ITEM 9.     Directors, Executive Officers, Promoters and Control Persons;
                  Compliance With Section 16(a) of the Exchange Act          12
  ITEM 10.    Executive Compensation                                         13
  ITEM 11.    Security Ownership of Certain Beneficial Owners and
                  Management and Related Stockholder Matters                 14
  ITEM 12.    Certain Relationships and Related Transactions                 14
  ITEM 13.    Exhibits and Reports on Form 8-K                               15
  ITEM 14.    Principal Accountant Fees and Services                         15

SIGNATURES                                                                   16

                                       3
<PAGE>

PART I

ITEM 1. Description of Business

THIS  ANNUAL  REPORT ON FORM 10-KSB  CONTAINS  FORWARD-LOOKING  STATEMENTS  THAT
INVOLVE RISKS AND UNCERTAINTIES. THESE STATEMENTS RELATE TO THE COMPANY'S FUTURE
PLANS,  OBJECTIVES,  EXPECTATIONS  AND INTENTIONS AND MAY BE IDENTIFIED BY WORDS
LIKE "BELIEVE,"  "EXPECT," "MAY," "WILL," "SHOULD," "SEEK," OR "ANTICIPATE," AND
SIMILAR  EXPRESSIONS.  OUR ACTUAL  RESULTS  COULD DIFFER  MATERIALLY  FROM THOSE
ANTICIPATED IN THESE FORWARD-LOOKING  STATEMENTS AS A RESULT OF CERTAIN FACTORS,
INCLUDING  THOSE  SET FORTH IN THIS  BUSINESS  SECTION  AND UNDER  "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" BELOW.

1st Net  Technologies,  Inc. (the  "Company" or "1st Net") had,  prior to August
2001,  primarily been in the Internet  commerce and services  business since its
inception in 1997. In August 2001, the Company's  Board of Directors  decided to
suspend  its  California  operations  and,  subsequently,  moved  the  Company's
headquarters to Colorado, its original state of incorporation.  With the closing
of its  California  operations,  the  Company  currently  maintains  no business
operations,  other than to manage its remaining  assets and  liabilities.  Since
August  2001,  the  Company  has  been a shell  company  in  search  of a merger
candidate. Recent operations have consisted of debt restructuring.

In October 2001, the Company retained the services of a Corporate Reorganization
/ Bankruptcy Specialist in order to determine a course of action that might best
provide  the  Company  with the  opportunity  to remain a going  concern.  As of
December 31, 2003, the Company  continues to have discussions with its unsecured
creditors to determine  their  willingness to negotiate their claims against the
Company.  The  Company  has a limited  amount of  capital  from which to pay its
remaining obligations. If the Company is unable to negotiate favorable and final
terms with its remaining creditors, the Company may have to seek protection from
its  creditors  through a Chapter 11 or  Chapter 7 filing,  at some point in the
future. To date, no definitive decision has been made with regard to this course
of action.

Our  historical  financial  information  contained in this Annual Report on Form
10-KSB is that of 1st Net Technologies, Inc. and its subsidiary corporation, SSP
Management Corp., and is presented on a consolidated basis.

In January 1999, we acquired a 100 percent  interest in SSP Management  Corp., a
Colorado  corporation  ("SSP"),  from a private  company  that is  considered  a
related  party.  SSP was wholly owned by  Entrepreneur  Investments,  LLC ("EI")
whose    sole    shareholder,    James   H.    Watson,    Jr.,    our    current
Chairman/President/CEO, was a member of 1st Net's Board of Directors at the time
of  acquisition.  Through our  acquisition  of that  company,  we built  several
investment-oriented  Internet Web sites and on-line newsletter publications.  In
December 1999, we made a strategic decision to divest ourselves of the SSP types
of clients and services and,  where  applicable,  to sell our  information-based
assets  to  companies  whose  long-term  objective  was to  participate  in that
business.  Accordingly,  we completed the sale of some of our online newsletters
to other unrelated  companies in February and August 2000 and this subsidiary is
no longer active in its former business.

At December 31, 2003, SSP and 1st Net Technologies continue to hold common stock
in the following former clients:

                                        4
<PAGE>


Name of Company         Status            Owner    # of shares owned at 12/31/03
---------------         ------            -----    -----------------------------

a) SureCare, Inc.       Account            SSP              60,000 common
b) Zootech, Inc.        Account            SSP               5,000 common
c) Allwest System       Account          1st Net                33 common
d) Phelps Engineer      Account          1st Net            21,000 common
e) Uniprime Capital     Account          1st Net             2,035 common
f) Zootech, Inc.        Account          1st Net            17,000 common
e) CTG                  Certificate      1st Net         2,120,114 common

All the above,  except  Children's  Technology Group (CTG),  currently trades on
either the NASD's Bulletin Board system or the "Pink Sheets."

CHILDREN'S TECHNOLOGY GROUP

In May 1999, we acquired a  controlling  interest in The  Children's  Technology
Group, Inc. ("CTG") (formerly  Tummybusters,  Inc.), a Nevada  corporation.  The
business  model of CTG is to build a safe and enjoyable  Internet  community for
children on-line. Prior to its acquisition by 1st Net, James H. Watson, Jr., our
Chairman/President/CEO served as a member of the boards of directors of both CTG
and 1st  Net.  Prior  to  December  31,  2000,  the  Company  accounted  for its
investment in  Children's  Technology  Group,  Inc.  ("CTG") in accordance  with
Accounting  Principle  Board  ("APB")  Opinion No. 16.  Under this  method,  the
Company  consolidated  CTG's financial  statements with its own. During the year
ended  December 31, 2000, CTG issued  additional  shares of its common stock and
preferred stock to the public resulting in a change in the Company's  ownership.
Because  of the change in  ownership,  the  Company no longer has a  controlling
interest in CTG.

At January 1, 2001,  the cost basis in the 4,172,614  shares of CTG common stock
was $146,232.  On June 28, 2001, the Company,  CTG and a third party investor in
CTG  entered  into a shares  exchange  and  option  agreement.  Pursuant  to the
agreement,  the Company  returned  250,000  shares of CTG stock in exchange  for
$25,000 in July 2001.  Upon receiving the $25,000 from CTG, the Company  granted
the third party  investor an option to purchase  1,250,000  shares of CTG common
stock owned by 1st Net at $.125 per share.  At December  31,  2001,  the Company
held 3,922,614 shares of CTG common stock valued at $120,731.  Additionally, the
Company agreed to exchange 550,500 shares of its CTG's common stock with 550,500
shares of 1st Net's common stock owned by CTG. The share  exchange was closed in
January 2002.

During February 2002, the third party investor  exercised the option to purchase
1,250,000 of the CTG stock owned by the Company,  and paid the Company  $156,250
($.125/share).  The sale  reduced the number of shares of CTG common stock owned
by the Company to  2,120,114.  The Company  recognized a gain on the sale of the
CTG stock of  $110,497  and  reduced  its cost  basis in the CTG  investment  by
$44,753.

In January 2002, the Company granted the third party investor  another option to
purchase an  additional  1,370,114  shares of its CTG common  stock at $.225 per
share.  This option was not exercised  during its applicable term and expired in
January 2003.

                                        5
<PAGE>

The Company's  investment in CTG dropped to 13 percent at December 31, 2002. Due
to the reduction in the percentage of ownership, the Company's investment in CTG
was been reclassified as marketable securities that are available-for-sale.

SALE OF INTERNET PORTALS

In December 1999, we made a strategic  decision to divest ourselves of the types
of clients serviced by our subsidiary SSP Management and, where applicable, sell
our  information-based  assets to  companies  whose  long-term  objective  is to
participate in the investor information business.

On February  23, 2000,  SSP sold  certain  related  assets to  MarketByte,  LLC.
("MarketByte")  in  exchange  for a note  receivable  totaling  $200,000  and 10
percent  of  any  future  non-cash   consideration  received  by  Marketbyte  in
connection  with the assets,  through  June 2, 2002.  Under this Asset  Purchase
Agreement,  in the event that the consideration received from Marketbyte through
June 2, 2002 does not equal or exceed  $750,000,  Marketbyte will be required to
pay the Company the difference between $750,000 and the consideration previously
paid to the Company in connection  with the original Asset  Purchase  Agreement.
Subsequently,  there have been two  amendments to this  Agreement to date.  They
are:

In October 2000, the Company  agreed to amend its Agreement  with  MarketByte to
read,  "Upon  expiration of the contract  period of this  Agreement,  and should
Seller (Company) not have received the total sum of Six Hundred Thousand Dollars
($600,000) in cash and market value securities received or excess thereof, Buyer
(MarketByte)  shall  agree to  renegotiate  in  order to make up the  difference
between those amounts  received by Seller and Six Hundred  Thousand  Dollars and
such shall become due and owing immediately upon such date and the conclusion of
the  aforementioned  negotiation." In  consideration  for agreeing to reduce the
total value of the agreement by $150,000, the Company received from Buyer 50,000
shares of marketable securities, which were valued at $3.00 per share.

In December 2001,  the Company again agreed to amend the  MarketByte  Agreement.
This amendment states that "By mutual agreement Buyer and Seller do hereby agree
to extend the payment  period of such  non-cash  consideration  as  follows:  a)
MarketByte  shall continue to pay 10 percent of any/all  non-cash  consideration
(i.e.  securities)  it receives  during its normal course of business until such
time as the full amount owed has been received by Seller, with no specified time
limit,"  and,  "the  parties  also  agree that as of the  executed  date of this
Supplement  the total  amount of  non-cash  consideration  due to the  Seller is
$370,886.25,  which is figured by subtracting  the amounts already paid by Buyer
to date...minus the original amount owed of $400,000."

At December 31, 2003,  MarketByte  owed the Company $10,000 in cash and $317,655
in  other  non-cash  consideration.  Due  to  the  uncertainty  related  to  the
collection of the "other consideration", no receivable has been recorded and any
collections are recorded as income when received.

In August 2000, our two remaining  newsletter  publications and their respective
databases  were sold to a different  unaffiliated  party,  Millennium  Financial
Publishing, LLC. (MFP) for an aggregate of $115,000 in cash and promissory notes
for the remainder of the $1.5 million  aggregate  purchase price.  Subsequent to
the close of those agreements, MFP made payments to the Company totaling $50,000
before  becoming in default on those  Agreements.  During the second  quarter of
2001,  the Company filed suit against MFP in District  Court,  Arapahoe  County,
Colorado  for breach of contract and failure to pay under the  promissory  notes
executed by the companies. On or about February 28, 2002, the Company decided to
settle its suit with MFP in  consideration  of them paying us $2,500 in cash and
$5,000  in  marketable  securities,  as well as  returning  to the  Company  the
non-exclusive  rights to the  databases  and the  exclusive  rights to the other
properties  sold.  MFP has not  chosen  not to honor  the  stipulations  of this
settlement as of December 31, 2003.

                                        6
<PAGE>


EMPLOYEES

As  of  December  31,  2003,  the  Company  had  no  employees  other  than  our
President/CEO Mr. Watson.  Mr. Watson currently receives no compensation for his
services,  other than  reimbursements  for  expenses  incurred  on behalf of the
Company.

ITEM 2. Description of Property

The  Company  maintains  its  executive  offices  at  1869 W.  Littleton  Blvd.,
Littleton,  Colorado  80120.  The Company paid $1,000 and $4,800 in rent for its
office space during the years ended December 31, 2003 and 2002.

Our  property and  equipment  as of December  31, 2003  consists of certain idle
equipment at an estimated fair value of $2,000.

The Company defaulted on its capital lease obligations  during 2001 and returned
all of the equipment under capital leases to the lessors in August 2001.  During
the year ended December 31, 2003, the Company  determined that one lease was the
obligation  o f an  affiliate  and not 1st Net  Technologies.  As a result,  the
Company  wrote-off the $99,456 lease  obligation  during the year ended December
31, 2003. The Company remains liable for the remaining lease  obligations  which
totaled $49,039 at December 31, 2003.

The Company moved out of its leased office space in August 2001 and left certain
equipment  and furniture as  compensation  to the lessor.  The  remaining  lease
commitment  under the defaulted  operating  lease totaled  $106,400 as of August
2001. The Company estimated a remaining lease liability of approximately $45,000
as of December  31,  2002,  after  subtracting  the fair value of the  abandoned
equipment.  Do to a change in  ownership  of the  building  where the office was
located  and the  lack of  contact  with the  landlord  since  2001,  management
believes the  probability  of collection  actions on the office lease is remote.
Therefore,  the Company  wrote-off the $45,000 lease obligation  during the year
ended December 31, 2003.

ITEM 3. Legal Proceedings

As  described  toward the end of Item 1 above,  we decided to settle our pending
litigation  against  Millennium  Financial  Publishing,  LLC ("MFP") in February
2002. MFP has so far chosen not to honor the stipulations of this settlement and
thus no  compensation  has been  received  by the  Company  as a result  of this
action.  The  Company  has  chosen,  at this time,  not to expend the  resources
necessary to pursue this action, although we may pursue this suit in the future.

The Company was a party to the following lawsuits during 2003:

     1) During  2001,  a suit was filed by L.A.  Commercial  Group,  Inc. in the
amount of $2,666.  A default  judgment  was  awarded  against  the Company in LA
County, CA district court in 2002.

                                        7
<PAGE>


     3) In October,  2002, the Company entered into a  representation  agreement
with the Law Office of Roy R. Withers,  of San Diego,  California,  to represent
the Company in a civil  action  against  Mitchell & Shea,  attorneys at law, for
misuse of name and related damages.  This action stems from the dismissal of the
Company pursuant to a 2002 lawsuit, whereby the Company is seeking to recoup the
fees and expenses it had to expend to defend itself in that suit. The Company is
also asking the Court for  punitive  damages  related to this case.  The case is
still pending as of March 31, 2004.

ITEM 4. Submission of Matters to a Vote of Security Holders

We did not submit any  matters to a vote of security  holders  during the fourth
quarter of the year ended December 31, 2003.


                                    PART II

ITEM 5. Market for Common Equity, Related Shareholder Matters and Small business
        Issuer Purchases of Equity Securities

Our common  stock  trades on the NASD's  Bulletin  Board system under the symbol
"FNTT."  Although  an active  trading  market for our Common  Stock has at times
existed  in the  past,  currently  our  shares  are  only  sporadically  traded.
Consequently, no meaningful market information is currently available.

To date, we have paid no dividends and do not anticipate  paying dividends until
we receive revenues in an amount which management determines to be sufficient.

The number of record  holders of the  Company's  $.001 par value Common Stock at
December 31, 2003, was approximately 1,500.

We did not issue or sell any shares of stock during the year ended  December 31,
2003.

ITEM 6.  Management's Discussion and Analysis or Plan of Operation

This  discussion may contain  forward-looking  statements that involve risks and
uncertainties.  Our  actual  results  may  differ  materially  from the  results
discussed in such  forward-looking  statements.  Factors that might cause such a
difference  include,  but are not  limited  to,  those  discussed  in "Risks and
Uncertainties" below. We undertake no obligation to release publicly the results
of any  revisions  to these  forward-looking  statements  to  reflect  events or
circumstances arising after the date hereof.

OVERVIEW

Prior to August 2001,  the Company had primarily  been in the Internet  commerce
and services  business  since its inception in 1997.  During 2001, the Company's
Board  of  Directors   decided  to  suspend  its  California   operations   and,
subsequently,  moved  the  Company's  headquarters  to  Colorado,  its  state of
incorporation.  With the  closing  of its  California  operations,  the  Company
maintains no current  business  operations,  other than to manage its  remaining
assets and liabilities.  The Company maintains one subsidiary  corporation;  SSP
Management  Corp. Our historical  financial  information  contained in this Form
10-KSB is that of 1st Net Technologies, Inc. and SSP on a consolidated basis.

                                        8
<PAGE>


RESULTS OF  OPERATIONS  FOR THE YEARS ENDED  DECEMBER  31, 2003 AND DECEMBER 31,
2002.

During the year ended  December  31,  2003,  the Company  recognized  net income
totaling  $442,127 as  compared  to net income of $32,123  during the year ended
December  31,  2002.  The net  income  recognized  in 2003  was  related  to the
following changes in revenues and expenses:

Operating expenses

Operating  expenses  totaling $15,839 in 2003 decreased  $69,200 or 81.4 percent
from $85,039 in 2002. The decrease in operating  expenses is due to the cut-back
of  corporate  activities  and a related  reduction  in  professional  fees from
$68,063 in 2002 to $13,274 in 2003.

Other Income and Expense

December 31, 2003
During the year ended  December  31, 2003,  other income  includes a gain on the
sale of assets of $45,380,  gains on the write-down of payables,  accruals,  and
lease  obligations  of  $253,928,  and a gain on the  write-down  of the accrued
liabilities  reserve  totaling  $158,668.  There were no amounts  recognized for
these types of gains during the year ended  December 31, 2002.  The $45,380 gain
on sale of assets is  related to  collections  of "other  consideration"  on the
MarketByte  receivable,  which  is  recorded  as a gain  when  consideration  is
received.

The  majority of the gain  related to (1) the  reduction of payroll tax accruals
owed to the Internal Revenue Service from $93,791 to $40,000,  for a net gain of
$53,791,  (2) the $99,456 gain  recognized on the  write-down of a capital lease
obligation,  and (3) the $45,000 gain  recognized on the write-down of an office
lease obligation.

The Company  established  a  liabilities  allowance  at December 31, 2000 in the
amount  of  $350,000  due to its  plan  to  terminate  operations.  The  Company
recognized  liabilities  totaling  $191,332  during the years ended December 31,
2003,  2002 and 2001,  which reduced the allowance to $158,668.  At December 31,
2003,  management  determined  that the  Company  was no longer  subject to such
liabilities,  that all corporate  liabilities were known to the Company, and the
liabilities  allowance  was no  longer  applicable.  As a  result,  the  Company
wrote-off the $158,668 liabilities allowance.

December 31, 2002
During the year ended December 31, 2002,  other income  included gains from sale
of marketable securities and investments totaling $117,562.  The gains from sale
of marketable securities were largely due to the sale of 1,250,000 shares of CTG
stock for  $156,250 in  February  2002.  The  Company  incurred a $4,000 loss on
impairment of its idle assets during 2002.


LIQUIDITY AND CAPITAL RESOURCES

To date,  we have been funded  through sale of equity  securities  received from
services, advances and loans from related parties, sale of SSP's operations, and
proceeds from equity offerings. At December 31, 2002, the Company had cash and a
net working  capital  deficit of $9,077 and $186,137,  respectively.  Our future
source of capital will come from the remaining note  receivable from prior sales
of SSP's operations and disposal of equity securities held by the Company.

                                        9
<PAGE>


As of December  31,  2003,  we had total  assets of $21,782,  including  current
assets of  $19,282,  investments  of $500 and $2,000 in idle  equipment.  We had
total  liabilities  (all current) of $205,419 as of December 31, 2003. We had an
accumulated  deficit of $6,204,456  and a  shareholders'  deficit of $183,637 at
December 31, 2003.

As of December  31,  2002,  we had total  assets of $70,216,  including  current
assets of  $67,716,  investments  of $500 and $2,000 in idle  equipment.  We had
total  liabilities  (all  current) of $673,594 as of December 31, 2002. We had a
retained loss of $6,646,583 and a shareholders'  deficit of $603,378 at December
31, 2002.

Net cash used in operations  was $50,674 in 2003  consisting the $442,127 of net
income  offset by the gain on sale of assets of $45,380,  the gain on write-down
of  liabilities  of  $412,596,  and the  increase  in payables  and  accruals of
$34,825.  Cash provided by investing  activities was $80,380 in 2003 all related
to proceeds from SSP's MarketByte receivable.  Cash used in financing activities
was $20,754 in 2003 all related to the repayment of promissory notes.

Net cash used in  operations  was  $112,772  in 2002  primarily  due to the gain
realized  on the  sale  of  investments  totaling  $117,562.  Cash  provided  by
investing  activities was $163,315 in 2002 all related to proceeds from the sale
of  investments.  Cash used in  financing  activities  was  $55,000  in 2002 all
related to the repayment of promissory notes.

On a  forward-looking  basis,  1st Net and its 100 percent owned  subsidiary SSP
maintain  only  minimal  holdings of  marketable  securities.  It is  impossible
however to ascertain the actual amounts that will be eventually  realized by the
Company when these  securities  are sold.  Management  is not sure that proceeds
from the sale of  investments  held in addition to cash  payments to be received
from the transactions  described above,  will be sufficient to make up projected
shortfalls from the results of its operations through the next twelve months.

Prior to August 2001, the majority of our capital resources was expended:  1) on
salaries  and  benefits  to our  employees,  2) to  service  our debt  burden to
vendors, and 3) to our professional  consultants.  Since September 2001, we have
eliminated our employee burden completely. Today, our greatest needs for capital
are to pay fees to our outside consultants,  primarily legal and accounting, and
to continue trying to service and restructure our debt burden with past vendors.

Our main  source  of  capital  is our Asset  Purchase  and Loan  Agreement  with
MarketByte,  LLC. Entered into during the first quarter of 2000, SSP concluded a
sale of its  newsletter  OTCjournal.com  for a $200,000 note  receivable  and 10
percent of the gross non-cash compensation the buyer realizes from the operation
of  OTCjournal.com.  To date, there is approximately,  $327,655  remaining to be
paid to SSP from that contract,  including  $10,000 due on a note receivable and
$317,655  in  future  other  considerations.  There  can  be no  assurance  that
MarketByte  can and will continue to honor its financial  commitment  under this
Agreement.

On July 11, 2001, the Company issued an option (Option #1) to purchase 1,250,000
common  shares of its holdings in Children's  Technology  Group to DOC Partners,
LLC (DOC) of Golden,  Colorado.  The option carried a strike price of $0.125 per
share. On February 11, 2002, DOC exercised that option by issuing a check in the
amount of $156,250 to the Company.  On January 11, 2002,  the Company  agreed to
issue a second and final option  (Option #2) to DOC for 1,370,114  common shares
at an exercise  price of $0.225 per share.  This  option  expired on January 11,
2003.  At December  31,  2003,  the Company  holds  2,120,114  common  shares in
Children's Technology Group.

                                       10
<PAGE>


RISKS AND UNCERTAINTIES

The risks and uncertainties  described below are those that we currently deem to
be material and that we believe are specific to our Company.  If any of these or
other  risks  actually  occurs,  the  trading  price of our Common  Stock  could
decline.  We have a history of losses  and  absent  the gains on the  MarketByte
agreement,  the settlement of liabilities  and the write-off of the  liabilities
reserve;  we would have suffered a net loss in 2003. Also, because we expect our
operating losses to continue into the future, we may never be profitable. We had
an  accumulated  deficit of  $6,344,042  at December 31,  2003.  We incurred net
income of $302,541  and $32,123 for the years ended  December 31, 2003 and 2002,
respectively,  due to the previously described non-operating gains. While we are
unable to predict accurately our future operating expenses,  we currently expect
our  operating  expenses  to remain low,  year-to-year,  as we attempt to find a
business  combination  that  would  be a  suitable  fit  for  the  Company  on a
go-forward  basis. If we fail to find a suitable  business to acquire or combine
with, we will not succeed.

We are much less likely to succeed than a business with an established operating
history.  You should  consider an investment in our stock in light of the risks,
uncertainties and difficulties  frequently  encountered by early-stage companies
in new markets such as ours. We may not be able to  successfully  address any or
all of these  risks.  Failure  to  adequately  do so could  cause our  business,
results of operations and financial  condition to suffer.  Our future  financial
performance also will depend, in part, on our ability to diversify our offerings
by successfully  developing,  introducing and gaining customer acceptance of new
products. We cannot assure you, however, that we will be successful in achieving
market acceptance of any new products that we develop or acquire. Any failure or
delay in diversifying our existing offerings could harm our business, results of
operations and financial condition.

We face  increasing  competition  from  better-established  companies  that have
significantly  greater resources.  Many of our current and potential competitors
could enjoy substantial competitive advantages, such as:

     *    Greater  corporate name recognition and larger  marketing  budgets and
          resources;

     *    Established  marketing  relationships  and  access to larger  customer
          bases; and

     *    Substantially greater financial, technical and other resources.

In order to be  successful  we will need to seek out,  identify,  and  negotiate
certain  favorable  terms with an  existing  business  entity or  concept  whose
operations  may be a good  fit  for  the  Company.  However,  problems  commonly
associated with such a transaction  may eventually  cause us to fail. Our future
success will depend in part upon the ability of our  management  to  effectively
negotiate  such a  transaction.  Such a  transaction  may require us to hire and
train additional  personnel to manage the expanded operations.  In addition,  we
will  be  required  to  continue  to  improve  our  operational,  financial  and
management  controls and our  reporting  systems and  procedures.  If we fail to
successfully  manage these  processes,  we may be unable to proceed forward as a
going concern.  If we acquire any companies or technologies in the future,  they
could prove  difficult to integrate,  disrupt our business,  dilute  shareholder
value and adversely affect operating results. We may acquire or make investments
in  complementary  companies,  services  and  technologies  in the future.  As a
result, if we fail to properly evaluate and execute acquisitions or investments,
our business and prospects will be seriously harmed.

If we have to go to court and litigate for any reason, it will be time consuming
and expensive. Therefore, the threat of creditor lawsuits could adversely affect
the Company's ability as a going concern.

                                       11
<PAGE>


In the future, we may seek to license additional  technology or content in order
to enhance our current  features or to introduce new  services.  There can be no
assurance  that any such licenses will be available on  commercially  reasonable
terms,  if at all.  The loss of or  inability to obtain or maintain any of these
technology licenses could result in delays in introduction of new services until
equivalent  technology,  if available,  is identified,  licensed and integrated,
which  could  have a  material  adverse  effect  on  our  business,  results  of
operations and financial condition.

We are not sure of the scope or the  impact on us of all of the laws,  rules and
regulations that are likely to affect our business in the future.

The securities industry in the United States is subject to extensive  regulation
under both federal and state laws.  In  addition,  the  Securities  and Exchange
Commission (the  "Commission"),  the NASD,  various stock  exchanges,  and other
regulatory  bodies,  such  as  state  securities  commissions,   require  strict
compliance  with  their  rules and  regulations.  As a matter of public  policy,
regulatory  bodies are charged with safeguarding the integrity of the securities
and other  financial  markets and with  protecting  the  interests  of customers
participating  in those  markets.  Our failure to comply with any of these laws,
rules  or  regulations  could  result  in  censure,  fine,  or the  issuance  of
cease-and-desist  orders,  any of which could have a material  adverse effect on
our business, financial condition and operating results.

ITEM 7. Financial Statements

The Financial Statements are included on Pages F-1 through F-13.


ITEM 8.  Changes  In  and  Disagreements  With  Accountants  on  Accounting  and
         Financial Disclosure

There  have  been no  disagreements  between  the  Company  and its  independent
accountants  on any matter of  accounting  principles  or practices or financial
statement disclosure.

ITEM 8A. Controls and Procedures

(a)  Evaluation  of  disclosure  controls  and  procedures.
     ------------------------------------------------------
     Our Chief Executive Officer and Principal  Accounting Officer has evaluated
     the  effectiveness of our disclosure  controls and procedures (as such term
     is defined in Rules 13a-15 and 15d-15 under the Securities  Exchange Act of
     1934, as amended (the "Exchange  Act")) as of the end of the period covered
     by this annual report (the "Evaluation Date").  Based upon such evaluation,
     the officer has concluded  that, as of the Evaluation  Date, our disclosure
     controls and  procedures are effective in alerting him on a timely basis to
     material  information  relating to our Company  (including our consolidated
     subsidiary) required to be included in our reports filed or submitted under
     the Exchange Act.

(b)  Changes in internal controls over Financial Reporting.
     ------------------------------------------------------
     During the most recent  fiscal  year,  there have not been any  significant
     changes in our  internal  controls  over  financial  reporting  or in other
     factors that could have materially  affected,  or are reasonably  likely to
     materially affect, our internal controls over financial reporting.

                                       12
<PAGE>


PART III

ITEM 9.  Directors, Executive Officers, Promoters and Control Persons;
         Compliance with Section 16(a) of the Exchange Act

     The Directors and Officers of the Company are as follows:

   Name                        Age       Positions and Offices Held
   ----                        ---       --------------------------

  James H. Watson, Jr.          41       President, Chairman, Chief Executive
                                         Officer, Chief Financial Officer
                                         and Director

  Daniel Nye                    43       Director

There is no family relationship between any Director or Executive Officer of the
Company.

The Company presently has no committees.

Set forth below are the names of all  Directors  and  Executive  Officers of the
Company,  all  positions  and offices with the Company held by each such person,
the period  during which he has served as such,  and the business  experience of
such persons during at least the last five years:

James H. Watson, Jr., 41, has served as our President since December 2000 and as
our Chief  Executive  Officer and Chairman of our Board of Directors  since June
30, 1999.  He has been a member of our Board since 1997.  Mr.  Watson  currently
devotes  40-50% of his time to our  business.  Mr. Watson is the Founder and the
General  Managing  Member  of  Entrepreneur  Investments,  LLC  (EI),  a private
financial consulting and investment firm that specializes in the unique needs of
development  stage  companies.  Started in 1996, EI has worked hand in hand with
both public and private  companies,  assisting them with such critical issues as
corporate  capitalization,   mergers/acquisitions,   management  placement,  and
business  strategy.  From  1995 to 1996,  he was a Founder  and Chief  Operating
Member of N8 Concepts, LLC, a private company that specialized in sports-related
trademark  licensing  and event  management.  Mr.  Watson  has served on various
Boards in recent years including Probook, Inc., Nicklebys.com,  Inc., Children's
Technology Group, Inc., and Mariah  Communications.  At present, Mr. Watson does
not sit on any  other  Boards.  Mr.  Watson  graduated  from the  University  of
Tennessee  /  Chattanooga   in  1985  with  a  Bachelors   degree  in  Political
Science/Public Administration.

Daniel  Nye,  43,  has been the  President  of NYCON  Resources  Inc.  since its
inception in 1992. NYCON is a private  corporation  involved in natural resource
exploration and investment,  real estate investment, and securities speculation.
Mr. Nye is responsible for identifying and structuring investment  opportunities
and  strategic  planning  for NYCON.  Mr. Nye  received a BS degree in Aerospace
Technology from Indiana State University.

SECTION 16(A) BENEFICIAL REPORTING COMPLIANCE

Section  16(a) of the  Securities  Exchange Act of 1934  requires the  Company's
directors  and  executive  officers,  and  persons  who own  more  than 10% of a
registered class of the Company's equity  securities to file with the Securities
and Exchange  Commission  initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company.  Officers,
directors and greater than 10%  shareholders  are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file.

                                       13
<PAGE>


To the  Company's  knowledge,  based  solely on its review of the copies of such
reports  furnished  to the  Company and  written  representations  that no other
reports were required during the year ended December 31, 2003, all Section 16(a)
filing requirements  applicable to its officers,  directors and greater than 10%
beneficial owners were complied with.

ITEM 10.  Executive Compensation

BOARD OF DIRECTOR MEETINGS AND COMMITTEES

The Board of Directors held no meetings during the year ended December 31, 2003.

COMPENSATION SUMMARY

The following  table sets forth the  annualized  base salary that we paid to our
Chief Executive Officer. Mr. James H. Watson became our CEO on June 29, 1999 and
has not received any cash compensation since accepting the position. None of our
other  executives  or directors  has  received  compensation.  We reimburse  our
officers and directors for any reasonable out-of-pocket expenses incurred on our
behalf.

         Name and                        Salary                         Other
    Principal Position      Year      Compensation       Bonus      Compensation
    ------------------      ----      ------------       -----      ------------

James H. Watson, Jr.        2003         $ --           $ --              $ --
President, CEO              2002         $ --           $ --              $ --


As of December 31, 2003, we had no group life, health, hospitalization,  medical
reimbursement or relocation plans in effect. Further, we had no pension plans or
plans or agreements,  which provide  compensation on the event of termination of
employment or change in control of the Company.

We do not pay  members  of our Board of  Directors  any fees for  attendance  or
similar  remuneration or reimburse them for any out-of-pocket  expenses incurred
by them in connection with our business.

COMPENSATION OF DIRECTORS

There was no compensation paid to any directors of 1st Net.

EMPLOYMENT AGREEMENTS

Currently, no employment agreements exist with any officer or employee.

LONG-TERM INCENTIVE PLAN

None.

                                       14
<PAGE>


ITEM 11.  Security Ownership of Certain Beneficial Owners and Management
          and Related Stockholder Matters

BENEFICIAL OWNERS

The following table sets forth information regarding the beneficial ownership of
the shares of the Common Stock (the only class of shares outstanding) of 1st Net
on  December  31,  2003 (at which date there were  6,395,357  shares  issued and
outstanding), by each person known by us to be the beneficial owner of more than
five  percent of the  outstanding  shares of our Common Stock and by each person
known by us to be a director or nominee or executive officer owning a beneficial
interest in our equity securities.

Name and Address of             Amount of        Percent of
Beneficial Owner(a)           Class (Shares)       Class          Title of Class
   -------------------       --------------      ---------        --------------

Entrepreneur Investments,
LLC (a)(b)                      118,500             1.85%          Common Stock

APJW, Inc. (a)(b)               600,000             9.38%          Common Stock

All Officers and Directors
as a Group (One Person)         718,500            11.23%          Common Stock

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

(a) All entities or persons  listed have sole voting and  investment  power with
respect  to their  shares of Common  Stock,  except to the extent  authority  is
shared by spouses under applicable law.

(b) James H. Watson is the managing  member of Entrepreneur  Investments,  LLC.,
and also the President and sole shareholder of APJW, Inc.

CHANGES IN CONTROL

The  Company  knows of no  arrangement,  including  the  pledge by anyone of any
securities of the Company, that may result in a change in control.

ITEM 12.  Certain Relationships and Related Transactions

The Company  borrowed funds from JW Holdings  Corporation  ("JW  Holdings"),  an
affiliate under common control, for working capital during 2001. At December 31,
2001,  the Company was indebted to the  affiliate in the amount of $75,078.  The
Company  borrowed  $27,882  and $-0- from the  affiliate  and made  payments  of
$48,636  and  $30,000  in 2003  and  2002,  respectively.  Borrowings  from  the
affiliate  are  non-interest  bearing  unless so  stated  at the time  funds are
advanced. The Company owed the affiliate $24,324 at December 31, 2003.

                                       15
<PAGE>

In September 2000, Daniel Nye, a Director, personally loaned the Company $50,000
in exchange for a  promissory  note.  The note  carried an interest  rate of ten
percent  (10%)  annually with a one (1) year term.  In September  2001,  Mr. Nye
agreed to extend the note for six (6)  additional  months.  On June 7, 2001,  we
paid  interest  accrued on this loan totaling  $2,500.  On February 12, 2002, we
paid the  entire  principal  due of  $50,000  and Mr.  Nye  agreed  to waive all
remaining,  accrued interest. Mr. Nye was not an affiliate of the Company at the
time the loan was granted.

Item 13.  Exhibits and Reports on Form 8-K

        Reports on Form 8-K:

           None.

        Exhibits:

        1st Net Technologies, Inc. includes herewith the following exhibits:

        31.1  Certification of Chief Executive Officer and Principal  Accounting
              Officer pursuant to Rule 13a-14(a), as adopted pursuant to Section
              302 of the Sarbanes-Oxley Act of 2002.

        32.1  Certification of Chief Executive Officer and Principal  Accounting
              Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
              Section 906 of the Sarbanes-Oxley Act of 2002.

Item 14. Principal Accountant Fees and Services

1.   Audit and Audit-Related Fees

During the year ended  December 31, 2003,  the  Company's  principal  accountant
billed  $6,700 in fees that were directly  associated  with the  preparation  of
annual audit reports and quarterly review reports.

During the year ended  December 31, 2002,  the  Company's  principal  accountant
billed  $7,794 in fees that were directly  associated  with the  preparation  of
annual audit reports and quarterly review reports.

2.   Tax Fees

During the year ended  December 31, 2003,  the  Company's  principal  accountant
billed $-0- in fees that were directly  associated  with the  preparation of tax
filings.

During the year ended  December 31, 2002,  the  Company's  principal  accountant
billed  $300 in fees that  were  directly  associated  with the  preparation  of
filings.

3.   All Other Fees

The Company's principal  accountant did not bill any other fees during the years
ended December 31, 2003 and 2002.

                                       16
<PAGE>

Audit Committee's Pre-Approval Policies and Procedures

Due to the fact that 1st Net  Technologies  has only one active  officer and two
directors, the Company does not have an audit committee at this time.

Percentage of Hours Expended

All  hours  expended  on the  principal  accountant's  engagement  to audit  the
registrant's   financial  statements  for  the  most  recent  fiscal  year  were
attributable  to work  performed by persons that are the principal  accountant's
full-time, permanent employees.


SIGNATURES

In  accordance  with Section 13 or 15(d) of the  Exchange,  the  Registrant  has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                               1st Net Technologies, Inc.
                               --------------------------




Dated:  April 12, 2004         By: /s/ James H. Watson, Jr.
        --------------             ---------------------------------------------
                                   James H. Watson, Jr., Chief Executive Officer
                                   Officer and Principal Accounting Officer of
                                   the Registrant




Pursuant to the  requirements of the Security  Exchange Act of 1934, as amended,
this Report has been signed by the following  persons in the  capacities  and on
the dates indicated.


Dated:  April 12, 2004         By: /s/ James H. Watson, Jr.
        --------------             ---------------------------------------------
                                   James H. Watson, Jr., Chief Executive Officer
                                   Officer and Principal Accounting Officer of
                                   the Registrant


                                       17

<PAGE>


                                                                          Page
                                                                          ----

Report of Independent Auditors...........................................  F-2

Consolidated Balance Sheet at December 31, 2003..........................  F-3

Consolidated Statements of Operations for the years ended
     December 31, 2003 and 2002..........................................  F-4

Consolidated Statement of Changes in Shareholders' Deficit
     for the years ended December 31, 2003 and 2002......................  F-5

Consolidated Statements of Cash Flows for the years ended
     December 31, 2003 and 2002..........................................  F-6

Notes to Consolidated Financial Statements...............................  F-7

                                       F-1
<PAGE>

To the Board of Directors and Shareholders:
1st Net Technologies, Inc.

                         REPORT OF INDEPENDENT AUDITORS

We  have  audited  the  accompanying  consolidated  balance  sheet  of  1st  Net
Technologies,  Inc. (a Colorado corporation) and Subsidiary,  as of December 31,
2003  and  the  related  consolidated  statements  of  operations,   changes  in
shareholders'  deficit and cash flows for the years ended  December 31, 2003 and
2002. These  consolidated  financial  statements are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
consolidated financial statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly,  in  all  material   respects,   the  financial   position  of  1st  Net
Technologies,  Inc., as of December 31, 2003 and the results of their operations
and  their  cash  flows  for the  years  ended  December  31,  2003  and 2002 in
conformity with accounting principles generally accepted in the United States of
America.

The accompanying  consolidated  financial statements have been prepared assuming
the  Company  will  continue  as a  going  concern.  As  shown  in Note 2 to the
consolidated  financial  statements,  the Company has  incurred net losses since
inception  and has a net capital  deficit at December 31, 2003.  These and other
factors  discussed in Note 2 to the  consolidated  financial  statements raise a
substantial  doubt  about the  ability  of the  Company to  continue  as a going
concern.  Management's  plans in regard to those  matters are also  described in
Note 2. The Company's ability to achieve its plans with regard to those matters,
which may be necessary to permit the  realization of assets and  satisfaction of
liabilities in the ordinary course of business,  is uncertain.  The consolidated
financial  statements do not include any adjustments  that might result from the
outcome of this uncertainty.



/s/ Cordovano and Honeck, P.C.
------------------------------
Cordovano and Honeck, P.C.
Denver, Colorado
March 26, 2004

                                       F-2
<PAGE>


                           1ST NET TECHNOLOGIES, INC.
                           Consolidated Balance Sheet
                                December 31, 2003



                                     Assets
Current assets:
    Cash .......................................................   $     9,077
    Marketable securities (Note 5) .............................           205
    Note receivable (Note 4) ...................................        10,000
                                                                   -----------
                  Total current assets .........................        19,282

Investment, at cost (Note 6) ...................................           500
Idle equipment, at cost, net of accumulated
    depreciation of $9,599 (Note 7) ............................         2,000
                                                                   -----------

                                                                   $    21,782
                                                                   ===========

                      Liabilities and Shareholders' Deficit
Current liabilities:
    Accounts payable and accrued liabilities ...................   $    92,056
    Indebtedness to related parties (Note 3) ...................        24,324
    Capital lease obligations (Note 8) .........................        49,039
    Accrued payroll and payroll taxes ..........................        40,000
                                                                   -----------
                  Total current liabilities ....................       205,419
                                                                   -----------

Shareholders' deficit (Note 9):
    Preferred stock, $.001 par value; 10,000,000 shares
       authorized, -0- shares issued and outstanding ...........          --
    Common stock, $.001 par value; 40,000,000 shares authorized,
       6,395,357 shares issued and outstanding .................         6,395
    Additional paid-in capital .................................     6,093,485
    Accumulated deficit ........................................    (6,204,456)
    Accumulated other comprehensive income:
       Unrealized holding loss on marketable securities ........       (79,061)
                                                                   -----------

                  Total shareholders' deficit ..................      (183,637)
                                                                   -----------

                                                                   $    21,782
                                                                   ===========

           See accompanying notes to consolidated financial statements

                                       F-3
<PAGE>

                           1ST NET TECHNOLOGIES, INC.
                      Consolidated Statements of Operations

                                                      For the Years Ended
                                                         December 31,
                                                  --------------------------
                                                     2003           2002
                                                  -----------    -----------
Costs and expenses:
    General and administrative expenses .......   $    15,839    $    85,039
                                                  -----------    -----------

                   Loss from operations .......       (15,839)       (85,039)

Other income (expense):
    Realized gain/(loss) on sale of investments          --          117,562
    Interest expense ..........................           (10)          --
    Gain on sale of assets ....................        45,380           --
    Gain on debt restructure (Note 12) ........       412,596           --
    Impairment of idle assets (Note 7) ........          --           (4,000)
    Other income ..............................          --            3,600
                                                  -----------    -----------

                   Income before income taxes .       442,127         32,123

Provision for income taxes (Note 10) ..........          --             --
                                                  -----------    -----------

                   Net income .................   $   442,127    $    32,123
                                                  ===========    ===========

Basic and diluted income per share ............   $      0.07    $      0.00
                                                  ===========    ===========

Weighted average common shares outstanding ....     6,395,357      6,479,511
                                                  ===========    ===========

           See accompanying notes to consolidated financial statements

                                       F-4
<PAGE>

<TABLE>
                           1ST NET TECHNOLOGIES, INC.
                            Consolidated Statement of
                        Changes in Shareholders' Deficit

                             Table Split - See Below
<CAPTION>

                                          Preferred Stock           Common Stock           Common
                                        --------------------   -----------------------      Stock
                                         Shares    Par Value     Shares      Par Value    Warrants
                                         ------    ---------   ---------    ----------    ---------

<S>                                      <C>       <C>         <C>          <C>           <C>
Balance at January 1, 2002 ...........     --      $    --     6,945,857    $    6,946    $ 177,022

Shares reacquired in exchange for
    552,500 shares of CTG (Note 6) ...     --           --      (550,500)         (551)        --
Common stock warrants expired (Note 9)     --           --          --            --       (177,022)
Comprehensive loss:
    Unrealized loss on investments
      held for sale ..................     --           --          --            --           --
    Net income .......................     --           --          --            --           --

              Total comprehensive loss
                                         ------    ---------   ---------    ----------    ---------

Balance at December 31, 2002 .........     --           --     6,395,357         6,395         --

Comprehensive loss:
    Unrealized loss on investments
      held for sale ..................     --           --          --            --           --
    Net income .......................     --           --          --            --           --
              Total comprehensive loss
                                         ------    ---------   ---------    ----------    ---------

Balance at December 31, 2003 .........     --      $    --     6,395,357    $    6,395    $    --
                                         ======    =========   =========    ==========    =========
</TABLE>

                             Table Split - See Below


<TABLE>
                           1ST NET TECHNOLOGIES, INC.
                            Consolidated Statement of
                        Changes in Shareholders' Deficit

                             Table Split - See Above
<CAPTION>
                                                                               Other
                                                                            Comprehensive
                                                                               Income
                                                                             -----------
                                                Additional                    Unrealized
                                                  Paid-in     Accumulated     Holding
                                                 Capital        Deficit          Loss           Total
                                                -----------   -----------    -----------    -----------

<S>                                             <C>           <C>            <C>            <C>
Balance at January 1, 2002 ...........          $ 5,915,912   $(6,678,706)   $      --      $  (578,826)

Shares reacquired in exchange for
    552,500 shares of CTG (Note 6) ...                  551          --             --             --
Common stock warrants expired (Note 9)              177,022          --             --             --
Comprehensive loss:
    Unrealized loss on investments
      held for sale ..................                 --            --          (56,675)       (56,675)
    Net income .......................                 --          32,123           --           32,123

              Total comprehensive loss                                                          (24,552)
                                                -----------   -----------    -----------    -----------

Balance at December 31, 2002 .........            6,093,485    (6,646,583)       (56,675)      (603,378)

Comprehensive loss:
    Unrealized loss on investments
      held for sale ..................                 --            --          (22,386)       (22,386)
    Net income .......................                 --         442,127           --          442,127
              Total comprehensive loss                                                          419,741
                                                -----------   -----------    -----------    -----------

Balance at December 31, 2003 .........          $ 6,093,485   $(6,204,456)   $   (79,061)   $  (183,637)
                                                ===========   ===========    ===========    ===========
</TABLE>

                             Table Split - See Above

           See accompanying notes to consolidated financial statements

                                       F-5
<PAGE>

                           1ST NET TECHNOLOGIES, INC.
                      Consolidated Statements of Cash Flows

                                                         For the Years Ended
                                                            December 31,
                                                        ----------------------
                                                          2003         2002
                                                        ---------    ---------
Cash flows from operating activities:
    Net income (loss) ...............................   $ 442,127    $  32,123
    Adjustments to reconcile net income (loss) to
       net cash used by operating activities:
          Gain on sale of assets ....................     (45,380)        --
          Asset impairment ..........................        --          4,000
          Realized gain on sale of investments ......        --       (117,562)
          Gain on debt restructure (Note 12) ........    (412,596)        --
          Changes in current assets and liabilities:
             Accounts receivable ....................        --          2,060
             Accounts payable and accrued liabilities     (34,825)     (33,393)
                                                        ---------    ---------
                     Net cash used in
                         operating activities .......     (50,674)    (112,772)
                                                        ---------    ---------

Cash flows from investing activities:
    Proceeds from receipt of note receivable ........      80,380         --
    Proceeds from sale of marketable securities, net         --        163,315
                                                        ---------    ---------
                     Net cash provided by
                         investing activities .......      80,380      163,315
                                                        ---------    ---------

Cash flows from financing activities:
    Repayment of notes payable ......................        --        (55,000)
    Proceeds from related party loans (Note 2) ......      27,882         --
    Repayment of related party loans (Note 2) .......     (48,636)        --
                                                        ---------    ---------
                     Net cash used in
                         financing activities .......     (20,754)     (55,000)
                                                        ---------    ---------

                         Net change in cash .........       8,952       (4,457)

Cash, beginning of period ...........................         125        4,582
                                                        ---------    ---------

Cash, end of period .................................   $   9,077    $     125
                                                        =========    =========

Supplemental disclosure of cash flow information:
   Cash paid for:
       Interest .....................................   $    --      $    --
                                                        =========    =========
       Income taxes .................................   $    --      $    --
                                                        =========    =========


           See accompanying notes to consolidated financial statements

                                       F-6
<PAGE>

                           1ST NET TECHNOLOGIES, INC.
                   Notes to Consolidated Financial Statements

1.   Organization

1st Net  Technologies,  Inc.  (the  "Company" or "1st Net") was primarily in the
Internet  commerce  and  services  business  from its  inception in 1997 through
August  2001.  The  Company  conducted  its  business   operations  through  SSP
Management Corp.  ("SSP"),  its wholly owned  subsidiary.  SSP provided Internet
public  relations and Internet  newsletters  and sold  substantially  all of its
operations in 2000. At December 31, 2003, SSP remains  wholly-owned  by 1st Net.
The  Company  ceased  operations  and moved  its  headquarters  from San  Diego,
California to Denver,  Colorado in August 2001.  Since August 2001,  the Company
has been a shell company in search of a merger candidate. Recent operations have
consisted of debt restructuring.

2.   Significant accounting policies

Going concern

The Company's  financial  statements  have been prepared under the assumption it
will continue as a going  concern.  Realization  of the Company's  assets in the
accompanying  financial  statements is dependent upon the continued operation of
the Company. In order to continue operations,  the Company must raise additional
funds by  incurring  new debt,  raising  new  equity or  liquidating  investment
securities.  There is no assurance  the Company will be  successful in acquiring
the working  capital  necessary to continue as a going  concern.  The Company is
operating through the forbearance of its creditors.

Principles of consolidation

The consolidated  financial  statements  include the accounts of the Company and
SSP. All significant intercompany accounts and transactions have been eliminated
in consolidation.  The accompanying financial statements have been prepared on a
consolidated  basis as if common control was  established as of the inception of
SSP.

Estimates and assumptions

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

Cash and cash equivalents

The Company  considers  all highly  liquid debt  instruments  purchased  with an
original  maturity of three months or less to be cash  equivalents.  The Company
had no cash equivalents at December 31, 2003.

Investments

Marketable  securities  are  stated at market  value as  determined  by the most
recently  traded price of the security at the balance sheet date.  The Company's
marketable securities have been classified as  available-for-sale  securities in
accordance with Statement of Financial  Accounting  Standards  ("SFAS") No. 115,
Accounting for Certain Investments in Debt and Equity Securities. The unrealized
gains and losses on  available-for-sale  securities  are  reported as a separate
component of shareholders' equity, using the specific identification method.

                                       F-7
<PAGE>

                           1ST NET TECHNOLOGIES, INC.
                   Notes to Consolidated Financial Statements


Idle equipment

At December  31,  2003,  the  Company's  idle  equipment  consisted  of computer
equipment. The net book value of this equipment totals $2,000. In the opinion of
management, the net book value of the idle equipment is not in excess of the net
realizable value.

Impairment and disposal of long-lived assets

The Company  evaluates  the carrying  value of its  long-lived  assets under the
provisions  of SFAS No.  144,  Accounting  for the  Impairment  or  Disposal  of
Long-Lived Assets.  Statement No. 144 requires  impairment losses to be recorded
on long-lived  assets used in  operations  when  indicators  of  impairment  are
present and the  undiscounted  future cash flows  estimated  to be  generated by
those  assets are less than the  assets'  carrying  amount.  If such  assets are
impaired, the impairment to be recognized is measured by the amount by which the
carrying amount of the assets exceeds the fair value of the assets. Assets to be
disposed of are reported at the lower of the carrying value or fair value,  less
costs to sell.

Fair value of financial instruments

The Company  estimates  the fair value of its  monetary  assets and  liabilities
based  upon  existing  interest  rates  related to such  assets and  liabilities
compared to current rates of interest for instruments  with a similar nature and
degree of risk. The Company  estimates that the carrying  values of its monetary
assets and liabilities approximate their fair values as of December 31, 2003 due
to the short-term maturity of those instruments.

Comprehensive income

SFAS No. 130, Reporting  Comprehensive  Income,  requires that all components of
comprehensive  income,  including  net  income,  be  reported  in the  financial
statements in the period in which they are recognized.  Comprehensive  income is
defined  as the change in equity  during a period  from  transactions  and other
events and  circumstances  from non-owner  sources.  Net income (loss) and other
comprehensive income,  including unrealized gains and losses on investments held
for sale,  shall be  reported  net of their  related  tax  effect,  to arrive at
comprehensive income (loss).

Earnings per share

Earnings  per share is computed in  accordance  with SFAS No. 128,  Earnings Per
Share and SEC Staff Accounting Bulletin (or SAB) No. 98. Under the provisions of
SFAS No. 128,  basic earnings per share is computed by dividing the net loss for
the period by the weighted  average number of common shares  outstanding  during
the period.  Diluted earnings per share is computed by dividing the net loss for
the period by the weighted average number of common and common equivalent shares
outstanding during the period. Under the provisions of SAB No. 98, common shares
issued for nominal  consideration are included in the per share  calculations as
if they were outstanding for all periods presented.

Potentially  dilutive securities include options and warrants that were excluded
from basic and diluted earnings per share because of their anti-dilutive effect.
Anti-dilutive securities outstanding totaled 625,000 and 625,000 at December 31,
2003 and 2002, respectively.

                                       F-8
<PAGE>

                           1ST NET TECHNOLOGIES, INC.
                   Notes to Consolidated Financial Statements


Stock-based compensation

The Company has elected to follow  Accounting  Principles  Board Opinion No. 25,
Accounting for Stock Issued to Employees ("APB 25"), and related interpretations
in accounting for its employee stock options because the alternative  fair value
accounting   provided  for  under  SFAS  No.  123,  Accounting  for  Stock-Based
Compensation,  requires  the  use of  option  valuation  models  that  were  not
developed  for use in valuing  employee  stock  options.  Under APB 25, when the
exercise  price of the  Company's  employee  stock  options is not less than the
deemed fair value for the underlying stock on the date of grant, no compensation
expense is  recognized.  At the time stock  options were  granted,  the exercise
price  was at a price  not less  than the fair  value of the  underlying  common
stock.

3.   Related party transactions

The Company borrowed funds for working capital from an affiliate during 2001. At
December  31, 2001,  the Company was indebted to the  affiliate in the amount of
$75,078.  The  Company  borrowed  $27,882 and $-0- from the  affiliate  and made
payments of $48,636 and $30,000 in 2003 and 2002, respectively.  Borrowings from
the affiliate are  non-interest  bearing  unless so stated at the time funds are
advanced. The Company owed the affiliate $24,324 at December 31, 2003.

At December 31, 2001, the Company was indebted to two related  parties  pursuant
to  promissory  notes  totaling  $50,000 and $5,000,  respectively.  The Company
repaid both notes during 2002.

4.   Notes Receivable

On February 23, 2000, SSP sold an Internet  newsletter  published by the Company
along with certain  related assets to Marketbyte,  L.L.C.  ("Marketbyte")  for a
$200,000  promissory  note and  $550,000 in other  future  consideration.  Other
future  consideration  consists of 10% of any future  consideration  received by
Marketbyte  in  connection  with the  newsletter  through June 2, 2002.  SSP and
Marketbyte  amended  the sale  agreement  in October  2000 and again in December
2001.  The amended  terms reduced  other future  consideration  from $550,000 to
$400,000   and   cancelled   the  June  2,  2002  due  date  for  other   future
considerations.  Marketbyte  has paid  $190,000  towards the note and $82,345 in
other consideration through December 31, 2003. At December 31, 2003, the balance
on the promissory note of $10,000 is included in the  accompanying  consolidated
financial statements as "Note receivable". Due to the uncertainty related to the
collection of the "other consideration", no receivable has been recorded and any
collections are recorded as income when received.

5.   Marketable securities

Marketable  securities  are  stated at their  fair  value and  consisted  of the
following at December 31, 2003:

                                          Unrealized     Unrealized   Fair
            2003                 Cost       Gain           Loss       Value
----------------------------------------------------------------------------
Equity Securities.............  $ 22,591     $ --      $ (22,386)     $ 205


                                          Unrealized     Unrealized   Fair
            2002                 Cost       Gain           Loss       Value
------------------------------------------------------------------------------
Equity Securities.............  $ 79,266     $688.00   $ (57,363)     $22,591


The Company  received net proceeds  from sale of equity  securities  held in the
amount  of $-0- and  $163,315  and  realized  a gain in the  amount  of $-0- and
$117,562,  in 2003 and 2002  respectively.  The Company recorded net accumulated
comprehensive  losses on  available-for-sale  securities  totaling  $22,386  and
$56,675 during the years ended December 31, 2003 and 2002, respectively.

                                       F-9
<PAGE>

                           1ST NET TECHNOLOGIES, INC.
                   Notes to Consolidated Financial Statements


6.   Investments

CTG common stock

At January 1, 2001,  the cost basis in the 4,172,614  shares of CTG common stock
was $146,232.  On June 28, 2001, the Company,  CTG and a third party investor in
CTG  entered  into a shares  exchange  and  option  agreement.  Pursuant  to the
agreement,  the Company  returned  250,000  shares of CTG stock in exchange  for
$25,000 in July 2001.  Upon receiving the $25,000 from CTG, the Company  granted
the third party  investor an option to purchase  1,250,000  shares of CTG common
stock owned by 1st Net at $.125 per share.  At December  31,  2001,  the Company
held 3,922,614 shares of CTG common stock valued at $120,731.  Additionally, the
Company agreed to exchange 550,500 shares of its CTG's common stock with 550,500
shares of 1st Net's common stock owned by CTG. The share  exchange was closed in
January 2002.

During February 2002, the third party investor  exercised the option to purchase
1,250,000 of the CTG stock owned by the Company,  and paid the Company  $156,250
($.125/share).  The sale  reduced the number of shares of CTG common stock owned
by the Company to  2,120,114.  The Company  recognized a gain on the sale of the
CTG stock of  $110,497  and  reduced  its cost  basis in the CTG  investment  by
$44,753.

The  Company's  investment  in CTG  dropped to 13 percent  during the year ended
December 31, 2002.  Due to the reduction in the  percentage  of  ownership,  the
Company's  investment in CTG was reclassified as marketable  securities that are
available-for-sale  and the investment was written down to market value.  During
the years ended  December  31, 2003 and 2002,  the Company  recorded  unrealized
losses on the CTG investment totaling $21,201 and $23,552, respectively.

Other investments

During the year ended December 31, 2002, the Company sold another  investment to
a third party investor for $7,065. The Company recognized a gain on the sale for
$7,065 as the investment had previously been written off by the Company.

The Company  holds one other equity  investment in a private  company  valued at
cost,  after an allowance for permanent  decline in value, in the amount of $500
at December 31, 2003.

7.   Idle equipment

In August 2001,  the Company  returned all property  under capital leases to the
financial  institutions and gave most of its remaining property and equipment to
a third party vendor for an unpaid office lease obligation. The Company retained
certain equipment and its associated software,  which has been idle since August
2001. The Company expects to dispose the remaining  equipment in its foreseeable
future.  The Company recorded an asset impairment  charge totaling $4,000 during
the year ended  December  31, 2002.  The idle  equipment  has an  estimated  net
realizable value of $2,000 at December 31, 2003.

                                      F-10
<PAGE>

                           1ST NET TECHNOLOGIES, INC.
                   Notes to Consolidated Financial Statements


Idle equipment consists of the following at December 31, 2003:

      Computer equipment..............................   $ 11,599
      Less accumulated depreciation ..................     (9,599)
                                                         ---------
                                                          $ 2,000
                                                         =========


There was no depreciation  expense  recorded during the years ended December 31,
2003 and 2002.

8.   Lease obligations

The Company defaulted on its capital lease obligations  during 2001 and returned
all of the equipment under capital leases to the lessors in August 2001.  During
the year ended December 31, 2003, the Company  determined that one lease was the
obligation  o f an  affiliate  and not 1st Net  Technologies.  As a result,  the
Company  wrote-off the $99,456 lease  obligation  during the year ended December
31,  2003 (see Note 12).  The Company  remains  liable for the  remaining  lease
obligations which totaled $49,039 at December 31, 2003.

The Company relocated in August 2001 and left certain equipment and furniture as
compensation to the lessor.  The remaining lease  commitment under the defaulted
operating  lease  totaled  $106,400 as of August 2001.  The Company  estimated a
remaining  lease  liability  of  approximately  $45,000 as of December 31, 2002,
after subtracting the fair value of the abandoned  equipment.  Do to a change in
ownership  of the  building  where the office  lease was located and the lack of
contact with the landlord  since 2001,  management  believes the  probability of
collection  actions  on the  office  lease is  remote.  Therefore,  the  Company
wrote-off the $45,000 lease  obligation  during the year ended December 31, 2003
(see Note 12).

9.   Shareholders' deficit

Preferred stock

The Board of Directors  is  authorized  to issue  shares of  preferred  stock in
series  and  to fix  the  number  of  shares  in  such  series  as  well  as the
designation, relative rights, powers, preferences, restrictions, and limitations
of all such series.  The Company had no preferred  shares issued and outstanding
at December 31, 2003.

Options and warrants

The Company  accounts  for all stock  options  under SFAS No. 123.  However,  as
permitted by SFAS No. 123, the Company  accounts  for stock  options  granted to
employees  and stock options  granted to  nonemployees,  in a different  manner.
Directors, acting in their capacity as directors, are considered employees.

The Company has elected to account for stock options  granted to employees under
the "intrinsic value method" whereby no compensation  expense is recorded if the
option's  price equals or exceeds the fair value of the  underlying  stock.  The
Company  accounts for stock options  granted to consultants  and other providers
under the "fair value method" whereby  compensation  expense is recorded for the
excess of the fair value of the option over the market  price of the  underlying
stock.

On October 31, 2002,  236,200 warrants  expired.  The Company recorded a capital
contribution of $177,022 upon expiration of the warrants.

                                      F-11
<PAGE>

                           1ST NET TECHNOLOGIES, INC.
                   Notes to Consolidated Financial Statements


Under SFAS No. 123,  when the  intrinsic  value method is elected,  compensation
expense is also  measured  under the fair value  method,  but reported on a "pro
forma" basis.  However,  there was no pro forma effect  related to the Company's
options and warrants during the years ended December 31, 2003 and 2002.

Following  is a schedule of changes in the  Company's  outstanding  warrants and
options for years ended December 31, 2003 and 2002:

<TABLE>
<CAPTION>
                                                                               Weighted        Weighted Avg
                                                                Number           Avg            Remaining
             Options/Warrants                   Number       Exercisable     Exercise Price       Life
--------------------------------           -----------------------------------------------------------------

<S>                                        <C>               <C>             <C>               <C>
Outstanding at January 1, 2002..........      861,200           411,200         $3.39           2 years
Granted.................................            --               --            --                --
Exercised...............................            --               --            --                --
Expired.................................     (236,200)               --         $5.48                --
Cancelled...............................            -                --            --                --
                                           ------------------------------------------------------------------
Outstanding at December 31, 2002........      625,000           625,000         $2.60            1 year
Granted.................................            --               --            --                --
Exercised...............................            --               --            --                --
Expired.................................            --               --            --                --
Cancelled...............................            --               --            --                --
                                           ------------------------------------------------------------------
Outstanding at December 31, 2003........      625,000           625,000         $2.60           2 months
                                           ===========
</TABLE>


10.  Income taxes

A reconciliation of the U.S.  statutory federal income tax rate to the effective
rate is as follows:

                                                             2003       2002
                                                            --------  --------
Federal income tax rate..................................    34.00%    15.00%
State income tax rate, net of Federal benefit............     3.06%     3.94%
Net operating loss for which no tax benefit
   is currently available................................   -37.06%   -18.94%
                                                            --------  --------
                                                              0.00%     0.00%
                                                            ========  ========

At December 31, 2003, deferred taxes consisted of a net tax asset of $2,100,843,
due to operating loss carryforwards of $6,204,456,  which was fully allowed for,
in the valuation  allowance of $2,100,843.  The valuation  allowance offsets the
net deferred  tax asset for which there is no assurance of recovery.  The change
in the  valuation  allowance  for the years  ended  December  31,  2003 and 2002
totaled  $(163,834) and $(6,083).  Net operating loss  carryforwards will expire
through 2021.

The  valuation   allowance  will  be  evaluated  at  each  balance  sheet  date,
considering  positive  and  negative  evidence  about  whether the asset will be
realized.  At that time,  the  allowance  will either be  increased  or reduced;
reduction could result in the complete  elimination of the allowance if positive
evidence  indicates  that  the  value of the  deferred  tax  asset is no  longer
impaired and the allowance is no longer required.

                                      F-12
<PAGE>

                           1ST NET TECHNOLOGIES, INC.
                   Notes to Consolidated Financial Statements

Should the Company undergo an ownership  change as defined in Section 382 of the
Internal  Revenue  Code,  the Company's  tax net  operating  loss  carryforwards
generated prior to the ownership change will be subject to an annual limitation,
which could reduce or defer the utilization of these losses.

11.  Commitments and contingencies

During 2002, the Company received a demand for payment of approximately $135,000
from  Diagnostic  Recovery  Services,  Inc. on behalf of CIT Group.  The Company
denies any knowledge of liability related to this claim. There was no litigation
related to this claim as of the date of this report. The Company has not accrued
any liability specifically related to this claim.

12.  Extinguished liabilities

During the year ended  December 31, 2003,  the Company  recognized a gain on the
write-down of certain payables and accruals totaling  $253,928.  The majority of
the gain  related to (1) the  reduction  of  payroll  tax  accruals  owed to the
Internal Revenue Service from $93,791 to $40,000, for a net gain of $53,791, (2)
the $99,456 gain recognized on the write-down of a capital lease obligation (see
Note 8), and (3) the $45,000  gain  recognized  on the  write-down  of an office
lease  obligation  (see Note 8). The total gain of  $253,928  is included in the
accompanying consolidated financial statements as "Gain on debt restructure".

The Company  established  a  liabilities  allowance  at December 31, 2000 in the
amount  of  $350,000  due to its  plan  to  terminate  operations.  The  Company
recognized  liabilities  totaling  $191,332  during the years ended December 31,
2003,  2002 and 2001,  which reduced the allowance to $158,668.  At December 31,
2003,  management  determined  that the  Company  was no longer  subject to such
liabilities,  that all corporate  liabilities were known to the Company, and the
liabilities  allowance  was no  longer  applicable.  As a  result,  the  Company
wrote-off  the  $158,668  liabilities  allowance,   which  is  included  in  the
accompanying consolidated financial statements as "Gain on debt restructure".


                                      F-13