U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

                                   Form 10-QSB


                Quarterly Report Under Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

                For the Quarterly Period Ended September 30, 2003

                         Commission File Number 0-25725


                                V-FORMATION, INC.
                                -----------------
          (Exact name of small business issuer as specified in charter)

                                   New Jersey
                                   ----------
         (State of either jurisdiction of incorporation or organization)

                                   22-3345169
                                   ----------
                        (IRS Employer Identification No.)

                         99 Wood Avenue South, Suite 805
                            Iselin, New Jersey 08830
                            ------------------------
                    (Address of principal executive offices)

                                  732-321-4040
                                  ------------
                           (Issuer's telephone number)


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

State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest  practicable  date: As of December 23, 2003,  there were
18,950,011 common shares outstanding.



<PAGE>

                                     PART I

ITEM 1. FINANCIAL STATEMENTS.

     Our unaudited condensed consolidated financial statements for the three and
nine months ended September 30, 2003, are attached hereto.

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

     The following  discussion  should be read in conjunction with our unaudited
condensed  consolidated  financial statements and notes thereto included herein.
In connection with, and because we desire to take advantage of the "safe harbor"
provisions of the Private  Securities  Litigation Reform Act of 1995, we caution
readers regarding certain forward looking statements in the following discussion
and  elsewhere  in this  report  and in any other  statement  made by, or on our
behalf,  whether  or not in future  filings  with the  Securities  and  Exchange
Commission.  Forward  looking  statements are statements not based on historical
information and which relate to future operations, strategies, financial results
or other  developments.  Forward looking  statements are necessarily  based upon
estimates and assumptions that are inherently  subject to significant  business,
economic and  competitive  uncertainties  and  contingencies,  many of which are
beyond our control and many of which, with respect to future business decisions,
are subject to change.  These  uncertainties and contingencies can affect actual
results and could cause actual results to differ materially from those expressed
in any forward looking  statements made by us, or on our behalf. We disclaim any
obligation to update forward-looking statements.

Overview

     V-Formation,  Inc. ("we", "us", "our" or the "Company") is a multi-faceted,
innovative,  sports technologies  company that has made significant  advances in
the development and marketing of the first major evolution in inline skates. Our
objective is to become the premier sports and related  technologies  firm in the
sports product and  entertainment  industry.  We  manufacture  and sell patented
V-configuration  roller skates, as well as "cutting edge" extreme sports apparel
under the Nexed brand name, to sporting goods retailers  located  throughout the
United States and Canada.

     While we can provide no assurances,  we believe that, with suitable capital
funding,  we will be well positioned to make substantial market penetration with
respect to our product lines and capture market share, substantially fueling our
growth. Additionally, through the use and acquisition of intellectual properties
which  are  either  owned or  licensed  exclusively  by us, we  believe  we have
effectively  established  the  broad  foundation  we  have  used to  attain  the
accomplishments  we have  experienced to date. We intend to use our intellectual
properties  as a  springboard  for  future  growth.  Presently,  all our  sports
products incorporate next generation

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technology  in  their  design  and  implementation.  Importantly,  all  our  key
technologies are proprietary, licensable and transferable.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

     We have  identified  critical  accounting  policies  that,  as a result  of
judgements,  uncertainties,   uniqueness  and  complexities  of  the  underlying
accounting standards and operation involved, could result in material changes to
our financial  position or results of operations  under different  conditions or
using different assumptions. The most critical accounting policies and estimates
are:

     >    The preparation of financial  statements in conformity with accounting
          principles generally accepted in the United States of America requires
          management to make estimates and assumptions  that affect the reported
          amounts of assets and liabilities 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.

     >    Fair value of instruments. The Company's financial instruments consist
          of accounts receivable,  accounts payable and long term debt. The fair
          value of financial instruments approximate their recorded values. Fair
          value of loans payable to  stockholders  and balances of bank lines of
          credit, in the circumstances, are not reasonably determinable.

     >    Patents and trademarks. The costs associated with the acquisition of a
          patent and the costs of  registering  the patents and  trademarks  are
          capitalized  and  amortized  on  the  straight-line   basis  over  the
          remaining  lives of 15 to 17 years.  The periods of  amortization  are
          periodically  evaluated to  determine  whether  circumstances  warrant
          revised estimates of useful lives.

     >    Impairment of long-lived assets.  Long-lived assets, including patents
          and  trademarks,  to be held  and  used are  reviewed  for  impairment
          whenever events or changes in circumstances  indicate that the related
          carrying  amounts  may  not  be  recoverable   using  expected  future
          undiscounted cash flows. When required, impairment losses on assets to
          be held and used are  recognized  based on the  excess of the  asset's
          carrying  amount over its fair value as determined  by selling  prices
          for  similar  assets or  application  of other  appropriate  valuation
          techniques.

     The  following  information  is intended to highlight  developments  in our
operations  to  present  our  results  of  operations,  to  identify  key trends
affecting our businesses and to identify other factors  affecting our results of
operations  for the three and  nine-month  periods ended  September 30, 2003 and
2002.


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<PAGE>

Results of Operations

Comparison  of  Results  of  Operations  for the  Three  and Nine  Months  Ended
September 30, 2003 and 2002.

     Our sales  revenues  increased to $475,252 for the three month period ended
September 20, 2003 from $154,600 for the three month period ended  September 30,
2002, an increase of $320,652 (207%). Sales for the quarter were derived totally
from our paintball  products,  while none were sold during the similar period in
the prior year.  Sales  increased to $1,115,113 for the nine-month  period ended
September 30, 2003, from $931,425,  an increase of $183,688 (20%).  The increase
in revenues was mainly  attributable  to the sales of paintball  products during
the nine months ended  September 30, 2003,  which totaled  $752,945,  while none
were sold  during the  similar  period in the prior  year.  This was offset by a
decrease in sales of our hockey related products (skates,  pants,  gloves, bags,
jerseys and girdles) which totaled  $362,168 for the nine months ended September
30, 2003,  as compared to $931,425 for the similar  period in the prior year. We
believe the decrease is due to the general downturn in the economy.

     For the  three  month  period  ended  September  30,  2003,  cost of  sales
increased to $373,198 from  $200,539 for the three month period ended  September
30,  2002,  an increase  of  $172,659  (86%).  For the nine month  period  ended
September 30, 2003,  costs of sales  increased to $872,549  compared to $790,929
for the nine months ended September 30, 2002, an increase of $81,620 (10%).  The
increase  was due to the  increase in sales  volume  previously  discussed.  The
related  gross margins  increased to $242,564  (22%) for the  nine-month  period
ended  September 30, 2003,  compared to $140,496 (15%) gross margin for the nine
months  ended  September  30,  2002.  The lower  gross  margin in 2002 is mainly
attributable  to the closeout of certain  models of our roller skates during the
third calendar quarter of 2002.

     During the months  ended  September  30,  2003,  we  received  $75,000  for
consulting  services from domestic  companies  endeavoring to do business within
the Russian  Federation.  We received these fees through  Muscovy Import Group a
division the Company established during the second quarter of 2003. The services
offered by Muscovy Import group include  assistance in the  development of sales
and  distribution  channels  in  Russia,  identifying  and  contacting  selected
accredited  business partners in Russia,  arranging for preferred tax and tariff
treatment when doing business in Russia and negotiating the financial aspects of
any foreign business/trade transactions.

     While no assurances can be provided,  we anticipate a future revenue stream
from  infringement  litigation  which is  discussed  in "Part II,  Item 1, Legal
Proceedings,"  below  herein,  provided  that we are either  successful  in this
litigation or an acceptable settlement is reached.  During the nine month period
ended September 30, 2003, we did not receive any royalty payments  applicable to
such infringement litigation.

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<PAGE>

     During the three  month  period  ended  September  30,  2003,  selling  and
promotional  costs  decreased by $88,614 (60%) from $146,608 to $57,994.  During
the nine-month  period ended September 30, 2003,  selling and promotional  costs
decreased by $282,992  from $528,894 to $245,902  (54%).  The decrease is due to
our being more selective in the scheduling of promotional events which therefore
reduced associated travel costs. In addition,  we eliminated the majority of our
salaried sales force during 2003.

     General and  administrative  expenses were  $1,109,656  for the three month
period ended September 30, 2003,  compared to $757,289 for the similar period in
2002, an increase of $352,367 (47%).  General and  administrative  expenses were
$2,557,406 for the nine months ended September 30, 2003,  compared to $2,371,433
for the similar  period in 2002, an increase of $185,973 (8%). The increases are
mainly attributable to the issuance of stock as compensation to employees during
2003 totaling  $800,750 as compared to $48,825 in the similar  period last year.
During the first nine months of 2003, we also amortized $281,250 of equity-based
deferred compensation recorded at December 31, 2002. The increase in expense was
offset by a reduction of professional and outside  consultants  during the first
nine months of 2003.

     Research  and  development  costs  during  the  three  month  period  ended
September  30, 2003  increased  to $149,331  from  $121,074 for the three months
ended  September 30, 2002, an increase of $28,257  (23%).  During the nine-month
period ended September 30, 2003,  research and development  costs were $406,238,
as compared to $278,401 in the similar  period in 2002,  an increase of $127,837
(46%).  The increase is primarily due to costs associated with the production of
numerous samples in conjunction with our expansion into the paintball  industry,
along with a possible future joint venture on an international basis.

     During  the  three  months  ended  September  30,  2003,  depreciation  and
amortization  expense  decreased  from  $33,830 to $30,514.  For the nine months
ended September 30, 2003,  depreciation and amortization  expense decreased from
$107,432 to $91,464.  Amortization  and depreciation is associated with patents,
trademarks and equipment.

     Interest  income and expense  decreased  from a net expense of $768,583 for
the three- month period  ended  September  30, 2002 to a net expense of $130,464
for the three  months ended  September  30,  2003.  Interest  income and expense
increased from a net of $802,788 in the nine months ended September 30, 2002, to
a net of $2,856,918 for the nine months ended September 30, 2003, an increase of
$2,008,757.  This significant increase was due to the amortization of $2,479,170
of deferred  financing  costs  recorded at December  31,  2002,  and $257,400 of
current year deferred  financing  costs for the issuance of 85,800 shares of our
common stock to one of our directors for providing collateral for our bank lines
of credit.

     During the nine month period ended  September  30, 2002,  we were  notified
that  other  defendants  in a  litigation  matter  that was  settled in 1998 had
satisfied  $85,598  of a  note  payable  obligation,  which  we  had  originally
recorded. As a result, we recognized income from

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<PAGE>

elimination of this obligation. During the nine month period ended September 30,
2003, we settled minor legal matter by agreeing to issue a payments of $47,500.

     During  the  three  month  period  ended  September  30,  2003,   dividends
attributable to preferred stock was $59,209.  During the nine month period ended
September 30, 2003, dividends attributable to preferred stock was $177,626.

     As a result, we generated a net loss attributable to common stockholders of
$(1,360,114)  for the three  months  ended  September  30, 2003 ($.07 per share)
compared  to a net loss of  $(1,873,323)  ($.12 per share) for the three  months
ended  September  30,  2002.  We  generated  a net loss  attributable  to common
stockholders of $(6,065,490)  for the nine months ended September 30, 2003 ($.32
per share)  compared to a net loss of  $(3,967,439)  for the nine  months  ended
September 30, 2002 ($.25 per share).

Liquidity and Capital Resources

     At  September  30,  2003,  we had $44,954 in cash and cash  equivalents,  a
decrease  of  $416,245  from  December  31,  2002.  This  decrease  in cash  was
attributable  to net cash used in operating  activities of $1,429,777,  net cash
used in  investing  activities  of $12,673 and net cash  provided  by  financing
activities of $1,026,205.

     At September 30, 2003, our working capital deficiency was $4,200,752.  This
working  capital  deficiency  is  primarily  due to the fact we had made various
short-term  financing  arrangements  to  continue  operations,  such  as  having
$2,500,000  outstanding at September 30, 2003 in borrowings  from our $2,000,000
and $500,000  lines of credit.  As of September  30, 2003,  the  $2,000,000  and
$500,000 lines of credit had expiration dates of December 31, 2003. In addition,
we have financed operations by borrowing from various stockholders and directors
and have $646,008 outstanding at September 30, 2003 from such arrangements.

     Net cash used in operating  activities  during the nine-month  period ended
September 30, 2003,  was  $1,429,777,  versus  $1,807,820 for the same period in
2002.  Net loss for the nine months ended  September 30, 2003 was $5,887,864 and
net loss for the nine months ended  September  30, 2002 was  $3,812,855  for the
same  period  in the  prior  year.  A  significant  factor  in the  loss was the
amortization  of $2,479,170 of deferred  financing  costs which were recorded at
December 31, 2002 along with $257,400 of current year deferred  financing costs.
In addition,  $800,750 of expense was paid in stock and  warrants for  services.
During the first nine months of 2003, we also amortized $281,250 of equity-based
deferred  compensation  recorded  at  December  31,  2002.  Also,  net  accounts
receivable increased by $116,825 to $338,870, and inventory decreased by $53,454
to $376,818 which is attributable to the recent  relationship  entered into with
Sports Giant LLC and National Paintball Supply.

                                                                               6

<PAGE>

     During the nine months  ended  September  30,  2003,  investing  activities
consisted of capital expenditures for equipment totaling $11,736, along with the
purchase of marketable securities of $937.

     Net cash  provided  by  financing  activities  totaled  $1,026,205  for the
nine-month period ended September 30, 2003. This was mainly  attributable to two
of our officers/directors selling an aggregate of 741,000 shares of their Common
Stock in our Company and thereafter  contributing  $814,203 of the proceeds from
such sale to the Company. In consideration for the contribution of proceeds,  we
issued these two people  warrants to purchase up to 236,000 shares of our Common
Stock,  each such warrant  exercisable  at a price of $3.75 per  warrant.  These
warrants were to expire December 31, 2003. However,  the two  officers/directors
decided to surrender the warrants  back to us and the warrants were  terminated.
No  compensation  cost was  recorded as a result of the issuance of grants above
the fair market value at the time of grant.  Also, we received a net $212,500 as
loans from  directors  and  shareholders  during  the  nine-month  period  ended
September 30, 2003.

     In August 2002, we entered into a new $2,000,000  line of credit  agreement
with a bank. The line of credit was originally  available through June 30, 2003,
but has been extended through December 31, 2003.  Amounts drawn on the line bear
interest at the prime rate plus 1% but not to be less than 6% at any time (6% at
September 30, 2003) and is payable monthly.  The obligation is collateralized by
the personal  guarantees and second  mortgages on specific real estate assets of
one of our officers and one of its directors and by  assignments  of patents and
settlement  proceeds from patent  infringements.  At September 30, 2003 the line
was fully utilized.  The line of credit  agreement  contains  certain  financial
covenants including the submission of timely financial statements.  At September
30, 2003, we were in compliance with such covenants.

     In June 2002,  we obtained a new $500,000 line of credit  agreement  with a
bank. The line of credit was originally  available through July 1, 2003, but has
been extended  through  December 31, 2003.  Amounts drawn on this line of credit
bear  interest  at prime  rate  plus 3% (7.25% at  September  30,  2003) and are
payable monthly. The obligation is collateralized by certificates of deposit and
personal guarantees of one of our directors. At September 30, 2003, the line was
fully utilized.

     In connection  with our lines of credit for  $2,000,000  and  $500,000,  we
issued  1,100,000  shares of our Common  Stock  valued at $3.00 per share for an
aggregate  value  of  $3,300,000  to  certain   stockholders  and  directors  in
consideration for their providing  collateral of assets and personal guarantees.
Of such amounts, $1,287,500 is recorded as finance charges during the year ended
December  31,  2002.  Accordingly,  $2,012,500  has been  recorded  as  deferred
financing  costs as of December  31,  2002.  Such amount is being  amortized  as
interest expense over the remaining life of the loans. For the nine months ended
September 30, 2003,  $2,012,500 has been expensed.  As of September 30, 2003, no
deferred balance remained.

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<PAGE>

     In connection  with our lines of credit for  $2,000,000  and  $500,000,  we
issued  85,800  shares of our Common  Stock,  valued at $3.00 per share,  for an
aggregate  value  of   approximately   $257,000  to  one  of  our  directors  in
consideration  for extending  collateral for our bank lines of credit beyond the
original  maturity date. Such amount is being amortized as interest expense over
the remaining  life of the loan.  For the nine months ended  September 30, 2003,
$257,000 has been  expensed.  As of  September  30,  2003,  no deferred  balance
remains.

     In addition,  we have an  outstanding  note  payable  which had a principal
balance  of $70,000 at  September  30,  2003.  This note,  which was  originally
$175,000,  is unsecured,  payable in five annual installments of $35,000 without
interest,  which  payments  commenced  March  31,  2001,  and  is  related  to a
settlement  agreement  to  resolve  a  legal  dispute  which  arose  from a 1996
transaction  in which the  plaintiffs  acted as brokers by  introducing  various
parties that  subsequently  invested in our Series B Preferred Stock. The unpaid
balance  of the note is  payable in full in the event of a sale or merger of our
Company,  or in the event we receive net funding of $1.5 million or more from an
equity offering.

     In May 2002, a  stockholder/director  granted us an unsecured  loan,  which
loan is due on or before  December 31, 2003, and bears interest at 6% per annum.
At September  30,  2003,  the  principal  loan  balance to the  stockholder  was
$119,508.

     During 2002, we borrowed  various  unsecured loans from other  stockholders
and a  director,  which  bear  interest  at 6% per  annum,  leaving a balance of
$314,000 at December 31, 2002,  payable on or before  December 31, 2003.  During
the nine  months  ended  September  30,  2003,  $37,500 was repaid by us to this
director, leaving a remaining balance of $276,500.

     During August 2003, we borrowed  $250,000 from one of our  directors.  This
loan, which is unsecured, bears interest at 6% per annum and is due on demand.

     These  three  aforementioned  transactions  resulted  in loans  payable  to
stockholders/directors of $646,008 at September 30, 2003.

     In connection with these borrowings from the stockholders and directors, we
issued  642,585  shares of our Common Stock,  valued at $3.00 per share,  for an
aggregate value of approximately  $1,928,000,  to the stockholders and directors
in consideration of them providing such funds. Such amount is being amortized as
interest  expensed  over the  remaining  life of the  loans.  For the year ended
December 31, 2002,  approximately  $1,461,000  was expensed.  As of December 31,
2002,  approximately  $467,000 was deferred. For the nine months ended September
30, 2003, approximately $467,000 has been expensed. As of September 30, 2003, no
deferred balance remained.

     We have extended the lines of credit for $2,000,000 and $500,000 beyond the
maturity  dates  of June  30,  2003,  and  July 1,  2003,  as  presented  in the
accompanying condensed consolidated unaudited financial statements as of and for
the three and nine months ended

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<PAGE>

September  30, 2003. If either of these lines of credit or the  borrowings  from
shareholders  and directors  were to become due, it is unlikely that we would be
able to meet these  obligations  or other  obligations  that occur in the normal
course of business.  We are pursuing long-term  financing  arrangements and have
taken  several  strategic  initiatives  to improve  our working  cash  position,
including an expansion of product lines and various legal  proceedings to defend
our  patents.  We also have taken  severe  cost  cutting  measures,  including a
reduction of staff.  At this time,  we are unable to predict  whether we will be
successful in our efforts.

     We have incurred net losses and utilized  cash on our operating  activities
for each of the three and nine months  ended  September  30,  2003.  Our capital
deficit  has  increased  at  September  30, 2003 from  December  31,  2002.  Our
management  anticipates  that net losses will continue and that  additional cash
will be utilized for operations during the year ending December 31, 2003.

     We believe we will have adequate financial  resources for at least the next
twelve months. In order to increase revenues,  we have started selling paintball
apparel and related  products.  Such sales,  which  commenced  in October  2002,
amounted to $752,945  for the  nine-month  period  ending  September  30,  2003.
However,  if,  during the next 12 months,  we are unable to  continually  extend
current lines of credit and  borrowings  from  shareholders  as they become due,
raise additional long-term financing  arrangements and receive market acceptance
of our new  business  strategies,  we will  not be able to  continue  as a going
concern.  The report of our independent  auditors on the consolidated  financial
statements for the years ended December 31, 2002 and 2001 include an explanatory
paragraph which stated that we incurred  substantial net losses during the years
ended  December  31,  2002 and 2001,  have a capital  deficit  and have  working
capital deficiency,  which raise substantial doubt about our ability to continue
as a going concern.  The  consolidated  financial  statements do not include any
adjustments that might result from the uncertainty.

     Finally,  during the nine  months  ended  September  30,  2003,  two of our
officers/directors  sold an aggregate of 741,000 shares of their Common Stock in
our  Company and  contributed  $814,203  of the  proceeds  from such sale to us.
During the nine months ended  September  30,  2003,  in  consideration  for such
proceeds,  we issued these two people  warrants to purchase up to 236,000 shares
of our  Common  Stock,  each such  warrant  exercisable  at a price of $3.75 per
warrant.  These  warrants  were to expire  December 31, 2003;  however,  the two
officers/directors decided to surrender the warrants back to the Company and the
warrants were terminated.  No compensation  cost was recorded since the warrants
were granted at an exercise price above the fair market value.

Trends

     Our strategy is to direct our current  efforts to increase sales and market
penetration  along with  developing  an income  stream from the licensing of our
patented technologies.  We believe the current economic downturn is the cause of
the decrease in sales this year.  However,  while no assurances can be provided,
we believe that our core business,  the wholesale  distribution and

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<PAGE>

marketing  of "Nexed"  branded  roller  skates,  apparel and  accessories,  will
substantially  grow over the next 12 months. In support of this contention,  the
Sporting Goods Manufacturing  Association  activity report dated April 30, 2001,
cites the sport of inline  skating as "the third most popular  sports for youth,
based on frequent  participation"  for ages 6-17. We remain  confident that this
growth trend will continue and as a result,  our sales revenues and market share
will continue to grow in a proportional manner.

     Also,  in  September  2002,  we  formally  launched  and  introduced  NEXED
Paintball.  During late 2001, we started receiving  unsolicited orders for NEXED
apparel in which its use was specifically intended for Paintball. Inadvertently,
our NEXED product line began to garner the  attention of many "elite"  Paintball
participants  and  enthusiasts.  In  recognizing  the  opportunity,  we  quickly
responded and with relatively  little effort, we coordinated a manufacturing and
marketing effort.  We strategically  chose to launch NEXED Paintball at the ESPN
sponsored  National Paintball League World Cup Tournament held at Disney's Epcot
Center. We plan on attending similar events in the future.

     With  industry  revenues  in excess of $250  million  per year,  consistent
annual  growth and  existing  cross  marketing  opportunities,  it was a logical
expansion  for us.  According  to the  SGMA  "2001  Superstudy,"  the  sport  of
Paintball  was ranked the third most popular  extreme  sport,  having  surpassed
snowboarding participation.  Paintball participation is projected to continue to
grow and expand worldwide.

     During the second  quarter of 2003,  we  established  Muscovy  Import Group
("MIG").  Through our past experience with international  trade transactions and
through the  development of foreign  strategic  alliances,  Muscovy Import Group
offers consulting services to American companies seeking to establish a business
presence in the Russian  Federation and other countries  within the Commonwealth
of Independent States and the Newly Independent States.

     Russian  markets are expanding  exponentially  and are  embracing  American
goods and American business partners.  Macroeconomic  factors such as a dramatic
increase in gross  domestic  product and a decrease in  inflation,  as well as a
change in social and lifestyle  factors are reasons why businesses are currently
eager to enter or expand their presence in the Russian marketplace. Further, the
political  stability  of the current  administration  and the  overall  positive
attitude of the  Russian  people  bolster the  decision  for  companies  to move
forward in this area.

     The services offered by MIG include  assistance in the development of sales
and  distribution  channels  in  Russia,  identifying  and  contacting  selected
accredited  business partners in Russia,  arranging for preferred tax and tariff
treatment when doing business in Russia and negotiating the financial aspects of
any foreign business/trade transactions.

     Though MIG has only recently begun offering its consulting services,  since
August 2003, we have  generated and received  $275,000 in consulting  fees as of
the date of this report.  While no assurances  can be provided,  we believe this
segment of our  business  has  tremendous  potential.

                                                                              10

<PAGE>

The  relevant  consulting  contracts  include  a front  end  fee to MIG,  plus a
percentage of future sales in Russia by the respective client.

     Based upon the above  discussions,  we believe  the  acceptance  of our new
paintball  product  line and the  expansion  of MIG  together  with the expected
growth of our existing  business lines will enhance our growth. If these factors
occur,  and if economic  conditions in the United States  improve,  we expect to
reach  profitability  in 2004.  However,  there  can be no  assurances  that our
forecasts will be accurate.

Inflation

     Although our operations are influenced by general economic  conditions,  we
do not believe that inflation had a material effect on the results of operations
during the nine months ended September 30, 2003.

ITEM 3. CONTROLS AND PROCEDURES

     Our Chief  Executive  Officer and Chief  Financial  Officer (our  principal
executive  officer  and  principal   financial  officer,   respectively),   have
concluded,  based on their  evaluation as of December 23, 2003, (the "Evaluation
Date"),  that  the  design  and  operation  of  our  "disclosure   controls  and
procedures"  (as defined in Rules  13a-14(c) and 15d-14(c)  under the Securities
Exchange Act of 1934, as amended, (the "Exchange Act")), are effective to ensure
that  information  required  to be  disclosed  by us in  the  reports  filed  or
submitted  by us under the  Exchange Act is  accumulated,  recorded,  processed,
summarized  and reported to our  management,  including our principal  executive
officer and our principal  financial  officer,  as  appropriate  to allow timely
decisions regarding whether or not disclosure is required.

     There were no significant  changes in internal controls or in other factors
that could  significantly  affect internal controls subsequent to the Evaluation
Date, nor were there any significant  deficiencies or material weaknesses in our
internal  controls.  As  a  result,  no  corrective  actions  were  required  or
undertaken.


                                     PART II

ITEM 1. LEGAL PROCEEDINGS

     As of the  date of this  Report,  we are  party  to  various  judicial  and
administrative matters, including the following:

     In January  2001,  we filed a complaint  against  Benetton  Group,  SPA and
Roller Blade, Inc. in the United States District Court, Southern District of New
York,  Docket No. 01 CIV 510,  wherein we have alleged  willful  infringement of
certain of our patent  rights for  Toeplate  with

                                                                              11

<PAGE>

Dual  Flanges  for  Inline  Skate  Frames.  Upon  information  and  belief,  the
defendants  are making,  using and offering to sell inline skate  products which
infringe on our patents.  In November  2002,  the Court  entered an Order on the
defendant's Motion for Summary Judgment,  dismissing our claims. We have filed a
timely notice of appeal requesting reversal of the trial court decision and this
matter is now  before  the US Court of  Appeals  for the 2nd  Circuit.  While no
assurances can be provided, we are optimistic about the likelihood of success on
appeal.

     In February 2001, we filed a complaint in the United States District Court,
Southern  District of New York,  Docket No. 01 CV 7179,  against adidas America,
Salomon North America,  Inc., Salomon S.A., adidas AG and adidas Salomon AG, The
Sports Authority,  Inc., Princeton Ski Outlet Corp., dba Princeton Ski Shops and
Paragon  Sporting Goods Co., Inc. for willful  infringement  of certain  patents
held by us, including  Toeplate with Dual Flanges for Inline Skate Frames.  Upon
information  and belief,  the defendants are making,  using and offering to sell
inline skate  products  which  infringe on certain of our  patents.  In November
2002, the Court entered an Order on the defendant's Motion for Summary Judgment,
dismissing our claims.  We intend to appeal,  but have not yet done so as of the
date of this Report, as no final judgment has been entered.  While no assurances
can be provided, we are optimistic about the likelihood of success on appeal.

     In April 2001,  Vertex  Capital Corp.  filed a complaint  against us in the
United  States  District  Court for the  Southern  District of New York  seeking
damages for alleged breach of contract and unjust enrichment. In September 2002,
the court entered summary  judgment in our favor,  dismissing all but one of the
plaintiff's claims. In January 2003, we entered into a verbal settlement of this
matter,  which provided for us to issue warrants.  However,  when the settlement
was being reduced to writing,  a dispute concerning the terms of the warrants to
be issued arose and no formal  settlement  was reached.  The court has dismissed
this action,  without  prejudice,  due to the failure of the plaintiff to timely
file pleadings. No further action has taken place.

     In October 2001,  we filed an action  against USCO  Distribution  Services,
Inc.,  d/b/a USCO  Logistics  ("USCO"),  which was removed to the United  States
District  Court for the  District of  Colorado,  asserting  claims  arising from
USCO's failure to perform according to its "order fulfillment"  contracts.  USCO
asserted  counterclaims totaling approximately $103,000 based on its charges for
services under the contracts and asserted a possessory  lien on our inventory in
their possession.  USCO subsequently  liquidated the inventory pursuant to their
possessory  lien.  In April  2003,  we entered  into a  confidential  settlement
agreement, which partially reimbursed USCO for UPS shipping charges.

     In January 2002, we filed a complaint in the United States  District Court,
Southern District of New York, Docket No. 010 CIV 1693,  against K2 Corporation,
where we alleged  willful  infringement of patent rights held by us for Toeplate
with Dual Flanges for Inline  Skate  Frames.  In August 2002,  we entered into a
settlement of this matter in which we received a compensatory award for previous
infringement,  as well as a future royalty on sales for roller skates  utilizing
our  patented  technology  and the  assignment  of two  patents.  As part of the
settlement, the Court ordered the settlement terms confidential.

                                                                              12

<PAGE>

     Thereafter,  we  learned  that,  immediately  prior  to  entering  into the
aforesaid settlement agreement,  K2 Corporation allegedly signed agreements with
both  Benetton  Group,  SPA and Roller Blade,  Inc., as well as adidas  America,
Salomon North  America,  Inc.,  Salomon S.A.,  adidas AG and adidas  Salomon AG,
which  agreements  included  covenants  not to sue for any  patent  infringement
relating  to the  patents  subsequently  assigned  to us.  We  maintain  that K2
Corporation never advised us of these agreements.  Applicable  thereto, in March
2003, we commenced an action against K2 Corporation  and its General  Counsel in
the US District Court,  District of Colorado,  alleging fraudulent  concealment,
misrepresentation  and breach of  contract,  with damages to be  established  at
trial. This matter was subsequently remanded to the United States District Court
for the Western District of Seattle,  Washington. As of the date of this Report,
this Court has  issued  scheduling  orders  and the  matter is in the  discovery
phase. Trial on this matter has been scheduled for September 2004.

     Relevant  thereto,  in January 2003 we also commenced  patent  infringement
suits against both Benetton Group, SPA and Roller Blade, Inc., as well as adidas
America,  Salomon North America, Inc., Salmon S.A., adidas AG and adidas Salomon
AG, The Sports  Authority,  Inc.,  Princeton Ski Outlet Corp., dba Princeton Ski
Shops and Paragon  Sporting Goods Co., Inc. in separate  actions filed in the US
District Court, District of Colorado,  where we have alleged infringement by the
defendants  of those  patents  assigned to us by K2  Corporation.  Discovery has
commenced in these matters.

     In December 2002, we filed an action in the US District Court,  District of
New Jersey,  against KPMG Corporate  Finance LLC.,  ("KPMG")  alleging breach of
contract  and  conflict  of  interest.  We had  previously  signed a  consulting
agreement  with KPMG for it to  provide  investment  banking  services.  We have
alleged that KPMG failed to disclose that they also  represented  certain of our
competitors.   This  matter  was  resolved  by  the  parties   entering  into  a
confidential settlement agreement in October 2003.

     In December 1997, we entered into a Confidential  Settlement  Agreement and
Release  in  conjunction  with  a  Product  and  License  Agreement  to  resolve
outstanding litigation in the matter of The Brandner Corporation v. Jeannette L.
Brandner,  et al.,  docket no. 96CV 3163 (JRS) then pending in the United States
District Court for the Southern  District of New York. The settlement  sought to
resolve all  outstanding  issues  regarding  technology  embraced by  Brandner's
patent,  no.  5,303,940  (the "940  Technology").  Pursuant  to the  Product and
License  Agreement,  we made all required  royalty payments for skates utilizing
the technology as set forth in the License Agreement. In February 2002, Brandner
filed a request with the Court,  seeking royalty payments for skates not covered
by the 940 Technology. We filed an opposition to Brandner's request. In November
2002, the Court entered judgment against us. We have appealed this ruling to the
US Court of Appeals for the 2nd Circuit. Although no assurances can be provided,
we are  optimistic  about the  likelihood  of our  prevailing  in this matter on
appeal.

     Finally,  in December 2002, a complaint was filed against us by Primagency,
Inc. in the  Supreme  Court of the State of New York,  who alleged  that we owed
$200,000 in placement fees

                                                                              13

<PAGE>

arising out of an agency  compensation  agreement which we entered into with the
plaintiff.  Judgment was entered against us in the principal  amount or $200,000
which  judgment was stayed by the court.  We have filed an appeal and the matter
is currently pending.

     There  are no  other  material  legal  proceedings,  either  threatened  or
current, to which we are a party, or are otherwise aware.

ITEM 2. CHANGES IN SECURITIES

     In  March  2003,  our  Board  of  Directors  declared  a  dividend  on  our
outstanding  Series A, Series B, Series C and Series D Preferred  Stock pursuant
to the  designations  and preferences of each such series of preferred stock. At
December 31, 2002,  dividends on the Series A and Series B Cumulative  Preferred
Stock were in arrears by $30,000 and $24,000,  respectively.  If such  dividends
are in  arrears,  no  dividends  shall  be  declared,  nor  shall  there  be any
redemption  of shares  having a rank lower in priority to the Series A Preferred
Stock  with  respect  to  dividends.  Dividends  on the  Series  C and  Series D
preferred  stock were in arrears  by  $174,792  and  $7,320,  respectively.  All
dividends in arrears for 2002 were paid though the issuance of 78,944  shares of
our Common Stock during the first quarter of 2003.

     In connection  with the lines of credit for  $2,000,000  and  $500,000,  we
issued  85,800  shares  of our  common  stock  valued  at $3.00 per share for an
aggregate value of  approximately  $257,000 to a director in  consideration  for
extending  collateral for our bank lines of credit beyond the original  maturity
date. Such amount is being amortized as interest expense over the remaining life
of the loans.  For the three  months  ended  March 31,  2003,  $68,400  has been
expensed. As of March 31, 2003, $189,000 has been deferred.

     Also, during the nine-month period ended September 30, 2003, two holders of
our Series C Preferred  Stock  elected to convert an aggregate of 24,000 of such
shares into 24,000 shares of our Common Stock.  Holders of 200 of our issued and
outstanding  Common  Stock  Purchase  Warrants  also  elected to exercise  their
warrants and we issued 200 shares of our Common Stock  applicable  thereto.  The
exercise price of these warrants was $3.75 per warrant.

     During the nine months ended September 30, 2003, two employees were granted
90,250  shares  of our  Common  Stock as part of an  employee  agreement,  or as
additional compensation.

     In connection  with our lines of credit for  $2,000,000  and  $500,000,  we
issued  85,800  shares  of our  Common  Stock  valued  at $3.00 per share for an
aggregate  value of  approximately  $257,00 to a director in  consideration  for
extending  collateral for our bank lines of credit beyond the original  maturity
date. Such amount is being amortized as interest expense over the remaining life
of the loans.  During the six months ended June 30, 2003, $257,400 was expensed.
As of September 30, 2003, no deferred balance remained.

     During  the  nine   months   ended   September   30,   2003,   two  of  our
officers/directors  sold 741,000 shares of their Common Stock in our Company and
contributed  $814,203 of the
                                                                              14

<PAGE>

proceeds  from such sale to us. In  consideration  of such  proceeds,  we issued
these two people  warrants to purchase up to 236,000 shares of our Common Stock,
each such warrant  exercisable  at a price of $3.75 per warrant.  These warrants
were to expire December 31, 2003; however, the two officers/directors decided to
surrender  the  warrants  back  to us  and  the  warrants  were  terminated.  No
compensation  cost was recorded  since the warrants  were granted at an exercise
price above the fair market value.

     During the nine months ended September 30, 2003, for services performed, an
officer/director  was issued 353,333  warrants to purchase  common shares of our
Company,  each such  warrant  exercisable  at a price of $3.75 per  warrant.  We
converted  176,667 of such warrants on a cashless  basis.  The  officer/director
decided to surrender the remaining  176,666 warrants back to us and the warrants
were terminated.

     In  the  aforesaid   transactions,   we  relied  upon  the  exemption  from
registration  afforded by Section 4(2) and/or Regulation D promulgated under the
Securities Act of 1933, as amended, to issue the securities.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES - None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - None

ITEM 5. OTHER INFORMATION - None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K -

     (a) Exhibits

         31      Certification Pursuant to Section 302 of the Sarbanes-Oxley Act
                 of 2002.

         32      Certification Pursuant to Section 906 of the Sarbanes-Oxley Act
                 of 2002.

     (b) Reports on Form 8-K.

     We did not file any reports on Form 8-K during the three month period ended
September 30, 2003.

                                                                              15

<PAGE>

<TABLE>
V-FORMATION, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheet
(Unaudited)

<CAPTION>
                                                                                 Sept 30, 2003
                                                                               ----------------
<S>                                                                            <C>
ASSETS
Current assets:
   Cash and cash equivalents                                                   $         44,954
   Investments in marketable securities                                                     937
   Accounts receivable, net of allowance for doubtful accounts of $40,000               338,870
   Inventories                                                                          376,818
   Prepaid expenses and other current assets                                             30,000
                                                                               ----------------

        Total current assets                                                            791,579

Property and equipment, net                                                             214,733
Patents and trademarks, net of accumulated amortization of $275,963                     643,710
Security deposits                                                                        24,792
                                                                               ----------------

                                                                               $      1,674,814
                                                                               ================
LIABILITIES
Current liabilities:
   Bank lines of credit                                                        $      2,500,000
   Current maturities of long-term debt                                                  35,000
   Accounts payable and accrued expenses                                              1,759,964
   Related party loans payable                                                           51,359
   Due to stockholders/directors - loans                                                646,008
                                                                               ----------------

        Total current liabilities                                                     4,992,331
                                                                               ----------------

Long-term debt, net of current maturities                                                35,000
                                                                               ----------------

Mandatory redeemable, Series A convertible 6% cumulative preferred stock,
   no par value, 500,000 shares authorized, 500,000 shares issued and
   outstanding, aggregating liquidation preference of $30,000                           500,000
                                                                               ----------------

CAPITAL DEFICIT
   Preferred stock - no par value, 7,000,000 shares authorized, 474,127 and
        473,043 shares issued and outstanding, respectively;
      aggregate liquidation preference $303,709 (Series B $300,003, Series C
      $3,401, Series D $305)                                                          2,438,857
   Common stock - no par value, 45,000,000 shares authorized, 19,606,760
      and 18,950,011 shares issued and outstanding, respectively                     41,523,303
   Additional paid-in capital                                                        45,443,667
   Deferred compensation                                                                (93,750)
   Accumulated deficit                                                              (92,566,605)
   Treasury stock at cost, 657,833 shares                                              (597,989)
                                                                               ----------------

        Total capital deficit                                                        (3,852,517)
                                                                               ----------------

                                                                               $      1,674,814
                                                                               ================

</TABLE>

See notes to condensed consolidated financial statements

                                      F-1

                                                                              16
<PAGE>

<TABLE>
V-FORMATION, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations
(Unaudited)

<CAPTION>
                                                                              Three Months Ended
                                                                                  September 30,
                                                                          ----------------------------
                                                                               2003           2002
                                                                          -------------  -------------
<S>                                                                       <C>            <C>
Net sales                                                                 $     475,252  $     154,600
Cost of goods sold                                                              373,198        200,539
                                                                          -------------  -------------

Gross profit                                                                    102,054        (45,939)
License/royalty/consulting income                                                75,000              -
                                                                          -------------  -------------

                                                                                177,054        (45,939)
                                                                          -------------  -------------

Costs and operating expenses:
   Selling and promotional                                                       57,994        146,608
   General and administrative (including stock-based compensation             1,109,656        757,289
      of $623,750 in 2003 and $48,825 in 2002)
   Research and development                                                     149,331        121,074
   Depreciation and amortization                                                 30,514         33,830
                                                                          -------------  -------------

      Total operating expenses                                                1,347,495      1,058,801
                                                                          -------------  -------------

Loss from operations                                                         (1,170,441)    (1,104,740)
                                                                          -------------  -------------

Other income (expense):
   Interest income                                                                  136          7,848
   Interest and financing expense                                              (130,600)      (776,431)
                                                                          -------------  -------------

      Total other income (expense), net                                        (130,464)      (768,583)
                                                                          -------------  -------------


Net loss                                                                     (1,300,905)    (1,873,323)
                                                                          -------------  -------------

Dividends attributable to preferred stock                                        59,209              -
                                                                          -------------  -------------

Net loss attributable to common stockholders                              $  (1,360,114) $  (1,873,323)
                                                                          =============  =============

Net loss attributable to common stockholders per common share basic and
diluted:                                                                  $       (0.07) $       (0.12)
                                                                          =============  =============

Weighted average shares basic and diluted                                    18,805,701     16,274,965
                                                                          =============  =============
</TABLE>
See notes to condensed consolidated financial statements

                                      F-2

                                                                              17

<PAGE>
<TABLE>
V-FORMATION, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations
(Unaudited)

<CAPTION>
                                                                             Nine Months Ended
                                                                                September 30,
                                                                         --------------------------
                                                                              2003         2002
                                                                         ------------  ------------
<S>                                                                      <C>           <C>
Net sales                                                                $  1,115,113  $    931,425
Cost of goods sold                                                            872,549       790,929
                                                                         ------------  ------------

Gross profit                                                                  242,564       140,496
License/royalty/consulting income                                              75,000        50,000
                                                                         ------------  ------------

                                                                              317,564       190,496
                                                                         ------------  ------------

Costs and operating expenses:
   Selling and promotional                                                    245,902       528,895
   General and administrative (including stock-based compensation           2,557,406     2,371,433
      of $1,082,000 in 2003 and $48,825 in 2002)
   Research and development                                                   406,238       278,401
   Depreciation and amortization                                               91,464       107,432
                                                                         ------------  ------------

      Total operating expenses                                              3,301,010     3,286,161
                                                                         ------------  ------------

Loss from operations                                                       (2,983,446)   (3,095,665)
                                                                         ------------  ------------

Other income (expense):
   Interest income                                                                323        25,666
   Interest and financing expense                                          (2,857,241)     (828,454)
   Settlement adjustment                                                      (47,500)       85,598
                                                                         ------------  ------------

      Total other income (expense), net                                    (2,904,418)     (717,190)
                                                                         ------------  ------------

Net loss                                                                   (5,887,864)   (3,812,855)
                                                                         ------------  ------------

Dividends attributable to preferred stock                                     177,626       154,584
                                                                         ------------  ------------

Net loss attributable to common stockholders                             $ (6,065,490) $ (3,967,439)
                                                                         ============  ============

Net loss attributable to common stockholders per common share basic and
diluted:                                                                 $      (0.32) $      (0.25)
                                                                         ============  ============

Weighted average shares basic and diluted                                  18,701,310    16,101,692
                                                                         ============  ============

</TABLE>

See notes to condensed consolidated financial statements

                                       F-3

                                                                              18
<PAGE>
<TABLE>
V-FORMATION, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows
(Unaudited)

<CAPTION>
                                                                                    Nine Months Ended
                                                                                       September 30,
                                                                                --------------------------
                                                                                    2003          2002
                                                                                ------------  ------------
<S>                                                                             <C>           <C>
Cash flows from operating activities:
   Net loss                                                                     $ (5,887,864) $ (3,812,855)
   Adjustments to reconcile net loss to net cash used in operating activities:
      Depreciation and amortization                                                   91,464       107,432
      Amortization of deferred compensation                                          281,250             -
      Employee compensation paid in common stock                                     800,750       749,349
      Amortization of deferred financing costs                                     2,736,570        56,751
      Changes in:
        Accounts receivable                                                         (116,825)      262,687
        Inventories                                                                   53,454       439,665
        Prepaid expenses and other current assets                                     17,454          (476)
        Security deposits                                                                950        18,076
        Accounts payable and accrued expenses                                        593,020       371,551
                                                                                ------------  ------------

           Net cash used in operating activities                                  (1,429,777)   (1,807,820)
                                                                                ------------  ------------

Cash flows from investing activities:
   Capital expenditures for equipment                                                (11,736)      (31,988)
   Capital expenditures for patents                                                        -       (18,503)
   Purchase of marketable securities                                                    (937)            -
                                                                                ------------  ------------

           Net cash used in investing activities                                     (12,673)      (50,491)
                                                                                ------------  ------------

Cash flows from financing activities:
   Borrowings under bank lines of credit                                                   -     2,949,201
    Repayment of bank line of credit                                                       -    (1,250,000)
   Advances from/(to) related parties - net                                           33,752       (68,050)
   Loans from officers/directors - net                                               212,500       133,508
   Principal payments under long-term debts                                          (35,000)     (257,500)
    Capital contribution by stockholders                                             814,203             -
   Proceeds from issuance of common stock and exercise of warrants                       750       212,000
                                                                                ------------  ------------

           Net cash provided by financing activities                               1,026,205     1,719,159
                                                                                ------------  ------------

Net decrease in cash and cash equivalents                                           (416,245)     (139,152)
Cash and cash equivalents, beginning of period                                       461,199       214,736
                                                                                ------------  ------------

Cash and cash equivalents, end of period                                        $     44,954  $     75,584
                                                                                ============  ============

</TABLE>
See notes to condensed consolidated financial statements

                                       F-4

                                                                              19

<PAGE>

V-FORMATION, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements
(Unaudited)

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

[1]  Basis of Presentation:

     The  accompanying   condensed   consolidated  financial  statements  as  of
     September 30, 2003 and for the nine month periods ended  September 30, 2003
     and September 30, 2002, is unaudited, but, in the opinion of the management
     of V-Formation,  Inc. (the  "Company"),  contain all adjustments  which the
     Company  considers  necessary  for the fair  presentation  of the Company's
     financial  position as of September 30, 2003, the results of its operations
     and its cash flows for the nine month periods ended  September 30, 2003 and
     September  30,  2002.  The  condensed   consolidated  financial  statements
     included  herein  have been  prepared  in  accordance  with the  accounting
     principles  generally  accepted in the United States of America for interim
     financial  information and the  instructions  to Form 10-QSB.  Accordingly,
     certain  information  and  footnote  disclosures  normally  included in the
     financial   statements  prepared  in  accordance  with  generally  accepted
     accounting  principles  have  been  omitted  pursuant  to  such  rules  and
     regulations, although management believes that the disclosures are adequate
     to  make  the  information   presented  not  misleading.   These  financial
     statements  should  be read  in  conjunction  with  the  audited  financial
     statements  for the year ended  December 31, 2002 included in the Company's
     Annual  Report on Form  10-KSB/A1  filed with the  Securities  and Exchange
     Commission.  The results of operations for the nine months ended  September
     30,  2003  and  2002  are not  necessarily  indicative  of the  results  of
     operations to be expected for the full year.

[2]  Business:

     V-Formation,  Inc.  manufactures through contractors and distributes inline
     skates,  roller  hockey and  paintball  sporting  goods items.  Relating to
     inline skates,  the Company  incorporates a proprietary,  patented  angular
     wheel  technology,  that  displaces  the  wheels at  alternating  16-degree
     angles.

     The   Company   was   organized   in  January   1995  and  sells   patented
     V-configuration   in-line   roller  skates  and  other  sporting  goods  to
     distributors  located in the United States.  The Company's two subsidiaries
     discontinued operations in 2001 and remain inactive.

[3]  Going concern:

     The  Company  has  incurred   substantial   losses  and  expects  to  incur
     substantial  losses for the foreseeable  future and has working capital and
     capital  deficits.  Additional  cash will be utilized during the year ended
     December 31, 2003.

     The Company's  viability is dependent upon its ability to raise  additional
     capital to continue as a going concern.  In June 2002, the Company obtained
     a  $500,000  line of  credit.  In  August  2002,  the  Company  obtained  a
     $2,000,000 line of credit. At September 30, 2003, both lines of credit were
     fully utilized and are extended through December 31, 2003 (see Note B). The
     Company  continues to be in discussions with investment  bankers and others
     to seek  extension  of due dates for the  lines of  credit  and  additional
     financing  for  operations.  The  Company  believes  it will have  adequate
     financial resources for at least the next 12 months.  However, no assurance
     can be given that the Company will obtain any additional financing.

     In September 2002, the Company expanded its product  offerings to include a
     line of paintball products.  The Company believes that sales from paintball
     products will offset the declining sales from its existing  in-line skating
     products.  Unless the Company generates positive cash flows from operations
     in the near  future,  of which  there can be no  assurance,  the failure to
     infuse  additional  capital  into  the  Company  may  force  management  to
     significantly curtail expenditures,  which may affect the Company's ability
     to fully implement its business plan.

                                      F-5

                                                                              20

<PAGE>
V-FORMATION, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements
(Unaudited)

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

[3]  Going Concern (continued):

     These  issues  raise  substantial  doubt  about the  Company's  ability  to
     continue  as a  going  concern.  The  accompanying  consolidated  financial
     statements  have been  prepared on the basis that the Company will continue
     as  a  going  concern,   which  assumes  the   realization  of  assets  and
     satisfaction  of liabilities  in the normal course of business,  and do not
     include  any  adjustments   that  may  result  from  the  outcome  of  this
     uncertainty.

[4]  Inventories:

     Inventories  are  stated  at the  lower of cost or  market  on a  first-in,
     first-out basis.

[5]  Supplementary disclosures of cash flow information:

     During the nine months ended  September 30, 2003 and 2002, the Company paid
     interest expense of $112,473 and $65,186, respectively.

[6]  Supplementary schedules of noncash investing and financing activities:

                                                              Nine Months Ended
                                                                   Sept 30,
                                                              ------------------
                                                                2003      2002
                                                              --------  --------

       Common stock issued in connection with debt financing  $257,400
                                                              ========

       Common stock issued as dividends to preferred holders  $236,833  $236,154
                                                              ========  ========

[7]  Concentration of credit risk:

     During the nine months ended  September  30, 2003 and 2002,  two  customers
     accounted for approximately 85% and 23% of net sales, respectively.

     At  September  30,  2003,  the Company  had  accounts  receivable  from one
     customer in the amount of approximately  $279,000,  representing 80% of the
     accounts receivable balance at that date.

     The Company uses outside manufacturers to produce its products.  During the
     nine months ended  September 30, 2003 and 2002,  two vendors  accounted for
     approximately 84% and 90% purchase of products, respectively.

[8]  Stock-based compensation:

     The Company accounts for stock-based employee compensation under Accounting
     Principles  Board ("APB")  Opinion No. 25,  "Accounting for Stock Issued to
     Employees",  and  related  interpretations.  The  Company  has  adopted the
     disclosure-only  provisions of Statement of Financial  Accounting Standards
     ("SFAS") No. 123,  "Accounting for Stock-Based  Compensation"  and SFAS No.
     148, "Accounting for Stock-Based Compensation - Transition and Disclosure",
     which was  released in December  2002 as an  amendment of SFAS No. 123. The
     following  table  illustrates  the effect on net loss and loss per share if
     the fair value-based method had been applied to all awards.

                                      F-6

                                                                              21

<PAGE>
V-FORMATION, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements
(Unaudited)

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

[8] Stock-based compensation (continued):

<TABLE>
<CAPTION>
                                                                       Nine Months Ended
                                                                         September 30,
                                                                   -------------------------
                                                                       2003         2002
                                                                   -----------   -----------
<S>                                                                <C>           <C>
       Reported net loss attributable to common stockholders       $(6,287,323)  $(3,967,439)
       Stock-based employee compensation expense included in
          reported net loss, net of related tax effects              3,537,320        48,825
       Stock-based employee compensation determined under the
          fair value-based method, net of related tax effects       (3,540,544)   (1,157,137)
                                                                   -----------   -----------

       Pro forma net loss attributable to common stockholders      $(6,290,547)  $(5,075,751)
                                                                   ===========   ===========

       Net loss attributable to common stockholders per common
       share (basic and diluted):
           As reported                                             $     (0.34)  $     (0.25)
                                                                   ===========   ===========

           Pro forma                                               $     (0.34)  $     (0.32)
                                                                   ===========   ===========
</TABLE>

     The fair  value  of each  warrant  grant on the date of grant is  estimated
     using the Black-Scholes  option-pricing  model with no expected volatility,
     expected life of one year,  risk-free  interest rate of approximately 2% in
     2003 and 4% in 2002 and a dividend  yield of 0%. The weighted  average fair
     value of warrants  granted during the nine months ended  September 30, 2003
     and 2002 were $0.06 and $0.50, respectively.

[9]  Loss per common share:

     Loss per common share is computed using SFAS No. 128, "Earnings per Share."
     SFAS No. 128 established standards for the computation,  presentation,  and
     disclosure of earnings per share. Basic loss per share amounts are computed
     by dividing the net loss by the weighted  average  number of common  shares
     outstanding  during the periods.  Treasury stock is subtracted  from shares
     issued to determine the weighted  average of shares  outstanding.  Dilutive
     loss per share includes the dilutive effects of stock options, warrants and
     convertible  securities.   The  effects  of  stock  options,  warrants  and
     convertible  securities  have not been  included  in 2003 and 2002 loss per
     share computations as their effect would have been anti-dilutive. Potential
     common  shares   totaling   3,989,933  and  6,068,853,   which  consist  of
     outstanding warrants and convertible preferred shares, are considered to be
     anti-dilutive at September 30, 2003 and 2002, respectively.

[10] Reclassification:

     Certain  prior period  amounts have been  reclassified  to conform  current
     period presentation.

[11] Newly issued accounting pronouncements:

     In April 2002, the Financial  Accounting  Standards  Board ("FASB")  issued
     SFAS No. 145,  "Rescission of FASB Statements No. 4, 44, and 64,  Amendment
     to FASB Statement No. 13, and Technical Corrections." SFAS No. 145 rescinds
     the requirement that all gains and losses from  extinguishment from debt be
     classified as an extraordinary  item.  Additionally,  SFAS No. 145 requires
     that certain  lease  modifications  that have economic  effects  similar to
     sale-leaseback  transactions  be  accounted  for  in  the  same  manner  as
     sales-leaseback  transactions.  SFAS No. 145 is  effective  for the Company
     beginning  in 2003,  and the  effect of  adoption  did not have a  material
     impact  on the  financial  statements.

                                      F-7

                                                                              22
<PAGE>
V-FORMATION, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements
(Unaudited)

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

[11] Newly issued accounting pronouncements (continued):

     In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
     Compensation - Transition and  Disclosure."  This statement amends SFAS No.
     123,  "Accounting for  Stock-Based  Compensation,"  to provide  alternative
     methods of  transition  for an entity that  changes to fair value method of
     accounting for stock-based employee compensation. In addition, SFAS No. 148
     amends the  disclosure  provisions of SFAS No. 123 to require  expanded and
     more prominent  disclosures in annual financial statements about the method
     for stock-based compensation and the proforma effect on reported results of
     applying  the fair  value  method for  entities  that use  intrinsic  value
     method.  The  proforma  disclosures  are  also  required  to  be  displayed
     prominently in interim financial statements.  The Company did not change to
     the fair  value  method  of  accounting  and has  included  the  disclosure
     required of SFAS No. 148 in the accompanying financial statements.

     In January 2003, the FASB issued FASB Interpretation No. 46, "Consolidation
     of Variable  Interest  Entities"  ("FIN No. 46").  FIN No. 46 clarifies the
     application of Accounting Research Bulletin No. 51, "Consolidated Financial
     Statements", for certain entities that do no have sufficient equity at risk
     for the entity to finance its activities  without  additional  subordinated
     financial  support from other  parties or in which equity  investors do not
     have the  characteristics of a controlling  financial  interest  ("variable
     interest entities"). Variable interest entities within the scope of FIN No.
     46 will be required to be  consolidated by their primary  beneficiary.  The
     primary  beneficiary of a variable  interest entity is determined to be the
     party that absorbs a majority of the entity's  expected losses,  receives a
     majority of its expected returns,  or both. FIN No. 46 applies  immediately
     to variable  interest  entities  created  after  January 31,  2003,  and to
     variable interest entities in which an enterprise obtains an interest after
     that date. It applies in the first fiscal year or interim period  beginning
     after June 15, 2003, to variable  interest  entities in which an enterprise
     holds a variable  interest that it acquired  before  February 1, 2003.  The
     Company is in the process of determining what impact,  if any, the adoption
     of the  provisions of FIN No. 46 will have upon its financial  condition or
     results of operations.

     In May 2003, FASB issued SFAS No. 150,  "Accounting  for Certain  Financial
     Instruments with  Characteristics of both Liabilities and Equity." SFAS No.
     150 establishes  standards for how an issuer classifies and measures in its
     statement  of  financial   position  certain  financial   instruments  with
     characteristics of both liabilities and equity.  SFAS No. 150 requires that
     an issuer  classify a financial  instrument  that is within SFAS No.  150's
     scope  as a  liability  (or an asset in some  circumstances)  because  that
     financial  instrument  embodies an obligation of the issuer.  Many of those
     instruments were previously  classified as equity. SFAS No. 150 requires an
     issuer to classify the following  instruments as liabilities  (or assets in
     some  circumstances):   mandatorily   redeemable   financial   instruments;
     obligations  to  repurchase  the  issuer's  equity  shares by  transferring
     assets;  and certain  obligations to issue a variable  number of its equity
     shares.  SFAS No. 150 is effective  for all financial  instruments  entered
     into or modified after May 31, 2003, and otherwise  became effective at the
     beginning of the first interim  period  beginning  after June 15, 2003. The
     adoption of SFAS No. 150 did not have a material effect on its consolidated
     financial statements.

NOTE B - BANK LINES OF CREDIT

     In August 2002, the Company  entered into a new  $2,000,000  line of credit
     agreement with a bank.  The line of credit which was  originally  available
     through  June 30, 2003 but has been  extended  through  December  31, 2003.
     Amounts  drawn on the line bear  interest at the prime rate plus 1% but not
     to be less than 6% at any time (6% at  September  30,  2003) and is payable
     monthly.  The obligation is collateralized  by the personal  guarantees and
     mortgages on specific real estate  assets of one of the Company's  officers
     and one of its  directors  and by  assignments  of patents  and  settlement
     proceeds  from patent  infringements.  At  September  30, 2003 the line was
     fully utilized.  The line of credit agreement  contains  certain  financial
     covenants,  including the  submission of timely  financial  statements.  At
     September 30, 2003, the Company was in  compliance.

                                      F-8

                                                                              23
<PAGE>
V-FORMATION, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements
(Unaudited)

NOTE B - BANK LINES OF CREDIT (CONTINUED)

     In addition,  in June 2002,  the Company  obtained a new  $500,000  line of
     credit  agreement with a bank. The line of credit was originally  available
     through  July 1, 2003,  but has been  extended  through  December 31, 2003.
     Amounts  drawn on this line of credit  bear  interest at prime rate plus 3%
     (7.25% at September  30, 2003) and is payable  monthly.  The  obligation is
     collateralized by certificates of deposit and personal guarantees of one of
     the  Company's  directors.  At  September  30,  2003,  the line  was  fully
     utilized.

     In connection  with the lines of credit for  $2,000,000  and $500,000,  the
     Company issued  1,100,000  shares of common stock valued at $3.00 per share
     for an aggregate value of $3,300,000, to certain stockholders and directors
     in  consideration  of them  providing  collateral  of assets  and  personal
     guarantees.  Of such  amount,  $1,287,500  is recorded  as finance  charges
     during the year ended December 31, 2002.  Accordingly,  $2,012,500 has been
     recorded as deferred  financing  costs as of December 31, 2002. Such amount
     is being  amortized  as interest  expense  over the  remaining  life of the
     loans.  For the nine months ended  September 30, 2003,  $2,012,500 has been
     expensed and there is no deferred balance remaining.

     In connection  with the lines of credit for  $2,000,000  and $500,000,  the
     Company  issued 85,800 shares of common stock valued at $3.00 per share for
     an aggregate value of $257,400 to a director in consideration for providing
     collateral for our bank lines of credit beyond the original  maturity dates
     to December 31, 2003.  Such amount is being  amortized as interest  expense
     over the remaining  life of the loan.  For the nine months ended  September
     30,  2003,  $257,400  has been  expensed.  There is no  remaining  deferred
     balance.

NOTE C - COMMITMENTS AND CONTINGENCIES

[1]  Related party transactions:

     At  December  2002,  a balance was due to an  officer/director  of $17,607.
     During the nine months  ended  September  30,  2003,  the  officer/director
     loaned the Company an additional $70,000 of which $36,248 was repaid during
     the period.  At September 30, 2003,  the net balance of $51,359 is shown as
     related  party  loans  payable  in  the  accompanying  condensed  financial
     statements.

     In May  2002,  a  stockholder/director  granted  an  unsecured  loan to the
     Company,  which  loan is due on or  before  December  30,  2003  and  bears
     interest at 6% per annum. At September 30, 2003, the principal loan balance
     to the stockholder/director was $119,508.

     During  2002,  the  Company  borrowed  various  unsecured  loans from other
     stockholders  and a director  bearing  interest at 6% per annum,  leaving a
     balance of $314,000 at December 31, 2002 payable on or before  December 31,
     2003.  During the period,  $37,500 was repaid by the Company to a director,
     leaving a balance of $276,500.

     During the quarter  ended  September 30 2003, a director and a  shareholder
     loaned the Company  $250,000  on an  unsecured  basis  payable on or before
     December 31, 2003.

     These three transactions resulted in loans payable to stockholders/officers
     of $646,008 at September 30, 2003.

     In connection with these  borrowings from the  stockholders  and directors,
     the company issued 642,585 shares of common stock valued at $3.00 per share
     for an aggregate value of approximately  $1,928,000 to the stockholders and
     directors in  consideration  of them providing  such funds.  Such amount is
     being  amortized as interest and expensed  over the  remaining  life of the
     loans.  For the year ended  December 31, 2002,  approximately  $467,000 has
     been deferred.  For the nine months ended September 30, 2003,  $467,000 has
     been  expensed.  As of September 30, 2003,  there is no remaining  deferred
     balance.

                                      F-9

                                                                              24
<PAGE>
V-FORMATION, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements
(Unaudited)

NOTE C - COMMITMENTS AND CONTINGENCIES (CONTINUED)

[1]  Related party transactions (continued):

     During the nine months ended September 30, 2003, two  officers/directors of
     the Company sold an  aggregate  of 741,000  shares of their Common Stock in
     the Company and thereafter  contributed  $814,203 of the proceeds from such
     sale to the Company. In consideration thereof, the Company issued these two
     people warrants to purchase up to 236,000 shares of Common Stock, each such
     warrant exercisable at a price of $3.75 per warrant. These warrants were to
     expire December 31, 2003. However,  the two  officers/directors  decided to
     surrender   the  warrants  back  to  the  Company  and  the  warrants  were
     terminated.  No compensation  cost was recorded as a result of the issuance
     of grants above the fair market value at the time of grant.

[2]  Legal proceedings:

     In January 2001, the Company filed a complaint  against Benetton Group, SPA
     and Roller  Blade,  Inc.  in the United  States  District  Court,  Southern
     District of New York,  Docket No. 01 CIV 510,  wherein the Company  alleged
     willful infringement of certain of its patent rights for Toeplate with Dual
     Flanges  for  Inline  Skate  Frames.   Upon  information  and  belief,  the
     defendants  are making,  using and offering to sell inline  skate  products
     which  infringe upon the Company's  patents.  In November  2002,  the Court
     entered an Order on the defendant's Motion for Summary Judgment, dismissing
     the  Company's  claims.  The  Company  has filed a timely  notice of appeal
     requesting  reversal  of the trial  court  decision  and this matter is now
     before the US Court of Appeals for the 2nd Circuit. While no assurances can
     be provided,  the Company is optimistic  about the likelihood of success on
     appeal.

     In February  2001,  the  Company  filed a  complaint  in the United  States
     District  Court,  Southern  District  of New York,  Docket  No. 01 CV 7179,
     against adidas America,  Salomon North America,  Inc., Salomon S.A., adidas
     AG and adidas Salomon AG, The Sports Authority,  Inc., Princeton Ski Outlet
     Corp.,  dba  Princeton Ski Shops and Paragon  Sporting  Goods Co., Inc. for
     willful infringement of certain patents held by it, including Toeplate with
     Dual Flanges for Inline Skate  Frames.  Upon  information  and belief,  the
     defendants  are making,  using and offering to sell inline  skate  products
     which infringe on certain of the Company's  patents.  In November 2002, the
     Court  entered an Order on the  defendant's  Motion for  Summary  Judgment,
     dismissing the Company's claims. The Company intends to appeal, but has not
     yet done so as of the date of this  Report,  as no final  judgment has been
     entered.  While no  assurances  can be provided,  the Company is optimistic
     about the likelihood of success on appeal.

     In April 2001,  Vertex Capital Corp. filed a complaint  against the Company
     in the United States District Court for the Southern  District of New York,
     seeking  damages for alleged breach of contract and unjust  enrichment.  In
     September 2002, the Court entered summary  judgment in the Company's favor,
     dismissing  all but one of the  plaintiff's  claims.  In January 2003,  the
     Company entered into a verbal settlement of this matter, which provided for
     the  Company to issue  warrants.  However,  when the  settlement  was being
     reduced to writing,  a dispute  concerning  the terms of the warrants to be
     issued arose and no formal  settlement was reached.  As of the date of this
     Report, the Court has dismissed this action, without prejudice,  due to the
     failure of the  plaintiff  to timely  file  various  pleadings.  No further
     action has taken place.

     In October  2001,  the Company  filed an action  against USCO  Distribution
     Services,  Inc.,  d/b/a USCO Logistics  ("USCO"),  which was removed to the
     United States District Court for the District of Colorado, asserting claims
     arising from USCO's failure to perform according to its "order fulfillment"
     contracts.  USCO asserted  counterclaims  totaling  approximately  $103,000
     based on its  charges  for  services  under the  contracts  and  asserted a
     possessory  lien on the  Company's  inventory  in  their  possession.  USCO
     subsequently liquidated the inventory pursuant to their possessory lien. In
     April 2003, the Company entered into a confidential  settlement  agreement,
     which partially reimbursed USCO for UPS shipping charges.

                                      F-10

                                                                              25
<PAGE>
V-FORMATION, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements
(Unaudited)

NOTE C - COMMITMENTS AND CONTINGENCIES (CONTINUED)

[2]  Legal proceedings (continued):

     In January  2002,  the  Company  filed a  complaint  in the  United  States
     District  Court,  Southern  District of New York,  Docket No. 010 CIV 1693,
     against K2 Corporation, wherein the Company alleged willful infringement of
     patent  rights held by it for  Toeplate  with Dual Flanges for Inline Skate
     Frames.  In August 2002,  the Company  entered  into a  settlement  of this
     matter in which the  Company  received a  compensatory  award for  previous
     infringement,  as well as a future  royalty  on  sales  for  roller  skates
     utilizing its patented  technology  and the  assignment of two patents.  As
     part  of  the   settlement,   the  Court  ordered  the   settlement   terms
     confidential.

     Thereafter,  the Company learned that,  immediately  prior to entering into
     the  aforesaid  settlement  agreement,   K2  Corporation  allegedly  signed
     agreements with both Benetton Group, SPA and Roller Blade, Inc., as well as
     adidas America,  Salomon North America,  Inc.,  Salomon S.A., adidas AG and
     adidas Salomon AG, which agreements  included  covenants not to sue for any
     patent infringement  relating to the patents  subsequently  assigned to the
     Company.  The Company  maintains  that K2  Corporation  never advised it of
     these agreements.  Applicable thereto, in March 2003, the Company commenced
     an action  against K2  Corporation  and its  General  Counsel in the United
     States  District   Court,   District  of  Colorado,   alleging   fraudulent
     concealment,  misrepresentation and breach of contract,  with damages to be
     established at trial.

     This matter was  subsequently  remanded to the United States District Court
     for the Western  District of  Seattle,  Washington.  As of the date of this
     Report,  this Court has issued  scheduling  orders and the matter is in the
     discovery  phase.  Trial on this matter has been  scheduled  for  September
     2004.

     Relevant  thereto,  in January  2003,  the Company  also  commenced  patent
     infringement suits against both Benetton Group, SPA and Roller Blade, Inc.,
     as well as adidas  America,  Salomon  North  America,  Inc.,  Salomon S.A.,
     adidas AG and adidas Salomon AG, The Sports Authority,  Inc., Princeton Ski
     Outlet Corp.,  dba Princeton Ski Shops and Paragon Sporting Goods Co., Inc.
     in separate actions filed in the United States District Court,  District of
     Colorado, wherein the Company has alleged infringement by the defendants of
     those  patents  assigned to the Company by K2  Corporation.  Discovery  has
     commenced in these matters.

     In December 2002, the Company filed an action in the United States District
     Court,  District  of New  Jersey,  against  KPMG  Corporate  Finance  LLC.,
     ("KPMG") alleging breach of contract and conflict of interest.  The Company
     had  previously  signed a consulting  agreement with KPMG for it to provide
     investment  banking  services.  The  Company  alleged  that KPMG  failed to
     disclose that they also represented  certain of the Company's  competitors.
     This  matter was  resolved  by the  parties  entering  into a  confidential
     settlement agreement in October 2003.

     In  December  1997,  the Company  entered  into a  Confidential  Settlement
     Agreement and Release in conjunction  with a Product and License  Agreement
     to resolve outstanding litigation in the matter of The Brandner Corporation
     v. Jeannette L. Brandner,  et al.,  Docket No. 96CV 3163 (JRS) then pending
     in the United States District Court for the Southern  District of New York.
     The  settlement   sought  to  resolve  all  outstanding   issues  regarding
     technology   embraced  by  Brandner's   Patent  No.   5,303,940  (the  "940
     Technology").  Pursuant to the Product and License  Agreement,  the Company
     made all required  royalty  payments for skates utilizing the technology as
     set forth in the License  Agreement.  In February  2002,  Brandner  filed a
     request with the Court seeking  royalty  payments for skates not covered by
     the 940 Technology.  The Company filed an opposition to Brandner's request.
     In November  2002,  the Court  entered  judgment  against the Company.  The
     Company has appealed  this ruling to the United States Court of Appeals for
     the 2nd  Circuit.  The Court of Appeals has  remanded  the case back to the
     District  Court to explore the Company's  position that the District  Court
     lacked  jurisdiction  over any  alleged  continuing  disputes  between  the
     parties  relative  to the  product  and  licensing  contract.  Although  no
     assurances can be provided,  the Company is optimistic about the likelihood
     of  prevailing  in  this  matter  on  appeal.

                                      F-11

                                                                              26
<PAGE>
V-FORMATION, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements
(Unaudited)

NOTE C - COMMITMENTS AND CONTINGENCIES (CONTINUED)

[2]  Legal proceedings (continued):

     Finally,  in December  2002, a complaint  was filed  against the Company by
     Primagency, Inc. in the Supreme Court of the State of New York, who alleged
     that the Company owed  $200,000 in placement  fees arising out of an agency
     compensation  agreement  which the Company entered into with the plaintiff.
     Judgment was entered  against us in the principal  amount of $200,000 which
     judgment was stayed by the court. We have filed an appeal and the matter is
     currently pending.

     The  Company  has been  named as a  defendant  in one other  lawsuit in the
     normal course of business.  In the opinion of management,  after consulting
     with legal counsel,  the  liabilities,  if any,  resulting from this matter
     will not have a material effect on the Company's financial statements.

                                      F-12

                                                                              27


<PAGE>

                                   SIGNATURES

     Pursuant to the  requirements  of Section 12 of the Securities and Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                    V-FORMATION, INC.
                                    (Registrant)

                                    Dated: December 23, 2003


                                    By: s/ Richard Stelnick
                                       -----------------------------------------
                                       Richard Stelnick, Chief Executive Officer



                                                                              28